• Mike Beall

Four "Other" Paths to CDFI Certification


The NCUA recently announced its streamlined Community Development Financial Institution certification platform, based on a basic, automated loan analysis, is going away. This platform proved useful for credit unions that meet very specific criteria. Importantly, however, it often rejected credit unions that should have qualified.


We’ve seen it: CU Strategic Planning has re-applied for many credit unions that were initially turned down by the automated system and were able to get them approved. It’s critical to leverage the knowledge of experts who have successfully applied for grants on behalf of hundreds of credit unions. If you needed another reason why, the CDFI Fund will be changing the CDFI certification process later in 2022.


Four more nuanced paths to certification exist, such as serving:

  • A membership of which 60% are low- to moderate-income

  • A membership of which 60% have been traditionally disenfranchised

  • A low-income geographic area or

  • A blending the various options

Even if your credit union already was turned down through the NCUA’s streamlined process, you likely can become CDFI certified and gain access to all the benefits that come with it so you can serve your members better.


Applicants must submit a CDFI Certification Application to the CDFI Fund for review. The application documents how the organization meets the certification requirements, including:

  1. Submitting a charter to show that the applicant is a legal, non-government entity and not be under the control of any government entity at the time of certification application. Tribal governments are typically excluded from this requirement.

  2. Submitting a mission statement and/or board resolution documenting a primary mission of promoting community development.

  3. Conducting a loan analysis, mapping and other documentation to show the applicant primarily serves one or more “target markets.” A target market can be either a historically distressed investment area, a low-income population, or an “other targeted population” (OTP). OTPs are vulnerable or underserved populations that have historically been denied credit or lack adequate access to capital.

  4. Demonstrating that the organization is accountable to its designated target markets through the make-up of its board of directors or an advisory board, where the members are representative of the target market.

  5. Demonstrating that the applicant must be a financing entity. Regulated certification applicants, including CDFI credit unions, are deemed to automatically meet the financing entity criteria.

  6. Documenting the “development services” the organization provides in conjunction with its financing activities. Development services include technical assistance or training activities that prepare borrowers to access the institution’s financial products. There must be a direct link between the institution’s development services activities and its financial products.

Primarily, CDFI credit unions are seeking the right to apply for CDFI Financial Assistance Grant funds for up to $1,000,000 that help them serve these historically underserved markets. We often advise our clients to use these funds for loan loss reserves as an extra cushion to protect members’ hard-built capital, while also reaching out to members of their community who are underserved or economically distressed with new or expanded products and services.


Once a credit union has been certified, annual reports also must be filed to maintain its certification and eligibility for CDFI Fund grants. If you miss it, the process starts all over again!


CDFI certification is intense and involved, but if your credit union has the means and the heart, the results for your community are your reward. CU Strategic Planning has more than a decade of experience helping hundreds of credit unions become certified CDFIs by the U.S. Department of Treasury’s CDFI Fund. We’ve helped credit unions earn more than three-quarters of a BILLION dollars in funds through CDFI.


Let us help guide your credit union through the winding process. Contact us today to learn more.