Can You Feel the Love?
Time to sing? Not even close, but it’s fascinating how much push-back the recent Executive Order to reduce or severely eliminate the CDFI Fund is getting from Senate Republicans.
Trump's order to cut the Main Street lending program earns a rebuke from the GOP.
Warner and Crapo Lead CDFI Support Letter
Treasury Secretary Bessent: 'CDFIs are key component' to support Main Street.'
Today, applications are due for the annual CDFI Fund Program Round, which awards grants for capital or investments in building loan fund capacity and performance. As with all nonprofits, the leadership of these organizations has legitimate concerns about whether to avoid the ‘bad’ words that federal agencies have flagged to limit or avoid. Also, as part of the CDFI Fund certification requirements, the organization must designate a “Target Market(s)” specifying whether they serve predominantly low-income individuals or focus exclusively on persons of color or people with disabilities (termed “Other Targeted Populations”), or contiguous census tracts that demonstrate high levels of economic distress. “Are we a target if our clients are wholly or predominantly African-American,” many have asked.
At the Annual Meeting of the CDFI Coalition, CDFI Fund Director Provinia Raghavan was asked whether CDFIs with OTP Target Market designations would be subject to D.E.I. scrutiny. She replied, "OTPs are not D.E.I." She explained that TMs are data points (my term), and the entity must provide the necessary documentation/data to verify that it meets the requirement. Period.*
At the end of the Q&A period, she closed with two sentences. Initially, it sounded like standard rhetoric, but the second sentence stopped me cold. Paraphrasing:
"CDFIs are financial institutions that provide capital to people and places that traditionally have been unable to access conventional financing. It's not about who runs them."
Anecdotally, I can tell you that 50% of our clients submitting these applications have an OTP Target Market, and none have chosen to betray their mission and purpose by trying to conceal who they serve. At the same time, the words "fair," "just," "promising," "weak," "uneven," "underdeveloped," and "untapped" are not on the ‘bad’ word list. As I have mentioned elsewhere, the objective is not to do a ‘search and replace’ and cross your fingers. Instead, we must fundamentally change the narrative. Social impact appeals that lead with “the system is broken, individuals are powerless, and populations should be defined by their challenges'“ is a buzz-kill. The ‘next narrative’ communications strategy emphasizes “Builders” over “Fixers” and has already achieved success in uniting people of all parties to support progressive goals without compromising anyone’s values.
Congratulations to the CDFIs, undaunted and undeterred, for submitting your application to the CDFI Fund. What’s next? Drop me a line!
*Fact: "OTPs" are referenced in OMB Administrative Regs, which refers to definitions established in 1997 and later updated. See page 5 of the PreApproved TM Assessment Methodologies Guidance December 2023 (attached): For Target Market assessment purposes, the CDFI Fund relies on the definition of "African American" established by the 1997 Office of Management and Budget (OMB) standards on race and ethnicity (62 FR 58782), which is "a person having origins in any of the black racial groups of Africa. (Revisions to the Standards for the Classification of Federal Data on OFFICE OF MANAGEMENT AND BUDGET).) OMB would have to go through the rule-making process to change this, which can take years and end up in the courts
