CDFI Certification Provides Pathways to Better Serving Members, Communities

In January 2016, NCUA and the U.S. Department of the Treasury’s Community Development Financial Institutions Fund signed a memorandum of understanding aimed at increasing the number of credit unions that are eligible for funding through the CDFI program. Working together, NCUA and Treasury have since formalized a new streamlined application process for eligible low-income credit unions.

Under the streamlined process, NCUA performs a substantial portion of the data gathering needed to complete the CDFI-certification process using information that credit unions report to NCUA regularly through the supervisory process. This reduces the amount of time and effort credit unions spend on their applications.

Last summer, NCUA notified more than 500 low-income designated credit unions of their preliminary qualification for the streamlined CDFI Fund application. We encourage these eligible credit unions to consider becoming CDFI certified. All these credit unions need to do is to confirm their eligibility for the streamlined process by submitting their AIRES and other non-core processor loan downloads to NCUA for analysis.

Being a CDFI-certified credit union means that more low- to moderate-income communities can benefit from CDFI-funding opportunities. Credit unions may use these funds to offer financial services to underbanked low-income individuals and make investments in local businesses, affordable housing and community facilities. CDFI-certified credit unions are able to apply for multiple funding programs offered by the CDFI Fund in the form of financial and technical assistance grants and bond guarantee programs.

These awards can be significant. For example, up to $3 million can be awarded under the financial assistance grant program, and technical assistance grants are available up to $100,000 to eligible financial institutions. In 2016, the CDFI Fund provided more than $200 million in awards, with $33.6 million going to 23 CDFI-certified credit unions.

To be eligible for a CDFI Fund certification, an organization must meet seven criteria:

  • Be a legal entity,
  • Be a financing entity,
  • Primarily serve one or more target markets,
  • Have a primary mission of promoting community development,
  • Provide development services in conjunction with its financing activities,
  • Maintain accountability to its defined target market, and
  • Be a non-governmental entity and not be under the control of any government entity (typically excluding tribal governments).

An overview of the CDFI certification is available at http://go.usa.gov/x4Erj. Low-income designated credit unions generally meet most of the CDFI Fund’s criteria.

However, not all low-income credit unions are eligible for the streamlined application process. Only those already contacted by NCUA are eligible for the application program. To inquire if your credit union was notified as an eligible candidate for the CDFI streamlined application, please contact partners@ncua.gov.

All other credit unions are encouraged to apply for CDFI certification through the standard application process. For additional information on becoming a CDFI-certified credit union, go to http://go.usa.gov/x9Y5u.