Credit unions recognized as community development financial institutions have the opportunity to get some of the $787 billion the federal government has decided to spend on economic stimulus.
The American Recovery and Reinvestment Act that President Obama signed into law on Feb. 17 included $100 million for the U.S. Treasury Department's Community Development Financial Institutions Fund to make grants to CDFIs around the country, including credit unions.
The award more than doubles the fund's usual appropriation for this year since the CDFI Fund is also budgeted to receive money through the government's usual appropriations process.
"The fact that the Community Development Financial Institutions Fund is included in this significant legislation is an important recognition by Congress that the CDFI Fund plays a vital role in promoting economic revitalization in our nation's most distressed communities," said CDFI Fund Director Donna Gambrell in a statement celebrating the appropriation.
"I can assure you that the CDFI Fund is mobilizing quickly to expeditiously deploy this new funding. A detailed announcement will be released shortly by the CDFI Fund to provide further guidance regarding the implementation strategy and schedule," she added.
Gambrell will likely outline the fund's approach to making the grants when she addresses the March 2 CDFI Institute, sponsored by the CDFI Coalition, a trade association that lobbies Congress in support of the fund.
Fred Zeytoonjian, executive director of the CDFI Coalition, explained that the money does not impact the fund's appropriation currently still in the appropriations process.
Zeytoonjian stressed that he did not have any news on the final version of the bill but said that the fund would likely have 60 days to decide how it was going to allocate the money and that the latest word was that the fund would not fund applications from the 2008 cycle.
"There is always a lot of horse trading in the legislative process and while I don't know how or why [the funding procedure] might have come up, the latest word we have is that the fund will do that," Zeytoonjian.
Fund supporters had suggested that simply funding previously unfunded applications would be an efficient way use the stimulus funds, but Zeytoonjian speculated that the fund might want new applications to make sure the funds were still going to financially sound CDFIs.
CDFI credit unions have received grants from the fund for everything from support for their capital to grants for technical assistance. According to a CDFI Fund database, over 200 credit unions have received grants since 1996.
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