ARLINGTON, Va. – The U.S. Treasury’s Community Development Financial Institutions Fund is eight years old this year and things are a changing. Up until now it has provided many community development credit unions with access to capital and technical assistance grants that they have used to grow their programs. But earlier this year the Fund changed some key elements of its programming, eliminating parts that CDCUs have found most useful and CDCUs have begun pushing to get back to the place at the table that they once held. The chief loss they are trying to remedy, according to Clifford Rosenthal, executive director of the National Federation of Community Development Credit Unions and chairman of the CDFI Coalition, is the elimination of the Small and Emerging CDFI (SECA) program from the CDFI Fund’s operations, a case the Federation recently made in a letter to the Fund: “This program was especially popular and, we believe, successful among low-income credit unions. The Fund abolished the program – which was instituted specifically with the urging of Congress – in the early months of 2003,” the Federation wrote in a comment letter to the CDFI Fund’s most recent strategic plan. “The SECA program wasn’t broken; the `fix’ has not made the CDFI Fund a more attractive partner to credit unions,” the letter added. Rosenthal and others argue that eliminating the capital portion of the SECA program, in favor of offering up to $50,000 in technical assistance grants, doesn’t work well because it effectively puts the cart before the horse. Most of the sorts of technical assistance for which a CDCU would normally apply for a technical assistance grant are going to come in the course of doing some sort of work for which they will have already received capital assistance, Rosenthal explained. If the credit union doesn’t get the capital assistance it is less likely that it will need the technical assistance grant. The Federation believes that this reality will be reflected in a sharp downturn in the numbers of CDCUs applying for technical assistance grants and has filed a Freedom of Information Act request to find out how many CDFIs and what sort have asked for the funds. It’s the Federation’s view that this is a public program using public funds and as stakeholders CDCUs should be able to find out how the money is being spent and whether the program is effectively helping their community, Rosenthal added. This change in policy has effectively discouraged many former CDCU participants, the Federation said. “By offering a technical-assistance-only program, devoid of financial assistance, the Fund significantly changed the cost-benefit calculus for many CDFIs, which no longer regarded the small ($50,000 maximum) award as worth the extensive effort and program obligations that would be required,” the Federation wrote in its letter. “The problem is that most CDCUs are really going to need a two-pronged approach,” said Jennifer Vasiloff, Executive Director of the CDFI Coalition, based in Arlington, Virginia. “They need both the capital formerly offered and the technical assistance. Yes, some might be able to take $50,000 for staff training or to upgrade technology, but most are going to apply for that sort of money in conjunction with some sort of significant expansion.” It is significant that support for restoring the SECA program cuts across all the members of the Coalition and is not just limited to CDCUs. There are many different types of institutions that qualify as CDFIs and are not credit unions. This has occasionally brought tension to setting an agenda for the CDFI Coalition and the CDFI Fund itself. But Vasiloff reported that Coalition members from all parts of the CDFI industry supported reinstating the program. It is unclear whether the Fund will be successful in its effort. The Senate Appropriations Committee, as part of its funding for the CDFI Fund this year, specifically lamented the Fund’s elimination of the SECA program and instructed that it be restored. However, the House of Representatives version of the funding language does not include similar language and cuts the funding for the CDFI Fund overall. In its recent letter the Federation also pressed the CDFI Fund for credit union representation on the Fund’s Advisory Board and among Fund staff. “The Fund has never included a representative of credit unions on its Advisory Board,” the Federation wrote in a comment letter on the Fund’s most recent strategic plan. “This despite the numerous qualified candidates proposed by our and other organizations. Considering the large potential market of credit unions, this lack is especially perplexing.” The Federation also noted that in its eight years, the Fund has had virtually no staff with credit union experience and suggested that the absence of this representation has hurt the Fund with CDCUs. “Currently, there are approximately 1,000 credit unions in the United States that are designated as low-income by the federal regulatory agency, the National Credit Union Administration,” the Federation wrote. “Since these credit unions are regulated depositories with a specific, official mission of serving low-income populations, they would appear to be natural partners for the CDFI Fund. However, barely 10% of such institutions have found it worthwhile to seek certification from the Fund; moreover, some credit unions that have previously been certified have chosen to let their certification lapse.” [email protected]