Community development financial institutions (CDFIs) have been using small-scale and locally developed strategies to stabilize and advance low-income and financially underserved communities for decades. CDFIs are specialized financial institutions that work in market niches that are underserved by traditional financial institutions. They provide a range of financial products and services in economically distressed markets, such as mortgage financing for low-income and first-time homebuyers and not-for-profit developers, flexible underwriting and risk capital for needed community facilities, technical assistance, and commercial loans and investments to small start-up or expanding businesses in low-income areas. CDFIs exist in both rural and urban communities. CDFIs include regulated institutions, such as community development banks and credit unions, and nonregulated institutions, such as loan and venture capital funds. Some stakeholders are concerned that a shortage of capital from CDFIs will reduce opportunities for new entrepreneurs to establish a business, existing businesses to expand and hire new workers, and consumers to acquire the credit they need to buy or make improvements to a property. Others believe that these goals can be better served through other public policy or private means. This report begins by describing the Community Development Financial Institutions Fund's (Fund's) history, current appropriations, and each of its programs. The next section of the report analyzes four policy considerations of congressional interest regarding the Fund and the effective use of federal resources to promote economic development. It analyzes the reasons why some individuals may choose not to locate in an underdeveloped community, why government policies may be justified in encouraging economic activity to relocate to underdeveloped communities, and which policies are more successful in addressing aspects of underdevelopment. Lastly, this report examines the Fund's programs and management to see if they represent an effective and efficient government effort to promote economic development in low-income and distressed communities. The Riegle Community Development and Regulatory Improvement Act of 1994 ( P.L. 103-325 ) established the Fund to assist CDFIs in providing coordinated development strategies across various sectors of the local economy. These coordinated development strategies are designed to encourage small businesses, affordable housing, the availability of commercial real estate, and human development. The legislation intended to improve the supply of capital, credit, private investment, and development services in economically distressed areas. In proposing the Fund, President Clinton stated that "by ensuring greater access to capital and credit, we will tap the entrepreneurial energy of America's poorest communities and enable individuals and communities to become self-sufficient." Although the Riegle Act created the Fund as a wholly owned, independent government corporation, a supplemental appropriations bill moved the Fund into the Department of the Treasury (Treasury) in 1995. The Fund was moved within Treasury because of its focus on financial institutions and because other bank regulatory agencies (i.e., the Office of Thrift Supervision and Office of the Comptroller of the Currency) were already located within the agency. The Fund is a component of the programs of the Under Secretary's Office of Domestic Finance, and it is directly under the Assistant Secretary for Financial Institutions. The Fund is headed by a director, who is appointed by the Secretary of the Treasury and not subject to Senate confirmation. Initially, the director served a three-year term. However the Fund was led by approximately 10 directors in its first 15 years. To bring greater stability to the Fund's leadership, the Secretary of the Treasury made the director's position into a career appointment in 2010, meaning there are no limits on the length of the director's term. Annie Donovan has been Director of the Fund since December 2014. By statute, the Fund also has a 15-member Community Development Advisory Board. The board members include the Secretaries of Agriculture, Commerce, Housing and Urban Development (HUD), Interior, and the Treasury; the Administrator of the Small Business Administration (SBA); and nine private citizens appointed by the President. The advisory board's function is to advise the Director of the Fund on policies regarding the Fund's activities. The advisory board is not allowed, by law, to advise the Fund on the granting or denial of any particular application for monetary or nonmonetary awards. Although the Fund is organized within Treasury's Office of Domestic Finance, in recent years Congress has provided the Fund with its own budget authority line in annual financial services appropriations bills. These appropriations go toward the Fund's administration, programs, and program awards. The Fund's appropriations cover administration