Editor's Note: This article has been udpated to accurately reflect certain deadlines that appeared incorrectly in an earlier report.
WASHINGTON–After seven years of work, the CDFI Fund has released its revised Community Development Financial Institution (CDFI) Certification Application, garnering praise from credit unions and CU organizations in the process—although the CU trade groups said there are some remaining issues to be addressed.
Current CDFIs will have until Dec. 20, 2024 to recertify.
CDFI Certification provides eligibility to participate in various CDFI Fund programs for the purpose of promoting community development in distressed and underserved communities, according to the Treasury Dept., which oversees the fund.
As CUToday.info reported, in July of 2022 the fund announced it would pause the acceptance of new CDFI certification applications from Oct. 1, 2022 through April 2, 2023 as it deployed a new application and reporting tools. The pause followed a number of significant issues, including long delays in getting applications processed.
There are approximately 1,500 CDFIs in the U.S., including more than 500 credit unions, representing more than $300 billion in total assets.
‘Extensive Engagement’
According to the CDFI Fund, its revised application was finalized after an extensive process of public engagement that took place over seven years and reflects the “careful consideration the CDFI Fund gave to all of the public comments.”
The CDFI Fund has published a description of key aspects of the revised Application, which includes descriptions of key changes made in response to public comment.
Nussle: ‘Important Changes Made’
“We thank the fund for taking credit union concerns seriously, and are relieved that many important changes were made. Updating the certification standards was a significant challenge, and a necessary step to protect the value of the certification and the low-income and underserved populations at the heart of the mission of both the Fund and CDFI credit unions,” said CUNA President/CEO Jim Nussle. “CUNA and NAFCU thank the fund for taking the time to thoroughly consider stakeholder feedback. However, there is more work to be done as concerns regarding Target Market methodologies were not addressed. The CDFI Fund remains one of the most effective ways to multiply and leverage federal funds into positive outcomes to communities, and CUNA, NAFCU, and CDFI credit unions look forward to continued work with the Fund to ensure credit unions doing the work of reaching historically redlined, rural, and under-resourced communities are able to continue doing so.”
Berger: CUs Can Now ‘Unleash’ Resources
“NAFCU appreciates the CDFI Fund finalizing its application for certification and incorporating several recommendations from CUNA and NAFCU. While credit unions can now finally access a certification application for the critical CDFI Fund to unleash financial resources to communities that face immense economic struggles, we still have significant concerns with several aspects of the application,” said NAFCU President and CEO Dan Berger. “There are more than 530 credit unions and cooperatives that are CDFI certified, serving more than 20 million people. NAFCU looks forward to continuing to work with the CDFI Fund and is ready to jump in and help any member credit union to ensure underserved communities can thrive and have financial support available.”
CU-Supported Changes
According to the trade groups, the final application reflects credit union requested changes, including:
- Providing 30 days for credit unions to execute and return the CDFI Certification Agreement, rather than 10.
- Allowing for lenders that offer balloon payment mortgages if it is responsibly designed.
- Broadening the definition of “development services” to better recognize the effectiveness of coaching, online training, youth programs, and other services offered by credit unions.
- Altering the Financial Interest Policy to ensure that officers of credit union governing boards who hold loans in the credit union are not excluded from serving as a source of accountability.
- Recognizing that staff and not just executives of mission-driven organizations that serve a target market are appropriate sources of accountability to CDFI credit unions.
Deadline Approaching
Credit unions that are CDFI certified as of December 20, 2023 must apply for recertification within one year from that date, allowing credit unions a grace period of up-to one year. As announced in November, the Fund also will implement a one-time process change to allow organizations with pending CDFI Certification Applications to apply in the FY 2024 round, noted CUNA and NAFCU.
‘Every Community Deserves a CDFI’
A firm that is among the leaders in credit unions in assisting CUs in becoming CDFIs also welcomes the long-awaited changes.
CU Strategic Planning said it has been “leading the charge in deciphering and disseminating the revised requirements for credit unions.”
The Tacoma, Wash.-based company said it represents nearly 200 credit unions in CDFI compliance services, having certified 203 credit unions as CDFIs and secured $945 million in award funding.
CU Strategic Planning said it will be sharing insights with leagues, system partners and credit unions, as it is currently working on a credit union CDFI research project with the Filene Research Institute.
"As we analyze the new application our goal is to ensure credit unions retain their CDFI certification while facilitating the expansion of the powerful designation to even more credit unions nationwide," said Stacy Augustine, president/CEO CU Strategic Planning. "We firmly believe that every community in America deserves access to a CDFI."
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