As we enter the New Year, it is a fitting time to chart out the Community Development Financial Institutions Fund’s (CDFI Fund’s) course for 2022. Much is happening behind the scenes at the CDFI Fund to open application rounds, finalize assistance agreements, and deploy new initiatives.
Before we delve into what this year holds, it is important to celebrate the Community Development Financial Institution (CDFI) industry’s accomplishments of this past year. The ongoing pandemic and resulting economic disruptions created a challenging environment for the CDFI Fund’s staff, as well as for the nationwide network of CDFIs, Community Development Entities, and mission-driven, community-based organizations we serve. Despite the challenges, fiscal year (FY) 2021 was a year of noteworthy progress in the work to support underserved communities across the country.
The industry reported an astonishing level of impact. CDFI Program, and NACA Program, Financial Assistance recipients reported lending and investment activity in excess of $38.7 billion, an increase of more than 52.3% over what was reported in FY 2020. This increased lending contributed to the financing of nearly 50,000 affordable housing units and more than 124,000 businesses.
The CDFI Fund worked to sustain this performance over the course of FY 2021 by providing nearly $1.5 billion in monetary awards and loans, guaranteeing $100 million in bonds, and allocating $5 billion in New Markets Tax Credits.
For in-depth details on the CDFI Fund’s FY 2021 activities, please view our most recent Agency Financial Report. Please read on for information about the CDFI Fund’s plans for 2022.
The CDFI Fund has been working diligently to make available roughly $1.75 billion in funding to support lending in minority communities and minority lending institutions that, along with RRP, was included in the Consolidated Appropriations Act of 2021 (Pub. L. 116-260). Much has already been done to prepare for this program’s launch—we have crafted policies, procedures, and systems necessary to structure a funding blueprint. As a result, the CDFI Fund anticipates that the application round for the program will open in spring 2022.
Since this legislation was enacted in December of 2020, I have heard from many across the CDFI industry with thoughts on how the CDFI Fund should structure this program to maximize impact in distressed and underserved minority communities across the country. It is our intent that the final program design will succeed in achieving these goals while operating within certain legal constraints. As the official opening of the application round gets closer, we fully expect to provide additional information (via updates and webinars) on the general structure and design of this initiative.
It is important to note that those organizations eligible to apply for this funding, per statute, will be limited to Certified CDFIs. If your organization is not currently a Certified CDFI, but is contemplating the submission of a CDFI Certification Application in order to apply for this program—or any CDFI Fund program that requires Certification as a CDFI—please consider submitting an application as soon as possible. Given the increased demand from organizations seeking Certification, the CDFI Fund does require a substantial amount of time to review and evaluate applications and cannot provide any guarantee as to the length of time needed to complete this process.
CDFI Certification, Compliance Monitoring & Data Collection Activities
Over the summer, the CDFI Fund released a blog post detailing updates to the CDFI Fund’s process for considering and evaluating CDFI Certification Applications. Given the influx of applications submitted since December 2020, the CDFI Fund can no longer provide a definitive timeline (previously 90 days from submission of an application) for when a Certification determination will be rendered.
Understandably, this has raised some concerns. We are committed to returning to a review window and are taking concrete actions to mitigate delays in the CDFI Certification Application evaluation process.
First, late last year the CDFI Fund restructured our former Office of Certification, Compliance Monitoring and Evaluation (CCME) and created a separate Office for Certification Policy and Evaluation (CPE), led by Michelle Dickens and Office for Compliance Monitoring and Evaluation (CME), led by Heather Hunt. This restructuring will better optimize workflow and the management needs between the CDFI Fund’s Certification activities and award compliance functions. We expect this will help alleviate the existing backlog of CDFI Certification applications. However, this internal change does not affect how you reach out to us if you have a certification or compliance question—the Help Desk for Certification and Compliance inquiries and AMIS Service Requests remains the same.
