GAO Says CDFIs Need Help, NCUA Making $3.4 Million Available to Low-Income-Designated Credit Unions Through CDRLF Grants

GAO Says CDFIs Need Help, NCUA Making $3.4 Million Available to Low-Income-Designated Credit Unions Through CDRLF Grants

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The Government Accountability Office (GAO) recently released an economic development report in which it polled Community Development Financial Institutions (CDFIs) and Minority Depository Institutions (MDIs) on their ability to provide services to low- and moderate-income communities.

CDFIs and MDIs receive their designation from the government providing them with access to government-appropriated funding to assist these communities that may not otherwise have access to necessary financial services.

In its study, the GAO interviewed credit unions and banks with one or both of these designations regarding their access to technology necessary for serving members, whether that be loan underwriting tools, mobile banking, or training tools for staff.

Among the biggest challenges CDFIs and MDIs reported were the initial cost of technology and its ongoing expense. Beyond that, those institutions also expressed that even when they are able to secure access to technology, they can find it difficult to implement and train staff at their existing staffing levels.

While the CDFI fund has grown over the last ten years, increasing its pool of available technical assistance grants from $3.6 to $25.2 million per year, institutions state they still struggle with technology training, and the CDFI fund has done little to improve its training materials the last four years.

The GAO’s recommendation was that the CDFI Fund should develop more training for CDFIs, especially for the smallest credit unions and banks with that designation.

The NCUA has its own designation and pool of resources it makes available to credit unions: the low-income designation. The low-income designation is not mutually exclusive with the CDFI designation, so many credit unions that meet the qualifications for both have taken advantage of the programs.

In an April announcement, NCUA shared that it would be opening its application period for the Community Development Revolving Loan Fund (CDRLF) on May 1. The CDRLF is open to low-income-designated credit unions. In previous years, MDIs were also eligible, but NCUA announced that they would not be eligible for funding in 2024 without also being a Low-Income Credit Union (LICU).

In a statement released by NCUA Chairman Todd Harper, he said, “These grants give eligible credit unions the resources needed to support the financial needs of their members and communities. They create new, safe, fair, and affordable financial products and services and expand existing services. They bolster cybersecurity, build capacity, and train new leaders. There are nearly 2,500 low-income credit unions across the country, so there is a lot of potential for putting these grants to work in rural and under-resourced communities.”

Though not as expansive as the CDFI Fund’s grants, the CDRLF will administer more than $3.4 million to LICUs. Grants will fall under five primary categories, with a maximum award of $50,000—the ceiling differs by category. LICUs can apply for funds for underserved outreach, MDI capacity building, consumer financial protection, digital services & cybersecurity, and training.

Credit unions interested in learning more about the 2024 CDRLF grants can find that information on the NCUA website.

Author

  • Esteban Camargo

    As a supervising editor of CUSO Magazine, Esteban reviews and edits submissions, assists in the development of the publishing calendar, and performs his own research and writing. His experience provides CUSO Mag with a seasoned writer and content curator, able to provide valuable input to contributors, correspondents, and freelance journalists. Esteban has worked at CU*Answers since 2008 and currently serves as the CUSO's content marketing manager.

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