The Treasury's Community Development Financial Institution Fund announced its 2022 Financial Assistance Awards last week, and we were honored to see that our clients had great success. To break things down a little more, here are some details about goes in to those winning numbers: Out of all credit union 2022 FA Awards, 56% went to our clients. Half of our 2022 winning clients were first time FA recipients, and half had received at least one FA award in the past. Total funds won for clients (Base and PPC FA funds) was $26,965,300. Our winning clients averaged $89,312 more per award than other credit union FA recipients. The Financial Assistance application process is an intense and involved one, with over 50 sections to complete and more than a dozen people working on each one - financial analysts, grant strategists, writers, editors and sharp-eyed admins. All this work comes together in the form of a full business plan that details how an applicant will use the funds to improve the lives of people in their communities as part of their overall operations. Where a credit union chooses to direct their focus depends on their community's need, as verified by our research. Here's how this year's recipients will be using the grant funding: Financial Inclusion: 28% Women's Empowerment: 18% Household Stabilization: 18% Affordable Housing: 15% Home Rehab: 8% Workforce Development: 5% Small Business: 5% Disaster Recovery: 5% Overall, CU Strategic Planning has secured $800,000,000 in total funding for CDFI credit unions since its founding. (Editor's note: the April 10 ERP award announcement has brought the total to over $945 million) Learn more about our work with CDFIs, certification, grant writing and compliance.

We're so pleased to announce that the grant applications CU Strategic Planning facilitated for our clients make up 56% of all this year's Financial Assistance awards granted to credit unions as part of the 2022 Community Development Financial Institution Program, totaling $26.97 million. In terms of dollars won, CU Strategic Planning clients won two thirds of all funding awarded to credit unions outside of Puerto Rico and 17 clients won the highest base award amount of $640,000 given to credit unions this year. In total 233 CDFIs, including 72 credit unions, earned awards totaling $144.7 million in FA grants. Client credit unions will leverage these funds to serve more hard-working people across the country, through focuses such as: products and services to increase financial inclusion for disenfranchised households; lending for affordable housing; financial support for workforce development; economic stability for female-headed households; and other areas of demonstrated local need for low- to moderate-income families. Our clients' Base FA applications averaged $89,312 higher than other credit union award winners. “We draw on our nearly 15 years of experience in consulting for CDFI credit unions,” said Mike Beall, Chief Experience Officer. “We’re proud to consistently produce results that provide incredible ROI.” The funds awarded in this year’s FA Base Awards was an $8 million increase over last year’s, but a decrease of overall total recipients. At the same time, there was an increase in the number of credit union represented, making up 31% of this year’s awardees. “We’re pleased to see that credit union representation has increased in this year’s FA awards, and we’re so proud of the work all our clients do for their communities” CU Strategic Planning CEO Stacy Augustine said. “CDFI credit unions, as member-owned financial cooperatives, are dedicated to eliminating financial inequities and improving the lives of families in their communities. We’re honored to be able to assist credit unions to unlock opportunities to make those changes, through our CDFI grant efforts on their behalf.” The awards announced today for CU Strategic Planning clients help CDFI credit unions serve low- to moderate-income families. The firm has now won more than $797 million in funding for credit unions from the Treasury Department and its CDFI Fund, including FA awards, Rapid Response Program (RRP) Awards, and secondary capital awards from the Emergency Capital Investment Program (ECIP). Announcement of the Equitable Recovery Program (ERP) awards are expected in the coming weeks.

Jodie Harris, Director of the U.S. Department of the Treasury's Community Development Financial Institutions Fund (CDFI Fund), announced on February 23 that she will be stepping down as Director of the agency at the end of April. She has accepted a position as the next president of the Philadelphia Industrial Development Corporation. Deputy Director of Policy and Programs Marcia Sigal will serve as Acting Director until a new Director is named. Harris has served as the director of the CDFI Fund since 2019, overseeing the agency’s mission of promoting economic revitalization and community development through investment in and assistance to Community Development Financial Institutions, including CDFI credit unions. The director’s departure comes amid controversial changes to the CDFI certification process and a prolonged pause on certifications, and congressional questions. The Fund announced in late January that the planned early April rollout of the updated Certification Application, as well as the pause on CDFI Certification Application submissions, was extended for an indefinite amount of time. That announcement indicated that the extension was at least in part due to concerns from stakeholders submitted in the last round of public comments in November 2022. During this pause period new CDFI applications have not been accepted and those institutions that had already submitted applications have received no information on their status. This leadership change leaves in question those revisions that credit unions and other CDFI stakeholders said were detrimental to existing CDFIs and communities they serve.

Credit unions are the original socially responsible lenders, and now Community Development Financial Institution-Certified credit unions have a wonderful new opportunity to expand services to even more people in need and help the environment. The Environmental Protection Agency recently announced the structure for its $27 billion Greenhouse Gas Reduction Fund, which was created when President Joe Biden signed the Inflation Reduction Act into law last year. The EPA has created a nearly $20 billion General and Low-Income Assistance Competition to award competitive grants to eligible nonprofit entities that will collaborate with community financing institutions like green banks, CDFIs, credit unions, housing finance agencies and others. The goal of the funds is to leverage the public dollars with private capital to invest in projects that reduce pollution and lower energy costs for families, particularly those in the low-income and disadvantaged communities. Awardees will also facilitate technical assistance and capacity building to strengthen the community-based organizations, small businesses, workers and suppliers required to accelerate the transition to an equitable, net-zero economy and catalyze the jobs of the future. The EPA expects to make between 2 and 15 grants under this competition. “We are excited about the significant opportunity this presents for the communities served by our credit unions and the future of green lending," CU Strategic Planning CEO Stacy Augustine said. "Credit unions have always been pioneers in socially responsible lending creating market momentum that forces profit-driven financial institutions to follow suit." According to the Opportunity Finance Network, the $27 billion Greenhouse Gas Reduction Fund aims to bolster energy-efficient projects across three areas: $7 billion for zero-emission technologies available to states, municipalities, tribal governments, and others $11.9 billion for financial and technical assistance grants for both direct and indirect investments into qualified projects $8 billion for financial and technical assistance grants for both direct and indirect investments specifically in low-income and disadvantaged communities for qualified projects, such as financing solar panels, home energy-efficiency projects and electric vehicles “CDFIs are well-positioned to deliver greenhouse gas reduction financing to the low-income and disadvantaged communities targeted in this initiative,” OFN VP for Public Policy Mary Scott Balys wrote. OFN advocated with the EPA and other Biden-Harris Administration officials that the CDFI industry be included as essential partners in the implementation of this new fund. CDFI credit unions and other eligible organizations received recognition in the EPA’s announcement from several members of congress, like Washington State’s own U.S. representative Congressional Progressive Caucus Chair Pramila Jayapal, who stated, “The Greenhouse Gas Reduction Fund will provide vital funding to create jobs, speed the development of new renewable energy technologies, and support development in communities across the country, all while contributing to the work to reach President Biden's goal of 80 percent clean energy by 2030. I applaud the EPA for this ambitious new program." U.S. Representative Debbie Dingell of Michigan said, “We have proven green bank models nationwide, including in Michigan, that not only mobilize investment directly into the most critical projects, but are creating incredible economic opportunity, with good-paying, high-value jobs. Over the next decade, this investment will help us build on current efforts by mobilizing financing and private capital for a range of clean energy projects to decarbonize communities—including low-income and disadvantaged communities—across the United States.”

