In the current fiscal environment focused on cutting federal spending, public-private partnerships are increasingly being hailed as the panacea for addressing shrinking public budgets. The fact is that the budget bill now moving through Congress threatens these partnerships by cutting funding for the U.S. Treasury’s CDFI Fund.

There are nearly 1,500 Treasury-certified Community Development Financial Institutions (CDFIs) nationwide that are private, mission-driven institutions that invest, lend and deliver responsible, affordable financial products and services to the most economically burdened communities, including in Southwest and Southside Virginia. CDFIs are a key conduit for fostering public-private partnerships that create jobs, start and grow businesses, and build and improve affordable housing and community facilities, creating economic opportunities in distressed areas. By pooling together public and private funds with flexible structuring, CDFIs facilitate projects with community benefits that neither the private sector nor the public sector can accomplish on their own in challenging markets with perceived risks.

CDFIs’ most significant public sector partner is the U.S. Treasury’s CDFI Fund, which long had solid bipartisan Congressional support. Earlier this spring, Treasury Secretary Scott Bessent even stated “CDFIs are a key component of President Trump’s commitment to supporting Main Street America in the pursuit of job growth, wealth creation, and prosperity.”

And yet in this current hyper-partisan environment of slashing budgets, CDFIs are in the crosshairs. CDFIs are in jeopardy of losing a majority of funding and are forced to advocate for level funding of $324 million from Congress for Fiscal Year 2026 even though demand for our services is growing and will increase sharply as community services budgets shrink.

An immediate effect of this budget-cutting is that the administration has also withheld $251 million of previously appropriated funds for FY 25. Withholding the FY 25 awards not only disregards Congress’s authority over appropriations, but critically, limits CDFIs’ capacity to scale our work to expand affordable homeownership, strengthen small businesses, and create economic opportunity in low-income communities in Virginia.

CDFIs leverage over $12 in private capital for every $1 in federal support, filling deep credit gaps encountered in many communities. We cannot afford to lose these resources. Just as big investment banks on Wall Street do for corporate America, CDFIs do for America’s revitalizing Main Streets and rural communities, bringing financial instruments that would otherwise not be available locally.

Consider the economic impact of the 21 CDFIs in Virginia alone. Between 2010 and 2022, Virginia’s CDFIs were responsible for:

· Lending over $2.6 billion across 21,356 loans that created or maintained 37,643 permanent jobs

· Created 2,028 education/childcare seats

· Financed 9,122 small businesses

· Created 18,606 housing units

· Financed 9,486 consumer loans, including down payment loans to first-time homebuyers.

While CDFIs take on challenging projects considered to be “higher risk” by traditional lenders, delinquency rates among CDFI borrowers remain extremely low, underscoring CDFIs’ ability to be excellent stewards of public funds. For example, Virginia Community Development Fund (VCDF), which serves Virginia and West Virginia, has had delinquency rates below one percent for well over a decade. Following are descriptions of some recent VCDF projects that have brought economic vibrancy, housing stability and job creation in Southwest and Southside Virginia:

Birthplace of Country Music (Bristol)

In 1927, when New York music producer Ralph Peer came to Bristol to record local talent, few could have suspected the impact his discoveries would have on the world of country music. Johnny Cash called the 1927 Bristol Sessions, where first recordings were made of The Carter Family and Jimmie Rodgers, “the most important event in the history of country music.” In 1988, the U.S. Congress officially designated Bristol as “the birthplace of country music.”

The Birthplace of Country Music Alliance, an affiliate of the Smithsonian Institution, was established in order to preserve and promote the musical heritage of Bristol, a city that straddles the state line between Virginia and Tennessee. With focused collaboration between public and private entities on both the Virginia and Tennessee sides of town, the Birthplace of Country Music Cultural Heritage Center was born in 2014. The museum preserves the legacy of the 1927 Bristol Sessions — the “Big Bang” of modern country music — and serves over 30,000 visitors annually as an educational institution and cultural center with programming that includes concerts, workshops and broadcasts.

Formerly a retail space and car dealership, the building the museum occupies is listed on the National Register of Historic Places. The project used $9.6 million in New Markets Tax Credits (NMTC) provided by VCDF, along with state and federal historic tax credits and other resources to restore and improve the building.

