WASHINGTON - Community development credit unions have received amixture of good and bad news about a previously popular governmentprogram. On the positive side, the leadership of the U.S.Treasury's Community Development Financial Institution Fundannounced that it will bring back a part of its program under whichthe majority of credit unions had received assistance in the past.On the negative side, the Bush Administration also requested evenless money for the fund overall than it did last year, alreadyalmost a record low. Addressing attendees at the 2004 National CDFIInstitute, held in Washington on February 5, CDFI Director TonyBrown told the meeting that the fund will bring back the Small andEmerging CDFI Assistance part of its program. The SECA component ofthe fund's operations is responsible for the lion's share of theover $30 million that CDCUs have received from the fund since 1995.In 2002, grants mostly made through the SECA component accountedfor $2 million for individual CDCUs and an additional $2 millionfor the National Federation of Community Development Credit Unionswhich administers the money on behalf of CDCUs that are too smallto interact with the fund directly. But in fiscal year 2003, thefund ended the SECA program in favor of an emphasis on a programcalled the New Markets Tax Credit program. Under NMTC, businesseswhich make grants to qualified community development financialinstitutions can receive tax credits from the federal governmentfor those grants. The new program was meant to move CDFIs,including CDCUs, away from a focus on the federal government forsupport and more toward looking to the financial sector. TheFederation pointed out that relatively few CDCUs had the size,staff or resources to really take advantage of the NMTC and warnedthat eliminating SECA would effectively eliminate many CDCUs. Sureenough, in 2003 the fund made only four grants to CDCUs, totalingjust over $1 million. The Federation received no money on behalf ofCDCUs at all, even though it had applied for over $900,000. Thedrop in support for CDCUs, one of the groups which had beenresponsible for the creation of the Fund, drew the attention of notonly the Federation, but also some fund administrators, Treasuryofficials and members of Congress. That pressure helped bring backthe SECA component, Brown said. Brown noted that the fund had heardfrom CDFIs which had been hurt by last year's SECA cuts,particularly CDCUs, and he noted from the podium that CliffRosenthal, Executive Director of the Federation and Chairman of theCDFI Coalition, had spoken up most loudly. In part because of thecomplaints, Brown explained, "we recognize small CDFIs covergreater underserved markets," and Brown said that the last year'selimination of the program in favor of an emphasis on larger CDFIshad not been intended to cut smaller CDFIs, like credit unions, outof the program. Further, Brown explained that the revived SECAprogram would also be administered with smaller CDFIs, like CDCUs,in mind. The fund pledged to become more flexible about grantrequirements for the smaller institutions and to take into accounttheir smaller size and different economic circumstances. Forexample, the fund routinely requires CDFIs that get matching grantsto have their matching funds in hand, or committed, when they applyfor CDFI money. But under the SECA program Brown explained grantadministrators would be more willing to take size into account.That additional flexibility may be needed since Brown alsoannounced the Fund would begin implementing a new data collectionsystem. Dubbed the Community Investment Impact System (CIIS), theeffort will seek to collect data on the institutions which receivethe Fund grants as well as document what they do with them. TheFund hopes the data will help substantiate its institutions' recordof working with federal funds for the U.S. Congress and theindividual CDFIs will be able to build a track record that theythen can show to private foundations and other sources of funds.But many CDFIs, especially CDCUs, worry that they will not have theresources they need to implement the new reporting software andmeet CIIS' other requirements. Brown sought to reassure them thatthe Fund had already appropriated money through its TechnicalAssistance component to help bring small CDFIs up to speed on theCIIS system and that the Fund would implement a streamlinedTechnical Assistance grant application for those funds. ButAdministration Funding Still Cut Overshadowing the news about theFund's reviving SECA and the helping CDCUs out with CIIS was thereality that the Bush Administration's commitment to the programapparently has continued to wane. The Administration's budgetrequest for 2005 asked for only $48.4 million for the Fund. Lastyear, another record low year, the Administration has asked foronly $51 million. Congress eventually appropriated $61 million forthe fund last year. "The CDFI Coalition is dismayed that thePresident has requested only $48.4 million for the CDFI Fund in hisFY 2005 Budget proposal," the Coalition wrote to CDFI supporters."We must rely on Congress to once again recognize the value of thisprogram and approve a more appropriate funding level for the CDFIFund of at least $80 million. In the coming year advocacy will beeven more important to secure adequate federal support for CDFIs."Perhaps borrowing a page from CUNA, Institute organizers hadlobbying materials on hand for attendees and had scheduled time onFebruary 5 for the members to visit legislators' offices. -

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