CDFI Impact Blog

 

 

Program Notes: A Deeper Look at the FY 2017 CDFI Program and NACA Program Award Round https://www.cdfifund.gov/impact/Lists/Posts/ViewPost.aspx?ID=39Program Notes: A Deeper Look at the FY 2017 CDFI Program and NACA Program Award Round <div class="ExternalClass18DBB30805C04F3DA3DB49E4EB162190"><p>Recently, CDFI Fund Director Annie Donovan spoke at the <a href="/news-events/Pages/speeches-detail.aspx?SpeechID=49" target="_blank">2017 Opportunity Finance Network Conference </a>about how there were more awardees under the fiscal year (FY) 2017 award round of the Community Development Financial Institutions Program (CDFI Program) and Native American CDFI Assistance Program (NACA Program) than ever before in the history of the CDFI Fund. The <a href="/news-events/news/Pages/news-detail.aspx?NewsID=269" target="_blank">303 awardees operate in all 50 states, the District of Columbia, and the U.S. territories.</a></p><p>This impressive statistic illustrates the essential goal of the reforms we made to the FY 2017 application: to increase the impact of CDFIs by supporting their growth, reach, and performance. The group of 303 awardees includes 50 organizations receiving Financial Assistance awards for the first time. By reaching more CDFIs, and new CDFIs, the CDFI Fund supports the expansion of affordable financial services and lending across the country. The large number of awardees isn’t the only success story in the FY 2017 award round, however. The CDFI Fund met other objectives, such as:</p><p> <b>Serving areas of Persistent Poverty:</b> The Consolidated Appropriations Act for Fiscal Year (FY) 2017 required that 10 percent of the funds awarded by the CDFI Fund under the appropriation “shall be used for awards that support investments that serve populations living in” Persistent Poverty Counties (PPCs). PPCs are defined as counties where 20 percent or more of the population has lived in poverty over the past 30 years. These counties can be found in the United States in both rural and urban areas.</p><p>For the FY 2017 CDFI Program and NACA Program award round, one third of the awardees - 101 CDFIs – committed to serving PPCs. 92 CDFIs received $20.1 million in Financial Assistance awards specifically for investments in PPCs, which is in addition to the work that CDFIs already do in PPCs. In addition, nine CDFIs headquartered in PPCs received Technical Assistance awards. </p><p> <b>Geographic representation:</b> Beyond areas of persistent poverty, the FY 2017 CDFI Program and NACA Program awards will reach a broad swath of low-income communities across the United States. The awardees will serve rural, major urban, and minor urban target markets. In particular, 29% of the awardees primarily serve rural target markets; 14% of Americans live in rural communities, and face particular challenges with access to affordable financial services. </p><p> <b>Institutional proportionality:</b> CDFIs can be various types of financial institutions, from banks or credit unions to loan funds or venture capital funds. The revised application was designed, in part, to make it easier for CDFIs to demonstrate the impact they’d be able to achieve with an award regardless of what type of financial institution they are. As a result, the percentage of the 224 CDFIs that received CDFI Program Financial Assistance awards in the FY 2017 round closely mirrored the percentage of institution types that applied:</p><p> <b><a href="/SiteCollectionImages/PublicationImages/CDFI%202017%20App%20and%20Award%20Table%20102517.JPG" target="_blank">Table 1: Financial Institution Types that Received CDFI Program FA Awards vs. Applied </a><sup><a href="#1">1</a></sup></b></p><p> <b>Customer service:</b> Another objective of the revised application was to make the questions easier to understand, less repetitive, and less time-consuming to complete. The CDFI Fund surveyed the FY 2017 applicant pool to see if we achieved these objectives. Of the applicants that responded to the survey that had previously applied for a Financial Assistance award:</p><ul><li><p>43% thought that the revised application was easier to understand than the old application; 43% thought that the difficulty was about the same;</p></li><li><p>50% thought that the revised application was less repetitive than the old application; 45% thought the amount of repetitiveness was about the same; and</p></li><li><p>32% thought that the revised application took less time to complete than the old application; 43% thought it took about the same amount of time.