This morning, the House Financial Services and General Government (FSGG) Appropriations Subcommittee held a hearing on the Community Development Financial Institution Fund (CDFI Fund). Four CDFI leaders provided live testimony: Annie Donovan, former CDFI Fund Director; Grace Fricks, President and CEO of Access to Capital for Entrepreneurs, Inc.; Bob Jones, CEO of United Bank; and Joe Neri, CEO of IFF.
“The very essence of the CDFI Fund acknowledges the old adage that ‘Washington doesn’t always know best.’ That’s because the power of the CDFI Fund — and the reason I believe it has received strong bipartisan support for so many years — is that it is not a one-size-fits all policy prescription developed in Washington, D.C.,” Neri said in his testimony. “Instead, the flexible grants it provides to mission-driven lenders of every type — serving people, businesses and communities with completely different needs and challenges — puts capital into the hands of the local problem solvers best equipped to find solutions.”
IFF was one of the very first CDFIs to get certified by the CDFI Fund in 1996, and now there are more than 1,000 certified CDFIs nationally. IFF was also among the first to receive various sources of funding from the CDFI Fund, including: Core Grants in 1996; New Markets Tax Credits in 2002; Healthy Food Financing Initiative grants in 2011; and a Disability Funds grants in 2018. Overall, since the CDFI Fund’s launch over two decades ago, IFF has received 26 grants, ranging from $50,000 to $5 million, and five NMTC allocations, ranging from $10 million to $80 million.
“I cannot emphasize enough how important these grants have been and continue to be to IFF’s ability to grow and provide capital to more low-income communities and persons with disabilities,” Neri said. “These grants are the only consistent source of equity capital available to nonprofit CDFIs and are an absolutely essential component of our business model.”
Every $1 IFF receives from the CDFI Fund leverages about $12 in total public-private investment. But the impact of these funds does not stop with this initial leverage — each $1 we receive from the CDFI Fund remains on our balance sheet permanently (these funds are not used to pay for any expenses) and continues to generate capital in perpetuity.
Neri explained that the CDFI Fund grants not only boosted IFF’s net assets and helped make IFF more attractive to bank investors; they also gave IFF the flexibility to innovate and craft the specific loan products needed in different communities.
“For two decades, the CDFI Fund has seeded and grown a vibrant network of strong, nimble financial institutions that can leverage substantial capital and inject it into neglected markets. And, despite its growth, this network of CDFIs has remained deeply rooted in communities,” Neri concluded. “This powerful combination of capital and community knowledge is where CDFIs shine; we are the last-mile financier and policy implementer. We are where capital meets justice. And there is still a large and fundamental need for the work we do.”