Last week, we saw the current administration’s first budget proposal, which calls for a $54 billion increase in military spending, funded by cuts to nonmilitary programs.
The New York Times reported that, as part of these cuts, the U.S. Treasury’s Community Development Financial Institution (CDFI) Fund (“the Fund”) will be “all but eliminated.”
While it is unlikely that the budget proposal will be finalized in its current form, these reports still concern us.
If we “all but eliminate” the Fund, we “all but eliminate” countless opportunities for people living in poverty.
Without the Fund, CDFIs across the country will lose a valuable source of funding. Communities nationwide will lose the affordable homes CDFIs provide, the jobs they create, and the businesses they help flourish.
Moreover, one of the major functions of the Fund is to certify CDFIs, which allows critical funding to flow from Community Reinvestment Act (CRA) investors to CDFIs and ultimately to disadvantaged communities, making it a quintessential public-private partnership. If CRA-motivated investors withdraw from the CDFI industry, our nation’s most vulnerable will be disproportionately and adversely affected.
A U.S. Department of Treasury program launched in 1994, the Fund finances the work of more than 1,000 CDFIs nationwide. For decades, CDFIs have provided capital, credit, and other financial services to groups working in communities neglected by traditional financial institutions; nearly 70 percent of CDFI customers are people with low incomes, 59 percent are racial minorities, and 52 percent are women, according to the National Low Income Housing Coalition (NLIHC).
The Fund’s impacts are significant; just last year, the program provided financing that created more than 36,000 jobs, provided loans to 11,000 businesses, and financed 24,000 homes. In 2016, Mercy Loan Fund (MLF) closed transactions that provided 2,218 homes serving 4,212 people, and since inception, MLF has been the catalyst for more than $2 billion in affordable real estate.
CDFIs leverage $12 for every dollar they receive of federal support, and with a budget of $258 million (or $0.79 per American), maintaining the Fund makes moral andfinancial sense.
We encourage you to stand in support of CDFIs and add your voice to the #CDFIsInvest campaign. Contact your representatives in Congress and urge them to support a $250 million budget for the Fund for fiscal years 2017 and 2018. This level of funding is consistent with what the Fund has received since 2010, and is what CDFIs need to maintain our high level of impact.
This article was written by Jason Battista, President of Mercy Loan Fund, and David Landis, Senior Vice President and Chief Operating Officer of Community Housing Capital. Together, the two organizations have leveraged approximately $4 billion in development. It was originally posted on LinkedIn.
Mercy Loan Fund (MLF) is a leading CDFI that focuses on funding affordable housing and essential community infrastructure projects that support affordable housing. By collaborating with socially responsible developers, MLF has helped finance the development of single and multifamily homes for rental and homeownership. These developments help underserved communities, including people with low incomes, seniors, farm workers, people who have experienced homelessness, and people with disabilities. MLF is a subsidiary of the affordable housing nonprofit, Mercy Housing, Inc. (MHI), headquartered in Denver, Colo. For more information, please visit mercyloanfund.org.
Community Housing Capital (CHC) is a national CDFI that exclusively serves as a direct lender to the NeighborWorks America network. CHC provides both interim real estate development loans and permanent multifamily loans with favorable rates and terms. Between 2000 and 2016, CHC originated over 395 loans for a total of $533 million, which provided financing for over 15,700 units of affordable housing and leveraged nearly $2 billion in development. For more information, please visit communityhousingcapital.org.