The Community Development Financial Institutions Fund (CDFI Fund) has said that it wants to ensure sufficient time to consider the many comments submitted regarding its proposed update to the CDFI Certification process. We know that a letter went to Treasury Secretary Janet Yellen from Senators Warner and Crapo – they've taken the lead on the developing Senate caucus on CDFIs. The letter asked Secretary Yellen for more information and to look into the process by which the CDFI Fund was acting on this new CDFI certification. The Administrative Procedures Act hasn't exactly been followed. The fact that on January 24th the CDFI Fund changed course and has delayed without a date as to when the release will come of the new certification hints at a couple of things. A lot of people are questioning how the CDFI Fund is proceeding on this. This is their second initiative to change the to change the certification process. Their transparency has been called into question. Even the comment period was brief. The Fund seemed to signal they were proceeding, they were taking in comments, but our sense was they were going to do what they were going to do. Congress has taken note of this. This program is very popular with Congress. And yet the Fund has drawn questions from inquiring minds. So, what happens next? 1. If you're a credit union looking to certify, it looks like the pause period is going to continue until this change comes out. 2. If you have a certification in and you're waiting, we don't really know. Will they release any of those? Doubtful. I think they're going to wait until after this is done. 3. We’re still waiting on the FA 2022 and ERP Award announcements. The CDFI Fund has promised to announce a revised timeline in the near future, which it has said will include time for stakeholders to familiarize themselves with the new application prior to the effective date. A grace period will also be implemented for existing CDFIs to achieve compliance with the new guidelines. The point I want to bring across is this is probably, in the long run, good news – that we should get more information out of the process and hopefully clearer information once the certification is released. If you’d like further information, please watch our recent webinar, CDFI 2023: What Comes Next for CDFI Credit Unions.

This is a confusing time for CDFI credit unions, and for those who are interested in Community Development Financial Institution status—pause periods, new certification applications, changed grant deadlines—how do you keep up? On January 11, CU Strategic Planning hosted a webinar with Callahan and Associates where we dug in to the current landscape for credit unions and the CDFI Fund. Our Chief Experience Office Mike Beall led the presentation, joined by President/CEO Stacy Augustine, VP of Grant Compliance Christine Duncan and Senior Partner of Total Spectrum John McKechnie to discuss: Existing Grants The New Certification Coming 2023 Future Awards Our predicted timeline for the new CDFI Certification Best practices to stay in compliance Ideas to help avoid a CDFI Cure letter, and what to do if you get one in 2023 Be in it to win it! Ways to win 2023 CDFI FA and TA Grants If you missed the live webinar, you can view the recording on demand and download the slides. Be sure to check out this comprehensive webinar to learn about what's in store this year for CDFIs.

October of 2023 will mark 15 years since CU Strategic Planning was founded, and 15 years of helping credit unions gain certification as Community Development Financial Institutions and winning awards for those CDFIs to the tune of $770 million—along with the rest of our services. We’ve seen a lot of changes over that time in our work as credit union consultants, and the most recent proposal from Treasury’s CDFI Fund has many that could affect credit unions’ operations and service to their members. We’ve heard from many of you about the impact, communicated our concerns to the CDFI Fund, and our experienced team is keeping abreast of this situation, which is in flux. The proposed certification requirements are slated to go into effect in April of 2023, and it’s presumed that CDFIs would have up to one year from that date to implement any changes needed to meet those new requirements. Let’s discuss these requirements for better understanding, or you can view our recent webinar here for even further detail. One of the key changes in the proposal would affect Low-Income Designated (LID) credit unions. While these LID credit unions previously automatically qualified for CDFI certification, the proposed changes would revoke this concession. LID CDFI credit unions, as well as other existing CDFIs, would be required to adopt a mission statement that clearly reflects their community development mission under the proposal. In addition, this change would also apply to affiliates, such as CUSOs in which a CDFI credit union has at least a 25% ownership stake or controls 25% of the board seats. Another shift in policy would be the need for a community development strategy under the proposal. CDFIs would be required to submit a board-approved strategic plan demonstrating their community development strategy. The CDFI Fund has provided no further guidance on this element to date. Based on our experience with recent applicant reviews, this strategic plan will need to be detailed and focused specifically on achieving a community development mission, as opposed to a general focus on members and member well-being. As can probably be guessed, this an area where CU Strategic Planning is skilled and ready to assist clients. CDFIs, as outlined in the proposal, also would be required to have “appropriate” products and services. The CDFI Fund is studying matters such as NSF fees and overdraft protection programs, stating that “any applicant offering products that lack reasonable protections, or that charge excessive fees, inconsistent with regulatory guidance, or community development mission, may be determined ineligible for CDFI certification.” While there is no bright line guidance given, the new application is structured in a way that provides some indication of what the Fund would like to see from existing and applicant CDFIs. Some examples include ensuring a grace period prior to charging an overdraft fee, or allowing small negative balances without charging a fee, and allowing consumers to have access to real-time information about what’s available in their accounts, so they’re less likely to be hit with an overdraft fee. A consumer’s ability to repay their loans is also included in the proposed changes, especially with consideration to payday alternative loans. While the proposal doesn’t require CDFIs to disclose a Military APR (MAPR) to consumers not already covered by the Military Lending Act, all rates required in a CDFI’s annual reporting would now need to be recalculated as an MAPR. Any rates that exceed 36% wouldn’t automatically disqualify an applicant from CDFI certification, but would trigger a set of secondary questions designed to demonstrate that the applicant’s loans meet the CDFI Fund’s subjective consumer protection standards. Because the calculation of an MAPR includes fees not included in the calculation of a standard APR under the Truth in Lending Act, this is particularly problematic if the applicant has purchased loans throughout the year. Not all changes will be burdensome, however, such as the changes around CDFIs’ Target Markets (TMs). For example, the geographic boundaries of most TMs will be eliminated, so that all loans made to any qualified borrower, no matter where they live, will count toward qualified lending. Additionally, people with disabilities would be considered an “Other Targeted Population,” expanding CDFIs’ pool of potentially CDFI-qualified borrowers, helping to meet the 60% TM lending goal. Additionally, loans purchased that were originated in a TM would count toward the 60% requirement, even if those loans were not originated by the CDFI. Rest assured, our knowledgeable team is keeping track of the CDFI Fund’s proposed changes and will continue to follow its progress diligently. We’re committed to positive outcomes for our CDFI credit unions and your members who so greatly benefit from your services. If you’re interested in further details of our interpretation and suggested changes to the proposal, please read the letter we submitted to Treasury’s CDFI Fund here or contact us with your questions and concerns.

