CUNA, NAFCU applaud CDFI Fund for adopting credit union-sought changes to certification application

The Treasury’s Community Development Financial Institutions (CDFI) Fund finalized its application Thursday, incorporating many changes CUNA and NAFCU called for throughout the process.

“We thank the fund for taking credit union concerns seriously, and are relieved that many important changes were made. Updating the certification standards was a significant challenge, and a necessary step to protect the value of the certification and the low-income and underserved populations at the heart of the mission of both the Fund and CDFI credit unions,” said CUNA President/CEO Jim Nussle.

“CUNA and NAFCU thank the fund for taking the time to thoroughly consider stakeholder feedback. However, there is more work to be done as concerns regarding Target Market methodologies were not addressed. The CDFI Fund remains one of the most effective ways to multiply and leverage federal funds into positive outcomes to communities, and CUNA, NAFCU, and CDFI credit unions look forward to continued work with the Fund to ensure credit unions doing the work of reaching historically redlined, rural, and under-resourced communities are able to continue doing so.”

“NAFCU appreciates the CDFI Fund finalizing its application for certification and incorporating several recommendations from CUNA and NAFCU. While credit unions can now finally access a certification application for the critical CDFI Fund to unleash financial resources to communities that face immense economic struggles, we still have significant concerns with several aspects of the application,” said NAFCU President/CEO Dan Berger. “There are more than 530 credit unions and cooperatives that are CDFI certified, serving more than 20 million people. NAFCU looks forward to continuing to work with the CDFI Fund and is ready to jump in and help any member credit union to ensure underserved communities can thrive and have financial support available.”

The final application reflects credit union requested changes, including:

• Providing 30 days for credit unions to execute and return the CDFI Certification Agreement, rather than 10.
• Allowing for lenders that offer balloon payment mortgages if it is responsibly designed. Broadening the definition of “development services” to better recognize the effectiveness of coaching, online training, youth programs, and other services offered by credit unions.
• Altering the Financial Interest Policy to ensure that officers of credit union governing boards who hold loans in the credit union are not excluded from serving as a source of accountability.  
• Recognizing that staff and not just executives of mission-driven organizations that serve a target market are appropriate sources of accountability to CDFI credit unions.

Credit unions that are CDFI certified as of December 20, 2023 must apply for recertification within one year from that date, allowing credit unions a grace period of up-to one year. As announced in November, the Fund also will implement a one-time process change to allow organizations with pending CDFI Certification Applications to apply in the FY 2024 round.

CUNA and NAFCU wrote to the fund on its proposed application changes in December 2022 highlighting concerns, and followed up with a letter filed with NAFCU in July with proposed changes to the application.

Those recommendations were largely shared by the CDFI Fund’s Community Development Advisory Board in July.