The Inclusive Economy
New Cross-Sector Partnership Offering Up to $500 Million in Low-Cost Financing to CDFIs
By Sean Luechtefeld on 08/04/2016 @ 11:00 AM
Last month, the U.S. Department of Agriculture (USDA) announced the Uplift America Fund, an innovative partnership that leverages federal resources, private grants and traditional bank financing to infuse capital into areas where poverty has persisted for decades. The Fund—which is making available up to a half-billion dollars in financing for Community Development Financial Institutions (CDFIs)—was designed to alleviate economic distress in Appalachia, near the Texas-Mexico border, in the rural South and on Native American reservations. Over the past several months, CFED has contributed to the design and development of the Uplift America Fund and is honored to have been chosen by USDA to join Bank of America and the Mary Reynolds Babcock Foundation to ensure the Fund reaches the communities with the most need.
Unique about the Uplift America Fund—and why CFED was eager to contribute to this unprecedented effort—is that brings together the public and private sectors to facilitate infrastructure projects by investing in CDFIs. Although CDFIs do important work every day in communities across the country, the barriers these institutions face in investing in very-low-income rural communities can sometimes be insurmountable. In response, the Uplift America Fund will work to strengthen the balance sheets of CDFIs by connecting them to USDA’s Community Facilities Relending Program. The Community Facilities Relending Program provides financing for projects and services that enhance community vitality, such as health care clinics, fire departments, museum, food pantries and community gardens.
To inform the design of the Fund, CFED traveled the country, conducting focus groups with stakeholders in some of our nation’s most economically distressed communities. Everywhere we went, we heard a different story, but each story pointed to the same conclusion: investing in these communities will require significant resources and cross-sector collaboration. During a focus group in Appalachia, one participant told us, “The collapse of the coal industry is a catastrophe that sits on top of a disaster […]. We are going to need industrial-scale solutions for industrial-scale collapse.” A focus group participant in Indian Country also noted, “CDFIs and [Community Development Corporations] anchor a lot of the services that are available to households in Indian Country […]. We invest in them because there is accountability with CDFIs. They will pay the money back.”
As CFED President Andrea Levere remarked at the July 19 launch event for the Uplift America Fund, no one sector can address persistent poverty successfully. Instead, we need to bring together public, private and philanthropic capital to allow each of us to do what we do best. Ultimately, that’s the strength of the Uplift America Fund and why we consider ourselves privileged to be part of this important effort to address persistent poverty.