The following is the letter CU Strategic Planning provided in response to the Treasury's request for public comment on the Community Development Financial Institutions Program—Certification Application. December 2, 2022 Spencer W. Clark, Treasury PRA Clearance Officer Community Development Financial Institutions Fund U.S. Department of the Treasury Subject: Request for Public Comment: Community Development Financial Institutions Program—Certification Application, OMB Number: 1559-0028 CU Strategic Planning is a consultancy working with both CDFI certified and emerging CDFI credit unions across the country. On behalf of our clients, we appreciate the opportunity to provide comments in response to the CDFI Fund’s request for public comment on its certification application process. Broad Observations Public Policy Concerns: With this proposal, the CDFI Fund has indicated an interest in maintaining five policy objectives: 1) protection of the CDFI brand, 2) supporting the growth and reach of CDFIs, 3) fostering a diversity of CDFI types, activities and geographies, 4) minimizing administrative burden on CDFIs while maintaining data quality and collection methods, and 5) promoting efficiency within the department. Each of these policy objectives is understandable and even laudable, however, the CDFI Fund’s proposal sacrifices some policy objectives—particularly policy objective #4 which seeks to minimize administrative burden—in its efforts to achieve other policy objectives. Stepping back from these policy objectives, we believe the public policy objectives that resulted in the creation of the CDFI credential encourages organizations with a community development mission to apply for CDFI certification. This credential should be protected, but shouldn’t be protected to exclude a broad diversity of CDFI types. Diversity among CDFIs should be encouraged to meet the unique and varied needs of low income people and communities throughout the United States. In protecting the CDFI brand and promoting efficiency, we believe the CDFI Fund will make it difficult to achieve this diversity. We believe that the broader public policy could be achieved by giving the CDFI Fund the flexibility needed to identify those organizations with a calling focused on community development, rather than bright line definitions that could exclude organizations with a mission and heart for community development. We encourage the CDFI Fund to seriously consider these concerns because the changes proposed by the CDFI Fund will have a dramatic impact on credit unions currently certified as CDFIs. In a recent meeting of our clients, about one-third of participants reported that they would consider ending their certification status if these changes go into effect as written. Some of these clients have received significant Equitable Recovery Program or Emergency Capital Investment Program awards important for the nation’s post-pandemic economic recovery. Time Frame for Compliance: Other broad concerns include the CDFI Fund’s proposed timeframe for compliance with respect to the impactful changes proposed to its certification requirements. The cover letter to the preview proposal indicated that currently certified CDFIs would have one year to come into compliance. While it’s reasonable to expect compliance with methodologies and Target Market percentages within a year, this time frame is likely to prove problematic if a CDFI needs to make dramatic changes to its Target Market or establish new forms of accountability to meet these proposed requirements. The new standards proposed will require training and training takes time. If a large percentage of CDFIs suddenly failed to meet the new standards, this would create a tremendous burden on the CDFI Fund’s compliance team, which would need to manage and track all of the compliance issues resulting from the changes to the CDFI Fund’s certification standards. Would a CDFI that failed to meet the new requirements be put into cure allowing them to remain a CDFI while addressing these issues, or would the CDFI become uncertified? Would the CDFI Fund consider a longer runway for compliance that would better allow for the training needed to implement the changes proposed? Key Definitions Eligible Financial Products: The CDFI Fund recognizes forgivable loans that require at least one payment within twelve months of closing as an eligible Financial Product. We support the CDFI Fund’s choice to include forgivable loans as an eligible Financial Product, but encourage the department to broaden its definition of a forgivable loan. CDFIs sometimes model forgivable loans on existing government programs that qualify the borrower for forgiveness based on criteria such as income, length of stay in a home, sweat equity, etc. We encourage the CDFI Fund not to limit this definition to loans that require at least one payment within twelve months. We appreciate the CDFI Fund’s willingness to approve new Financial Products and create a process for this approval in the future. Eligible Financial Services: We encourage the CDFI Fund to add individual retirement accounts and individual development accounts to its list of recognized Financial Services. The CDFI Fund further indicates that the recognized Financial Services listed can be used for the purpose of certification, but not toward the Target Market test. If a CDFI can provide methodologies that show use of Financial Services by an eligible Target Market, we urge the CDFI Fund to allow Financial Services to count toward the Target Market test because Financial Services often represent an entry-level product for unbanked and very low-income consumers who cannot qualify for Financial Products. We appreciate the CDFI Fund’s willingness to approve new Financial Services and Development Services and create a process for these approvals in the future. Once approved, will the CDFI Fund publish a list of pre-approved products similar to its proposed plan for making pre-approved methodologies publicly available? Application Process Certification Agreement (#16): The CDFI Fund proposes requiring certification applicants to sign a CDFI Certification Agreement. While an additional requirement, we believe this addition to the certification process will help ensure the applicant’s understanding of their certification and the requirements that come with that credential. Determination Decline (#17): If an applicant’s certification application is declined, the CDFI Fund proposes to send a determination letter to the applicant. We encourage the CDFI Fund to include the specific reasons for the CDFI Fund’s decision in this determination letter to allow the applicant to take immediate and prompt steps to address any issues outstanding. Merger Concerns: The CDFI Fund’s proposal indicates that certification as a CDFI cannot be transferred to another entity. This appears to recognize current practice. However, the proposal goes on to indicate that following a merger, merged entities will be ejected from their certification status—regardless if they are the surviving entity. This is not consistent with the CDFI Fund’s current practice and would be extraordinarily detrimental to organizations with outstanding awards. While a merger represents a material event worth reporting to the CDFI Fund, and while the merged entity should certainly be required to meet all CDFI certification requirements post-merger, we do not understand why the CDFI Fund would choose to automatically remove a merged entity’s CDFI credential precipitously. Applicant Basic Information Bylaws or Similar Documentation (BI19 & BI20): The CDFI Fund requires an applicant to submit official meeting minutes showing initial approval of bylaws. Among credit unions, these documents are often 80+ years old. In the spirit of streamlining the application process and saving CDFI Fund staff time reviewing paperwork, we encourage the CDFI Fund to eliminate this requirement for any depository institution with a current and active charter number issued by the depository institution’s functional regulator (with the understanding that any depository institution with an active charter number would have this documentation in place). We also believe that the elimination of this unnecessary paperwork and documentation is consistent with 12 USC § 4715(b)(3) which requires the CDFI Fund to work with appropriate banking regulators to eliminate duplicative requests for information from insured depository institutions. Race, Ethnicity & Sex of Board and Staff Members (BI-DI2, DI13, DI14, DI16, DI18, DI12, DI13, DI15, DI17, DI19, DI20): The CDFI Fund’s proposal requires applicants to collect and disclose information on the race, ethnicity and sex of board members and executive staff. Respectfully, requesting this information is intrusive, will discourage CDFI certification and is not related to the statutory criteria for certification. The collection of this type of information could be relevant to the qualification as a Minority Lending Institution under a separate CDFI Fund proposal, and could be relevant to establishing accountability to an OTP Target Market, but should not generally be required as part of a certification application. The collection of this information is also practically meaningless since boards and executive staff members change from year to year. Basic Information Table 1: Financial Product Information: Table 1 asks each applicant to complete basic information on ALL of the applicant’s Financial Products. Some credit union applicants offer their members MANY Financial Products. For example, one of our clients offers members 43 different home financing loans. Requiring an applicant to list and describe ALL Financial Products is substantially burdensome to an applicant. Because this proposed requirement will have a far greater impact on large, complex CDFIs it will discourage large organizations from applying to be CDFI certified. Discouraging large, effective applicants from applying for CDFI certification is counter-intuitive and does not serve public policy since these organizations can be the most effective lenders in some market places and often have the capital on hand to take greater risk in their efforts to assist with broader community and economic development. We encourage the CDFI Fund to limit the list of data collected in Table 1 to ten Financial Products. Basic Information Table 2: Financial Services: Table 2 asks each applicant to complete basic information on ALL of the applicant’s Financial Services. Similar to the comments in the prior paragraph, this could be very burdensome and time consuming for a large entity applicant. We encourage the CDFI Fund to limit the list of data collected in Table 2 to ten Financial Services. Legal Entity Legal Entity Documentation: As mentioned previously, we