Since the Administration’s budget proposal was released, we’ve heard a lot of discontent about funding being eliminated for various programs.
What you haven’t heard much about – if at all – is that the proposed budget also eliminates federal support for the U.S. Treasury Department’s Community Development Financial Institutions Fund (CDFI Fund). This isn’t wise. Elimination of the CDFI Fund would deprive rural and low-income areas of millions of dollars in funding that help communities and businesses grow and thrive.
It’s important to note that since its inception over 20 years ago, the CDFI Fund has consistently received strong bipartisan presidential and congressional support. The fund costs each American just 79 cents per year to provide loans that annually create tens of thousands of jobs, businesses and affordable places to live.
Across Colorado, CDFIs partner with banks to fill a vital need by providing capital where banks cannot lend, and gap financing when banks can’t lend enough. For example, CDFIs fill a critical role in funding small business since CDFIs can take risks that banks aren’t permitted to take. Banks feel strongly enough about this that many of them make large investments in CDFIs to help increase their resources.
According to the national CDFI Coalition, CDFIs leverage up to $12 for every dollar they receive of federal support using private investment from banks, foundations and other funding partners. The impact is significant. In 2016, CDFIs across the country created 36,000 jobs, provided 11,000 business loans and financed 24,000 affordable housing units in communities that need it most. Colorado has 15 CDFIs that have received $40.3 million of direct CDFI Fund Awards. With leverage from other capital, these CDFI Awards have infused over $400 million into our economy to create jobs and help communities grow in our state.
Let’s look at one CDFI. To date, Colorado Enterprise Fund (CEF) has leveraged $11.7 million in CDFI Fund Awards to loan $60 million to nearly 2,000 small businesses in Colorado which have created and retained more than 17,000 jobs. More than 83 percent of CEF’s loans have helped businesses owned by women, minorities and low-income people who otherwise would not have had access to business loans. In Aurora alone, CEF has loaned $2.6 million to more than 100 small businesses, which have created and retained 734 jobs.
In a letter dated March 14, 2017, all the major banking associations, including the American Bankers Association, voiced their support to Congress for the continued funding of the CDFI Fund at the $250 million annual level. Here in Colorado, the CBA supports that.
State Rep. Scott Tipton, a Western-Slope Republican, signed onto a letter to his congressional colleagues in support of the $250 million budget for 2017 and 2018. We urge others to do the same. Cuts are proposed as part of the FY 2017 appropriations bills that must be completed by April 28. With this date quickly approaching, we encourage you to let your U.S. House and Senate offices know that the CDFI Fund is important to our communities.
Don Childears is president and CEO of Colorado Bankers Association and Ceyl Prinster is president and CEO of Colorado Enterprise Fund, and board member of the national CDFI Coalition.