An Applicant or Certified CDFI may disregard grant funds provided through a Federal, State government, or municipal community development-focused or public assistance program for the purposes of the Financing Entity predominance test if the following conditions are met:
- The majority of the funds were awarded to the Applicant/Certified CDFI for a community development, public assistance, or other purpose approved by the CDFI Fund.
- The grant funds are intended for and are ultimately delivered to an approved Target Market or Eligible Market in the form of grants, Financial Products and/or Financial Services, or other acceptable form of assistance or support as approved by the CDFI Fund.
If these conditions are met, grant funds received in a specific fiscal year may be disregarded for the next two subsequent fiscal years that serve as the basis for the relevant Financing Entity criteria review. For example, funds received in FY 2023 can be disregarded as financing activity for FYs 2023, 2024, and 2025, for a total of three fiscal years. All disregarded funds are subject to final approval by the CDFI Fund.
The CDFI Fund may grant an extension to the three-year period in the case of a Federal or Presidential declared disaster.
Although these funds may be disregarded for the purposes of the Financing Entity test, Certified CDFIs must still report on their grant making activities annually in the ACR.