Want to spread affordable credit union services to low- and moderate-income communities? Obtain Community Development Financial Institutions (CDFI) certification, which gives financial institutions access to the U.S. Treasury Department's CDFI Fund.
That’s the message from the National Federation of Community Development Credit Unions, which is making a strong push this year to increase the number of CDFI-certified credit unions.
“By increasing the numbers we aim to generate a critical mass that will result in more funding being directed to our sector,” says Pablo DeFilippi, the Federation’s director of membership.
Certified CDFIs may apply for financial assistance from the U.S. Treasury Department's CDFI Fund, which provides grants for financial institutions serving low-income people and communities that lack access to affordable financial products and services.
“In addition to access to funds, being CDFI-certified is a credential that nonprofits and local governments look for,” DeFilippi says. “It signifies the U.S. government has identified you as a financially responsible financial institution.”
To obtain CDFI certification, credit unions must have a primary mission of promoting community development through affordable and responsible financial services to low-income consumers and economically distressed communities.
Time is right
Now is the perfect time to seek certification, says DeFilippi.
NCUA is making $2,500 technical assistance grants available for eligible credit unions to help pay for the preparation cost of the CDFI-certification process. The agency will begin accepting applications for the grants Feb. 3.
“This is a great opportunity that any low-income credit union should consider,” DeFilippi says.
The Federation will host a webinar Jan. 28 to explain the NCUA grants and answer basic questions about CDFI certification.
The biggest obstacle to CDFI certification has been "the cumbersome process applicants needed to go through to obtain it,” DeFilippi says.
That’s been made easier by a methodology developed by the Federation, which streamlines the application process. Most of the credit unions that have been certified during the last two years have used the Federation’s new methodology, DeFilippi says.
And the Federation is ready to help more, he says. The organization has assisted more than 100 credit unions with their CDFI certification and/or recertification process.
Currently, there about 1,000 CDFIs and almost 25% of them are credit unions. And that percentage is growing.
“We're gaining market share and growing at a much faster rate than any other CDFI group,” DeFilippi says.
Since its inception the CDFI Fund has provided almost $1.5 billion to CDFIs, of which more than $150 million went to credit unions.