More Federal Funding for CDFIs
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OFN’s goal is to secure $1 billion in grant funding for CDFIs across the federal government.
Throughout 2023, the OFN policy team has been working hard to advocate for and represent mission lenders on Capitol Hill and beyond. With Washington slowing down in August while Congress is in recess, we are taking stock of our progress.
We are sharing a series of updates across all OFN federal policy priorities that advance our shared 2023 policy agenda.
The federal spending environment has shifted significantly since the pandemic. With spending fatigue setting in, 2023 ushered in a new era of fiscal restraint and reignited conversations about federal discretionary spending. These conversations came to a head during negotiations around the debt limit.
On June 3, President Biden signed a bill to raise the debt ceiling until 2025. But this bill wasn’t just about buying time – it came with rules to keep government spending in check. One of those rules was about how much money can be spent on non-defense programs and projects. The bill keeps fiscal year 2024 spending levels the same as the previous year, with a modest 1% increase over that in 2025.
These spending limits have some ripple effects. One of the programs affected is the CDFI Fund, our industry’s critical government partner. With these limits, the CDFI Fund and similar programs might have to make do with fewer resources.
How We Got Here
Back in March, President Biden proposed $341 million for the CDFI Fund, including $10 million for the CDFI Bond Guarantee Program. The president’s budget also includes support for CDFI priorities in the form of other funding increases and policy provisions, which OFN covered in this blog post. OFN communicated our support of the president’s budget request to the House and Senate Appropriations Committees.
Fast forward to June 22, when the House Financial Services and General Government Appropriations Subcommittee took a closer look at the numbers. Even though the debt ceiling bill already called for spending cuts, it didn’t go far enough.
They made even deeper cuts, with the CDFI Fund on the chopping block. The House proposal landed at $278.6 million for the CDFI Fund — a whopping $46 million cut from previous funding levels.
In July the Senate weighed in. They stuck to the original spending limits set during the debt ceiling negotiations but allocated slightly more for the CDFI Fund – $334 million. They also included the $10 million credit subsidy for the CDFI Bond Guarantee Program.
The Budget Deadline Looms
Now it’s time to negotiate. The House, Senate, and White House will need to hash out the final numbers after Congress returns from the August recess, leaving just a few days before the end of the fiscal year to reach an agreement and avoid a government shutdown.
OFN is urging Congress to adopt a funding level for the CDFI Fund that is aligned with the president’s budget request of $341 million in any final spending bill. We’re encouraging our members to remind Congress just how crucial the CDFI Fund is and to advocate for the highest possible funding.
Our policy action center has all the latest news and resources, including tools and templates for contacting your congressional representatives.
Read other updates in the series:
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