Ignore Trump; CDFI Program Is Vital, Witnesses Tell Subcommittee

The Community Development Financial Institutions program has not outlived its usefulness as the Trump Administration has claimed and in fact, funding for the program should be increased, witnesses told a House Appropriations Subcommittee Tuesday.

“The demand for CDFI Fund programs remains strong,” Annie Donovan, former director of the CDFI Fund and currently a senior fellow at the Center for Community Investment told the House Appropriations Committee’s Financial Services Subcommittee. “In fiscal year 2018, across programs, with the exception of the Bond Guarantee Program, demand ranged from two to eight times the supply of funding available.”

The Trump Administration has proposed eliminating the program in each of its budgets, arguing that the program has succeeded and that now there’s enough private capital to replace the federal funds.

Financial Services Appropriations Subcommittee Chairman Mike Quigley (D-Ill.) said he assumes that President Trump will again propose to slash funding and that it will be up to Congress to save the program.

Quigley said that the program is popular among members of Congress, adding that in FY19, the Appropriations Committee received 291-House member requests for specific funding or bill report language favoring a state or project.

He said that 19% of those requests came from Republicans. During the last Congress, House Republicans proposed decreasing the program’s funding.

Rather than eliminating the program, Congress should increase its funding, Grace Fricks, founder and CEO of Access to Capital for Entrepreneurs, a Georgia-based certified CDFI, told the subcommittee in her testimony.

“As you may know, there is exceptionally high demand for CDFI resources, which far outpaces the availability of funding,” she said. “In fact, in the FY 2018 cycle, application demand was at least three times the available funding.”

She called on Congress to provide $300 million for the program in FY20, a $50 million boost above the current fiscal year’s funding.

Credit union trade groups echoed their support for the programs, in letters to the subcommittee.

“The CDFI Fund uses small amounts of federal dollars to leverage significant amounts of private and non-federal dollar and has added a tremendous boost to the CDFI industry,” CUNA President/CEO Jim Nussle said.

Brad Thaler, NAFCU’s vice president of legislative affairs told the subcommittee that as of Nov. 30, there were 285 credit unions certified as CDFIs.

He said that since CDFI credit unions predominately serve low-income areas and other targeted areas, CDFI credit unions often are the only financial services provider for people living in those communities.

“The CDFI Fund grant program helps credit unions serve communities and consumers that large banks do not focus on,” he said.