In 2017, the Community Development Financial Institutions Fund (CDFI Fund) made extensive changes to the Financial Assistance (FA) and Technical Assistance (TA) applications. These changes were designed to ensure Community Development Financial Institutions Program (CDFI Program) and Native CDFI Assistance Program (NACA Program) resources could reach additional existing and new CDFIs, as well as allow the CDFI Fund to increase affordable financial products and services in underserved communities across the country.
Since this deep dive into the FA and TA application occurred, the CDFI industry has not only grown substantially, but the COVID-19 pandemic further highlighted the racial, health, and wealth disparities in our communities. CDFIs continue to play a critical role in addressing these disparities by providing financial products and services in our nation’s most distressed communities. These efforts underscore the important role CDFIs play in increasing access to financial products and services for communities that have traditionally been left out.
A growing demand for CDFI Fund resources and information mean that with this next phase of application and program development, the CDFI Fund needs to be intentional in supporting CDFIs work around equitable growth, while also addressing the growing need for results-oriented data and implementing meaningful and transparent compliance mandates. We need to look closely at the CDFI and NACA FA and TA applications to assess policy objectives, the application evaluation process and how we measure economic distress and impact.
In case you missed it, an official Request for Comment was recently released in the Federal Register and comments are due to the CDFI Fund by May 12, 2023.1 During this review, the CDFI Fund is asking new questions and identifying areas in need of a fresh look. This includes:
- What it means to be a small and emerging CDFI?
- What level of awards are most meaningful?
- How do we recognize innovation and impact and still be able to fund core work?
- How can CDFIs and the CDFI Fund better serve Native Communities?
- How can the CDFI Fund evaluate and measure ‘deep impact’ lending?
The questions we are asking only mean, that at this time, we are exploring policy changes to help strengthen the CDFI industry. While we know the prospect of changes may generate concern from some, the CDFI Fund is committed to ensuring we are providing CDFIs with the resources that can best support them.
In addition to soliciting higher-level policy feedback, the CDFI Fund is interested in understanding those practical modifications that can be instituted to improve the FA and TA application experience. Reducing applicant burden, streamlining data collection and modifying evaluation criteria are all areas where input is needed. All with an end goal of producing an application that effectively and efficiently allows you to tell us about your capacity for impact.
Your input is a critical part of this process. I look forward to your feedback.
Pooja P. Patel is the Program Manager for the CDFI Program and the CDFI Fund's Native Initiatives
[1] Please note that on March 22, 2023 the CDFI Fund published a correction to this Request for Comment in the Federal Register. This notice corrects the Financial Assistance Objective (FAO) number that the CDFI Fund proposes to eliminate in the CDFI Program and NACA Program Application. For more information, view the Federal Register Correction here.
