CDFI Fund: Too Many Grant Requests, Too Little Money
CDFI Fund officials say they will not be able to fulfill all requests
Although FY24 funding levels have not yet been set, certified Community Development Financial Institutions have submitted grant requests that likely will far exceed the amount Congress is expected to provide for the program, Treasury Department officials said Friday.
In total, 948 organizations have requested about $1.55 billion in awards. That is three times the amount of money expected to be available for grants.
“This has been another record-breaking round of the CDFI Program with an overall increase of 42% in Financial Assistance (FA) applications and an 18% increase in Technical Assistance applications,” CDFI Fund Director Pravina Raghavan said. “This historic level of demand through this combined round underscores the continuing critical need for capital and credit in economically distressed and underserved communities across the nation.”
Treasury Department officials recently overhauled the CDFI application and certification process. As a result, the agencies have not yet awarded grants using funds appropriated in FY23. They expect to combine FY23 funds with the FY24 funds to award grants. While the FY24 funding level has not been set, the program received $324 million in FY23.
The most money allocated in the CDFI program is dedicated to financial assistance awards. Those awards are made in the form of loans, grants, equity investments, deposits, and credit union shares, which CDFIs are required to match dollar-for-dollar with non-federal funds.
According to a description of the program, “This requirement enables CDFIs to multiply the impact of federal investment to meet the demand for affordable financial products in economically distressed communities.” Fund officials said that they have received applications from 610 organizations requesting $1.05 billion in awards for that program.
The second largest amount of allocated money is for technical assistance awards. Those funds may be used for such things as equipment purchases or to hire consultants. Treasury officials said that they had received applications from 285 CDFIs requesting $83.2 million in technical assistance awards.
In addition, there are several other small grant programs that are part of the CDFI program that require money to fund.
Treasury Department officials, focusing on the two largest CDFI programs, estimated that using the FY23 funding given by Congress, they will only be able to make $302.8 million in awards for the two programs. They are waiting to see how much Congress will pass for FY24 funding in order to determine how much more they have to fund more of the applications. It clearly is not even close to enough to fund all the applicants.
The CDFI program likely will fall far short of being able to fulfill all of the grant awards requested next year as well, if the Biden Administration’s FY25 budget is any indication. Biden earlier this month requested $325 million for the CDFI program in the next fiscal year.