Confusion over Community Development Financial Institution (CDFI) certification for credit unions is costing communities in need valuable resources, CUNA President/CEO Jim Nussle wrote in Credit Union Times. CUNA has engaged with the CDFI Fund in recent months over CDFI credit unions receiving blanket cure notices and having their CDFI designation terminated without meaningful information or guidance.
“[M]any CDFI credit unions around the country find themselves having trouble applying to maintain their CDFI status, a disruption in funding that these communities simply can’t afford,” Nussle wrote. Many have been told they need to “cure” certain “deficiencies,” without being told what those deficiencies are or how they can be cured.
“We first raised this issue with the CDFI Fund in July. It’s now September, and we’re weeks away from a six-month blackout in applications the CDFI Fund will institute from Oct. 1 until April 3,” he added. “After April 3, 2023, credit unions must comply with new application criteria, which have not yet been finalized.”
Nussle notes many credit unions are penalized due to demographics of their board, which demonstrates a “complete lack of understanding of the credit union structure,” due to credit unions’ democratically elected boards.
The CDFI Fund issued guidance Sept. 8, only 17 days before the cutoff deadline.
“Any pause in CDFI funding or termination of a CDFI designation will hurt communities working hard to recover from the pandemic and its economic effects,” Nussle wrote. “This would be a setback these communities can’t afford.
“The Fund must ensure that all CDFI credit unions that are able and willing to recertify are given the time and guidance to permit them to do so,” he added.