US policymakers have been urged by a senior co-op figure to invest more in Community Development Financial Institutions (CDFIs) at a hearing last week.
The hearing was focused on how CDFIs enhance economic opportunities in underserved communities, and looked for ways the federal government can better support their work. The Senate Banking Subcommittee on Transportation, Housing and Community Development heard Mr Holdsclaw urge Congress to increase annual funding to USD$1bn for the CDFI Fund, among other priorities.
One of the subcommittee’s chairs, senator Tina Smith (D-Minnesota), introduced the hearing, noting the “innovative” work of CDFIs. Policymakers can work with CDFIs to “address some of the challenges faced by underserved communities when it comes to access to capital and the financial system”, she added.
Sen Smith and her co-chair, Sen Mike Rounds(R-South Dakota), received NCBA CLUSA’s 2021 Cooperative IMPACT Champion Award for their work on the bipartisan Senate Rural Working Group.
In his testimony, Mr Holdsclaw said: “The CDFI industry is growing, serving more businesses and families, and delivering financial services to areas of persistent poverty and unemployment.”
He added: “Providing more resources through the CDFI Fund will ensure the continued growth of mission-driven financial services”.
Mr Holdsclaw explained how CDFIs such as North Carolina’s Self-Help Federal Credit Union have supported businesses impacted by Covid-19 through Paycheck Protection Program (PPP) loans. 63% of these loans administered by Self-Help Federal Credit Union benefits businesses owned by people of colour.
He went on to say that even before the pandemic, low-income communities and communities of colour faced significant obstacles in accessing financial services, affordable housing and the flexible capital needed to sustain a healthy economy.
“These are the communities CDFIs serve,” he added.