JFSJ on Capitol Hill

by: Josh Tulkin

Thu Mar 04, 2010 at 14:51:09 PM EST

Earlier this week, I made my first visits to Capitol Hill on behalf of Jewish Funds for Justice.  Along with Jeremy Burton, we met with staff from NY Senators Charles Schumer and Kirsten Gillibrand. 

The issue: Increasing funding for the Community Development Financial Institution (CDFI) Fund.  This fund, administered by the Treasury Department, was created to "expand the capacity of financial institutions to provide credit, capital, and financial services to underserved populations and communities in the United States". 

At a time when banks are closing their doors to a growing number of Americans, CDFIs, which come in the form of community banks, credit unions and other local financing projects, are continuing to serve populations in need.  These institutions fund vital projects like low-income housing, urban renewal, small business, and more. Since 1996, New York organizations have been awarded over $150 million from CDFIs since 1996 to work on valuable projects across the state.

For that reason, we are asking Congress to allocate $300 million to the Fund in 2011.  This is $50 million more than the Treasury requested, a drop in the bucket compared to the bank bailout, but a political challenge nonetheless. We are following the lead of the Coalition of CDFIs on this issue.  

Staff from Senator Schumer and Gillibrand's staff were very receptive.  Both appreciated the valuable role that CDFIs have played in New York.  However, we are still waiting to confirm their support on this request, and we'll be following up in the next few weeks urging them to send a letter of support to their colleagues.  

BACKGROUND: Through our Tzedec program,  JFSJ helps pools low and no-interest loans from Jewish philanthropic investors, and reinvests those funds in (CDFIs) to serve individuals, businesses, and nonprofits typically neglected by mainstream banks.  One of our funds is applying for a "techincal assistance grant" from the CDFI Fund to become a certified CDFI itself. Unfortunately, with its current capacity the CDFI Fund can only fill ¼ of the requested grants, slowing the great potential of this growing financial movement.

The CDFI Fund website describes the Fund as follows:

The CDFI Fund was created for the purpose of promoting economic revitalization and community development through investment in and assistance to community development financial institutions (CDFIs). The CDFI Fund was established by the Riegle Community Development and Regulatory Improvement Act of 1994, as a bipartisan initiative.

The CDFI Fund achieves its purpose by promoting access to capital and local economic growth in the following ways:

1. through its CDFI Program by directly investing in, supporting and training CDFIs that provide loans, investments, financial services and technical assistance to underserved populations and communities;

2. through its New Markets Tax Credit (NMTC) Program by providing an allocation of tax credits to community development entities (CDEs) which enable them to attract investment from the private-sector and reinvest these amounts in low-income communities;

3. through its Bank Enterprise Award (BEA) Program by providing an incentive to banks to invest in their communities and in other CDFIs; and

4. through its Native Initiatives, by taking action to provide financial assistance, technical assistance, and training to Native CDFIs and other Native entities proposing to become or create Native CDFIs.

Since its creation, the CDFI Fund has awarded $1.11 billion to community development organizations and financial institutions; it has awarded allocations of New Markets Tax Credits which will attract private-sector investments totaling $26 billion, including $1 billion of special allocation authority to be used for the recovery and redevelopment of the Gulf Opportunity Zone.