The Treasury’s Community Development Financial Institutions Fund has, in recent years, accepted applications for its annual Program awards (Financial Assistance and Technical Assistance) in early spring. These are awards of up to $1,000,000 for CDFIs to sustain and expand their products and services. In February, the CDFI Fund director announced that the 2023 Program round would not open until sometime this fall, and would be combined with 2024 funding in a single application. What does this mean for CDFI credit unions? It’s time to start your application now.
1. There will be no opportunity to apply in 2024.
This is the most obvious reason. If you were considering applying next year, you simply won’t be able to. The FY 2024 funding is being combined with FY2023, so that means that if you don’t submit an application this year, you won’t have another chance until 2025.
2. Get the loan loss reserves and capital reserves you need.
The CDFI Fund grants Program awards of up to $1 million to certified CDFIs in the form of FA awards. FA awards can be used for lending capital, loan loss reserves, capital reserves, financial services, and development services. Simply put, your credit union can increase its community impact with grant funds that will allow for lending to higher-risk members in need of financial inclusion and affordable financial products and services in underserved communities. A CDFI’s success is measured not just on their financial performance, but also by their impact on underserved communities. An FA award enables your credit union to increase the direct, measurable impacts you have on your members and change lives.
3. It’s later than you think.
The CDFI grant application development is a large-scale project, not simply an application to complete. To prepare for the application, a credit union must begin research to develop strategies, conduct meetings with community leaders, government officials and local non-profits. An award-winning CDFI application that supports lending and increases ROA driven by research and team collaboration takes months in planning and results in a five-year business plan that includes projected lending goals and community impacts.
For 2023 and 2024, the timeline has shifted greatly. Instead of two application rounds with the Notice of Funding Availability appearing early in the year (applications are due 60 days after this NOFA is released), there will be one round, with this NOFA scheduled for late fall. This means that now is when your credit union needs to prepare. CU Strategic Planning spends months with clients gathering data, developing a strategy tailored to your target market, analyzing financials and writing the application.