Mary Scott Balys
The CDFI Fund has announced the next steps in their process to update the certification and reporting requirements for CDFIs. In May 2020, the CDFI Fund requested comment on the application and the annual certification and data collection report and transaction level report for certified CDFIs. OFN submitted comments on the proposals prior to the November 2020 deadline. The previous version proposed several significant changes, including:
- Requiring certain subsidiaries and affiliates to have a primary mission of community development
- Requiring applicants to demonstrate commitment to responsible lending practices
- Removing geographic boundaries for certain Target Markets
- Changing accountability requirements for governing and advisory boards
- Transaction level reporting for new certification applicants and certified CDFIs that are not current Financial Assistance awardees
Implementation of the proposed changes to certification was put on hold as the CDFI Fund reviewed industry feedback. In the coming weeks, the CDFI Fund will resume the process and plans to release a revised CDFI Certification Application, ACR, and updated methods for collecting transactional level data from Certified CDFIs for a second and final round of public comment. It is unclear what new changes will be proposed in this version and whether previously proposed changes will be maintained.
The CDFI Fund intends to implement the new criteria on April 3, 2023. As a part of the process of preparing to implement the new criteria, the CDFI Fund will pause the acceptance of any new CDFI certifications and any requests for Target Market modifications for six months, starting October 1, 2022. During this six-month period, CDFIs that have already been certified are expected to remain in good standing and continue to comply with all required reporting for CDFI Fund programs.
Once the new CDFI certification requirements are in place, CDFIs that have already been certified will have a one-year period to comply with the new criteria.
CDFI certification is a mission test that serves not only as an eligibility screen for CDFI Fund programs, but as a valuable credential with private, philanthropic, and other public sector investors in CDFIs. OFN remains deeply committed to protecting the integrity of this credential while also balancing the burden and cost of compliance on CDFIs.
For more information about how this process will work, the CDFI Fund has updated the Frequently Asked Questions (FAQs) section on the CDFI Fund’s CDFI Certification Application & Data Collection Reporting Revisions webpage.