of approvals for allocations of the New Markets Tax Credit (NMTC); however, the actual tax credit is awarded through the Internal Revenue Code, not through the Fund's appropriations. As shown in Table 1 , the Fund's total enacted budget authority for FY2017 was $233.1 million. Of this $233.1 million, 66% ($153.1 million) was appropriated for the Fund's core CDFI financial and technical assistance programs; 10% ($23.6 million) was appropriated for administration of the Fund's programs, including the NMTC; 8% ($19.0 million) was appropriated for the Bank Enterprise Award (BEA) program; and the remaining 16% ($37.4 million) was appropriated for set-asides for other specific programs. In his FY2018 budget blueprint, President Trump requested $14 million to fund administration costs. This funding would be used to manage past awards and monitor compliance. Funding would also include administration of new award rounds for two zero credit subsidy programs: the NMTC and Bond Guarantee program. The budget blueprint calls for eliminating funding for the Fund's four discretionary grant and loan programs (i.e., CDFI Program, HFFI, BEA Program, and NACA) and new allocations into the Capital Magnet Fund. To be eligible for certain Fund-related programs, an organization must be certified as a CDFI, Community Development Entity (CDE), or Qualified Opportunity Fund (QOF). CDFIs are eligible for CDFI Program FA and TA. CDEs are eligible for the NMTC. QOFs are eligible for Opportunity Zone (OZ) tax incentives. CDFI certification is a designation conferred by the Fund and a requirement for accessing financial award assistance from the Fund through the CDFI program, Native American CDFI Assistance (NACA) programs, and certain benefits under the BEA program to support an organization's established community development financing programs. An organization that does not meet each of the certification eligibility requirements at the time of application for technical assistance is still eligible to apply for and receive technical assistance. This may occur if the Fund determines that the organization's application materials provide a realistic course of action to ensure that it will meet each of the certification requirements within two years of entering into an assistance agreement with the Fund. To be eligible for CDFI certification, the applicant must be a legal entity; have a primary mission of promoting community development; primarily provide financial products, development services, or other similar financing in arms-length transactions; primarily serve (direct at least 60% of financial product activities to) one or more geographic investment areas meeting certain poverty or income standards, low-income targeted populations, or other targeted populations that lack adequate access to capital and historically have been denied credit; provide development services, such as credit or home-buying counseling, in conjunction with financial products; maintain accountability to defined target markets through representation on a governing or advisory board or through outreach activities; and be a nongovernment entity and not under the control of any government entity (except tribal governments). As of November 31, 2017, there were 1,011 certified CDFIs. As shown in Figure 1 , at least one CDFI is located in each of the 50 states, the District of Columbia, Guam, and Puerto Rico. California and New York contain more certified CDFIs than any other U.S. state or territory. Of the 1,011 certified CDFIs, 558 (51%) are loan funds, 304 (28%) are credit unions, 137 (12%) are banks or thrifts, 86 (8%) are depository institution holding companies, and 16 (1%) are venture capital funds. Of the 1,011 certified CDFIs, 73 (7%) are certified Native American CDFIs. CDE certification is required to receive an NMTC allocation. A certified CDE is a domestic corporation or partnership that is an intermediary vehicle for the provision of loans, investments, or financial counseling in low-income communities (LICs). CDEs use the NMTC to encourage investors to make equity investments in the CDE or its subsidiaries. To be eligible for CDE certification, the applicant must be a legal entity and a domestic corporation or partnership for federal tax purposes; have a primary mission of serving or providing investment capital to low-income communities or low-income individuals and target at least 60% of activities to these groups; and maintain accountability to low-income communities through representation on a governing or advisory board. As of July 31, 2012, there were 5,780 certified CDEs (including their subsidiaries) located throughout the United States, Puerto Rico, and the U.S. Virgin Islands. As shown in Figure 2 , California and New York also contained more certified CDEs than any other U.S. state or territory. The 2017 tax revision ( P.L. 115-97 ) created a new set of tax incentives for entities that are certified by the Fund as being "Qualified Opportunity Funds" (QOFs). QOFs are defined in P.L.