encourage the CDFI Fund to eliminate the requirement that depository applicants provide copies of bylaws, amendments to bylaws, chartering documentation, etc. for regulated entities with a current and valid charter number since these documents were required for chartering and represent unnecessary data collection in order to validate that a depository institution is a legal entity. Primary Mission Applicants Other than DIHCs, Affiliates of DIHCs, and Subsidiaries of IDIs: The CDFI Fund’s guidance on primary mission requires all applicants other than depository institution holding companies (DIHCs), affiliates of DIHCs and subsidiaries of insured depository institutions (IDIs) to demonstrate that any affiliate meets all primary mission requirements. Because the term “IDI” only includes banks and thrifts with deposits insured by the FDIC, we encourage the CDFI Fund to include Insured Credit Unions and State-Insured Credit Unions in the exemption from requiring subsidiaries from demonstrating primary mission requirements. Documenting Mission: The documentation of a credit union certification applicant’s primary mission has often been a sticking point in certification applications. To date, the CDFI Fund has relied heavily on the applicant’s mission statement which has been problematic because a mission statement often doesn’t properly convey a community development mission. By way of background, because credit unions are governed by democratically elected representatives from the credit union’s membership that largely contribute their time as volunteers, credit union mission statements sometimes lack the polish and specificity of larger corporation, instead emphasizing service to the credit union’s members and financial stability. Credit union mission statements are often developed by this group of volunteers as part of a planning session. As a result, in our experience, their missions can be somewhat generic. We applaud the CDFI Fund’s willingness to look at other documentation such as the applicant’s community development strategies and community development-related Financial Products, Financial Services and Development Services that paint a holistic picture of the applicant’s dedication to community development. Further, we’d encourage the CDFI Fund to consider creating the assumption that any applicant that can show the deployment of over 60% of its total loan volume to an eligible Target Market (or perhaps a slightly higher benchmark) already has a primary mission of promoting community development in an effort to reduce paperwork and burden. The proof, as it is, being in the pudding. Applicants that fail to meet this standard could then be required to demonstrate a primary mission with additional documentation. This suggestion would support the CDFI Fund’s goal of minimizing administrative burden on CDFIs while maintaining data quality and collection methods, and its goal of promoting efficiency within the department. An approach to documenting a community development mission that might include a mission or vision statement, types of products and services offered, community development strategies and a past track record that shows service to low-income consumers paints a holistic pictures of an applicant’s track record and commitment to community development. The assessment of each of the factors alone is inherently subjective. If, instead, no one element is a requirement, but any of these elements could be submitted to show a community development mission, applicants would be in a better position to convey their mission-focus. Responsible Financing Practices: The CDFI Fund’s certification requirements propose to ask applicants a series of questions related to the Financial Products and Financial Services offered, with the answer to some questions automatically disqualifying the applicant. The responses to other questions would be used to evaluate the applicant’s practices as a whole. We urge the CDFI Fund to defer to the applicant’s functional regulator concerning what products should and should not be offered to consumers rather than imposing requirements that constitute the regulation of products and services through the window of CDFI certification. While some of the practices the CDFI Fund seeks to discourage—and essentially regulate with these requirements—may seem costly to the consumer some are situational. To you or I, a loan at 20% APR might be excessive. To someone with a negative credit history, it could be the opportunity needed to rebuild credit. If one of the goals of this proposal is to foster a diversity of CDFI types, we encourage the CDFI Fund to not view any lending practice as an effective veto on a certification application. Of specific concern in this section: Ability to Repay: The CDFI Fund’s proposal indicates that all loans must be based on a borrower’s ability to repay. While this appears very reasonable on a surface level, we’d like to point out two problematic issues concerning a bright-line ability to repay standard. First, payday alternative loans are not based on a borrower’s ability to repay. They are designed around a consumer’s need for immediate and emergency financing. Because they are not underwritten in a traditional manner, they represent greater risk of loss to the lender. This risk of loss along with the overhead expense of issuing the loan traditionally result in a higher interest rate. Neither payday loans nor payday loan alternatives are an ideal solution to long-term money management. However, it is advantageous for a CDFI to offer a payday lending alternative because it gives the CDFI the opportunity to work with the consumer on better long-term financial management strategies. Requiring underwriting for a payday alternative loan both removes an important source of competition to marketplace predatory lenders and eliminates the CDFI’s opportunity to identify, intervene and counsel borrowers. Second, requiring a bright-line ability to repay contravenes current regulatory standards that expressly create an exemption from the ability to repay rule with respect to mortgage financing under 12 CFR § 1026.43. Presumably this exemption was created to allow CDFIs to adapt extraordinary financing to meet the needs of low-income borrowers—helping their long-term ability to improve household stability and economic net worth. Interest Rate Cap: The CDFI Fund’s proposal prohibits charging more than 36% APR on loans. The CDFI Fund is seeking to regulate functional behavior with this requirement. Adding another functional regulator to a depository institution’s regulators is a distinct disincentive to CDFI certification. For a state-chartered credit union, these regulators already include a state regulatory authority, the NCUA through the credit union’s federal share insurance, the CFPB and a host of ancillary regulatory bodies (HUD, EEOC, etc.) Use of Military Annual Percentage Rate: Of even greater APR calculation concern, the CDFI Fund proposes that all certification applicants recalculate all rates in the form of a Military Annual Percentage Rate. This requirement would represent a tremendous burden to applicants requiring any CDFI applicant to recalculate all rates from the rate charged on the loan to an MAPR. Credit union lending systems aren’t set up for MAPR reporting, but are structured around meeting the disclosure requirements of the federal Truth in Lending Act. We’d strongly encourage the CDFI Fund to rely on the calculation requirements of the Truth in Lending Act since the Act was established to create a uniform disclosure of costs that allows consumers to effectively shop for rates and understand the cost of credit. Sale of Charged-Off Debt: The CDFI Fund proposes to disqualify any applicant that sells its charged off debt to a debt buyer. We encourage the CDFI Fund to remove this prohibition. As a financial cooperative, if a member has caused a credit union a loss, this loss is a loss to all owners of the cooperative—all of its members. Because of a credit union’s cooperative structure, if, after working with a member to restructure or refinance their debts, the member causes a significant loss to the cooperative, this loss usually results in expulsion from the cooperative. Once expelled from the credit union, it is a disservice to the cooperative’s members NOT to recoup losses that impact the health and well-being of the credit union. Sometimes selling charged-off debt to a debt buyer makes good business sense for the sustainability of the credit union and its member-owners. Information on Financial Services Offered: The CDFI Fund’s proposal appears to require depository institution applicants to provide information on all checking or share account features offered. It is unclear whether an applicant can highlight Financial Services designed for low income or first-time account holders or designed to reduce potential carrying costs to the consumer, or whether, as it appears, the applicant is required to detail information on all Financial Services offered. Including application information on all Financial Services offered is cumbersome and contravenes the CDFI Fund’s purpose in streamlining and reducing regulatory burden to the applicant. We encourage the CDFI Fund to clarify that the applicant should provide information on pertinent Financial Services offered rather than information on ALL Financial Services offered. PM13.1 Asks applicants to recalculate the current highest MAPR charged on any type of consumer loan, including purchased loans. Purchased loans often consist of equity investments. The calculation of MAPR is impacted by ancillary products such as GAP insurance. The purchaser of a loan will not have origination information needed to calculate MAPR on a purchased loan. PM13.3 & PM14.3 Ask applicants if any loans include a leveraged payment mechanism and makes any applicant with a leveraged payment mechanism that charges over a MAPR 36% rate ineligible for certification. While 36% seems a high rate, including ancillary products such as GAP insurance can increase a very reasonable rate to 36% or higher. The Federal Credit Union Act (12 USC § 1757(11)), and most—if not all—state credit union acts include a statutory lien on shares, constituting a leveraged payment mechanism. This statutory authority has been part of the Federal Credit Union Act since 1934 and represents both the will of Congress and its recognition of a credit union’s cooperative structure. We encourage the CDFI Fund to remove this prohibition or expressly exempt any credit union lien on shares from the definition of a leveraged payment mechanism. PM13.4 Appears to prohibit applicants from offering loans of $1,000 or less with a repayment timeframe of less than a year. Respectfully, some credit unions offer their members very small dollar