Next, the CDFI Fund is in the process of adding staff capacity necessary to accommodate the increased requests for CDFI Certification. However, adding new staff and then onboarding and providing necessary training takes time. This is not an immediate fix, but does serve as a long-term solution.
Finally, the CDFI Fund will automatically reject any incomplete or inaccurate application. Since enactment of legislation providing the CDFI Fund with COVID-19 recovery resources in December 2020, the number of application submissions have increased significantly. Through the first full quarter of FY 2022, the CDFI Fund has already received close to half of the total number of CDFI Certification Applications received in all of FY 2021. A significant number of these applications were either incomplete, fatally flawed or clearly failed to meet the Certification requirements. In order to timely respond to all applications, staff time that had previously been occupied with efforts to resolve data discrepancies or collect missing information will now be freed to spend on those applications that are complete, accurate, and ready to review.
The CDFI Fund is also continuing its work on a new Certification application and will be able to communicate the progress that has been made over the past year very soon. To recap, we released for comment a revised CDFI Certification Application, Annual Certification and Data Collection Report (ACR) and a new Certification Transaction Level Report (CTLR) in May 2020. Comments were due in early November of that year.
More than 50 unique comment letters were received and our review and adjudication of these comments is nearly complete. After the CDFI Fund has completed adjudicating comments and incorporating changes, an additional Request for Comments will be posted in the Federal Register in which the public will have 30-days to submit comments that will be collected and reviewed by the Office of Management and Budget (OMB). This will provide an additional opportunity for the public to submit comments before the CDFI Certification Application, ACR and CTLR are finalized. I would like to add that, in general, organizations can always submit letters proposing specific policy recommendations to the CDFI Fund at any point in time.
The proposed changes to the CDFI Certification Application are meant to ensure our process thoroughly evaluates high standards for mission, responsible products and services provided, accountability, conduct, and performance. These are immutable and universal tenets of CDFI Certification that should carry more weight during these challenging times, when much needs to be done to create economic opportunity in distressed, underserved and marginalized communities and when the resources available to CDFIs have never been greater.
We are aware of concerns that the revised Certification Application will require many CDFIs to adjust how they do business, as well as report more data to the CDFI Fund. Without a doubt, some CDFIs will have to make adjustments to their operations, business models, or both. Frankly, some organizations may no longer be able to meet the tests required for Certification.
CDFI Certification is not for every organization. It was never intended to be. Our strategic plan seeks to promote the growth, reach, and performance of the CDFI industry, but also states, “The CDFI Fund does not want growth for growth’s sake if it comes at the expense of a strong community development mission.” CDFIs were defined in law with a specific mission that brought with it an expectation of accountability and impact, which should never be diminished.
As we have proceeded through this process, we have been guided by the belief that—even in the absence of any other rewards, such as grant opportunities or regulatory relief—there is significant value just in being a Certified CDFI. If we hold this to be true, then ensuring that those standards that make CDFIs unique, as opposed to any other financial service provider, must be fully realized. With unprecedented levels of resources being directed at CDFIs – in some cases based merely on their status as CDFIs – this becomes even more critical.
We recognize a balance needs to be struck between minimizing burden and maximizing impact, while maintaining the integrity of the CDFI brand. We cannot abandon that progress that has been made on revising the Certification Application, but rather will identify opportunities to solicit feedback, issue relevant exceptions or changes, and generally be responsive to substantive concerns raised by the growing CDFI stakeholder community.
Finally, many have raised concerns about the timing to implement the new Certification and the time needed for CDFIs to, potentially, come into compliance with the new requirements. The CDFI Fund will NOT deploy the new Certification Application, ACR, or CTLR without providing substantial advance notice or a grace period for existing CDFIs to come into compliance. In the meantime, the existing Certification and annual recertification process and standards remain in effect.
CDFI Fund Program and Administrative Updates
In addition to the activities surrounding CDFI Certification and minority lending, there is a lot of work happening at the CDFI Fund to administer the regular slate of program rounds. See below for key updates and information on our programs.
