CDFI Fund 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
Program Notes: Checking in with Native Initiativeshttps://www.cdfifund.gov/impact/Lists/Posts/ViewPost.aspx?ID=20Program Notes: Checking in with Native Initiatives<div class="ExternalClassD20E0A45160B4D609466FA461EF2C3F2"><p>As we come to the end of National Native Heritage Month, I want to take a moment to highlight the CDFI Fund’s recent activities dedicated to expanding economic opportunity for Native American, Alaska Native, and Native Hawaiian communities nationwide. </p><p>I recently was honored to participate in the <a href="http://www.oweesta.org/native-gathering/" target="_blank">2016 Native Convening in Atlanta</a>. It was an opportunity to have a fantastic, engaged conversation around community development in Native Communities and the work of Native Community Development Financial Institutions (Native CDFIs). </p><p>One of the topics for the Convening was the new <a href="/programs-training/Programs/native-initiatives/Pages/native-communities-study.aspx" target="_blank">“Access to Capital and Credit in Native Communities” report</a> (the Report), commissioned by the CDFI Fund and published by the Native Nations Institute with support from the Morris K. and Stewart L. Udall Foundation. The CDFI Fund commissioned the Report as a follow-up to its 2001 Native American Lending Study, which analyzed access to capital and financial services in Native Communities, identified barriers to access, and provided options to address the barriers.</p><p>At the Convening, I found that the Report sparked discussion around how we can better coordinate with Tribal entities and governments and encourage the development of Native entrepreneurs, as well as the overall state of the Native CDFI industry.</p><p>One of the key takeaways from the new Report is that while barriers to capital and credit still exist in Native Communities, Native CDFIs are playing a critical role in raising the financial capability of their communities and increasing local access to credit. Native CDFIs are truly making a difference.</p><p>I am proud of that, and of the role the CDFI Fund has played in supporting the growth and ability of Native CDFIs to provide critical financial services, business and homeownership loans, and financial education in Native Communities. </p><p>The Report also found that data on financial barriers and financial services in these communities is still difficult to come by, which will be a challenge for the CDFI Fund and for CDFIs going forward. We are making progress on that front, however. In 2016, the CDFI Fund awarded First Nations Oweesta Corporation a prize through our <a href="/news-events/news/Pages/news-detail.aspx?NewsID=230" target="_blank">2016 CDFI Prize Competition </a>for their proposal to develop Opportunities Through Impact System (OTIS), an impact tracking platform designed specifically for Native CDFIs. The goal of the OTIS platform is to provide the technological resources—combined with the technical assistance of First Nations Oweesta—to help Native CDFIs demonstrate their impact in their communities. I look forward to seeing what they are able to achieve. </p><p>I believe the Report will continue to drive discussion about the best ways to spur economic growth in Native Communities, and the CDFI Fund is thoughtfully considering the Report’s findings as <a href="/news-events/Pages/story-detail.aspx?StoryID=6" target="_blank">we plan our initiatives for the next few years</a>. </p><p>I don’t want us to lose sight of what we have achieved so far, however. We are still finding success and impact with our Native American CDFI Assistance Program (NACA Program). We had eleven first-time awardees in the <a href="/news-events/Pages/news-detail.aspx?NewsID=231" target="_blank">2016 round of the NACA Program </a>– a sizable achievement considering there were only 38 awardees in total. And our “Building Native CDFIs’ Sustainability and Impact” training series, which wrapped up in 2016, provided more than 2,300 hours of direct technical assistance and coaching to Native CDFIs. As we look to 2017 and beyond, I am dedicated to providing quality training and assistance to Native CDFIs, and to finding new ways we can encourage economic growth and prosperity in Native Communities nationwide. </p><p>Be sure to check out the “<a href="http://nni.arizona.edu/publications-resources/publications/papers/2016/access-capital-and-credit-native-communities" target="_blank">Access to Capital and Credit in Native Communities</a>” report and the CDFI Fund’s <a href="/news-events/Pages/story-detail.aspx?StoryID=6" target="_blank">Strategic Plan </a>to learn more. </p><p> <i>Amber Kuchar-Bell is the CDFI Fund’s Program Manager for the CDFI Program and Native Initiatives</i></p></div>Amber Kuchar2016-11-29T19:00:00ZPrograms and Initiatives20GP0|#12da016b-d497-4568-a2bf-23bc3f22d03c;L0|#012da016b-d497-4568-a2bf-23bc3f22d03c|Native Communities;GTSet|#52f34ab0-6f81-4fe6-b393-2715c7089532
Impact and Excellence for the Next Five Yearshttps://www.cdfifund.gov/impact/Lists/Posts/ViewPost.aspx?ID=19Impact and Excellence for the Next Five Years<div class="ExternalClassB461102272BC466CAC31595A85A3EDBC"> <p>I’m very pleased to release the CDFI Fund’s new five-year Strategic Plan: Impact and Excellence. <a href="/Documents/Final%20Strategic%20Plan%20102516.pdf" target="_blank">You can read it here</a>.</p><p>As you’ll see, the strategic plan is concise—just 12 pages. However, it’s the product of an intensive process of reflection and discussion that has spanned more than 18 months. It reflects ideas we heard in various forms from over 700 members of the general public during our national Listening Tour in the summer of 2015, as well as insights we gained in strategic discussions within the Treasury Department and with our Community Development Advisory Board.</p><p>The CDFI Fund has a twenty-two year track record of success, which provides a strong foundation on which to build for the future. And yet, there are still too many people and too many communities that exist on the economic margins. More must be done to create opportunities for those in distressed communities to gain access to the financial tools that are needed to prosper. </p><p>The strategic plan will serve as the foundation for the CDFI Fund’s decisions and actions during the next five years. Underlying each of the five goals of the plan is this question: <i>How can the CDFI Fund and our network of awardees generate the greatest impact possible in underserved and distressed communities?</i> Our intent is to help create the conditions that allow the CDFI Fund network to grow and to achieve greater results for more communities.</p><p>The plan also articulates our intention to take a data-driven approach to decision-making. We want to direct our scarce resources toward what works. And, we want the industry to have the tools to do the same. Better data and evidence will serve to raise awareness of the industry’s effectiveness and increase its access to new capital from both private and public sources.</p><p>We continue to believe that it will take CDFIs of all types and sizes to meet the needs of underserved communities, and that the greatest impact can come when CDFIs work together with other CDFIs and other organizations who share a commitment to creating an inclusive economy. That is why our plan will promote partnerships and commits to building the capacity of the wide variety of organizations that make up the CDFI Fund’s network.</p><p>On behalf of the CDFI Fund, I would like to offer our thanks to those of you who provided comments and suggestions to help us develop our strategic plan. We look forward to working with you in the coming years to increase economic opportunity in distressed communities and to create an America where everyone can prosper.</p></div>Annie Donovan2016-10-27T12:28:00ZAround the CDFI Fund19GP0|#381b3368-a6d1-4ab9-9f3d-370d1a7e113c;L0|#0381b3368-a6d1-4ab9-9f3d-370d1a7e113c|Framework for the Future;GTSet|#52f34ab0-6f81-4fe6-b393-2715c7089532