loans. Requiring a loan repayment period of over a year on a $100 loan seems excessive and would result in higher interest costs to the borrower. We encourage the CDFI Fund to eliminate this prohibition because it is so situation specific. PM13.5 Appears to require a CDFI applicant to waive any upfront fees on a refinanced loan for twelve months. We strongly urge the CDFI Fund to remove this prohibition. While a lender may choose to waive fees for a loan applicant, this again is very situation specific. In addition to representing a regulatory requirement, it creates a strong disincentive to refinancing a loan—even if refinancing the loan would be in the consumer’s best interests, resulting in a perverse public policy outcome. PM16.2 Requires an applicant to underwrite adjustable-rate mortgages using the maximum rate allowed during the first five years of the loan. Underwriting a loan is essentially the process of collecting information that helps the lender understand the borrower’s full financial picture. Part of this process involves determining whether the loan is affordable. It is in neither the borrower nor the lender’s interest to finance a loan destined for default. While it is not unreasonable for a lender to understand the potential impact of a worst-case scenario on the borrower’s financing, underwriting involves many factors including the homebuyer’s potential for increased income. ARM loans can be abusive to consumers. ARM loans can also be an important tool to make homeownership accessible to first-time homebuyers. We encourage the CDFI Fund to review ARM loans, while not imposing what amounts to a new regulatory requirement—underwriting them using the maximum rate allowed during the first five years of the loan because it eliminates a useful tool in a CDFI lender’s toolkit for increasing homeownership through responsible ARM lending. PM16.3 Similar to our prior comments, offering mortgage loans with terms longer than 30 years is another tool that a responsible CDFI can use to help make homeownership accessible to first-time or low-income borrowers—particularly in expensive mortgage markets. Longer mortgage products also allow these borrowers to lock in lower interest rates in a rising rate environment. We encourage the CDI Fund to eliminate this bright-line determination that all mortgage loans with terms over 30 years are impermissible. PM17 The CDFI Fund’s proposal extends consumer Truth in Lending Act protections to small businesses. Businesses were purposefully excluded from TILA because businesses are presumed to have greater business wherewithal than consumers. Practically, business loans are often housed and underwritten on separate lending systems that do not automatically provide TILA disclosures creating expense and difficulty for the CDFI, disincentiving the CDFI from providing small business lending and adding regulatory burden not recognized under the Truth in Lending Act. PM24 This question asks certification applicants to identify certain features associated with a checking or share account. We encourage the CDFI Fund to remove account dormancy fees from its list. Most credit unions institute account dormancy fees because of their cooperative structure. This structure often makes it difficult to close the account of a member who has disappeared or otherwise become unreachable. Often the accounts are low balance. Credit unions charge dormancy fees after repeated attempts to locate the member with the intent of feeing out small balance “left overs” when members fail to close unused accounts. The alternative either requires a membership vote to expel the member (12 USC § 1764) or represents the paperwork intensive process of remitting unclaimed funds to the state. PM24 We also encourage the CDFI Fund to remove its picklist item that asks applicants to indicate if they “only deny new customers for past incidences of actual fraud.” Again, relating to a credit union’s cooperative nature, former credit union members re-applying for membership at a credit union will routinely be denied membership if they have caused the financial cooperative a loss. This loss impacts all members in the financial cooperative and goes beyond fraud. Former members who “make right” their loss to other members in the financial cooperative are allowed to rejoin, but will often not be allowed to rejoin the cooperative absent a willingness to reimburse a past loss. It’s also worth noting that members are sometimes expelled from membership for non-fraud related reasons such as abuse or inappropriate behavior to staff or other credit union members and SHOULD be screened from membership. PM25 Touches on the politically charged subject of overdraft fees and asks a series of questions designed to allow the CDFI Fund, in its judgment, to determine whether the overdraft fees are predatory or not. Overdraft fees can be abusive. Overdraft options can also be a viable, lower-cost alternative to a payday loan or NSF fees. The inherently subjective determination over whether the applicant’s holistic account structure is useful or predatory depends on each consumer’s situation. Transparency over rules and fees and the consumer’s ability to decide whether or not a product is a good fit seem the most important factors. Realistically, if one of the CDFI Fund’s goals is to promote efficiency in its certification determinations, wading into this complex and politically charged determination will not further its goal. We’d encourage the CDFI Fund to lean into the expertise of a depository institution’s functional regulator concerning the permissibility of overdraft fees. PM26 Asks applicants to report on whether account holders could be charged NSF fees. We encourage the CDFI Fund to remove this question because it implies that NSF fees are predatory. At a financial cooperative, NSF fees are designed to achieve two outcomes: 1) to encourage or discourage certain behaviors—such as discouraging purchases without the funds to make the purchase; and 2) to eliminate the socialization of costs to other members in the financial cooperative. Financing Entity Certain Regulated Financial Institutions: The CDFI Fund’s proposal creates the presumption that DIHCs, depository institutions with FDIC insurance and state-insured credit unions automatically meet the definition of a financing entity. It appears that Insured Credit Unions (federally insured credit unions representing the majority of all credit unions) have been omitted from this list. Target Market Financial Services Option: The CDFI Fund’s request for comments proposes to allow depository institutions to incorporate the delivery of Financial Services into the applicant’s calculation of service to a Target Market. This proposed change recognizes the crucial importance of lifeline account services to low-income consumers. We appreciate the CDFI Fund’s recognition of Financial Services, particularly since low-income consumers unable to qualify for Financial Products enter the financial mainstream through Financial Services. The CDFI Fund’s proposal allows a depository institution to demonstrate that 60% of total unique depository account holders are members of an eligible Target Market only if at least 50% of the dollar value of Financial Products and at least 60% of the total number of its Financial Products have also been made to one or more eligible Target Markets. The regulations interpreting the Riegel Community Development & Regulatory Improvement Act, which created the structure for the CDFI program (12 CFR § 1805.201(b)(3)) require a CDFI to serve a Target Market by showing that it provides “Financial Products and/or Financial Services in Investment Areas and/or Targeted Populations.” We believe that a plain meaning interpretation of the statute would allow an applicant to demonstrate its Target Market service through EITHER Financial Products or Financial Services, allowing the applicant to rely solely on Financial Services to qualify as a CDFI. We encourage the CDFI Fund to allow applicants to rely more heavily on the provision of Financial Services to a Target Market to demonstrate service to an eligible Target Market, including wholesale reliance on Financial Services to meet the standards established by the CDFI Fund (in other words, allowing the applicant to show 60% of Financial Services to an eligible Target Market instead of requiring both 60% of Financial Services to an eligible Target Market AND an additional 60% of the number of Financial Products to an eligible Target Market AND 50% of the dollar volume of Financial Products to an eligible Target Market). Target Market Benchmark Test: The CDFI Fund’s proposal clarifies that certification applicants must demonstrate compliance with Target Market percentage benchmarks based on a three-year average with any applicant falling below both number of loans and dollar volume of loan benchmarks marked as ineligible for CDFI certification. Once certified, a CDFI must maintain these benchmarks based on a three-year average. As these past three pandemic years have aptly illustrated, conditions outside of the control of an applicant could disqualify an otherwise well-qualified CDFI applicant from certification. With the understanding that neither the CDFI Fund’s current 60% requirement nor the requirement that an applicant meet this benchmark through both the number and dollar volume of Financial Products are part of a statute or regulation, we encourage the CDFI Fund to exercise flexibility concerning its benchmarking. If, for example, an applicant could show the CDFI Fund that the financial conditions created by the pandemic dramatically reduced its lending, but that it met or exceeded all required benchmarks in the years prior to the pandemic or over an average of a reasonable time period, this type of evidence could be used to show unusual fluctuations in lending. To achieve the CDFI Fund’s policy objective of promoting efficiency within the department, should an applicant seeking certification fail to meet required benchmarks, perhaps the applicant could shoulder the burden of proof in demonstrating service to an eligible Target Market and explain the market conditions that prevented the applicant from meeting the CDFI Fund’s general standards for certification. Other Targeted Population – Persons with Disabilities: We appreciate that the CDFI Fund’s proposal recognizes persons with disabilities as an OTP Target Market. Target Market Assessment Methodologies: The CDFI Fund’s request for comments proposes to adopt standardized Target Market assessment methodologies pre-approved by the department. These methodologies are part of a separate request for comments; however, we would like to thank the CDFI Fund for developing a process to approve new methodologies in an effort to continue to identify