With strong support by the community and local government, the Birthplace of Country Music Cultural Heritage Center has expanded the live music scene and stimulated the development of new businesses, including restaurants, hotels, breweries, and retail. The 24,000-square-foot Center now serves a projected 75,000 visitors annually and has sustained over 160 local jobs.

Emory and Henry School of Health and the Mel Leaman Free Clinic (Marion)

The partnership between Emory & Henry University’s School of Health Sciences (SHS) and the Mel Leaman Free Clinic, supported by a $5 million VCDF investment in 2019 via New Market Tax Credits, has expanded access to care for low-income and uninsured residents in Marion, VA, and nearby counties.

Located on SHS’s campus, the Free Clinic provides free medical, mental health, lab and physical therapy services — reaching 295 patients through 1,579 appointments in 2024 via in-office and mobile care. Services are delivered by volunteers and SHS students and faculty.

Founded in 2014, SHS offers graduate health programs, employs 40 full-time staff, and enrolls 204 students (105 in Marion), who lead local projects on public health, disability access, and homelessness.

Claremont School Apartments (Pulaski)

Claremont School Apartments is a new project in Pulaski that repurposes an old elementary school in Pulaski into 50 affordable apartment homes designed for low-income families. This innovative redevelopment supports Pulaski County’s efforts to expand affordable housing options, meeting the needs of a growing population and the region’s increasing economic opportunities.

The Claremont School, built in 1952 and listed on the National Register of Historic Places, served as an elementary school and community space for decades before being abandoned in 2003. For over 20 years, the building sat vacant — but now it will be transformed into a modern living space for families that blends history with new development. This transformation was made possible with support from a $1 million permanent loan from VCDF that supported the project’s initiation.

Bluffwalk (Lynchburg)

The Craddock Terry Hotel, opened in 2005 at the eastern edge of the city of Lynchburg, has served as the catalyst for the city’s downtown revitalization. With 44 boutique rooms, two restaurants and flexible event spaces, it became an early and successful model of Virginia’s boutique hotel trend and remains widely praised.

Today, the hotel supports downtown Lynchburg’s economic growth, offering accessible jobs with competitive pay, benefits and training for low-income residents. In 2024, VCDF provided two loans totaling $1.8 million to refinance part of the hotel’s burdensome mortgage. This creative financing allowed the Craddock Terry to stabilize operations and plan for future expansion.

Florida Terrace (Lynchburg)

Florida Terrace Apartments is an affordable housing community with 31 rental homes serving low-income residents in Lynchburg. Florida Terrace was developed by Rush Homes, Inc., a nonprofit dedicated to providing housing for low- to mid-income individuals and families with disabilities. The property offers eight units that are designed to be fully accessible to residents with physical disabilities. In 2022, VCDF provided two low-interest loans totaling $1 million to fill vital construction financing gaps that helped bring this community to life.

Poplar Creek (South Boston)

Poplar Creek Homes is a community in rural South Boston that offers 32 affordable townhomes for families and individuals living below the average income in the area. The development was a collaboration between the Southside Outreach Group and the town of South Boston. VCDF provided two loans of over $460K to support pre-development and construction costs for the project, helping bring it to fruition in 2023. With a waiting list of 200 people when it first opened, Poplar Creek Homes highlights the need for more affordable housing in the community.

In conclusion, if public officials truly want to support public-private partnerships, they will fully fund appropriations for the CDFI Fund, which facilitates exactly that in communities across the country. Our Members of Congress from Southwest and Southside Virginia — Representatives Morgan Griffith, John McGuire and Ben Cline, and Senators Tim Kaine and Mark Warner — must support the Treasury’s CDFI Fund so that Virginia’s CDFIs can continue to create jobs, affordable housing and economic opportunities that are the foundations for economic growth in underserved markets. Call your members of Congress and ask them to level-fund Treasury’s CDFI Fund at $324 million for FY 26 and to restore FY 25 funding as Congressionally appropriated.

Laura Dupuy is the Fund Director of Virginia Community Development Fund (VCDF), a certified CDFI, serving low-income and distressed urban and rural communities in Virginia and West Virginia, and is a board member of the Virginia CDFI Coalition.