Your CDFI Fund Award Is Here. What Happens Next?
After a long wait, the CDFI Fund’s latest awards have been announced, and winning credit unions are preparing for their next step: reviewing and signing their Assistance Agreements.
These agreements establish how award funds may be used, what recipients are expected to accomplish and how they'll demonstrate compliance. The FY 2025 agreements also include changes that experienced CDFIs will want to review closely.
In our recent webinar, CDFI Fund Awards and Assistance Agreements: What Winning Credit Unions Need to Know, CU Strategic Planning's Mike Beall, Chief Experience Officer, and Christine Duncan, Senior Vice President of CDFI Compliance and Data Analytics, explained what credit unions should know about FY 2025 Financial Assistance (FA) and Technical Assistance (TA) awards and FY 2026 Small Dollar Loan (SDL) Program awards. We've also published an Essential Takeaways version of the webinar for those who want to hear the guidance directly from Mike and Christine.
Understand your agreement before signing
FA, TA and SDL Assistance Agreements have a similar structure, but each program has its own authorized uses and requirements. Your agreement also includes performance goals, payment information and reporting deadlines specific to your award.
Start with the award amount, initial payment and period of performance. Then look at the activities you're authorized to fund and the measures you'll be expected to meet. Don't skip the definitions: they determine how the CDFI Fund interprets key terms throughout the agreement. Some standard provisions won't apply to credit unions, so pay attention to the sections identified as applicable to your institution.
What's changed in the FY 2025 FA agreement?
The draft FY 2025 FA Assistance Agreement includes changes to the definition of Eligible Market, along with new compliance language. Both deserve attention before recipients finalize their plans for using award funds.
A narrower Eligible Market definition. Under the revised definition, an Eligible Market is a qualifying geographic area or individuals who are Low-Income, Native American, Native Hawaiian, Alaska Native or Persons with Disabilities. African American, Hispanic, Other Pacific Islander, Filipino and Vietnamese individuals are no longer listed as separate qualifying categories.
That doesn't mean lending to borrowers in those groups is automatically ineligible. A loan may still qualify based on income or location, for example. But credit unions will need to use the revised criteria when determining whether an activity qualifies under their award and how to report it.
Additional compliance provisions. Section 5.1 of the draft references four executive orders, and Section 7.16(b) addresses compliance with federal anti-discrimination laws, including restrictions on unlawful race-, ethnicity- or sex-based preferences or set-asides. Recipients must maintain relevant compliance policies and make annual attestations.
Section 5.2 also expands language concerning fraud, waste and abuse. Potential consequences of noncompliance include termination or repayment of an award, suspension or debarment, and civil or criminal referrals.
These provisions warrant a careful review with your compliance team, particularly if your credit union needs to update its policies or documentation practices. The exact obligations will be those in your executed agreement.
Know how your award can be used
The permissible uses of funds vary by program. FA awards can support loan loss or capital reserves, financial products, financial services and development services. Development services include programs that help members become better prepared to borrow, such as financial coaching. Staff compensation associated with an eligible program may qualify.
TA awards focus on organizational capacity, including eligible technology and operational expenses, rather than loan loss or capital reserves. SDL awards include technical assistance activities and funding for loan loss reserves supporting small-dollar lending.
The categories sound familiar, but your agreement determines the uses authorized for your particular award. Review those provisions before allocating funds.
Put your award to work, and watch the interest
For FY 2025 FA awards, the presenters highlighted an important performance measure: recipients must use at least 90% of their initial payment by the end of the first performance period, which they identified as the end of 2027.
That makes early planning important. Christine recommended deciding how to allocate funds and recording those decisions promptly, rather than leaving the award sitting in a deferred-income account while the credit union works out its plans.
There is also an interest issue to consider. FA recipients must account for interest earned on unexpended award funds, and amounts above the applicable $500 threshold may have to be remitted to the federal government. Work with your accounting team to understand the treatment of your funds under the agreement.
Keep your accounting and reporting records ready
The CDFI Fund expects recipients to document how award dollars were allocated or spent. For FA recipients, the records needed depend on the authorized use. TA recipients need to support expenses such as personnel costs or technology purchases. SDL recipients have additional tracking requirements, including a separate general ledger.
Christine encouraged credit unions to establish their accounting approach early with their finance teams and auditors. She also pointed to NCUA Supervisory Letter 16-01, which includes illustrative accounting entries for FA and TA grants.
Reporting requirements vary by award, but may include Performance Progress Reports (PPRs) on award goals, Transaction Level Reports (TLRs) containing loan-level information, and Uses of Award Reports identifying how funds were used. The SF-425 Federal Financial Report follows the federal fiscal year of October 1 through September 30, which may differ from your credit union's reporting calendar.
Certified CDFIs also have an ongoing obligation to maintain certification through Annual Certification Reporting (ACR). As Christine explained, ACR is separate from grant reporting. At the time of the webinar, the CDFI Fund had not released the reporting schedule for outstanding ACR periods. Credit unions should watch for instructions in AMIS and continue keeping the records those submissions will require.
Review the details, then sign in AMIS
Before signing, confirm that the agreement reflects your award amount, performance schedule and authorized uses. Check that your SAM.gov registration is current, since an expired registration can interfere with payment processing.
The agreement must be signed through the CDFI Fund's Awards Management Information System (AMIS). Christine cautioned recipients to wait until they have received the Assistance Agreement PDF before starting the signing process in AMIS, because acting prematurely could delay payment.
Reviewing the agreement carefully and establishing your tracking procedures now will help your credit union put its award to work while meeting its obligations to the CDFI Fund.
CU Strategic Planning offers full service compliance reporting for CDFI awards and certification. Get in touch for more information about how we can help your credit union.
