On June 15, the U.S. Department of the Treasury announced an investment of $1.25 billion in economic relief grants to support communities hit especially hard by the COVID-19 pandemic. The money will go to 863 community development financial institutions (CDFIs).
- The Treasury Department is providing $1.25 billion in new COVID relief funds to underserved communities throughout the U.S.
- The money will go to community development financial institutions (CDFIs), which are private organizations that provide financing services for low-income, low-wealth, and other economically disadvantaged families.
- According to Treasury Secretary Janet Yellen, government investments in CDFIs typically spur larger private investments.
The Federal Government Focuses Relief Efforts on Disadvantaged Communities
The COVID-19 pandemic wreaked havoc on the U.S. economy, and historically underserved communities were among those hit the hardest.
With a new $1.25 billion investment in CDFIs by the U.S. Treasury Department in the form of grants, the federal government is providing relief directly to the communities that those private organizations service. The grants will be made through the department's CDFI Rapid Response Program (RRP).
CDFIs operate in four sectors: community development banks, credit unions, loan funds, and venture capital funds for small businesses.
According to Treasury Secretary Janet Yellen, "for every dollar injected into a CDFI, it catalyzes eight more dollars in private-sector investment, meaning that today's announcement might lead to an additional $10 billion in investment."
Funds will be used to support financial services and products, development services, and certain operational activities. They'll also help enable CDFIs to build their capital and loan-loss reserves.
According to CDFI Fund director Jodie Harris, the awards "will enable CDFIs to help businesses keep their doors open, help families make ends meet, and help maintain important community facilities during this difficult time."
Where the Money Is Going
According to the Treasury Department, 58 organizations have committed to direct their awards, totaling $54.6 million, to invest in Native American, Native Alaskan, and Native Hawaiian communities. Twenty-eight organizations, which received a total of $47.3 million, primarily serve Puerto Rico, and 90 minority depository institutions received $133.9 million.
The Treasury Department provided the following breakdown of how the funds have been awarded geographically:
- Major urban areas: 339 organizations receiving a total of $478.7 million in awards
- Small urban areas: 277 organizations receiving $414.2 million in awards
- Rural areas: 245 organizations receiving $353 million in awards
Here's how the funds have been allocated by organization type:
- Banking entities: 149 organizations receiving $267.1 million in awards
- Credit unions: 244 organizations receiving $401.8 million in awards
- Loan funds: 463 organizations receiving $571.3 million in awards
- Venture capital funds: seven organizations receiving $9.4 million in awards