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  • CU Strategic Planning

Navigating the CDFI FA Award Application Process

a door opening, signifying clarity about the CDFI FA Award process

The US Treasury’s Community Development Financial Institution (CDFI) Fund posted on its blog last week that the FY 2024 CDFI Program and NACA Program Application round, also known as the FA Awards, is coming soon – although the timeline still no more specific than “later this fall”. The post suggested that now is the time for organizations to begin preparing to apply, and provided tips to create or update, and AMIS accounts and obtain UEI and EIN Numbers.

However, with 15 years of experience writing hundreds of successful CDFI certifications and financial award applications, we know that there’s a lot more to it than that. Our team has been working for months on our clients’ applications for this combined 2023/2024 round of Financial Assistance Award applications. This is a brief look at what’s involved in creating a winning FA application.

About the CDFI Fund and Programs

The CDFI Fund was established in 1994 to create economic opportunity and transform the lives of working-class people, defined as moderate to low income. It is a mission we and credit unions in general hold dear, and in our work we’ve found that most credit unions, by their very nature, are eligible for CDFI Certification based on a combination of the geographic areas served and/or the income of members.

The Fund administers a number of programs that offer financial assistance to Certified CDFIs, with the CDFI Program Financial Assistance Awards being a mainstay.

The CDFI Program Financial Assistance Awards

These usually annual grants – 2023 has been an anomaly – are up to $1 million and can be used for capital reserves, loan loss reserves and operational expenses.

FA awards can be used for lending capital, loan loss reserves, capital reserves, financial services, and development services to achieve at least one of these objectives:

  • Increase volume of products or services

  • Provide new products or services

  • Expand operations into new geographic areas

  • Service new targeted populations

The awards application process is daunting, layering hundreds of pages of guidance across dozens of separate documents. It requires historical CDFI application knowledge, regulatory, lending and financial expertise. Prior to writing an application, CU Strategic Planning’s experienced team dissects and cross-references the current application documents, comparing materials to prior applications to identify trends, strategies, assumptions and key language.

This is not your typical grant; there’s a reason that the application is officially named a Comprehensive Business Plan. It’s a five-year plan that includes projected lending goals and community impacts, and requires strategies that involve local community partners.

What the Application is Really Asking

When staring down the application process, you can expect that the questions might be interpreted in a variety of ways and supported with data in several others. When it gets down to it, in our experience, here’s what they’re really asking:

Is your Comprehensive Business Plan (grant application) compelling?

  • Does your application represent the need and challenge in your community as more compelling than other communities?

  • Is your strategy more compelling and progressive than other applicants? Are your products, partners and projected impacts more compelling?

Is your application credible?

  • Just as your credit union would evaluate a business as a credible applicant for a business loan, capable of meeting its financial projections, does your credit union’s grant application demonstrate the capacity to achieve its goals?

  • Does the historical financial performance of your credit union demonstrate that future projections and assumptions are reasonable, and does your management team have the experience to achieve them?

  • Does your application cite reputable sources as evidence of the credibility, with all claims supported by evidence?

You must ensure your credit union is represented as knowledgeable in every aspect of the application. CDFI Fund leadership and members of the House of Representatives Appropriations Committee Subcommittee on Financial Services are accountable to use taxpayer dollars wisely, so they really dig in to ensure the funds are going to the best possible lenders to fulfill the CDFI mission of injecting capital into historically neglected communities.

Award Application Review Process and Scoring

The CDFI Fund receives hundreds of applications for FA awards every year, and the aggregate application amount requested always far exceeds the available funds.

The application evaluation and award selection process evolve from year to year but have typically included these five steps:

1. Eligibility Review

2. Financial Analysis and Compliance Evaluation

3. Business Plan Review

4. Policy Objective Review

5. Award Amount Determination

First, the CDFI Fund evaluates each application to determine if it meets the eligibility requirements. Then comes the financial analysis and compliance risk evaluation. The financial analysis score comes from a credit union’s CAMELS/CAMEL rating (which must be at least a 3), along with other feedback from the NCUA. The compliance risk evaluation is primarily performed by an automated CDFI Fund tool with additional review by staff as necessary.

The purpose of this step is to ensure the applicants have the capacity to maintain financial health and remain in compliance with the award requirements throughout the performance period.

The intent of the business plan review is to ensure that each applicant’s comprehensive business plan is sound and achievable. Two external reviewers, experts in community development finance, assess and score each component of the Comprehensive Business Plan (the application).

Next comes the policy objective review, performed by CDFI Fund staff to evaluate the extent of each applicant’s impact within the communities it serves and ability to meet the policy objectives, plus a due diligence review. Applicants are then grouped according to Total Policy Objective Review Composite Scores.

All Step 4 applicants being recommended for an award will advance to Step 5, the award amount determination. The CDFI Fund determines an award amount for each application based on a number of variables, such as the Total Policy Objective Review Composite Score, the applicant’s request amount, the applicant’s deployment track record, minimum award size, and funding availability.

CU Strategic Planning is Here to Help

As you can see, the CDFI Program FA Awards process is a complex one, with prep work that begins long before the official opening of each year’s application round and is much more complex than updating a account.

As you’re considering certification or applying for financial awards from the CDFI Fund, you’ll likely be overwhelmed with all the lingo and depth of the application requirements. We’d love to chat with you about how our dedicated team of experts can help your credit union certify as a CDFI and succeed in its funds quest to serve your members even better! We’re here to help.


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