Urban Institute Publishes New Brief on CDFI's in Wisconsin

January 10, 2018

Community Development Financial Institutions (CDFIs) are financial institutions with a mission of serving low- and moderate-income people and communities. For much of their early history, CDFIs were intimately involved in state and local policy and programs. But starting in the 1990s, several factors, including the creation of the CDFI Fund in the US Department of the Treasury, bank consolidation, stricter enforcement of the Community Reinvestment Act, expansion of low-income housing tax credits, and creation of new markets tax credits, shifted much of CDFI involvement in policymaking to the federal government.

More recently, however, a slowdown in bank consolidation, lighter enforcement of the Community Reinvestment Act, and reductions—actual and proposed—in the federal budget for the CDFI Fund and other federal programs CDFIs use, have refocused CDFI policy attention back to the state and local level (Theodos, Fazili, and Seidman 2016). To some extent, this activity has always been there, especially in states like California, Massachusetts, Minnesota, Vermont, and Wisconsin, where CDFIs have been particularly active in state and local policy formation. And since most CDFIs work at the local level and need to interact with their local governments, CDFIs have always paid attention to local policy. Further, as CDFIs have expanded their activities (such as into consumer lending), they have been required to interact with state and local regulatory bodies. In short, though CDFIs have always worked to some extent on state and local policy, those levels of government are now getting more attention, as CDFIs continue to work to scale up their impact.

This brief, based on interviews, a roundtable, and a workshop with CDFIs and policymakers who work with them, discusses the types of state and local policy issues CDFIs are interacting with and how they are doing it. The brief introduces the types of state and local policy that are important for CDFIs, provides some concrete examples of state and local policies CDFIs are working on, and concludes with a discussion of strategies and techniques for successful engagement.

Read Full Brief Here