2005: CDFI Dodges Another Bullet

WASHINGTON – The Treasury Department’s Community Development Financial Institution’s fund survived to make more grants in 2005, mounting an effective lobbying and political effort among its friends in Congress which kept it from being largely shut down and its appropriations divided up among a block grant program that would have been administered by the U.S. Department of Commerce. The only thing that would remain at the Treasury was the New Market Tax Credits side of the CDFI Fund, a program which has not yet benefited many credit unions The Bush administration maintained that taking this approach would allow the federal government to consolidate its different community development efforts under one roof and would introduce greater local control and accountability, but community development credit unions and other CDFIs said the proposal misses the mark when it comes to their work and in the end would only hurt their efforts. In 2004, the fund spread $7 million among 10 CDCUs and credit union organizations from its Small and Emerging CDFI component. Credit unions have also been helped under the fund’s Technical Assistance program and were instrumental in helping the fund get started and growing. Fund supporters noted that currently, CDCUs only have to compete with other CDCUs and other small CDFIs for resources from the fund’s Small and Emerging CDFI program. But under a block grant program administered by the Commerce Department, CDCUs will have to first compete with other local development initiatives to be part of a local block grant request and then hope their community’s block grant request is sufficiently strong to compete with requests from other local areas. CDFI supporters attacked the idea of closing down the fund by turning to both Democratic and Republican supporters of the program and managed to not only keep the fund’s appropriation for fiscal year 2006 at the same level as it had been in 2005, $55 million, but kept any legislation formally proposing the CDFI closure from being introduced.