effective ways of identifying applicable Target Markets. Transaction Level Report: The CDFI Fund proposes to require all certification applicants to complete a Transaction Level Report as part of their certification process. While we appreciate the CDFI Fund’s emphasis on creating data-driven and quantitative evaluation process that can be used to evaluate the effectiveness of certified CDFIs and CDFI applicants, we believe that the proposal is unduly burdensome. The proposal increases the burden of becoming a CDFI considerably and disincentivizes participation in the CDFI Fund’s certification process. Among first-time applicants, the difficulty of completing a TLR will be made particularly difficult for organizations applying without the assistance of a third-party expert. While this seems contrary to CU Strategic Planning’s interests (as a third-party expert), we believe that public policy should encourage organizations to become CDFIs and maintain the standards of a CDFI. We believe this public policy of encouraging organizations to become CDFIs is aligned with Congress’ intent in establishing the CDFI Fund, and that CDFIs are perfectly poised to assist with economic and community development in America. Specifically, because the proposed annual TLR requirement mirrors many of the requirements of grant reporting, and because we estimate that, on average, grant reporting takes an average of 40 hours to complete (compared to an average of 13 hours needed to complete an Annual Certification Report under current guidelines), the CDFI Fund’s proposal will create a regulatory burden of 27 additional hours to comply with the proposed requirement. A reporting requirement that directs an additional 27 hours away from mission-focused lending is simply too high, and for some organizations this burden will be much higher. More practically, the TLR format does not include any detailed information on consumer loans which represent the bread and butter of credit union lending. Few credit unions applying for CDFI certification will be successful if only relying on mortgage and small business lending. Further, if the CDFI Fund adds consumer loans to the TLR this outcome would create further burden and a technology issue for the CDFI Fund’s systems which have difficulty compensating for current TLR data, often requiring the data to be broken up into multiple uploads (currently if a CDFI’s TLR data needs to be broken out into more than ten or so files, CDFI Fund staff need to assist with the reporting upload). Simply put, credit unions make a LOT of consumer loans and the CDFI Fund’s TLR reporting system is not currently equipped to accommodate them and creates errors when uploading more than five thousand records. If adjusted to somehow accommodate this level of reporting, the CDFI Fund will be in a position of collecting information on hundreds of thousands of loans but will likely not have the staffing needed for any type of analysis because of the sheer weight of information provided. Development Services Generally: The CDFI Fund proposes to substantially narrow the definition of a Development Service. We would like to address several parameters established by the CDFI Fund in its request for comments. Development Services must be provided in conjunction with Financial Products: The CDFI Fund’s definition of a Development Service restricts that definition to training or coaching provided solely in conjunction with a Financial Product and not a Financial Service. We do not believe this is consistent with the CDFI Fund’s underlying statute or interpreting regulation. Specifically, 12 CFR § 1805.104 expressly defines Development Services as activities undertaken by a CDFI that assist consumers “to use the CDFI’s Financial Products or Financial Services.” Because Financial Services are such an important gateway to Financial Products, we believe the intent in this language is that Development Services should include training, counseling and technical assistance that promote access to and/or the success of Financial Services in addition to Financial Products and we urge the CDFI Fund to broaden its definition with respect to Development Services. Development Services must be formal, structured, stand-alone training, counseling or technical assistance service offered separately and distinctly from other products and services: We urge the CDFI Fund to remove this requirement. Often the most effective Development Services are those provided just in time to the consumer when they are most needed. Identifying and providing Development Services can often take place when opening an account or reviewing a loan application with the consumer—activities that are not distinctly separate from other products and services. Applicants must maintain control over the content and delivery of the Development Service: This means that mutually-beneficial partnerships with other community development-oriented organizations to provide Development Services will not be considered Development Services for the purposes of certification. In the past the CDFI Fund has recognizes the value of community partnerships that leverage the expertise of all parties involved. These types of partnerships can often offer more robust services to a Target Market consumer. While it’s reasonable to require the applicant and Development Services provider to be part of a structured agreement of some kind, we believe it better serves the consumer to not require the CDFI applicant to maintain control over the content and delivery of all Development Services. DS04 Requires certification applicants to attach all agreements with any entity that provides Development Services on behalf of the applicant. While it’s reasonable to require the applicant and Development Services provider to have an agreement that outlines expectations in place, asking applicants to attach confidential agreements creates an unnecessary paperwork burden. We do not believe the CDFI Fund should put itself in the position of acting as an arbiter concerning whether these agreements meet or fail to meet unknown standards. Rather, we suggest that it would be reasonable to require certification applicants to attest to the existence of these agreements. Accountability Demonstration of Accountability to Low-Income Targeted Populations: The CDFI Fund’s request for comments proposes narrowing avenues for demonstrating accountability to a LITP Target Market, restricting recognized accountability to persons who are low-income themselves or serve as an executive staff member of a third-party mission-driven organization that primarily serves low-income people. We encourage the CDFI Fund to allow service on the board of a mission-driven organization to demonstrate accountability, as in the past. Further, we encourage the CDFI Fund to expand its definition from solely considering executive staff to demonstrate accountability through certain non-executive key staff in the organization. For example, a credit union’s Marketing Director or Director of Community Development are unlikely to be considered executive staff, and yet are often in an excellent position to understand the Target Market’s community development needs. Governing/Advisory Board Size: The CDFI Fund proposes requiring all governing boards to consist of no less than three board members and all advisory boards to consist of no less than five advisory board members. Among credit unions, these numbers seem reversed. While it would be unlikely for any credit union to have just three board members, the work of an advisory board—chosen for each advisory board’s connection to key community development interests—can be effective with just three members. At minimum here, we encourage the CDFI Fund to reduce the minimum advisory board size to three members. Demonstration of Accountability Options: The CDFI Fund proposes to abandon the credit union special accountability provision. This long-standing policy provided that if 50% of a credit union’s loans are to a single Target Market, the CDFI Fund recognizes that a credit union’s democratically elected board creates automatic accountability to its Target Market. Credit union boards of directors continue to be democratically elected, a statutory requirement for almost 90 years and a hallmark of the credit union movement’s philosophical roots. We are perplexed and disappointed that the CDFI Fund would choose to eliminate this presumption, particularly since its elimination fails to support the department’s policy objective of minimizing administrative burden or its policy objective of promoting efficiency within the department. The CDFI Fund proposes to replace this simple and well-grounded presumption with a process that requires the development and appointment of an advisory board that includes both 60% accountability to the applicant’s overall proposed Target Market and individual accountability among advisory board members to each proposed Target Market. This requirement adds substantial regulatory burden to credit union applicants, a burden made worse by the continually evolving nature of boards and advisory boards, with a percentage of most boards and advisory boards turning over each year. We estimate that this proposed change will impact 83% of applicants that submitted their application in 2022 and 87% of applicants that were submitted prior to 2022, illustrating its impact and the ramifications of requiring all certified CDFIs to comply with the changes proposed by the CDFI Fund in the span of a year. Financial Interest Policy: The CDFI Fund’s proposal prohibits an applicant from relying on its own staff members to show accountability. The CDFI Fund’s proposal further prohibits an applicant from relying on its board members who have active loan products from the applicant to show accountability. The proposal asserts that these relationships create an inherent conflict of interest for the applicant. However, we fail to follow the CDFI Fund’s rationale behind these assumptions. Staff members at an applicant are often in the best possible position to show accountability through their understanding of the Target Market. Board members with outstanding loan products at the credit union are demonstrating loyalty to the credit union, nothing more. We cannot conceive of a scenario in which an outstanding loan product would create a conflict of interest with Target Market interests, particularly since all credit unions are required to have board-approved conflict of interest policies and 12 CFR § 703.17 prohibits conflicts of interest among federal credit union officials and employees (with most states adopting similar statutory or regulatory prohibitions). AC11 Doubling down on the comments submitted in the prior paragraph, this question makes any organization that compensates board members