Statement: Executive Orders and Impacts on the CDFI Fund
As certified Community Development Financial Institutions (CDFIs), the Minnesota Consortium of Community Developers (MCCD) and many of our nonprofit consortium members strive to build an economy that works for everybody. A recent executive order by the Trump Administration threatens to dismantle the CDFI Fund, impacting community development across the country.
The CDFI Fund was established in 1994 to promote community development by providing loan capital, technical assistance, and financial services to underserved communities across the United States, and it has historically enjoyed bipartisan support from both federal and state lawmakers. MCCD and our CDFI certified nonprofit consortium members steward federal dollars into innovative opportunities for homeowners, entrepreneurs, and small business owners to build generational wealth, while leveraging millions in private financing.
Since 2005, Minnesota’s CDFIs have
- Created over 30,000 new housing units, including thousands of owner-occupied units
- Provided loan capital to 12,000 small businesses and microenterprises
- Provided loans to over 13,000 consumers
Between 2017 – 2022 alone, CDFIs in Minnesota invested nearly $3.5 billion in capital in rural, suburban, urban, and tribal communities across the state.
Eliminating the CDFI Fund jeopardizes the vibrancy of communities across Minnesota, from the Iron Range to the Twin Cities. Not only would small businesses lose critical sources of capital, but investments in affordable housing could vanish, causing both a decrease in the supply of affordable single-family homes and an increase in homelessness statewide.
MCCD and our members are concerned about both the uncertainty of the CDFI Fund’s future and the potential loss of critical funding. Investments in affordable housing and small businesses are not “waste.” They are the backbones of thriving communities.
“As history has proven, Black, Indigenous, Latine, Asian/Pacific Islander, other Communities of Color and many more marginalized groups will take the brunt of the impacts.” said Elena Gaarder, Chief Executive Officer of MCCD. “MCCD will push against these threats and continue our work to collectively advance racial and economic justice.”
To learn more about MCCD’s response to current funding freezes, read the letter we recently sent to Minnesota’s Congressional Delegation.
Take action with us and ask your elected officials to support the CDFI Fund! Visit linktr.ee/mccdpolicy for a letter template, communication tips, and contact information to get in touch with your representatives.
Dear Honorable Members of Minnesota’s Congressional Delegation:
The Minnesota Consortium of Community Developers (MCCD) is an association of nonprofit organizations committed to expanding the wealth and resources of communities through affordable housing opportunities and economic development initiatives. Many of our members carry out the work of the federal government and utilize federal funding to support their critical work in communities. In a recent survey, 86% of our members indicated they rely on at least some federal funding to support their work in communities across Minnesota. Cuts to program and department funding like Medicaid, CDBG, SBA, HUD, CDFI Fund and staffing cuts at the relevant government agencies are already having an impact on Minnesotans and the communities they call home.
On behalf of our 35+ affordable housing and community economic development members, we ask that you advocate to the Administration to honor congressionally authorized funding, financial commitments, and contracts to nonprofits. The funding freeze will have incalculable effects on the ability of our members to serve their residents and their clients, who are already struggling to maintain their housing and keep their businesses open. While we understand the courts have paused the federal funding freeze for now, please know that we are all very concerned about the impact of uncertainty and potential loss of funding. What program cuts would mean for Minnesota:
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- This would mean increased instability for people living in income-restricted housing and ultimately would result in an increase in homelessness in communities across Minnesota. Specifically, residents who live in affordable housing rely on the supportive services provided to maintain their health, their employment, and their stability. The loss of this support and rental assistance would force more people into homelessness and would make it more difficult for affordable housing providers to operate.
- This would mean the loss of development and rehabilitation funding to help increase the supply of affordable single-family homes and could prevent thousands of first-time homebuyers from realizing the dream of homeownership.
- This would mean loans to small businesses are unable to be processed resulting in the loss of additional private financing or even the ability to sign a commercial lease.
Ultimately, the uncertainty of federal funding is already having a detrimental impact on development in Minnesota – as predictable funding is necessary for construction planning for affordable housing. Because federal funding helps leverage additional public and private investment, we anticipate the loss of millions in economic activity in Minnesota. We are currently reaching out to our members to collect more information to understand the full impact of this decision and we will continue to communicate with the Minnesota Congressional Delegation as we know more.
Thank you for your time and consideration. MCCD and our members would like to make ourselves available for any additional information to best help inform your decisions. Please reach out to Kari Johnson, Director of State Policy & Field Building, kjohnson@mccdmn.org, should you need any further information.
Sincerely,
Elena Gaarder
Chief Executive Officer
Minnesota Consortium of Community Developers