|New York State Senate Chambers.
State Fund Comes Step Closer to Becoming Reality
(April 5, 2010 – Albany, NY) Despite New York’s budgetary woes, state legislators are throwing their support behind community development financial institutions (CDFIs) in acknowledgement of their ability to expand affordable lending opportunities across the Empire State. On March 24, in its Majority Resolution for a Fair and Responsible SFY10-11 Budget, the New York State Senate called upon Governor Paterson to direct $15 million for an initial capitalization of the New York State CDFI Fund. In a state long known for its large-scale economic development programs, this shift to support local responsible lenders is a major breakthrough for community advocates.
CDFIs are community-based financial institutions with a primary focus on lending to low- and moderate-income people and communities. CDFIs include community development credit unions (CDCUs), community development banks, and community development loan funds. Certified by the U.S. Department of the Treasury as responsible lenders to low- and moderate-income people and communities, CDFIs serve populations that have been traditionally left behind by many mainstream financial institutions. According to research conducted through the CDFI Data Project (CDP), 78% of CDFI clients are low-income, 70% are minorities, and 63% are female.
The National Federation of Community Development Credit Unions (Federation), itself a CDFI Intermediary and a pioneer in the CDFI industry, has been operating the New York Coalition of CDFIs for more than a decade. Melanie Stern, Federation Senior Program Officer and Coordinator of the New York Coalition of CDFIs, explained the significance of the Senate’s resolution.
“In FY 2009, there were 110 CDFIs in New York with more than $1.93 billion in loans outstanding to more than 100,000 customers, including businesses, affordable housing developers, community facilities, microenterprises, and individuals,” she said. “CDFIs are experts at leveraging funds, and according to research conducted by the U.S. Department of the Treasury, CDFIs leverage federal dollars with private dollars by an average of 20 to 1. Based on this figure, we estimate that a $15 million appropriation to the New York CDFI Fund will allow the state’s CDFIs to leverage an additional $300 million in private sector investments; now that is a tremendous bang for your buck!”
This is a message that has resonated with the State Senate, and while the State Assembly has yet to pass its own resolution calling on the governor to include $15 million for CDFIs, Stern is optimistic because the Assembly has been the traditional champion for CDFIs in New York. “The only reason this program exists at all is because members of the Assembly kept it alive with yearly allocations of $1-$1.5 million to expand CDFI lending to minority and women-owned business enterprises [MWBEs],” Stern explained, “Our coalition is hopeful that the Assembly will follow through on its long history of support to CDFIs and pass a resolution with a similar recommendation to the Governor.”
The New York CDFI legislation is unique in that it is modeled after the federal CDFI Fund to allow the full range of CDFI services including small business, affordable housing and community facility lending. The New York Coalition of CDFIs and its allies are anxious to see the New York legislature take the final step by fully funding their state CDFI Fund.
“At the federal level, CDFIs have become central players in promoting economic recovery,” explained Federation President/CEO Clifford N. Rosenthal, who authored the original concept paper that became the basis for the Federal CDFI Fund. “Under the Obama Administration, the federal CDFI Fund has seen its yearly appropriation more than double from its all-time high under President Clinton, with $250 million requested by the president for 2011. There’s never been a been a better time for New York State to expand its support of CDFIs, and we hope state legislators realize that this is an opportunity to leverage those federal funds and put them to work jumpstarting New York’s economy.”
A link to the full resolution is available by visiting: http://www.nysenate.gov/press-release/majority-resolution-fair-and-responsible-sfy10-11-budget (see page 39 for New York State CDFI Fund language).
The Federation's resources and information about New York CDFIs are available on this website, by clicking here.
About the New York Coalition of CDFIs
The New York Coalition of CDFIs is led by a steering committee representing all sectors of the CDFI industry, both Upstate and Downstate. Steering Committee members are: Gina Harman and Jennifer Spaziano from ACCION New York (New York, NY); Grenchen Hanchett from ACCORD Corp. (Belmont, NY); Leni Hochman from Alternatives FCU (Ithaca, NY); Bob Radliff from the Capital District Community Loan Fund (Albany, NY); Kim Jacobs from Community Capital Resources (Hawthorne, NY); David Raynor from the Leviticus Alternative Fund (Yonkers, NY); Patrick James from the Nonprofit Finance Fund (New York, NY); Dana Brunett and Hubert VanTol from Pathstone (Rochester, NY) and Lesia Bates-Moss and Edwin Hong from Seedco (New York, NY).
In addition to the Federation’s long-time leadership, the New York Coalition of CDFIs has been working closely with the Credit Union Association of New York, New Yorkers for Responsible Lending, the New York City Office of Financial Empowerment, and Micro Biz New York to garner support from Albany.
Questions regarding the work of the New York Coalition of CDFIs, or institutions wishing to join the Coalition, should contact Melanie Stern at email@example.com, or (212) 809-1850 x211.
© 2010 National Federation of Community Development Credit Unions.