Talking Points for CDFI Listening Tour

Transcription

1 Talking Pints fr CDFI Listening Tur The CDFI Fund is hlding a natinal listening tur in July and August 2015 t slicit public pinin regarding a new strategic framewrk fr the CDFI Fund. CDBA encurages its Members t participate in the sessins. T view the tur schedule and learn mre, visit T supprt yur participatin, CDBA has cmpiled this mem which cvers the six tpics t be addressed during the listening sessins. This dcument is a starting pint fr yur wn thughts and is nt a cmprehensive statement. CDBA may update this infrmatin as we learn mre abut the Listening Sessins and receive feedback frm members. Yu can always find the latest versin f the mem (as well as ur past advcacy effrts) in the advcacy sectin f CDBA s website ( Unable t attend a Listening Sessin? Prvide yur feedback and insights by cmpleting this CDFI Fund survey. Please cntact Caitlin Krutsinger at krutsingerc@pcglanfund.rg r ext. 224 if yu have questins r cmments abut the CDFI Fund s listening tur, CDBA s advcacy effrts, r hw yu can participate. 1. Prgram Effectiveness: Are the CDFI Fund s prgrams wrking ptimally fr cmmunities? Preserve and Grw the Bank Enterprise Award Prgram. The BEA Prgram has been the mst imprtant and effective CDFI Fund Prgram in supprting and prmting the wrk f the CDFI Bank sectr. A 2012 analysis by the CDFI Fund reprted that f all f the agency s prgrams, the BEA Prgram is the mst targeted t lw and mderate incme ppulatins. The reprt states that 90% f all BEA mnies g t the lwest lw incme census tracts (30% pverty plus 1.5 natinal unemplyment). BEA is als highly effective in leveraging private dllars. Between 2010 and 2014, $57 millin in BEA awards leveraged $203 millin in supprt t CDFIs, $1.6 billin in lans and investments in Distressed Cmmunities, and prvided $73 millin in financial services t distressed cmmunities. Hwever, BEA has the mst unmet demand amng the CDFI Fund prgrams. In 2014, nly $1 in funding was available fr every $12 in requests -- with the CDFI Fund receiving $211 millin in requests fr $17.9 millin available. By cmparisn $1 in funding was available fr every $2.38 in requests fr the Financial Assistance Prgram, $3.98 fr Healthy Fds Financing Initiative, and $7.39 fr New CDFI Fund Listening Tur Talking Pints 1

2 Markets Tax Credits. Despite this success, in the past several years, the President s budget has prpsed eliminating funding fr this imprtant prgram. We strngly urge the CDFI Fund t be a strng advcate inside the Administratin fr this imprtant prgram. Target the Bank Enterprise Award Prgram t CDFI Banks. Since its inceptin, the BEA prgram has largely shifted its fcus frm subsidizing large, nn-cdfi banks t supprting CDFI banks and minrity depsitry institutins. Despite this psitive change, the prgram cntinues t be perceived as a subsidy fr big banks, partly because big, nn-cdfi banks still receive sme BEA funds abut 5% in In % f BEA funds went t nn-cdfi banks regardless f asset size. The CDFI fund needs t g even further in giving preference t cmmunity-based CDFI banks that specialize in helping lw-incme cmmunities. Ensure the CDFI Prgram serves the entire CDFI industry We recmmend that the CDFI Fund wrk t cntinuusly ensure that this prgram wrks fr all CDFIs. We urge the CDFI Fund t recgnize that there is n ne size fits all apprach t cmmunity develpment r prviding financial services t distressed markets. The Fund must assure that applicatin materials and review prcess acknwledge and value the diverse business strategies pursued by cmmunity develpment banks, credit unins, lan funds and venture funds. We urge the CDFI Fund t remedy the disparity in CDFI Prgram Awards. Histrically, nn-regulated CDFIs receive a disprprtinate share f CDFI Prgram awards despite the fact the regulated CDFIs cmprise a large majrity f the assets and vlume f lending and service activities. The Fund tk a step in the right directin in FY 2013 when it reinstituted the practice f ensuring the diversity f the CDFI sectr is prprtinally reflected in award decisins. We strngly urge yu t cntinue this plicy. Furthermre, t ensure that all applicants receive a fair review, we strngly urge yu t slicit readers frm each respective CDFI sectr t assist in the evaluatin prcess. Allw all CDFIs nt applying fr Financial Assistance t apply fr Technical Assistance Awards f up t $200,000. The riginal authrizing statute recgnized that CDFIs at all stages f rganizatinal develpment need technical assistance. Access t Technical Assistance grants shuld nt be limited nly t the smallest r mst nascent rganizatins; such a limitatin is cntrary t Cngressinal intent and des a disservice t the CDFI industry. We urge the CDFI Fund t allw retained earnings that are used as matching funds under the Financial Assistance Prgram t receive Equity Capital. In the early years f the CDFI Fund, CDFI banks were able t receive assistance in the frm f Equity Capital. In recent years, the CDFI Fund has drifted away frm the practice and nly allwed CDFI CDFI Fund Listening Tur Talking Pints 2