</p></li></ul><p>The survey respondents also provided helpful feedback on the application process and the information the CDFI Fund provides during the application round. The CDFI Fund will be reviewing all of the comments closely as we continue to refine our application materials. Thank you to everyone who responded to the survey for your time and thoughts. </p><p>I’m pleased that our applicants thought that we were moving in the right direction with the application changes. Even though the respondents had suggestions for how we can continue to improve, 79% of the survey respondents thought that the application allowed them to accurately describe their organization and the impact they could make with an award, which is the primary objective of the application as a whole. I am especially proud that with the application changes this year we were able to reach a broad pool of awardees that will have significant impact in low-income communities across the United States. </p><p>Learn more about the FY 2017 award round on the <a href="/news-events/news/Pages/news-detail.aspx?NewsID=269" target="_blank">CDFI Fund’s website</a>. More information about the CDFI Program can be found at <a href="http://www.cdfifund.gov/cdfi" target="_blank">www.cdfifund.gov/cdfi</a>, and the NACA Program at <a href="http://www.cdfifund.gov/native" target="_blank">www.cdfifund.gov/native</a>.  </p><p> <i>Amber Kuchar-Bell is the Program Manager for the CDFI Program and the CDFI Fund’s Native Initiatives</i></p> <br> <hr /> <footer> <ol><li id="1"> <i>View the CDFI Fund’s <a href="/Documents/FINAL%202017%20CDFI%20Award%20Book%20091817_for%20web.pdf" target="_blank">FY 2017 CDFI Program Award Book </a>for more information about the different types of Financial Assistance awards (CORE vs. SECA) and for more information about the awardee pool. </i></li><p> </p></ol> </footer> </div>Amber Kuchar-Bell2017-10-26T13:00:00ZPrograms and Initiatives39GP0|#0760f5d5-6360-4d45-ba32-761ff5345cd1;L0|#00760f5d5-6360-4d45-ba32-761ff5345cd1|CDFI Program;GTSet|#52f34ab0-6f81-4fe6-b393-2715c7089532;GP0|#c890ec6f-810e-4c92-a8a0-1af04abbffc9;L0|#0c890ec6f-810e-4c92-a8a0-1af04abbffc9|Native Initiatives
Why We are Re-examining CDFI Certification https://www.cdfifund.gov/impact/Lists/Posts/ViewPost.aspx?ID=21Why We are Re-examining CDFI Certification <div class="ExternalClass4149CA318681437AA4D120AC2026F4C9"><p>In October 2016, the CDFI Fund released a five-year strategic plan.  <a href="/Documents/Final%20Strategic%20Plan%20102516.pdf" target="_blank"> You can read the plan here</a>.  One of the opportunities we saw was the need to re-examine our CDFI certification policies so that the certification reflects the flexibility needed to reach effectively into every community that CDFIs can serve - to more nimbly respond to changes in the financial services sector while still adhering to the primary mission of community development.</p><p>We believe that engagement of the CDFI Fund network, practitioners, and the public is a vital part of this effort, so we are calling for the public’s thoughts and ideas about CDFI Certification.  On January 6, the CDFI Fund issued a Request for Information (RFI), which was published in the <a href="https://www.gpo.gov/fdsys/pkg/FR-2017-01-09/pdf/2017-00013.pdf" target="_blank">Federal Register</a>. </p><p>Certification as a CDFI is the first step many community–based organizations take to access CDFI Fund programs and training.  Since the CDFI Fund certified its first CDFIs more than 20 years ago, their population has grown from just under 200 certified organizations in 1997 to more than 1,000 today, with total combined assets in excess of $100 billion.  While this is great news, the financial sector continues to evolve and there remains room for growth of the CDFI Fund network. Having the right certification policies will aid in this effort.</p><p>CDFI investment and lending activity touches just about every facet of finance—including lending to microenterprises and entrepreneurs; commercial and residential real estate; infrastructure investment; and financial literacy training and counseling—all of which focus on providing access to critically needed capital and credit to businesses and families overlooked by the greater economic mainstream.  Last year alone, CDFIs originated over $3.6 billion in loans and investments; financed 33,500 units of affordable housing; and made loans to over 11,000 small businesses.  