for their service on the board ineligible for CDFI certification. Credit union board members overwhelmingly serve as volunteers; however, some states have authorized reasonable compensation to better allow credit unions to attract quality, experienced board members and hold those board members to higher performance standards. A larger percentage of credit unions don’t compensate their board members, but may provide insurance to them as a benefit under the credit union’s umbrella plan. An insurance benefit is not exempted from the constructive prohibition against compensating board members. We encourage the CDFI Fund to eliminate this prohibition on compensation altogether as we believe it has little demonstrable connection to a conflict of interest and is not a statutory or regulatory requirement for certification. Absent removal of the prohibition, expressly exempting insurance and other benefits designed to attract quality board members from the definition of compensation is an important consideration. Providing these types of benefits does not create a conflict of interest for a CDFI applicant. AC16 Precludes board members from demonstrating accountability through the ownership of a small business with multiple locations unless 51% of the business locations are located in a qualified census tract. While it’s conceivable that a business with many locations may lose its connection and understanding of a Target Market community, this is not necessarily the case. For example, even with multiple locations the business might be headquartered in a qualified census tract or develop a firm understanding of local needs through regular interaction with the census tract. Among applicants that fail to meet this criterion, we encourage the CDFI Fund to allow applicants to describe their connection to the Target Market as part of their application—to make their case explaining why they meet required accountability standards. Means of Accountability – Low Income Targeted Population (AC25): The CDFI Fund’s proposal appears to require certification applicants to verify each board member’s income to assure their accountability to a Low Income Targeted Population. We strongly urge the CDFI Fund to allow this verification to take the form of simply asking the board member whether they earn more or less than their applicable low income benchmark. Unless the CDFI Fund has seen growing evidence of board members lying in order to meet accountability standards in service to low income consumers, we cannot stress the importance of relying on the board member’s own verification (as opposed to requiring pay stubs, tax forms or other forms of income verification). To do otherwise constitutes an invasion of privacy and will dissuade capable board members from serving on CDFI boards of directors, representing poor public policy. Native CDFI Designation Native CDFI Designation Qualifying Standards: Echoing our comments under the Target Market section, we encourage the CDFI Fund to allow applicants seeking certification as a Native CDFI to demonstrate service to their Target Market through the delivery of Financial Services in addition to Financial Products, and to rely on these Financial Services in part or solely to meet a 60% benchmark standard. The CDFI Fund’s proposed certification changes are clearly the product of much time and intensive effort. Thank you for the opportunity to provide our input on this important proposal. As always, if you have any questions concerning these comments, please do not hesitate to reach out. Respectfully yours, Stacy S. Augustine President/CEO

Your credit union believes in the values of diversity, equity, inclusion, belonging and accessibility, and you know you need a DEIBA strategy. How do you ensure that you go about implementing that strategy in a manner that will be effective, worthwhile and a good use of funds? Developing a specific and multi-phase budget specifically for DEIBA is key. Simply adding funds into existing budgets like recruiting or training is likely to create unfocused and possibly unsuccessful results. A DEIBA journey is a marathon, not a sprint, and you need to be sure your organization is well prepared so it can make it through the entire process. So how do you begin to create this budget? And how to you get that budget approved? We have four key points to keep in mind. 1. Make it part of your strategic plan DEIBA as a strategic initiative is the first step to implementing change. If the board and executive leadership recognize that diversity, equity, inclusion, belonging and accessibility are values that your credit union holds, then you can start looking at what actionable changes your organization can make. Creating a strategy that’s aligned with the executive team’s vision will allow for DEIBA initiatives that are integrated into ALL your operations. It will also allow you to determine what impact or outcome you’re trying to achieve with each budget expense. Strategic alignment is key because to be successful, the implementation of your DEIBA plan and initiatives must be a multi-year process. But sometimes, incorporating DEIBA into a strategic plan is a challenge in itself. Be prepared to start at step zero: make your first budget item training or consulting for your credit union’s board and leadership, from an organization or consultant experienced in working at the executive level. Once leadership is fully on board, you’ll be able to integrate DEIBA as a strategic initiative and make a multi-year budget. 2. Assess where you stand It’s key that you learn where your credit union stands as an organization in its relationship to all the elements of DEIBA. Quality assessments will help you see: The unconscious biases your staff and leadership What your current policies and practices reveal Where change is most needed What efforts to have been made date and to what effect Getting full buy-in from your staff on your DEIBA initiatives won’t happen overnight. A thorough assessment will prepare you for where you may see resistance and give you insights to help overcome it. An assessment should be thorough, honest, sensitive and informed—and it should allow you to meet people where they are in your next steps. Your staff needs to feel like even though this journey may involve uncomfortable moments, an initial assessment isn’t designed to make anyone feel judged, criticized or called out. This is why engaging outside help can be crucial. 3. Engage expert consultants Examining your own organization is difficult – you don’t know what you don’t know, so how can you fully assess and determine what changes are needed? Skilled DEIBA professionals can help you do just that. A good consultant can: Conduct assessments that set the tone for future initiatives Rework your policies, from HR to lending Help your staff open up and be honest about biases they’ve experienced—or held Create measurable and achievable goals Conduct staff training that meets your staff where they are, and results in tangible changes Another key benefit of working with an outside consultant is the perspective they can provide. As you make progress along your implementation path, a good consultant can help you spot sticking points or areas of resistance that could slow down your progress or prevent you from reaching your established goals. The credit union industry is unique, and engaging consultants who know and work in the industry is ideal. The credit union movement’s people helping people philosophy is both a good reminder why DEIBA is a worthwhile goal, and a yardstick to measure your progress. Is your organization living up to the standards of financial inclusion and accessibility that the movement calls for? 4. Partner thoughtfully with your community DEIBA is about more than just your internal culture; it’s about how your credit union brings those values to your membership and your community and is at the core of that people helping people philosophy. Partnering with community organizations allows your credit union to really learn and understand about the needs of your community, which can help you design more inclusive products or tailor development services to groups that could benefit the most. If your current partnerships are not as robust as they could be, consider hosting a community summit with nonprofits, social service agencies or foundations in your area. An event like this can acquaint you with the experiences and of those your community, and therefore the experiences and needs of your members. It’s also an excellent way to create partnerships with organizations and help their clients gain access to capital and financial inclusion. Tying it all together Considering these four key points will help you craft a budget that addresses the unique needs of your credit union. When DEIBA is recognized as a strategic imperative and you’ve determined your priorities, you’ll be able to take the long view on the best strategy to achieve your goals. But the specifics of a multi-year plan can be tough to determine on your own. A skilled DEIBA consultant can help you set goals and budgets that will ensure success.

The work we do with credit unions allows them to make real differences in the lives of their members and communities. This could be through CDFI certification or grant writing, strategic planning, product design, partnership creation or any of our other many services. And as part of this work, we get to hear the wonderful member impact stories that illustrate what credit unions are doing to unlock opportunities in the communities they serve. We will be highlighting some of these stories here. This story comes from Centric FCU in Louisiana. A young mother pulled into the drive-thru one day, requesting some account information. She explained that she was on her way to take out a payday loan from a notorious installment loan company. The credit union employee encouraged the member to come inside and talk to one of their loan officers instead. Once she did, she explained that she already had one loan with this installment lender, with a thirty-six percent rate, and now she needed another five hundred dollars. The loan officer told the member that Centric could provide the five hundred dollar loan, and that once she made on-time payments for three months, they could consolidate her high-rate loan. After three months of payments, the credit union raised her loan limit and she was able to pay off the installment lender, saving her eighteen percent interest. When the credit union shared this story with us, it had been five months since the member pulled into that drive-thru. She hadn't missed a payment and was recommending Centric to all her family and friends. CDFI-certified credit unions have countless stories like these to share, and we’re proud to highlight a few from our clients.

