It’s appropriate that Opportunity Finance Network’s (OFN) 2017 conference is held in Washington DC this year. Economic uncertainty persists, and where more appropriate to hold a dialog on policy then in the center of our nation’s political power?
OFN, a leading national network of community financial development institutions (CDFIs), works to shape policy and create partnerships among its network to impact financially stressed communities. This year, there is much to talk about.
Keynote speakers and breakout sessions spoke at length about economic inequality in 2017. Sen. Jeff Merkley (OR), one of the keynotes, talked about the slippery slope of economic inequality.
As the rich get richer, disparity in political influence grows, he says. And as the rich gain more influence, lawmakers introduce legislation that allows for continued accumulation of wealth for those at the top. This, he says, does not represent progress. It furthers inequality.
“The test for progress is not in whether we add to those who have much, but what we do for those who have little,” the senator says.
Opportunity often requires capital investment, however. OFN promotes this, which is why the theme of this year’s conference — the most attended in its 33 years — is “CDFIs Invest.”
But CDFIs, which collectively manage assets of 136 billion, says CDFI Fund Director Annie Donovan, exist to serve those with little, in communities where others don’t invest.
“CDFIs give infusion of capital where ordinary banks refuse to go,” Senator Merkley says.
For those in attendance, however, capital was the question.
In May, the Trump Administration introduced its budget for fiscal year 2018. In it, the administration proposed eliminating all funding for new grants under the CDFI program.
Following the budget release, Congress passed a Continuing Resolution for fiscal year 2017 that increased funding by approximately $15 million. In June, the House subcommittee on appropriations approved a fiscal year 2017 measure that cut the CDFI program by 23%, or some $58 million.
Because CDFIs operate by investing federal dollars alongside private sector capital, the elimination of federal funding of any kind — whether wholly or partially — has its impacts.
There is an answer, though, says Bill Bynum, CEO of Hope Credit Union (Jackson, MS, $238.3), which runs the Hope Enterprise Corporation CDFI. CDFIs are boots-on-the-ground local organizations that know the needs of their communities and can communicate those to major public or private financial organizations.
“We are able to connect the dots between Wall Street and Morehead, Mississippi,” Bynum says.
And he has. Bynum announced a partnership between Hope Enterprise Corporation and Goldman Sachs to fund an affordable housing development in Morehead, in an effort to rebuild a community by first providing affordable and quality housing.
Its investment in things like affordable housing, schools, and health clinics that have the most impact, says Nancy Andrews of the Low Income Investment Fund, a CDFI based in San Francisco.
“Those investments attract additional investments behind them,” she says.
That’s good, right? Yes and no.
“We can actually become so successful that the community starts to take off and we see that the folks we were setting out to serve can no longer live in the places we’ve helped develop,” she says. “It’s the paradox of community development we have to grapple with.”
As community developers, CDFIs must take a long-term approach to consider how the economy will grow — and how it will remain inclusive.
Andrews sites the East Lake neighborhood of Atlanta, GA. For years it was known as “Little Vietnam,” and not for the ethnic makeup of the area. Unemployment was near 80% and only 5% of children who attended school in that neighborhood were performing at grade level.
A local CDFI reinvested in the local schools, transforming the neighborhood through education. Today, the neighborhood is “one of the most desirable neighborhoods in the entire area,” Andrews says. But what happened to the original residents?
The CDFI worked to protect neighborhood housing for original residents, ensuring these families wouldn’t be displaced when new residents moved in. This, Andrews says, is what she means by long-term impact.
When CDFIs do good, she says, “We need to make sure we don’t create a new gap or problem that we have to fix.”
Read more from Day Two of the 2017 OFN Conference here.