The Treasury’s Community Development Financial Institutions (CDFI) Fund and NCUA’s Community Development Revolving Loan Fund (CDRLF) are two important funds that help credit unions advance underserved communities, CUNA wrote to the House Appropriations subcommittee on financial services and general government (FSGG) Tuesday. The administration’s budget request does not include any new funds for the CDFI Fund or the CDRLF.
The CDFI Fund makes capital grants, equity investments and awards for technical assistance to CDFIs for community development initiatives such as small businesses, community facilities, and low-income housing.
CDFIs such as Community Development Credit Unions (CDCUs) are charged with supplying low-income, distressed communities with traditional banking services such as savings accounts and personal loans, and offering individuals the tools needed to become self-sufficient stakeholders in their own future.
“The CDFI Fund uses small amounts of federal dollars to leverage significant amounts of private and non-federal dollars, and has added a tremendous boost to the CDFI industry (which relies heavily upon private sector funds from corporations, individuals, religious institutions, and private foundations),” CUNA’s letter reads. “The CDFI Fund is being used to grow local economies and serve the most economically distressed communities in the nation. Fully funding the CDFI Fund is a good investment by the federal government. Good paying jobs lead to more tax revenue and less dependence on the federal social safety net.”
As of Feb. 18, there are 320 credit union CDFIs, out of 1,127 CDFIs nationwide.
The CDRLF assists credit unions serving low-income communities to:
CUNA’s letter notes that every dollar appropriated to the CDRLF is passed on directly to the underserved communities, as credit unions insured by NCUA fund the CDRLF’s administrative costs.
“These grants enable small credit unions to offer a new product or service, such a new ATM or
an asset liability management model. In an age of rapid consolidation in the credit union and small bank sector, it is vital to allow these small credit unions to compete and not have to close shop or merge with a larger financial institution that may not know the needs of the members of these small credit unions,” the letter reads. “The CDRLF usually receives requests that greatly exceed available funds and CUNA is concerned that an elimination of this fund will result in fewer low-income credit unions having access to needed capital to provide critical services to low income credit union members.”