Community Development Financial Institutions, and those who work with them, are very aware of the many recent changes that have been put in place; program announcements, upcoming certification changes, calls for comments, and more. For those who are outside the world of CDFIs—even for those within it—these changes can be hard to distinguish and make sense of. To help bring a little clarity, we’ve put together this general update on current CDFI Fund changes and updates. CDFI CERTIFICATIONS Changes Pause Period Cure Notices Minority Lending Institution Designation Comment Period CDFI PROGRAMS Equitable Recovery Program 2022 Financial and Technical Assistance Awards 2023 and 2024 Financial and Technical Assistance Awards First, what is a CDFI? CDFI Certification is a designation given by the CDFI Fund to specialized organizations that provide financial services in low-income communities and to people who lack access to financing. Certified CDFIs eligible to apply for funding through various programs at the CDFI Fund, and CDFI certification status often serves as a qualifier to access certain other federal government programs. CU Strategic Planning works with credit unions on CDFI certification, compliance, grant applications and reporting; we’ve earned $770 million for our CDFI clients. CDFI CERTIFICATIONS CDFI Certification Changes The CDFI Fund will soon be announcing its revisions for the CDFI Certification Application, Annual Certification Report (ACR), and updated methods for collection transaction-level data from CDFIs. There will be an opportunity for public comment on this proposal, and the final changes will be implemented on April 3, 2023. Our Work Our team keeps on top of CDFI Fund changes and proposals, and has been engaged in advocacy for CDFI credit unions for over a decade. We will be reviewing these certification, reporting and data collection changes when they’re announced, and will comment and advocate for more transparent processes and for a better understanding of the governance structures of credit unions. Clarification of these issues will help credit unions retain their CDFI certifications and win future grants they are highly qualified to win and create the most impact in their communities. CDFI Certification Pause In July, the CDFI Fund announced that it was pausing acceptance of applications for new CDFI Certifications or Target Market Modifications for six months, starting October 1, 2022. The Fund will not accept any new applications after that point until April 3, 2023. This is to allow the CDFI Fund to prepare and implement the process changes, as well as get through the backlog of applications that have built up over the last two years. Our Work We’re committed to completing the applications for clients we’ve contracted with, and plan on having all submitted by September 30. For credit unions who wish to pursue CDFI Certification after October 1, we will be able to gather data and prepare your application based on the (yet-to-be-announced) proposed changes but will not be able to submit them until after the new application is finalized and released on April 3, 2023. CDFI Fund Cure Notices A number of credit unions have received “Cure Letters” recently related to the submission of a 2021 or 2022 Annual Certification and Data Collection Report (ACR). These are notifications of changes that need to be made to ensure that a CDFI maintains its certification status. The deadline for these Cure requirements will be dependent on the date the institution received the notice; however, those CDFIs that received notice between July 23 and 26 will have until October 23 to demonstrate compliance. Our Work We are working with our clients to protect their CDFI certification status, and will meet each credit union’s deadlines and deliverables associated with its cure requirement. Even for those credit unions that fall under the extended deadline, our team is continuing to work to meet the original September 30 deadline. Next Steps The CDFI Fund is expected to release a robust FAQ on the cure process shortly. Minority Lending Institution Designation Criteria The CDFI Fund is currently soliciting public comments about the criteria to designate a CDFI as a Minority Lending Institution. Comments are due by November 25, 2022. The designation is intended to recognize those CDFIs who demonstrate high levels of service and accountability to Minority populations and to identify barriers that these institutions experience in providing access to capital. This designation, and the development of its criteria, will play no role in award determinations made for the CDFI Equitable Recovery Program (ERP). It will also not play a role in ERP post-award compliance reporting requirements, but could play a part in future grant offerings. CDFI PROGRAMS Equitable Recovery Program (ERP) The CDFI Fund announced the opening of the long-awaited, $1.73 Billion Equitable Recovery Program on June 23, 2022. The funds are part of the Consolidated Appropriations Act of 2021, in response to the economic impact of the COVID-19 pandemic. Our Work Our team was hard at work on client applications when the Fund extended the original ERP application deadline of August 23 to September 22. We are still on track to have our clients’ applications turned in by the end of this month. Next Steps The CDFI Fund has indicated that ERP Grant award announcements will be made in early 2023. With the program awards of to $15 million per applicant, there will no doubt be significant reporting and implementation requirements; we’ll be here to assist with both. FY 2022 Financial Assistance and Technical Assistance Awards In an August 15 message, CDFI Fund Director Jodie Harris announced several changes, including the expected announcement of FY 2022 CDFI Program Awards. The smaller Technical Assistance Awards will be announced by the end of September 2022, but the CDFI Fund anticipates that the Financial Assistance Awards will not be announced until early 2023. Last year’s FY2021 Award announcement came in December 2021. Our Work We stand ready to help our clients implement their winning grants and set up grant reporting as soon as award winners are announced. FY 2023 and FY 2024 Financial Assistance and Technical Assistance Awards To accommodate the major changes in administration of CDFI programs and certifications, the CDFI Fund is opening the FY 2023 Financial Assistance, Technical Assistance and NACA Program applications later than in recent years: Harris’ announcement listed fall 2023 as the expected opening date, rather than spring. This will allow for public feedback on the programs before new applications are accepted. In addition, this FY 2023 Program will be combined with the FY2024 Program round. This means that the CDFI Fund will combine the appropriated dollars for 2023 and 2024, awarding all to applications received in the Fall of 2023 (rather than a Spring of 2023 round and a Spring of 2024 round). Our Work Before this announcement was made on August 15, we had already filled our FY2023 FA class and started our initial client meetings. To ensure that we’re able to provide our highest level of service (the level that results in FA Awards for our clients that average $109,000 higher than their peers), we will continue to follow our original timeline. This will allow us to devote our attention to what would normally be two groups of grant applications, and also make any final modifications needed to fit the parameters of the new FA application when it’s made available in 2023. Next Steps If you have signed a contract for the FY2023 FA grant round with us, you’re all set – we’ll keep you apprised of timelines and deadlines. If you had thought you’d missed your chance for FY2023, or if you were planning on working with us for FY2024, now is a perfect time to sign up. Contact us today to get started.

The work we do with credit unions allows them to make real differences in the lives of their members and communities. This could be through CDFI certification or grant writing, strategic planning, product design, partnership creation or any of our other many services. And as part of this work, we get to hear the wonderful member impact stories that illustrate what credit unions are doing to unlock opportunities in the communities they serve. We will be highlighting some of these stories here. This story comes to us from Oswego County FCU in New York and is about a member who came to the credit union desperate to get her finances back on track after several years of struggling due to job changes and periods of unemployment. The member had had loans with Oswego in the past, including one that she’d defaulted on. About a year later, she reached out to the credit union to ask if she could become a member again, expressing her dedication to improving her credit score. With the member's commitment to paying off her defaulted loan, the credit union reopened her account. Leveraging the member's steady income, the Oswego offered her their “Share Purchase” loan. This allowed her to make monthly payments for six months into a savings account, creating a positive payment history that increased the member's credit score. Once the six payments were made, the funds become available to the member, and she used them to pay down some of her other debts. Oswego also offered her a low-limit credit card to help her continue to build her credit. The member is currently working toward purchasing a home for her family, helped by a better understanding of her finances and the lower interest rates that the credit union was able to provide. Oswego County FCU believes in giving people second chances, especially those who are determined to get their finances back on track. CDFI-certified credit unions have countless stories like these to share, and we’re proud to highlight a few from our clients.