Small Businesses And Low-Income Americans Will Lose Under New Budget Cuts To CDFI And NMTC Programs
Op-ed by Luz Urrutia, Opportunity Fund CEO in Forbes
It’s easy for lawmakers to slash a budget when all they see are numbers on a page. But when those numbers represent real people and their hopes, dreams and economic opportunities, in a country grappling with economic and social inequality, our lawmakers should pause for reflection.
Congress is working on a plan to pass tax reform, with the vast majority of the benefit going to the wealthiest Americans. Unfortunately, proposals to help pay for those tax breaks could slash crucial programs that address health, housing, financial, and educational inequality for thousands of Americans each year, potentially eroding social and economic opportunity in underserved communities across the country.
Since its inception, the CDFI Fund has enabled 191,000 loans to small businesses across the country and created or maintained a million jobs as a result. Likewise, the NMTC program has brought more than $80 billion in private capital to low-income neighborhoods in rural and urban America in the form of healthcare clinics, schools and other enterprises.
If the 2016 election was a referendum on the economy, you’d think lawmakers would want to keep what’s working and fix what’s broken. Unfortunately, President Trump’s proposed 2018 budget would cut the CDFI Fund from $250 million to $14 million, extinguishing hope and opportunity for thousands of small and aspiring business owners. Adding insult to injury, the House Ways and Means Committee just proposed the elimination of the NMTC program as part of a proposal for tax reform. Though the Senate’s tax bill would maintain the NMTC, its fate is uncertain.
Over the past 20 years, Opportunity Fund—a CDFI that I lead—has embraced the notion that entrepreneurship, hard work, and creativity are the building blocks that will lead to greater prosperity for our low-income neighbors. But only if they are given the opportunity. With critical financial support from the CDFI Fund, we have helped thousands of Americans grow their small businesses, create jobs, and build assets for their families and drive economic activity in their communities. And through NMTC allocations, Opportunity Fund has funded high-impact community projects, including health clinics, homeless shelters and after-school programs.
Witness the numbers: Opportunity Fund leverages every federal dollar we receive from the CDFI Fund into $16 in loans. Our research
shows each dollar we lend generates nearly $2 in annual economic activity, and every loan we make helps an entrepreneur support an average of three jobs. This means every CDFI Fund dollar invested in Opportunity Fund has a ripple effect, generating more than $30 in economic activity in our communities.
The $12.3 million Opportunity Fund has received in CDFI grants has resulted in $369 million in economic activity in California alone, and we are just one CDFI. From 2005 to 2015, the CDFI Fund awarded $1.4 billion to CDFIs across the country, which turned that into $30.4 billion in loans. Likewise, the 21 projects we’ve funded through NMTC provide vital community services to more than 400,000 low-income Californians and supported more than 4,500 jobs. In total, the NMTC program has supported over 5,000 projects that include nonprofits like health centers and schools, as well as private enterprises such as manufacturing and industrial facilities. These initiatives generate significant tax revenues and have created more than 750,000 quality jobs.
Clearly, the CDFI Fund and NMTC program are more than just a line item to be trimmed from a budget spreadsheet. The modest investment the federal government makes through these programs is a commitment to creating good jobs, prosperity and hope. And it’s working. By investing in a world where opportunity, knowledge, and access to healthcare, housing, and capital are available in all communities, we all reap the reward by building stronger communities, a stronger economy and a stronger democracy.
On behalf of families transitioning out of homelessness, children learning to code or just getting a chance to have their teeth cleaned; on behalf of the thousands of small business owners we’ve met and loaned to over the past 20-plus years—and the countless people eyeing entrepreneurship down the road—I implore our representatives to go to the mat to preserve the CDFI Fund and NMTC program.
As lawmakers cast their votes on the budget and negotiate tax reform, they must have their eyes wide open about who is hurting in our country and support the programs that are working. The CDFI Fund and NMTC program work. We must keep them. People’s futures are hanging in the balance.
Thank you to everyone in our community for using your voice to call your Representatives and Senators in Congress. We are keeping a close eye on the budgeting process and will keep you updated as things progress.