This growth is a reflection of the critical demand for the vital financial services provided by CDFIs, as well as the impact they have in underserved communities. </p><p>CDFIs have matured and evolved over the past two decades, as have the tools and opportunities available to them.  The processes and policies of CDFI certification, originally established in the 1990s, need to ensure that CDFIs are able to develop operating models, products, and services to take advantage of these new tools and opportunities in order to meet the needs of underserved and distressed communities while still meeting the statutory requirements for certification.</p><p>The CDFI Fund has heard from organizations that are having difficulty utilizing new tools and growing to scale while still maintaining their CDFI certification under existing policies.  For example, new financing technologies create the potential for mission-driven organizations like CDFIs to extend their reach and impact in order to improve access to financial products and services for underserved communities and populations wherever they are. </p><p>This raises questions, however, of whether CDFI certification – particularly in terms of a CDFI’s ability to define a Target Market and demonstrate accountability to that Target Market – is currently designed to enable such scope, which was neither possible nor envisioned when the certification criteria were first established. </p><p>For instance, there may be a certified CDFI that has long worked in a local or statewide Investment Area that is growing in volume of activity as well as in the sophistication of their financing operation.  However, if this CDFI upgrades its technical ability and begins to underwrite products for customers nationwide, in areas far beyond its historic geographic footprint, it may create a challenge for the CDFI to maintain its CDFI certification. </p><p>To meet the accountability test for CDFI certification, CDFI Fund policy currently requires the CDFI to include members on its governing and/or advisory board(s) who are residents or otherwise that can represent the needs of the residents of the CDFI’s Investment Area and/or the CDFI’s Targeted Population(s).  Although the CDFI in this example historically has provided appropriate accountability through its governing board, it now would be challenged to include sufficient representation to demonstrate accountability to the communities it would be serving with a nationwide Investment Area.  However, the CDFI is still a mission-driven organization, and the increased volume from an expanded geographic market will likely strengthen their ability to further achieve their mission. </p><p>To help explore circumstances such as this one, the CDFI Fund is seeking feedback on questions such as “How should a CDFI demonstrate accountability to a national Target Market, in particular an Investment Area national in scope?   Should there be a requirement to have local accountability to supplement a national governing or advisory board?  In this context, how should the term “local” be defined?”</p><p>The CDFI Fund will tackle these and other questions – such as how the primary mission test should be met or what the criteria should be for serving Investment Areas and Targeted Populations -- when reviewing the certification criteria. </p><p>CDFI Certification represents the backbone of the nation’s on-the-ground community development finance infrastructure, and there is an enduring need to ensure this network is relevant, responsive, reliable, and representative of the CDFI Fund’s community development mission.  We hope to receive thoughtful feedback from CDFIs, community development practitioners, and the general public on how we can improve and modernize the CDFI certification process.</p><p><a href="https://www.gpo.gov/fdsys/pkg/FR-2017-01-09/pdf/2017-00013.pdf" target="_blank">View the full Federal Register notice here</a>.  Comments are due by March 10, 2017. </p><p><i>David Meyer is the Manager of the CDFI Fund’s Office of Certification, Compliance Monitoring and Evaluation. </i></p> </div>2017-01-18T20:06:00ZPrograms and Initiatives21GP0|#381b3368-a6d1-4ab9-9f3d-370d1a7e113c;L0|#0381b3368-a6d1-4ab9-9f3d-370d1a7e113c|Framework for the Future;GTSet|#52f34ab0-6f81-4fe6-b393-2715c7089532;GP0|#c8a5d5bc-32cc-47a9-88a8-702f1f974786;L0|#0c8a5d5bc-32cc-47a9-88a8-702f1f974786|CDFI Certification
