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The Federation and CDFIs: A Retrospective
One of the Federation's greatest advocacy triumphs came in September 1994, when the Community Development Financial Institutions (CDFI) Fund was signed into law by President Bill Clinton. The Federation had pressed for such a fund since the mid-eighties, and in 1990, it assembled a group of community development credit unions, community loan funds, and community banks, which became known as the Coalition of Community Development Financial Institutions, which led the struggle to establish the CDFI Fund.
The CDFI Fund made its first investments in 1996. Since that time, it has provided millions of dollars in grants and deposits to CDCUs and to the Federation itself. CDFI Fund awards have enabled CDCUs to establish new branches, add new products and services, upgrade their technology, and dramatically increase their net worth.
The Fund's support of the Federation fueled the dramatic growth of our Community Development Investment Program and helped launch the CDCU Institute™.
With this national success under our belt, the Federation established the New York Coalition of CDFIs in 1995. This coalition, which has been solely staffed and operated by the Federation, was instrumental in advocating for the creation of a CDFI grant program through the New York State Division of Minority and Women's Business and the Empire State Development Corporation.
In 2003 when the Federal CDFI Fund abruptly eliminated SECA -- the Small and Emerging CDFI Assistance Program -- which had proven the most accessible to CDCUs. Working with the CDFI Coalition, which Federation President/CEO Cliff Rosenthal chaired, the Federation fought successfully to revive SECA. That same year, Congress also restored $10 million in CDFI Fund appropriations that had been slated for cuts by the Bush Administration, and has continued to support CDFIs by increasing its federal appropriations to the Fund in every year.
Currently, with the United States facing a massive financial crisis and looming economic recession, the Federation and its fellow CDFI advocates have reached out to Congress and the Obama administration to support affordable and responsible financing by CDFIs. There has been strong support from both Congress and the Obama administration for CDFIs who have been playing and increasingly important role in our national economic recovery, but the national deficit and proposed budget cuts are an ever present threat to CDFIs. As such, the Federation and our allies are working diligently to ensure continued funding for the CDFI Fund at the FY 2011 level.
Technical Assistance for Credit Unions
In addition to our CDFI advocacy, our Technical Assistance Department provides resources and information to credit unions interested in becoming CDFI certified and to those applying for awards.
To access Federation's CDFI Fund resources and information, please click here.
Advocacy, News and Events
CDFI Certification
The CDFI Fund has been seeking comments as part of an effort to reduce paperwork and respondent burden. Specifically, the CDFI wants comments to focus on the following areas:
1. Whether the collection of information is necessary for the proper performance of the functions of the CDFI Fund, including whether the information shall have practical utility;
2. The accuracy of the CDFI Fund's estimate of the burden of the collection of information;
3. Ways to enhance the quality, utility, and clarity of the information to be collected;
4. Ways to minimize the burden of the collection of information on respondents, including through the use of technology;
5. Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information; and
6. Ways to minimize the burden of creating maps with contiguous census tracts as a requirement for Investment Area Target Markets.
As the only trade association representing the vast majority of the more than 200 CDFI certified credit unions in the United States, and the community development authority for the credit union system, we are pleased to share our comment letter to the CDFI Fund, which details concerns we have identified over years and years of work on behalf of credit unions seeking CDFI certification and recertification. Our comment letter makes recommendations that could, in our view, significantly improve the review process for credit unions seeking CDFI certification or recertification.
CDFI certification is a valuable asset and, and although we agree that certification applications must be carefully evaluated, we also believe that credit unions applying for certification deserve a timely response.
The Federation is confident that the CDFI Fund can streamline its certification process, reduce its administrative burden, and meet the needs of CDCUs looking to qualify for this important designation.
Our mission is to help low-income people and communities achieve financial independence through credit unions, and most of our recommendations focus specifically on issues that pertain to the certification and recertification of CDFI credit unions. However, many of our recommendations apply equally to all types of CDFIs, so for this reason, we have divided our comments into two sections:
Part 1 summarizes and expands on the key recommendations we share with our partners in the CDFI Coalition for a technological overhaul of the certification process;
Part 2 focuses specifically on the six questions contained in the Request for Comments as they pertain to CDFI credit unions.
To view our full comment letter, click here.
Should you have any questions or comments please feel free to contact Pablo DeFilippi at pablo@cdcu.coop or (800) 437-8711 x304.
CDFI Bond Program
The CDFI Bond Guarantee Program was enacted through the Small Business Jobs Act of 2010 (Public Law 111-240) on September 27, 2010. The CDFI Fund will serve as the program administrator and the Treasury Department will guarantee the full amount of notes or bonds issued to support Community Development Financial Institutions (CDFIs) that make investments for eligible community or economic development purposes. The bonds or notes will support CDFI lending and investment by providing a source of long-term, patient capital to CDFIs.
Approximately 200 credit unions are currently certified by the CDFI Fund, with dozens more awaiting certification or planning to apply, a number that is certain to increase when the parameters of the CDFI Bond program are fully elaborated.
The CDFI Bond program presents an important opportunity to CDFI credit unions at a time of acute, continuing economic distress with little prospect of early improvement.
The program as outlined in the legislation offers the prospect of access to long-term capital at advantageous rates. If it is properly structured and implemented, it has the potential to stabilize and support the growth of a financial sector that specializes in serving low- and moderate-income households that have suffered disproportionately from the recession.
The Federation has been an active participant in the CDFI Bond Policy Group (BPG), which has developed general principles to guide the program, as well as detailed recommendations. Above all, we have argued for flexibility in program design, enabling maximum diversity in financial structures, providers, and uses of the CDFI Bond proceeds by the CDFI field.
On August 12, 2011, the Federation submitted comments to the CDFI Fund about the CDFI Bond Program and it's potential impact on CDCUs.
That document is available on this site by clicking here.
