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CDFI Backs Away From CDCUs

WASHINGTON - The U.S. Treasury Department's Community Development Financial Institutions Fund has been a reliable supporter of community development credit unions for almost a decade. Since 1995, CDCUs or organizations that work with them like the National Federation of CDCUs, have received over $30 million dollars from the CDFI Fund....

By Staff Writer | Updated on December 16, 2003

WASHINGTON – The U.S. Treasury Department’s Community Development Financial Institutions Fund has been a reliable supporter of community development credit unions for almost a decade. Since 1995, CDCUs or organizations that work with them like the National Federation of CDCUs, have received over $30 million dollars from the CDFI Fund. But in 2003′s round of funding the CDFI fund made grants, worth about $1 million, to only four CDCUs and gave nothing to the National Federation, indicating that the long standing relationship between CDCUs and the CDFI Fund had changed. Cliff Rosenthal, executive director of the NFCDCU, and others have noted that the signs of the shift had been coming for a long time. The Fund had eliminated the funding program dedicated to helping small and emerging CDFI’s, for example, and that fund had provided a significant portion of the CDFI’s donations to CDCUs in recent years. In addition, problems with appropriations had led the Fund to put in place a program called the New Markets Tax Credit program. Under the NMTC program, CDFI’s are supposed to be able to attract investment from private industry which, subject to some restrictions, receives tax credits from the federal government for its contributions. But most CDCU’s are too small to effectively build the networks they need to make use of the program and remain cut off from much of the CDFI funding. But there are signs the situation might improve. Although the final bill has not yet passed, it seems that the Congress this year is keeping CDFI funding at last year’s levels instead of making deeper cuts that the Bush Administration requested.

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