CDFI Impact Blog

 

 

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
Hoffinger Industries Continues to be a Swimming Successhttps://www.cdfifund.gov/impact/Lists/Posts/ViewPost.aspx?ID=46Hoffinger Industries Continues to be a Swimming Success<div class="ExternalClass2A6669298A7E4CBA8F92777E5D808F7A"><p>Phillips County, Arkansas is situated in what was once one of the most prosperous parts of the nation—the Arkansas Delta. Agriculture drove the area’s success, but mechanized farming techniques eventually made many jobs obsolete. Over time, communities withered as workers left for urban areas in search of work. Today the Delta is still dominated by agriculture but with much fewer workers needed to grow crops, jobs are a scarce commodity.</p><p> <a href="/Documents/Hoffinger-Southern%20Bancorp%20CDFI%20Impact%20Story%202-16-18.pdf" target="_blank">Click here to read the full story</a>.</p></div>2018-02-20T17:00:00ZLocal Impact46GP0|#c8a5d5bc-32cc-47a9-88a8-702f1f974786;L0|#0c8a5d5bc-32cc-47a9-88a8-702f1f974786|CDFI Certification;GTSet|#52f34ab0-6f81-4fe6-b393-2715c7089532;GP0|#9007f782-92c5-422c-b7ab-e0c8caa2ff92;L0|#09007f782-92c5-422c-b7ab-e0c8caa2ff92|Arkansas
Supporting CDFI and CDE Success through Certification, Compliance Monitoring and Evaluationhttps://www.cdfifund.gov/impact/Lists/Posts/ViewPost.aspx?ID=51Supporting CDFI and CDE Success through Certification, Compliance Monitoring and Evaluation<div class="ExternalClassD9C4C40996704F75B43DF3F05DC88104"><p>I was pleased to attend the recent CDFI Coalition Institute here in Washington, DC. In addition to participating on a panel discussing the latest developments at the CDFI Fund, I along with other members of the Certification, Compliance Monitoring and Evaluation (CCME) team, held “office hours” to provide one-on-one assistance to a number of CDFIs.  It was time well spent for me and my teammates.  In this blog, I want to share these same updates and plans with the larger CDFI and CDE community.</p><div>For 2018, the CDFI Fund is focused on easing the customer experience.  CCME’s objective is to ensure that CDFIs and CDEs spend more time and effort on deploying resources and less on reports and compliance activities. </div><div><br></div><div>Here are some of the steps we are currently taken along this path.</div><div><br></div><div><strong>Community Investment Impact System (CIIS</strong><strong>)</strong><strong>:</strong> As I am sure you know by now, the CDFI Fund is transitioning all of our program activities to the Awards Management Information System (AMIS). AMIS will support all CDFI Fund programs through each phase of the program life cycle, including certification and compliance monitoring—the CDFI Certification application will soon be available in AMIS. As part of this process, the Community Investment Impact System (CIIS)—which CDFIs and CDEs utilize to submit Transactional Level Reports (TLRs) and Institutional Level Reports (ILRs)—will be integrated into AMIS. Recipients will be able to use one system to submit reports, which will provide a more user-friendly reporting process. We expect this process to be complete by fall 2018. </div><div><br></div><div><strong>CDFI Certification RF</strong><strong>I</strong><strong>:</strong> In January 2017, the CDFI Fund issued a Request for Information (RFI) seeking <a href="/impact/Pages/BlogDetail.aspx?BlogID=21">comments</a> on CDFI certification criteria. This effort is the first examination of CDFI certification guidelines since the CDFI Fund was established in 1994. We embarked on this review to ensure certification tests accurately reflect and assess the evolving nature of the financial services sector and the diversity of CDFIs and the communities they serve. We have taken your comments very seriously and appreciate your effort to provide feedback. The CDFI Fund is in the process of shaping several policy changes as a result of this process. </div><div><br></div><div>Rest assured, the changes we make will be preceded by a transition period to provide ample time for CDFIs to implement any new requirements that may result.</div><div><br></div><div><strong>Noncompliance Score Card (NSC)</strong><strong>:</strong> CCME has been moving to a risk-based approach for compliance monitoring. Annual report submissions are now being evaluated through a Noncompliance Scorecard (NSC), a tool that allows the CDFI Fund to determine the probability that awards/organizations may become noncompliant with assistance agreements.  This process will allow us to provide targeted assistance to organizations that may be at risk of noncompliance.</div><div><br></div><div><strong>Customer Service</strong><strong>:</strong> Providing timely and helpful assistance is a priority for all members of the CCME team. Our goal is to provide awardees, certified CDFIs, and CDEs responsive and pro-active support. CCME holds monthly CDFI certification <a href="/programs-training/certification/cdfi/Pages/default.aspx">conference calls</a> that provide a forum for potential CDFI certification applicants, certified CDFIs and others to ask questions about the certification and compliance reporting process. The CCME team also hosts quarterly webinars to coincide with compliance reporting deadlines to walk awardees through the reporting process and answer any questions related to report submissions.</div><div><br></div><div><strong>Behind-the-Scenes Activities</strong><strong>:</strong> By now, certified CDFIs are aware of the mandatory Annual Certification Report (ACR). The ACR, which is submitted through AMIS, allows the CDFI Fund to annually assess certified CDFIs’ compliance with certification rules. Also through AMIS, CCME sends out automatic 30-day and 15-day reminders to all authorized CDFI representatives notifying them of reports coming due. Expect to see these reminders in connection with the coming July 31, 2018, deadline for ACR submission.</div><div><br></div><div>Recent updates in AMIS have allowed the CDFI Fund to automatically approve most ACRs that meet specific criteria.  When an ACR requires additional review, it is routed to a portfolio manager who can reach out to the CDFI for more information. These automation features saved the CDFI Fund more than 600 man hours since inception; time that was freed up to allow CCME staff to provide hands-on technical assistance and information to CDFIs, CDEs, and other community development finance organizations. </div><div><br></div><div>CCME remains focused on providing service and assistance to ensure CDFI Fund award recipients so that they can maximize their impact in distressed and underserved communities across the nation. Do you have a question for us? Our dedicated team is only an <a href="/pages/contact.aspx">email or phone call away</a>. </div><div><br></div><div><em>Tanya McInnis is Acting Program Manager for Certification, Compliance Monitoring and Evaluation</em></div></div>Tanya McInnis2018-05-18T16:00:00ZPrograms and Initiatives51GP0|#c8a5d5bc-32cc-47a9-88a8-702f1f974786;L0|#0c8a5d5bc-32cc-47a9-88a8-702f1f974786|CDFI Certification;GTSet|#52f34ab0-6f81-4fe6-b393-2715c7089532;GP0|#677f9ba4-605b-4516-807b-920bec1191e3;L0|#0677f9ba4-605b-4516-807b-920bec1191e3|Compliance Monitoring;GP0|#52868bf4-9aa5-4f6a-ac57-8053626d1cc7;L0|#052868bf4-9aa5-4f6a-ac57-8053626d1cc7|CDE Certification