The Community Development Financial Institutions (CDFI) Fund recently announced that as it prepares for upcoming changes to its application process it will be suspending new applications and Target Market Modifications between October 1, 2022 and April 3, 2023.
In May 2020, the U.S. Department of Treasury requested comments from the public on the application and reporting requirements for the CDFI Fund. Following that comment period, the organization began reworking its application process after receiving complaints that it was too complicated. The CDFI Fund will also revise the Annual Certification and Data Collection Report (ACR), and introduce the collection of transactional level data from all Certified CDFIs.
Although the CDFI Fund plans on releasing its updated methods for a second round of public comments, they have already committed to suspending new applications and Target Market Modifications during the aforementioned period. Per officials of the CDFI Fund, “this will be the last opportunity for public input on the revised CDFI Certification Application and reporting requirements before they are implemented on April 3, 2023.”
The announcement came the same day legislation was passed by the House to increase funding for the program in financial year 2023, starting October 1st. Currently, funding allows for just over $295 million; the new funding will provide the CDFI Fund with $336.4 million.
Credit unions that have already received CDFI certification will have a one-year grace period to comply with the new criteria but are expected to stay in good standing during the suspended application period.
NAFCU officials have recently complained about the certification process, specifically of the long delays and turnaround. Per Vice President of Legislative Affairs, credit unions have reported the process taking as long as, and in some cases more than, 12 months. In other cases, certification has been revoked due to non-compliance with no opportunity for remedial action, which Thaler stated was in contradiction to Congress’s desire to expand the use of the CDFI Fund.
The CDFI Fund has published new resources to support interested credit unions and other financial institutions seeking information on the upcoming changes and how the blackout period will affect their application process. The resources are available on the CDFI website.