Scaling impact through policy and coalition building

You’ve likely seen stories of impactful Craft3 loans that are meeting essential community needs; needs that are unmet by mainstream financing. But creating more widespread and enduring impact often requires broader systems change. One important pathway for this is policy and legislative advocacy; which can help create new laws and policies as well as allocate capital and other resources. When successful; advocacy can help community development financial institutions (CDFIs) meet essential community financing needs and extend economic opportunity for those who benefit from partnering with CDFIs. But while policy change and legislation can be transformative; the process is unpredictable with victories often years in the making.

As a former congressional aide in Washington; D.C. working on issues important to my home state of Washington; I recognized that challenge when I joined Craft3 in 2015. Tasked with creating a new external affairs role; my work represents one part of Craft3’s commitment to invest in activities that support systems change. What follows is a story about a recent policy victory and how it all came together after years of work – work that couldn’t have happened without the support of a broad coalition. This important victory creates more resources for CDFIs operating in Washington state.

It started with a voicemail

In early 2020 I received a call from the State Department of Commerce requesting feedback on a bill to generate investment in rural areas. After some internal conversations; we suggested the bill include a provision to provide grant capital to CDFIs who would then make loans to underserved rural areas. This idea was added as an amendment to the already introduced bill. This bill didn’t pass; but it planted an important seed.

Building an informal coalition

In between legislative sessions we convened other CDFI loan funds in the state to brainstorm how to improve the bill and ensure it would help organizations of all sizes better serve their borrowers and communities. The sponsor of the earlier bill agreed to include many of those improvements and introduced this revised version of the bill – now known as the Washington Equitable Access to Credit Act (HB 1015) – during the 2021 legislative session. Realizing that more would need to be done; Craft3 partnered with three other CDFIs to fund an external lobbyist to support and coordinate our advocacy efforts. Though the bill passed the House; it unfortunately failed to pass the Senate.

Equitable Access to Credit Act (HB 1015)

HB 1015 creates a program to provide grant capital through the state Department of Commerce to CDFI loan funds that serve Washington state. The program will be funded through a Business & Occupancy tax credit capped at $8M annually for five years; resulting in up to $40M in grant capital for CDFIs. At least 65 percent of grant funds must be provided to Native CDFIs or for grantees to provide services or invest in defined rural counties. Up to 20 percent of any individual grant award may be used by the recipient to fund loan loss reserves; technical assistance; and small business training programs. 

The Washington Community Investment Coalition

Despite being disappointed about the bill’s failure; it reinforced for us that CDFIs are more powerful when we work together and raise our voices as one in a disciplined public affairs advocacy campaign. So; we formalized our collaboration and; inspired by the California Coalition for Community Investment and similar coalitions in other states around the country; Craft3 helped found the Washington Community Investment Coalition (WCIC) (download more information on the Coalition). In 2021; the Coalition’s 16 member CDFIs invested more than $115 million in over 1;500 startup and growing small businesses; nonprofits; and consumers across Washington state with loans ranging from $3;000 to over $5;000;000.

Committed to pursuing HB 1015; the WCIC also engaged an organizer and lobbyist to staff the Coalition and improve its prospects of securing important funding through legislative changes.

The third time is the charm

Since HB 1015 had passed the House in 2021; our primary focus in 2022 was the state Senate. There; the WCIC worked with a Senate committee chair and other supporters to hear the bill; make amendments; and answer final questions. The bill made its way through several key committees and eventually passed a full Senate vote; receiving 46 yeas and 2 nays. On March 10; 2022; the Washington Legislature delivered the bill to Governor Jay Inslee for his signature.

What began more than two years ago with an unexpected call and led to countless hours of hard work; had ended in an important victory. HB 1015 will provide essential capital for CDFIs across the state of Washington. This capital will help CDFIs provide the wrap-around services that make our borrowers successful and capitalize our loan funds so that we can accelerate our lending to in-need borrowers.

Looking ahead

I’m thrilled that the Washington Community Investment Coalition was able to help HB 1015 become law. The WCIC will continue its work and in many ways that work has only begun. Member CDFIs hope to use our developing voice and position to deepen our partnerships with state agencies and bring our capital and risk management expertise to serve those who aren’t served by mainstream financing – as well as share our deep expertise on policy issues that impact the communities we serve.