As Prepared for Delivery
Good morning, everyone. It is an honor to be here today, and I want to thank the Opportunity Finance Network (OFN) for the invitation and Harold Pettigrew and Donna Gambrell for their leadership and partnership over the years.
I am delighted to be here on behalf of the U.S. Department of the Treasury (Treasury) with leaders from so many community development financial institutions (CDFIs) across the country as we celebrate two great achievements: the 30th anniversary of the establishment of the CDFI Fund and the 40th anniversary of OFN.
Today we honor not just three decades of accomplishments, but also the transformative impact you have made in communities across our nation. Your steadfast commitment to mission-driven capital has uplifted countless individuals and businesses, fostering resilience and growth in areas that would have otherwise gone underserved.
Over the past 30 years, your ranks have grown tremendously, with now 1,500 CDFIs nationwide, collectively holding about $452 billion in assets. You are the lifeline to people and places that have long been overlooked, underestimated, and cut off from economic opportunity – not because they lack the talent, determination, or ideas but because they do not fit traditional risk models or live in banking deserts. But we know different. CDFIs are built to challenge traditional financing models. In doing so, you fuel homeownership, scale businesses, expand access to childcare, shelter, and health services. Every day you are showing us that when we invest in those most marginalized in our economy, we create greater prosperity for everyone.
Frankly, your birthday is right on time. CDFIs are reaching a point of maturity at a critical time when your capacity and reach are more important than ever.
Meeting the Economic Moment
The American Rescue Plan, the Inflation Reduction Act (IRA), the Bipartisan Infrastructure Law, and the CHIPS and Science Act—are ushering in a major economic transition that has the potential to reduce longstanding wealth and wage disparities – but only if we act swiftly and work together.
Treasury has played a major role in deploying a trillion dollars via the American Rescue Plan, and many of you were partners in that effort. Together, we kept people in their homes, saved small businesses, and delivered relief to millions of families all over the country. Our collective efforts helped secure one of the most equitable economic recoveries on record.
Now we are applying these lessons to our implementation of the Inflation Reduction Act. To date, the IRA has supported the creation of over 2,000 clean energy projects across the U.S., generating over $380 billion in announced investments. What’s even more promising is that these investments are reaching a broader range of communities than ever before.
For instance, 85% of clean energy investments have been made in areas with below-average wages and 85% have gone to communities with below-average college graduation rates. This growth is an outstanding example of this Administration’s commitment to grow the economy from the bottom-up and the middle-out, not just on aggregate, and to build the strength of the economy by expanding productive capacity in communities that have been overlooked.
Treasury is also working to bolster clean energy investments in low-income and environmental justice communities through IRA “bonus incentive credits” which help make these clean energy projects possible.
These include the:
- Low-Income Communities Bonus Credit Program
- The Energy Community Tax Credit Bonus; and
- Prevailing Wage and Apprenticeship Requirements
Last month, I had the opportunity to visit one such project that is not too far from here: the Sun Valley Bus Yard in Los Angeles, part of the Los Angeles Unified School District’s (LAUSD) electrification initiative. Partially funded by IRA green credits, this project is not only helping LAUSD transition to a fleet of 180 electric buses but is also providing local students with training in electrification technologies. The project’s strategic location — between a community center, an airport, and a high school — means it has the potential to serve as a power source for the local grid, further demonstrating the far-reaching impacts of the IRA. This visit underscored for me how clean energy investments are benefiting both the environment and communities in need, creating pathways to a more equitable and sustainable future.
Climate Investments Advancing Economic Resilience
Our implementation efforts so far are exciting – but we all know partnerships with trusted service providers are integral to the success of federal programs. This is the moment CDFIs have been training for over the last 30 years! That is why the Biden-Harris Administration, the bipartisan CDFI Caucus, and Treasury have worked together to give CDFIs the tools to be a force multiplier in our clean energy economic transition. I want to briefly talk about two examples:
First, included in the IRA is the Environmental Protection Agency’s Greenhouse Gas Reduction Fund (GGRF), including the $14 billion National Clean Investment Fund, the $6 billion Clean Communities Investment Accelerator, and the $7 billion Solar for All program.
OFN and many other CDFIs, Minority Depository Institutions (MDIs), and trade networks are recipients of GGRF and working closely with other state and nonprofit recipients. Together, you all will create a national financing network for clean energy and climate solutions to reach all communities across the country. It is the deep relationships in communities held by CDFIs that will help ensure that those most risk of being left out of the clean energy transition can access cost-saving technology.
Second, the State Small Business Credit Initiative (SSBCI) is a nearly $10 billion program providing capital to small businesses across the nation. As of year-end 2023, jurisdictions have reported that SSBCI funding has supported more than 3,600 small businesses across the country, facilitating over $3 billion in new loans and investments, $500 million of which was expended to support underserved businesses. About 40% of transactions were reported as supporting underserved businesses.
Participating jurisdictions are just getting started, and already CDFIs have been instrumental to the deployment of funds. Let me share some exciting pieces of data from the first SSBCI report:
- Through last year, over 60% of all SSBCI supported transactions were made through CDFIs, resulting in over $400 million in new financing for small businesses.
- Over 82% of CDFI transactions involved underserved businesses, a key driver of the program’s ability to reach these entrepreneurs.
- 55% of CDFI transactions were conducted by CDFI loan funds with average loan amounts around $100,000, supporting businesses with smaller capital needs.
The SSBCI program also includes funding for technical assistance programs, geared toward providing access to financial advisory, legal, and accounting services for underserved and very small businesses. Treasury has also partnered with the Minority Business Development Agency (MBDA) to launch the Capital Readiness Program which supports businesses through 43 service providers across the country.
Last year Treasury also released an updated CDFI Certification Application after incorporating extensive feedback from community finance practitioners. The updated Certification Application comes at a critical time in which the CDFI field has grown and become more diverse in its structure types, product offerings, and sectors served – and is increasingly serving as a qualifier in many cases for other federal, state, and private sector resources.
Private Sector Partnership
The Administration is also working with the private sector to complement federal efforts to support CDFIs. The Economic Opportunity Coalition (EOC) is a group of more than thirty of America’s leading companies that was launched by Vice President Harris and has the bipartisan support of Senators Mike Crapo and Mark Warner. Already, the EOC has secured over $1 billion in deposits into CDFIs and MDIs and has pledged to reach $3 billion in deposits by 2025.
Conclusion and Call to Action
The Biden-Harris Administration worked with Congress to pass and implement four “once-in-a-generation” bills that will fundamentally transform our economy. Now we need your help. As we reflect on the journey over the past 30 years, it is time to build on your successes to prepare for the opportunities afforded through historic federal investments.
You are critical to ensuring that borrowers, especially small business owners, successfully navigate changing market demands to capitalize on new opportunities. This includes mapping where capital is landing compared to where opportunities exist, developing strategies that align with emerging economic trends, and staying grounded in community needs to better serve current and future customers.
Together, we can lay the groundwork for a future where every community has the opportunity to thrive. Thank you for your dedication and your vision.
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