The acronyms can be a bit dizzying but the Treasury Department’s Community Development Financial Institution Fund, or CDFI, and its off-shoots are having an increasing impact in Mississippi.
The initiatives the CDFI sponsors have opened the door to leveraging tens of millions of dollars for investment in the state’s economically distressed localities. Mississippi had 10 CDFIs in August 2009. Today, it has 36, the Treasury Department says.
The capital investments CDFIs are bringing into the state “are potential game changers for Mississippi,” said Bill Bynum, CEO of Hope Enterprise Corp., a non-profit human services and development organization that has the distinction of being the state’ first CDFI.
CDFIs are pump primers and gap fillers for funding projects in the state, said Bynum, who hosted President Clinton in Clarksdale in the late 1990s when the former president came to Mississippi barnstorming for support for Congressional approval of the CDFIs.
Clinton’s CDFI initiative won approval and went into effect in 2000, thanks in part to the support of former Sen. Trent Lott . “He was instrumental in getting it passed,” Bynum said of the now-retired former Senate majority leader.
A $15-million allocation to Hope Enterprise was one of the first awarded, Bynum said.
“For a long time we were the only group (in Mississippi) that had one,” he added, referring to the CDFI designation.
In an off-shoot of the CDFI program, the Treasury Department this year is allocating $3.5 billion in its New Markets Tax Credit (NMTC) program. The program permits investors to receive a credit against federal income taxes for making qualified equity investments in designated Community Development Entities, or CDEs.
The Treasury designated two Mississippi CDEs to administer the tax credits to qualified projects in the state. More than a dozen other CDEs around the country pledged to do projects in Mississippi in exchange for the right to administer the tax credits.
Bynum said he thinks more Mississippi CDEs should have been selected, considering the degree of need here. “I’ve been somewhat disappointed that groups based in Mississippi haven’t been receiving the allocations,” he said.
Though the out-of-state CDEs designated Mississippi for their investment projects, that’s no guarantee the investments will come to the state, Bynum noted. “Unfortunately, there’s no accountability that requires groups” to serve the states they list on their applications for the CDE designation.
Those by-passed for the New Market Tax Credit allocations this year include Hope Enterprise Corp., parent of Hope Credit Union. “We’ll be competing for credits in the future,” Bynum said.
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