California Governor Gavin Newsom’s recently signed state budget has good news for CDFIs — and the people who benefit from them. The 2022-23 budget includes $50 million to establish the California Investment and Innovation Program (CIIP), a statewide CDFI fund.
“It’s the first state-funding CDFI grant program in California,” says Rachel Smith, advocacy and membership coordinator for the California Coalition for Community Investment (CCCI), a coalition of 30 CDFIs in the state which spearheaded the creation of the new fund. “Our vision is to uplift the voices of CDFI practitioners and the communities they serve in the state of California for years to come.”
CCCI provided subject matter expertise for how a state CDFI fund grant program could serve CDFIs in California. The organization also pushed for the program to be funded via the state budget. Smith, who also serves as policy and advocacy specialist at Rural Community Assistance Corporation, a West Sacramento CDFI, said it took two budget cycles to make it happen, but CIIP and a $50 million allocation were approved this year.
The $50 million will be distributed in multiple rounds, with the first grants available by February 1, 2024. Next City spoke to Smith about what CIIP and the influx of funding will mean for CDFIs in California.
Does the state’s inclusion of the funding signal more widespread recognition for CDFIs?
We think that the legislature is becoming increasingly more aware of CDFIs and their impact. Before the pandemic, CDFIs worked and advocated in a myriad of other state coalitions or even by themselves. With CCCI, we have a strong collective voice to educate and advance lawmakers’ understanding of how CDFIs can partner with the state and leverage investments, both private and public, to support and uplift low-income communities, communities of color, and under-resourced and unbanked groups.
The pandemic and the economic struggle and uncertainty that followed for these communities continue. CCCI sees a sustained need to connect their stories to state policymakers. CCCI hopes to provide opportunities for policymakers and other stakeholders through informal discussions, reviewing regulatory policies and grant guidelines, and through our annual Lobby Week. We want to continue to share the challenges and opportunities these communities face as they relate to financial services, equitable lending, affordable housing, entrepreneurship, community facility needs, small business, and others.
What’s possible for CDFIs with the influx of capital?
CIIP provides grants to federally certified CDFIs “to enhance the capacity of community development financial institutions to provide technical assistance and capital access to economically disadvantaged communities in this state.”
The fund is very flexible, allowing grants to be used for the following purposes:
Increase net assets for leverage
Lending capital for all product types (commercial and consumer)
Consumer banking services
Operations and funding for services including technology, technical assistance, training, and “other activities that benefit low-income neighborhoods, undercapitalized business owners, and other socially and economically disadvantaged individuals.”
How will the funding change how California CDFIs collaborate?
CCCI has shown that CDFIs can collaborate on policy and advocacy efforts. We have a broader vision for how the coalition could enhance CDFIs’ efforts by providing training and internship programs to attract new talent into our growing field. The funding itself will impact each CDFI in a unique way based on their needs. The beauty of the funding is that it is flexible enough to accommodate that diversity. But we also want to take the power of our coalition into new ways of growing our impact.
What will CCCI’s role be now that the funding is included in the state budget?
CCCI will be working with the state treasurer, her staff and CDFIs across the state to ensure that the program design, implementation and rollout meets the needs of CDFIs and the communities they serve. We look forward to holding listening sessions and meetings to hear from our members and other stakeholders and to being a partner to the state treasurer on her goals and vision as well.
The advocacy work will continue. We look forward to making sure the grant program helps CDFIs across the state deepen their impact lending and continue with their technical and financial services that they have been doing so well already. Our hope is this grant program supports the good work they are already doing and recognizes the need for flexible capital that CDFIs can use in ways that they see best for their organization’s unique needs.
This story is part of our series, CDFI Futures, which explores the community development finance industry through the lenses of equity, public policy and inclusive community development. The series is generously supported by Partners for the Common Good. Sign up for PCG’s CapNexus newsletter at capnexus.org.
Erica Sweeney is a freelance journalist based in Little Rock, AR. She covers health, wellness, business and many other topics. Her work has appeared in The New York Times, The Guardian, Good Housekeeping, HuffPost, Parade, Money, Insider and more.