Program Notes: Inside the New CDFI Program Application Evaluation Processhttps://www.cdfifund.gov/impact/Lists/Posts/ViewPost.aspx?ID=33Program Notes: Inside the New CDFI Program Application Evaluation Process<div class="ExternalClass2FF7A4CD3CB74E8FA0BC846317A09164"><p>Over the past few months, Community Development Financial Institutions Fund (CDFI Fund) Director Annie Donovan and members of the CDFI Fund’s staff have been talking a lot about the CDFI Fund’s five-year Strategic Plan, which will guide the CDFI Fund’s program and administrative decisions in pursuit of greater economic and community development opportunities for low-income communities. The very first goal of the Strategic Plan, to increase the impact of CDFIs by supporting their growth, reach, and performance, has already made a significant difference in how the Community Development Financial Institutions Program (CDFI Program) and Native American CDFI Assistance Program (NACA Program) team is handling the application process. </p><p>For the fiscal year (FY) 2017 application round, the CDFI Program and NACA Program team made extensive changes to the Financial Assistance and Technical Assistance applications to encourage greater growth and performance from CDFIs. We’ve discussed the changes to the applications previously, and you can read <a href="/Documents/FY%202017%20CDFI%20NACA%20Programs%20In-Person%20Application%20Workshop_508.pdf" target="_blank">more about those changes here</a>. But something we haven’t talked about as much are the changes we’ve made to our application evaluation process this year. </p><p>When evaluating the CDFI Program and NACA Program applications this year, we plan to both look at the strength of the applicant’s business plan and to require that award recipients commit to achieving at least one of the following four Financial Assistance Objectives: </p><ol><li><p>Expand operations into a new investment area or areas.</p></li><li><p>Serve a new targeted population or populations. </p></li><li><p>Provide new products or services.</p></li><li><p>Increase volume of products or services.</p></li></ol><p>Further, highly qualified applicants will be assessed on the extent of economic distress in the areas they are serving; the extent to which their activities have expanded, or will expand, economic opportunities; and the extent to which the applicant will collaborate with their community and increase its resources though collaborations and partnerships. These criteria will affect the size of an organization’s award. Our primary objective is to let successful CDFI Program and NACA Program awardees maintain their flexibility to respond to local needs with market-driven solutions, but in a way that also encourages growth and expansion to the communities that are most in need of investment.</p><p>As a result of all of the changes to the application, the evaluation process looks different this year than it has for previous rounds. The application evaluation and award selection process for the FY 2017 round consists of five steps:</p><ul><li><p>Step 1: Eligibility Review, conducted by CDFI Fund staff.</p></li><li><p>Step 2: Financial Analysis, conducted by external reviewers.</p></li><li><p>Step 3: Business Plan Review, conducted by external reviewers.</p></li><li><p>Step 4: Policy Objective Review, conducted by CDFI Fund staff.</p></li><li><p>Step 5: Award Amount Determination, conducted by CDFI Fund staff.</p></li></ul><p>We have provided additional information about each of these evaluation steps in our <a href="/Documents/FY17%20Financial%20Assistance%20Evaluation%20Process%20Cleared%203.24.17.pdf" target="_blank">CDFI Program and NACA Program Financial Assistance Evaluation Process document</a>, available on the CDFI Fund’s website. I’d encourage you take a moment to look at the new process as the CDFI Fund spends the next few months reviewing the FY 2017 applications. </p><p>For more information about the CDFI Program and NACA Program, please visit <a href="http://www.cdfifund.gov/cdfi" target="_blank">www.cdfifund.gov/cdfi</a> and <a href="http://www.cdfifund.gov/native" target="_blank">www.cdfifund.gov/native</a>. </p><p><i>Amber Kuchar-Bell is the Program Manager of the CDFI Program and NACA Program.</i></p> </div>Amber Kuchar-Bell2017-07-06T18:00:00ZPrograms and Initiatives33GP0|#0760f5d5-6360-4d45-ba32-761ff5345cd1;L0|#00760f5d5-6360-4d45-ba32-761ff5345cd1|CDFI Program;GTSet|#52f34ab0-6f81-4fe6-b393-2715c7089532;GP0|#c890ec6f-810e-4c92-a8a0-1af04abbffc9;L0|#0c890ec6f-810e-4c92-a8a0-1af04abbffc9|Native Initiatives