Bank Enterprise Award Program (BEA Program): The CDFI Fund opened the FY 2021 application in October 2021. Up to $26 million in funding is available under the FY 2021 application round. Applications were due December 14, 2021. The CDFI Fund anticipates announcing award recipients in spring 2022.
Capital Magnet Fund (CMF): The CDFI Fund opened the FY 2021 round in September 2021. The application round closed on November 9, 2021. The CDFI Fund anticipates announcing up to $380.2 million in awards, the largest in the history of the CMF program, in spring 2022.
CDFI Bond Guarantee Program (BG Program): Last September, the CDFI Fund announced the approval of a $100 million guarantee under the FY 2021 round of the BG Program. The CDFI Fund is close to opening the FY 2022 round and expects to release the Notice of Guarantee Availability during winter of 2022.
CDFI Program and NACA Program: In December 2021, 265 CDFIs received $180.3 million in Financial Assistance awards through the FY 2021 round of the CDFI Program and the NACA Program. This is in addition to $24.1 million in Technical Assistance awards made to 191 organizations in September 2021. The FY 2022 CDFI Program and NACA Program application round will open in winter 2022.
New Markets Tax Credit Program (NMTC Program): The Calendar Year 2021 NMTC Program allocation application round closed on January 13, 2022. The CDFI Fund anticipates that it will announce allocation awards in fall 2022.
In addition to the NMTC Program’s application round, the CDFI Fund is launching a Native NMTC Initiative this year. To support this initiative, we recently published a Request for Proposals to secure a contractor to: perform NMTC Program related research and analysis; plan, coordinate and administer a survey to various NMTC Program stakeholders; develop a self-assessment guide; and plan, coordinate and facilitate technical workshops. I hope to provide a fuller update on this initiative very soon.
Small Dollar Loan Program (SDL Program): In September 2021, more than $10.8 million was awarded to 52 CDFIs in 30 states, the District of Columbia, and Puerto Rico. The CDFI Fund anticipates that the second round of the SDL Program will open in spring 2022.
AmeriCorps CDFI Economic Mobility Corps (EMC): The second round of this program opened in September 2021 with $1.9 million in funding available for awards. The application period closed on January 5, 2022. EMC awards will be announced in May 2022.
Awards Management Information System (AMIS): Recently, as you may have noticed, AMIS got a new look. The CDFI Fund has posted a series of videos and a guidance manual that provide information and instructions on how to generally navigate AMIS in the upgraded Lightning environment. Additional information on navigating specific program applications and compliance forms will also be posted to specific CDFI Fund program, certification, and compliance pages.
CDFI Certification and ACR Conference Calls: The CDFI Fund continues to hold monthly conference calls on our CDFI Certification process. An updated schedule for 2022 is now available on our website. The calls or free to the general public and do not require advance registration. The CDFI Fund also holds quarterly conference calls on the ACR.
FYs 2023-2028 Strategic Plan: A little more than five years ago the CDFI Fund released its FYs 2017-2022 Strategic Plan: Impact and Excellence. The plan articulated a roadmap for the CDFI Fund’s efforts, activities, and work to operationalize impact. I am excited to say that we are taking our first steps to develop our FYs 2023-2028 strategic plan and am confident it will be instrumental in guiding our work to create the conditions to allow the CDFI Fund network to grow and foster economic opportunity. We hope to be able to share our work with the CDFI community, very soon.
Community Development Advisory Board: In November of last year, the CDFI Fund held the inaugural meeting of its new Community Development Advisory Board, the membership of which was appointed in record time. The Board plays an important role in advising the CDFI Fund on its policies and activities. Over this coming year, I look forward into tapping into the deep reservoir of experience and capabilities of both the public and private sector members of the Board as we develop our new five-year strategic plan, launch new programs and, consider the needs of CDFIs and CDEs and the communities they serve as we recover from the pandemic.
I hope this provides a thorough outline of what the CDFI Fund is currently working on and what can be expected over the coming months. In the meantime, I hope all of you have a safe and productive 2022.