3 banks t receive grants as a match fr retained earnings. Grants can be prblematic because CDFI banks (and their hlding cmpanies) are nt tax exempt. All grant dllars are taxable; thus, CDFI banks must instantly return a prtin f the CDFI grants t the Internal Revenue Service and the funds are nt available t supprt activities in LMI cmmunities. 2. Access: What mre can the CDFI Fund d t reach cmmunities that need CDFIs but are either nt being served by them r have limited access t CDFI Fund supprt? CDFI cverage research cnducted as part f the CDFI Fund s Capacity Building Initiative shws that there are many cmmunity banks currently wrking in underserved, high need areas that culd qualify fr CDFI certificatin. The CDFI Fund can crdinate with Federal banking regulatry agencies t identify these banks and educate them n the benefits f certificatin. The CDFI Bnd Guarantee Prgram (CDGP) is an pprtunity t fr CDFI banks t significantly expand prvisin f credit in Lw-and Mderate-Incme (LMI) cmmunities. Unfrtunately, the prgram's authrizing statute and Federal credit scring rules severely limit the ability fr CDFI banks t use the prgram. We urge t US Treasury t seek legislative changes that will allw the CBGP t be used t raise Tier I equity capital. 3. Innvatin and Scaling: Hw can the CDFI Fund best supprt CDFIs t cntinue t innvate? What will it take t scale slutins that are knwn t wrk? T supprt innvatin, we urge the CDFI Fund t practively educate the regulatry agencies abut the unique markets served by CDFI banks and their strategies fr managing risk. As regulated institutins, CDFI Banks walk a fine line when it cmes t innvatin. New prducts that serve lw incme peple can raise cncerns with examiners Innvatin requires funding fr research and develpment. a. The Fund shuld fund innvatin and industry capacity building effrts by allwing CDFIs t use awards t test and scale prmising prducts and services. b. The Fund shuld request Cngress waive r reduce the matching funds requirements n activities that facilitate innvatin. 4. Custmer Service: What wrks well at the CDFI Fund and what needs t be imprved? What wrks well? a. The CDFI Fund and its staff remains slidly cmmitted t prmting the CDFI industry and the needs f the cmmunities they serve. CDFI Fund Listening Tur Talking Pints 3

4 b. The agency has been effective in telling the stry f its wrk and the impact f the industry t Cngress. As result, the CDFI Fund has received slid and steady funding supprt during an era f limited surces. What needs t be imprved? a. The CDFI Financial Assistance Applicatin intrduced fr the FY 2014 funding rund has becme t numerically fcused and has mved t far away frm the riginal Cmprehensive Business Plan (CBP) cntemplated in the authrizing statute. The applicatin frces applicants int a ne size fits all framewrk that des a disservice t CDFIs f diverse rganizatinal types and CDFIs serving distinctively different market niches. The significantly reduced character limits n the narrative prtin f the applicatin exacerbate this prblem. We disagree with the CDFI Fund s premise that a mre numeric applicatin means the evaluatin prcess is fairer. Numbers are meaningless withut cntext. We strngly urge the CDFI Fund t return t a mre balanced, narrative based applicatin that allws each CDFI t tell its unique stry. b. We urge the CDFI Fund t prvide mre detailed debriefings fr all prgrams. Additinal detail n the strengths and weaknesses f unsuccessful applicatins will build industry capacity and imprve the quality f future applicatins. c. Imprve web-based data uplading systems. This year, the CIIS lan data mass-uplad feature was nn-peratinal in the week leading up t the due date, meaning data had t be entered ne lan at a time. In additin, many f the variable definitins were ambiguus and created cnfusin. The data input system is cumbersme and needs mdernizatin. d. Streamline the CDFI Fund website t increase access t resurces and applicatin materials. A mre accessible website wuld help prspective CDFIs learn abut the benefits f CDFI certificatin and enable certified CDFIs t better utilize the resurces available. 5. Data: Hw can the CDFI Fund supprt the use f data t strengthen the industry and increase its impact? Crdinate data cllectin and align definitins with existing regulatry requirements fr depsitry CDFIs. The CDFI Fund shuld invest in training and ther capacity building resurces t enhance the capacity f the entire CDFI sectr t cllect and evaluate scial impact data. We als urge the CDFI Fund t cnvene industry experts and practitiners t define cmmn scial impact metrics. Requiring the reprting f impact data thrugh CIIS r the Annual Certificatin prcess is highly prblematic withut defined standard, tls and systems t cllect data in a cst effective manner. CDFI Fund Listening Tur Talking Pints 4

5 Enable CDFIs t access data yu already cllect s we can use it t advcate fr and prmte the sectr. Fr example, the Fund releases its award dcuments as PDFs, but the same infrmatin released in a spreadsheet wuld be much easier t wrk with. Assciating each award with a unique identifying number (RSSD, EIN, NCUA Charter Number, etc.) wuld make it easier t track histrical trends and remve the uncertainty intrduced by name changes, spelling variatins and duplicate names. A unified spreadsheet with aggregated histrical award data wuld als be helpful. Imprve definitinal cnsistency. Fr example, family area median incme is defined and calculated differently by the investment area qualificatins spreadsheet versus NMTC. This means applicants must track tw different variables fr family AMI. 6. Blind Spts: What are the issues that shuld be n the CDFI Fund s radar screen but are nt? Technlgy is transfrming hw financing services are delivered t all custmers. With the increase in nline banking and financial technlgy, it is increasingly difficult t track and gecde custmers. In particular, lw incme individuals increasingly use pre-paid cards (at times even in lieu f bank accunts). We urge the CDFI Fund t examine hw CDFIs can demnstrate service t un- and under-banked ppulatins when technlgy tls are changing the landscape f hw and where custmers are served. CDFI Fund Listening Tur Talking Pints 5