Trump Budget Eliminates New CDFI Funding
President Trump’s proposed budget for the federal government’s fiscal year 2018 includes the near elimination of the Community Development Financial Institution (CDFI) Fund, reducing the program’s budget from $248 million to $14 million. CDFIs provide a wide range of financial services to underserved communities, including small business loans, financial literacy training, tax preparation, credit counseling, and business coaching. The proposed budget would end all new grant funding and limit the CDFI program to administering a few remaining programs carrying over from 2017. The administration’s justification for slashing the CDFI program comes from its apparent efficacy; according to the President’s office, the CDFI Fund has been so successful that it achieved its originally stated goal of improving access to capital in low income and underserved communities.
The administration’s proclamation that community investment is no longer needed in underserved areas ignores many realities still facing Indian Country. Indian reservations suffer greatly from what is termed “leakage”: a situation in which communities are unable to provide basic services to their citizens, so those citizens are forced to seek goods and services in other places. Local investment through CDFIs in small businesses and entrepreneurs ensures that communities have the products and services to support local residents. Robert Miller, a professor at Arizona State University, has studied this problem extensively. He notes that on the Navajo Reservation, $0.80 of every dollar immediately leaves the reservation. Helping local businesses develop and thrive keeps more money circulating through the community and benefits more residents.
Small business development in Indian Country, a key element of the CDFI program, still lags considerably behind other groups. There are more than 70 Native CDFIs currently operating all across the United States, employing hundreds of people and disbursing tens of millions of dollars in loans each year. Discrimination against Native American business owners is still far too common in America, so having a dedicated network of entrepreneurial funding sources for Indian Country is crucial to Native economic development and self-determination.
