Bipartisan lawmakers are rallying for CDFIs, investors need to do the same

Community investing policies have attracted bipartisan support for decades. Recent executive actions threaten this important, rare area of common ground. Investors must sound the alarm.

In his ongoing efforts to redefine the scope and role of the federal government, President Trump issued an executive order that took aim squarely at community investing. The order requires certain agencies, including the CDFI Fund that supports community development financial institutions, be “eliminated to the maximum extent consistent with applicable law.”

This caused immediate concern in investor circles, as these agencies provide essential services that enable place-based investing in communities across the country. In fact, every $1 invested by the federal government through the CDFI Fund leverages $8 in private capital. Eliminating these programs would immediately harm residents and workers on Main Streets around the country.

Bipartisan lawmakers rallied to support these programs and the importance of private investment in otherwise underinvested communities. 

What we need now is for the investor community to join them in publicly defending the CDFI Fund. 

Essential programs 

After the executive order was released, Treasury Secretary Scott Bessent immediately spoke out to say that “CDFIs are a key component of President Trump’s commitment to supporting Main Street America.” 

And more than two dozen senators, led by Sen. Mike Crapo, Republican of Idaho, and Sen. Mark Warner, Democrat of Virginia, issued a letter to the administration noting that “more distressed communities are being served by CDFIs than ever before, more first-time buyers are receiving the financing they need to purchase a home, more community facilities are being built, and more commercial loans are reaching entrepreneurs.” 

They continued, “A reduction in the functions and operations of the CDFI Fund will have a corresponding impact on CDFI-certified entities and local communities and we urge you to avoid this unfortunate outcome.”

The CDFI Fund is continuing to operate, and it is heartening that so many leaders in Washington are standing up for its essential programs. The Treasury Department has confirmed that the programs of the CDFI Fund are statutorily authorized. Congress just passed a continuing resolution funding their activities. The support from Capitol Hill for these programs runs deep and wide. 

Stories of impact

Unfortunately, we should prepare for place-based investment programs like the CDFI Fund to face further attacks in Washington. As these essential institutions continue to do their work of facilitating investment in shared prosperity, they need the support of impact investors now more than ever.

CDFIs help propel local economies by financing affordable housing, small businesses and community infrastructure in otherwise hard to reach areas. Every investor who works in a low-income, rural, urban or tribal community should be sharing their stories of impact with policymakers now. 

In American Banker, Kimberlee Cornett of the Robert Wood Johnson Foundation shared the stories of CDFIs like Fahe, the Mountain Plains Regional Native CDFI Coalition and Enterprise Community Partners, organizations expanding home ownership, wealth creation and job opportunities for underserved, rural or Native communities. Read more stories of CDFI impact from Opportunity Finance Network’s members.

The U.S. Impact Investing Alliance is working closely with our stakeholders and our allies in Washington to make this case, and we encourage our peers to join us in ensuring that our message is being heard. 

Fran Seegull is President of the U.S. Impact Investing Alliance.