How to Become a Certified CDFI
We first published a version of this post in 2018, and since then CU Strategic Planning has continued to lead the industry in certifying credit union clients as CDFIs, handling annual reporting, and writing award-winning grants. With the most recent round of CDFI RRP Grants, we have now directly won one quarter billion dollars in CDFI Fund grants for credit unions! You can learn more about our CDFI certification and grant writing services and CDFI reporting, or download further resources to learn more about becoming CDFI certified and how to use that designation to access financial awards that will allow your credit union to unlock opportunities in the communities you serve.
CDFI Certification is the U.S. Department of the Treasury’s recognition of specialized financial institutions serving low-income communities. CDFI Certification opens the door to opportunities for CDFIs to excel—both operationally and financially.
The Treasury’s CDFI Fund provides grants and financing to organizations certified as Community Development Financial Institutions (CDFIs). The CDFI designation limits those who can apply for those resources to ensure the program benefits those that need it most, with institutions accountable to their communities in their mission to make a difference.
The designation of CDFI certification conferred by the CDFI Fund to indicate that a financial institution provides financial products and services to underserved and economically distressed consumers and communities.
Eligibility Requirements to Become CDFI Certified
To be eligible for CDFI Certification, an organization must meet the following criteria:
Have a primary mission of promoting community development
Provide both financial and educational services
Serve and maintain accountability to one or more defined target markets
Maintain accountability to a defined market
Be a legal, non-governmental entity at the time of application (with the exception of Tribal governmental entities)
Fortunately, all credit unions meet most of these requirements. Low-income-designated credit unions generally meet all of them, and it's just a matter of documentation. The NCUA has worked to streamline the application process over the past few years, but it is still recommended that credit unions receive assistance; it's important to not just meet the criteria, but also to document and demonstrate it .
CDFI Certification Application Process
To apply to become certified as a CDFI, an organization must submit a CDFI Certification Application to the CDFI Fund for review. The application documents how the organization meets the certification requirements. Application steps include:
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.
Submitting a mission statement and/or board resolution documenting a primary mission of promoting community development.
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.
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.
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.
Document 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.
Maintaining CDFI Status
The CDFI certification is maintained annually with a CDFI annual certification report in the CDFI Funds AMIS system. If a certified CDFI fails to submit its annual certification report it will need to complete the entire certification process to be reinstated as a CDFI.
Get Assistance for the Process
CU Strategic Planning is made up of CDFI Experts, and we can work with your credit union every step of the way, from determining eligibility to winning those CDFI financial assistance grants. Let us show you how we can help you.