WASHINGTON—The Community Development Financial Institution (CDFI) Fund has issued a first look at a revised Application and Annual Certification and Data Collection Report (ACR), as well as revisions on its data collection mechanisms.
These proposed changes are a result of the CDFI Fund’s request for public comment, issued in May 2020.
The revised CDFI Certification Application, ACR, and new methods for data collection from certified CDFIs will later be released by the Office of Management and Budget (OMB) for a final round of public comment in the coming weeks with a 30-day comment period and no option for extension, according to the Bureau.
One area with a substantive change is with the Primary Section of the proposed CDFI Certification Application. The application will now include a bright-line questioning related to an organization’s lending and financing practices, to better gauge an applicant’s “adherence to responsible financial practices,” noted NAFCU in its analysis of the CFPB analysis.
Basis for Disqualification
In instances where the CDFI Fund is able to distinctly determine that the applicant’s financial products or practices are harmful to low-income and underserved communities, or do not align with the CDFI Fund’s mission or standards, the applicant will be disqualified, NAFCU noted.
Of additional note, the revised application will now also measure an applicant’s Target Market financing activity over the latest completed fiscal year only and eliminate the requirement that the applicant provides data on its year-to-date activity. T
The CDFI Fund said it will solicit input regarding a proposed list of pre-approved methodologies to allow organizations applying for CDFI Certification to demonstrate that they are indeed serving their identified Target Markets.
Applicants must show that they are able to meet financial product activity thresholds in both number and dollar amounts of such activity.
Significant Feedback
The CDFI Fund also stated it received a lot of feedback on the use of governing boards to demonstrate accountability to a Target Market. As a result, the revisions show advisory board options are now available for bank and credit union certified CDFIs.
In addition, the revised application also eliminates the use of the NCUA’s Low-Income Designation as acceptable documentary evidence of a primary mission of community development, NAFCU added.
Over the coming weeks, the CDFI Fund said it will release additional information on the ACR. The CDFI Fund is no longer proposing the creation of a separate certification level report, instead, all CDFIs will be required to submit a slightly modified version of the existing transaction level report.
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