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  • Stacy Augustine

How You’ll Learn to Stop Worrying and Love Advisory Boards

Editor's note: a version of this article also appears in The Credit Union Connection.

empty boardroom, to illustrate reticence about advisory boards

Accountability is a critical component when it comes to obtaining or (or maintaining) certification as a Community Development Financial Institution (CDFI).  As a CDFI, you serve what’s called a Target Market (or multiple Target Markets), which are made up of low income and underserved people and communities. To understand and serve your Target Market, you must have people in a governing or advisory capacity who are accountable to that Target Market.


With the newest CDFI certification rules, that accountability standard is tougher than it has been in the past. You can learn more about that from the recording of our December 14 webinar. To put it simply, our work with CDFI credit unions leads us to believe that most will need to implement an advisory board to meet accountability standards. But there are benefits beyond just accountability. Before we get to those:


Advisory Board Basics

What are the CDFI Fund’s requirements for an advisory board?

An advisory board must:

  • be appointed by the credit union’s board of directors.

  • provide strategic input to the credit union’s board of directors.

  • consist of no less than five persons.

  • meet at least three times a year.

  • contain at least one credit union board member.

  • operate according to a policy that describes the advisory board’s purpose and scope.


What needs to be included in the required advisory board policy?

The following items need to be addressed in the credit union’s advisory board policy:

  • The purpose of the advisory board and the scope of topics or strategic policy matters on which the advisory board provides input or advice to the credit union’s board of directors.

  • How input that the advisory board provides to the credit union’s board of directors is documented (for example: the advisory board is regularly or occasionally invited to meetings of the credit union’s board of directors, minutes from advisory board meetings are included in board meeting packets for review, or the advisory board provides the credit union’s board with written feedback on key policy issues, etc.);

  • The process by which individuals are selected and approved as members of the advisory board; and

  • How the advisory board seeks input from, and/or reviews data on the financial needs and opportunities in the Target Market(s) for which it provides accountability.


These matters can be outlined in a stand-alone document, or they can be incorporated into the credit union’s existing policy manual.


Does the advisory board need to be called an “advisory board”?

No. The credit union can give this advisory entity another more descriptive name so long as the advisory board requirements are met.


Is an advisory board always required to be a CDFI?

No. An advisory board is just one method for demonstrating accountability to your Target Market or Target Markets.

How can an advisory board show accountability?

Option One
Option Two
  • At least 20% of the credit union’s board members show accountability to its Target Market(s);

  • At least 60% of advisory board members are accountable to the overall Target Market(s); and

  • At least one advisory board member is accountable to each Target Market (if the credit union has more than one).

  • At least 33% of the credit union’s members fall into a Target Market type (for example, 33% of the credit union’s members are considered low-income or live in an Investment Area);

  • At least 60% of advisory board members are accountable to the overall Target Market(s); and

  • At least one advisory board member is accountable to each Target Market (if the credit union has more than one).

An Advisory Board as a Strategic Advantage


The key term to remember is advisory; this is an excellent way to get insight and input from your community, and in particular from your Target Market. Think of it as an in-house focus group: bringing an advisory board together for a quarterly discussion about community needs helps highlight issues facing your Target Market, strengthen community partnerships, and set the stage for product and policy development that’s a proper fit for the people you want to serve.


How do you find your advisory board members?

Look at your Target Market. At least 60% of your advisory board must be accountable to your overall Target Market. How to find them? Start with community partners – if you work with an organization that’s embedded in your community and serves low to moderate income people, you’ve got great candidates right there. Or community development organizations that aren’t partners – it’s an excellent way to get to know each other. Even Rotary clubs and other local, community-minded groups are a great place to find volunteers.


How are advisory board members selected?

Your policy should outline the process of appointing members to your advisory board, along with the term length and other details. Although advisory board members need to be actively engaged in the advisory board, they don’t need to be recruited from your current membership and can be a good way of attracting community leaders that might be well-suited to eventually serve on the credit union’s board of directors.


What staff member should be responsible for your advisory board?

You have options! You may want your head of member experience to take charge. Or your community engagement director, or the head of marketing – all are good choices. Just remember that the advisory board doesn’t need to be operated with the same degree of formality as your board of directors.


Love Your Advisory Board


Your credit union sought CDFI certification because it’s dedicated to serving the underserved. Regularly listening to your community is more than just a way to check off an accountability box – it’s at the heart of your mission.



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