Washington Community Investment Coalition

Case Study

Seizing an unexpected opportunity, Craft3 and other CDFIs in the Pacific Northwest came together to advocate for and obtain dedicated funding from Washington state.

Building Relationships and a More Effective Voice

Developing new policy muscle

Craft3 is one of nearly two dozen CDFI loan funds operating in Washington state. For years, our network of community development finance organizations has taken the approach of “collaboration, not competition” as we strive to serve as many customers that require non-bank financing as possible. That collaboration, though, rarely included public policy engagement supporting systems change.

This began to shift in early 2020, when the Washington State Department of Commerce engaged Craft3 to provide feedback on a piece of legislation to generate rural investment. After some internal conversations, we suggested the bill include a provision to provide direct funding to CDFIs who would then use that capital to make loans to people and businesses in underserved rural communities. This idea was added as an amendment to the already introduced bill. This bill didn’t pass, but it planted an important seed.

After this initial advocacy effort, Craft3 leveraged existing relationships with CDFI loan funds in our state to brainstorm how to improve the bill and ensure it would help organizations of all sizes better serve their borrowers and communities. But, while we had existing relationships, this new effort required us to start developing a new muscle around engaging together on policy. Meetings in summer 2020 helped us expand existing relationships and build new ones – relationships that generated legislative refinements we then offered to the bill sponsor. We were thrilled that a revised version of the bill introduced during the 2021legislative session – now known as the Washington Equitable Access to Credit Act (HB 1015) – incorporated many of the changes we had proposed.

Overcoming Challenges

Equitable Access to Credit Act (HB 1015) ¹

Recognizing that more would need to be done to get HB 1015 across the finish line, Craft3partnered with three other CDFIs in 2021 to fund an external lobbyist to support and coordinate our collective advocacy efforts. Through this process, our informal group began to recognize the scale of the challenge.

Advocacy is challenging because it requires patience and persistence. We found ourselves not only facing challenges in advocacy – but also challenges in awareness. For instance, many legislators had no idea what a CDFI was. And while they were interested, that learning curve was steep. Even those elected officials who recognized the value of community development finance often wanted to dig in –something that we simply didn’t have enough time for during the 2021 legislative session. In the end, the challenge of educating legislators about CDFIs at the same time as advocating for the passage of HB 1015 proved too much – and the bill failed to pass the Senate.

The lessons in that failure helped focus us over the coming months before the 2022session. It was clear that we needed to educate legislators about the value of CDFIs and how CDFIs and, through this legislation, legislators could serve their constituents. And we needed to do it as a group. Our experience 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. 

Working in Partnership

Formalizing a Coalition ² 

That summer, recognizing the need for a louder, coordinated voice 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).  Fifteen other CDFIs – from one-person shops to large national CDFIs working in Washington – joined the effort. The Coalition was our collective answer to the dual challenges of education and advocacy – providing dedicated resources that allowed strategic, purposeful engagement over that summer and fall.

When the 2022 session began, the Coalition worked closely with legislators (and supporters) in both houses to hear the bill, make amendments, and answer final questions. The bill made its way through several key committees, received supportive testimony from Coalition members and other interested parties, and eventually passed a full Senate vote, receiving 46 yeas and only 2 nays. Having already passed the House, on March10, 2022, the Washington Legislature delivered the bill to Governor Jay Inslee, who signed the bill into law on March 30, 2022.

Conclusion

Lessons Learned

In many ways, the work of WCIC has only begun. Member CDFIs hope to use the Coalition’s 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 more traditional financial institutions – as well as share our deep expertise on policy issues that impact the communities we serve. WCIC is also engaging around implementation of the program established by HB 1015, to secure the greatest benefit “on the ground” for the communities its members serve.

From Craft3’s perspective, there were several key lessons:

• Relationships matter. Existing relationships with the state agency and other CDFIs offered a foundation to build from, rather than starting from scratch.
• ‍Lobbying and policy are distinct skills. Those existing relationships facilitated early advocacy – but eventually in-house limitations constrained our actual lobbying capacity. We didn’t realize this soon enough. Additionally, our relationships to date had focused primarily on lending and funding partnerships, not necessarily public policy.
• ‍Education about what CDFIs do is essential. The voice of the CDFI network in Washington was, and still is, underdeveloped. As a result, many relationships with stakeholders first require significant investment to educate about CDFIs and our business model. This work is more effective when done through a coordinated coalition, and not through one-off or ad hoc advocacy.
• ‍When CDFIs work together, the future is brighter. Formalizing our relationships through the WCIC both added new capacity and contributed to the legitimacy of our advocacy effort. It gave us common purpose and focus which enabled the initial legislative success – and will create future opportunity.

Thanks to our partners!

We appreciate your collaboration.

 ¹ 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 maybe used by the recipient to fund loan loss reserves, technical assistance, and small business training programs. 

² Sixteen member CDFIs invested an annual total of 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.