20 Years of Lifting Up Communities
For two decades, the Community Development Financial Institutions Fund (CDFI Fund) has been an important element of an economic strategy designed to create opportunity for all and strengthen communities by increasing access to capital. Today, the Obama administration celebrated its 20th anniversary by convening government officials, business executives, and community leaders at the Treasury Department to mark the achievements of the CDFI Fund and to look at the prospects for its continued success.
The CDFI Fund plays an important role in addressing the economic needs of low-income communities, making progress to ensure all parts of our economy are able to grow together. Its programs help attract private-sector investment to communities that lack access to mainstream financial institutions. It provides financial tools to nearly 900 CDFIs, mission-driven financial institutions that serve low-income borrowers in underserved urban and rural areas. Since its creation, the CDFI Fund has awarded more than $2 billion through its monetary award programs and allocated $40 billion in tax credit allocation authority. It has also issued $525 million in guarantees for community development under recent awards of its bond guarantee program. Combined, these programs have responsibly leveraged billions more in private capital, advancing economic development and creating jobs in underserved communities.
CDFIs help finance small businesses, charter schools, grocery stores, and health centers in communities across America. Additionally, CDFIs can provide financial products and services, such as bank accounts or home mortgages, so low-income individuals in underserved communities can avoid high-cost, predatory products.
The CDFI Fund has supported thousands of projects nationwide, delivering real community impact. A few examples include:
- PVJOBS, Los Angeles, California – In 2009, a California-based CDFI, Clearinghouse CDFI, provided PVJOBS with financing made possible through the CDFI program. It received a $737,000 loan to renovate its headquarters. PVJOBS provides critical education, job training, and job placement services to workers and businesses, and the renovation made the organization a stronger resource to the community.
- Bread for the City, Washington, D.C. – Bread for the City provides food assistance, clothing, medical care, and legal assistance to Washington’s most vulnerable people. In 2009, its northwest Washington center received $6.8 million in investments for construction and renovation through the CDFI Fund’s New Markets Tax Credit Program from U.S. Bancorp Community Development Corporation in collaboration with City First Bank of DC, a CDFI. Today, it distributes more than 86,000 pounds of fresh produce each year through its food pantries, feeding an estimated 9,000 people each month.
- Continental Tire, Sumter, South Carolina – Continental Tire opened a new million-plus square-foot manufacturing facility in Sumter, South Carolina. An estimated 1,700 new jobs will be created over the next decade in a community where the unemployment rate is 1.53 times the national average. The living wage jobs provided by Continental Tire will be 25 percent higher than the median wage for the area. New Markets Tax Credit financing demonstrated to Continental Tire that this project could be feasible on American soil, thus bringing jobs back to the United States.
Based on its success to date, the Administration is committed to extending the CDFI Fund’s strong track record of spurring economic development and job growth in underserved communities. The Administration’s fiscal year 2015 budget proposal requested $225 million to enable strong support for the CDFI Fund’s key programs. Additionally, the Administration’s proposal called for a permanent extension of the CDFI Fund’s New Markets Tax Credit Program and proposed a one-year extension of the CDFI Bond Guarantee Program.
Every community in America deserves a chance to thrive, and for the past 20 years, the CDFI Fund has supported projects that provide communities in need with the economic opportunities that will help spur additional growth, bring jobs to the neighborhood, and provide access to much needed resources. As we look back today, we also look ahead to continue to push forward the valuable work of the CDFI Fund and its ongoing efforts to support stronger economic growth in all communities.
Jonathan Greenblatt is Special Assistant to the President and Director of the Office of Social Innovation and Civic Participation in the Domestic Policy Council.