Community Development Financial Institutions, and those who work with them, are very aware of the many recent changes that have been put in place; program announcements, upcoming certification changes, calls for comments, and more. For those who are outside the world of CDFIs—even for those within it—these changes can be hard to distinguish and make sense of.
To help bring a little clarity, we’ve put together this general update on current CDFI Fund changes and updates.
First, what is a CDFI?
CDFI Certification is a designation given by the CDFI Fund to specialized organizations that provide financial services in low-income communities and to people who lack access to financing. Certified CDFIs eligible to apply for funding through various programs at the CDFI Fund, and CDFI certification status often serves as a qualifier to access certain other federal government programs. CU Strategic Planning works with credit unions on CDFI certification, compliance, grant applications and reporting; we’ve earned $770 million for our CDFI clients.
CDFI Certification Changes
The CDFI Fund will soon be announcing its revisions for the CDFI Certification Application, Annual Certification Report (ACR), and updated methods for collection transaction-level data from CDFIs. There will be an opportunity for public comment on this proposal, and the final changes will be implemented on April 3, 2023.
Our team keeps on top of CDFI Fund changes and proposals, and has been engaged in advocacy for CDFI credit unions for over a decade. We will be reviewing these certification, reporting and data collection changes when they’re announced, and will comment and advocate for more transparent processes and for a better understanding of the governance structures of credit unions. Clarification of these issues will help credit unions retain their CDFI certifications and win future grants they are highly qualified to win and create the most impact in their communities.
CDFI Certification Pause
In July, the CDFI Fund announced that it was pausing acceptance of applications for new CDFI Certifications or Target Market Modifications for six months, starting October 1, 2022. The Fund will not accept any new applications after that point until April 3, 2023. This is to allow the CDFI Fund to prepare and implement the process changes, as well as get through the backlog of applications that have built up over the last two years.
We’re committed to completing the applications for clients we’ve contracted with, and plan on having all submitted by September 30. For credit unions who wish to pursue CDFI Certification after October 1, we will be able to gather data and prepare your application based on the (yet-to-be-announced) proposed changes but will not be able to submit them until after the new application is finalized and released on April 3, 2023.
CDFI Fund Cure Notices
A number of credit unions have received “Cure Letters” recently related to the submission of a 2021 or 2022 Annual Certification and Data Collection Report (ACR). These are notifications of changes that need to be made to ensure that a CDFI maintains its certification status. The deadline for these Cure requirements will be dependent on the date the institution received the notice; however, those CDFIs that received notice between July 23 and 26 will have until October 23 to demonstrate compliance.
We are working with our clients to protect their CDFI certification status, and will meet each credit union’s deadlines and deliverables associated with its cure requirement. Even for those credit unions that fall under the extended deadline, our team is continuing to work to meet the original September 30 deadline.
The CDFI Fund is expected to release a robust FAQ on the cure process shortly.
Minority Lending Institution Designation Criteria
The CDFI Fund is currently soliciting public comments about the criteria to designate a CDFI as a Minority Lending Institution. Comments are due by November 25, 2022. The designation is intended to recognize those CDFIs who demonstrate high levels of service and accountability to Minority populations and to identify barriers that these institutions experience in providing access to capital.
This designation, and the development of its criteria, will play no role in award determinations made for the CDFI Equitable Recovery Program (ERP). It will also not play a role in ERP post-award compliance reporting requirements, but could play a part in future grant offerings.
Equitable Recovery Program (ERP)
The CDFI Fund announced the opening of the long-awaited, $1.73 Billion Equitable Recovery Program on June 23, 2022. The funds are part of the Consolidated Appropriations Act of 2021, in response to the economic impact of the COVID-19 pandemic.
Our team was hard at work on client applications when the Fund extended the original ERP application deadline of August 23 to September 22. We are still on track to have our clients’ applications turned in by the end of this month.
The CDFI Fund has indicated that ERP Grant award announcements will be made in early 2023. With the program awards of to $15 million per applicant, there will no doubt be significant reporting and implementation requirements; we’ll be here to assist with both.
FY 2022 Financial Assistance and Technical Assistance Awards
In an August 15 message, CDFI Fund Director Jodie Harris announced several changes, including the expected announcement of FY 2022 CDFI Program Awards. The smaller Technical Assistance Awards will be announced by the end of September 2022, but the CDFI Fund anticipates that the Financial Assistance Awards will not be announced until early 2023. Last year’s FY2021 Award announcement came in December 2021.
We stand ready to help our clients implement their winning grants and set up grant reporting as soon as award winners are announced.
FY 2023 and FY 2024 Financial Assistance and Technical Assistance Awards
To accommodate the major changes in administration of CDFI programs and certifications, the CDFI Fund is opening the FY 2023 Financial Assistance, Technical Assistance and NACA Program applications later than in recent years: Harris’ announcement listed fall 2023 as the expected opening date, rather than spring. This will allow for public feedback on the programs before new applications are accepted. In addition, this FY 2023 Program will be combined with the FY2024 Program round.
This means that the CDFI Fund will combine the appropriated dollars for 2023 and 2024, awarding all to applications received in the Fall of 2023 (rather than a Spring of 2023 round and a Spring of 2024 round).
Before this announcement was made on August 15, we had already filled our FY2023 FA class and started our initial client meetings. To ensure that we’re able to provide our highest level of service (the level that results in FA Awards for our clients that average $109,000 higher than their peers), we will continue to follow our original timeline. This will allow us to devote our attention to what would normally be two groups of grant applications, and also make any final modifications needed to fit the parameters of the new FA application when it’s made available in 2023.
If you have signed a contract for the FY2023 FA grant round with us, you’re all set – we’ll keep you apprised of timelines and deadlines. If you had thought you’d missed your chance for FY2023, or if you were planning on working with us for FY2024, now is a perfect time to sign up. Contact us today to get started.