WASHINGTON — Community development financial institutions are hoping an Obama administration will mean some big change to one small program.
The Treasury Department's Community Development Financial Institutions Fund is that program. The fund supports CDFIs, including community development credit unions, around the country, helping to fund their overall financial health as well as their efforts to innovate and expand their work. For fiscal year 2008, the CDFI Fund is budgeted at $94 million, making it among the smallest of the Treasury Department's programs, not to mention the entire federal budget.
During the eight years of the Bush administration, the fund that began in the early days of the Clinton administration sustained a number of blows. The Bush administration routinely sought to reduce its funding, change its focus and proposed at one point to eliminate it, moving its funding to a Commerce Department program.
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But each time CDFIs were able to turn to their friends on Capitol Hill, both Democrats and Republicans, and keep the fund alive until a day when the political winds might bring a more favorable administration into office. Those supporters suggest Barack Obama's Nov. 4 election victory is that administration.
"While it's certainly too early to say definitively what difference an Obama administration might make," said Fred Zeytoonjian, executive director of the CDFI Coalition, a group of CDFIs formed to support the fund. "The signs are certainly promising for us," he said.
Clifford Rosenthal, president/CEO of the National Federation of CDCUs and one of the founding CDFI fund supporters, commented on the prospective change in administration from an impromptu office party celebrating the Obama victory. He reported that the Obama campaign signaled potential support for CDFIs relatively early by mentioning them in his platform.
"Barack Obama has support for CDFIs as part of his platform," Rosenthal said. "True, it's not a lengthy mention, but it's in there. We are all also very encouraged that Obama comes from the south side of Chicago, the home of Shore Bank, one of the most prominent and successful CDFIs."
Zeytoonjian said the coalition hoped at the very least that the fund might be able to return to the appropriations vitality it enjoyed under the Clinton administration. At its high point in 2001, the fund was appropriated $118 million and at its lowest it received $50 million.
The degree of funding is important, particularly to credit unions Rosenthal has explained, because when less money has been appropriated in the past, the amount that makes it to credit unions has shrunk even more. For example, credit unions and credit union organizations were awarded roughly 10% of the fund's most recent $54 million overall distribution even though, Rosenthal asserted, credit union CDFIs have among the most impact on their communities.
Credit unions have sometimes suffered in the allocations from the CDFI Fund. While credit unions are well represented in the CDFI industry, they are also usually among the smaller CDFIs and can lack the resources needed to compete for CDFI grants. One of the challenges the CDFI Fund faced when it announced that it would only accept grant applications electronically was the number of CDCUs that were unable to do that.
The federation stepped in to offer its members technical assistance in making the grant proposal and has a staff member dedicated to that ongoing effort.
Zeytoonjian said that in addition to greater allocations, the coalition would support continued streamlining of the CDFI Fund's processes, both in making grants and certifying new CDFIs.
He also explained that, internally, the coalition has planned changes to make sure it reflects a broader range of the overall CDFI industry. As of Jan. 1 of next year, the coalition board will grow from 12 members, six representing coalition associations as well as six representing large CDFIs, to 30 members representing CDFIs of different sizes and from a wider swath of the country.
Zeytoonjian said the coalition decided to make the change soon after he came on board as executive director. "I am pretty new here and as part of getting acquainted with the job I asked how the organization came to have the board it did," he explained. "As part of that exploration the board decided to expand its base somewhat."
The coalition is preparing to make concrete policy recommendations early next year, he added.
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