Access to affordable financial products and services is a staple of economically vibrant communities, and providing such access is a fundamental tenet of credit unions' philosophy of People Helping People. Yet, at least one-quarter of American households do not have a bank account or rely on costly payday lenders and check-cashing outlets. Additionally, many small businesses and critical community development projects lack access to the capital investment necessary to spark economic growth in their communities. As member-owned financial institutions, these issues are especially salient for credit unions as they strive to serve the communities in which their members live and work.
The Community Development Financial Institutions Program (CDFI Program) actively addresses these issues by investing federal resources—which are matched with private funding—in CDFIs working to serve low-income and underserved people and communities. As part of the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 (the "Act") passed late last year, Congress included $3 billion in CDFI funding, to be distributed as follows:
$1.25 billion for CDFI Rapid Response Program (RRP)
- Funds must be available within 60 days of legislative approval.
- To participate, institutions must have CDFI certification by the time the Notice of Funds Availability (NOFA) is published (mid-February).
- Inclusiv has advocated for funds to be deployed through a streamlined, formula-based, non-competitive process.
- The number of eligible credit unions nationwide: 340 currently certified.
- CDFI Fund is currently reviewing 40 to 50 applications, which may or may not be approved in time.
$1.75 billion for Technical and Financial Assistance grants ($1.2 billion set aside for Minority Depository Institutions (MDIs))
- Funding is available until it is expended.
- $270 million appropriations are also included in the 2021 Omnibus.
- NOFA for this funding pool may be part of the RRP NOFA or could be published later to give time to process RRP first.
- Eligible credit unions:
- All CDFI certified credit unions (even if they have already received RRP funding). They must be certified by the time NOFA is published.
- Any credit union that is not yet certified can apply for CDFI Technical Assistance grants for up to $125,000 (or potentially more if NOFA allows it).
Additionally, Congress included $9 million for an Emergency Capital Investment Fund in the Act. This fund will be administered by the U.S. Treasury Department and will provide low cost, long-term secondary capital loans. Participant credit unions must be low income designated and demonstrate at least 30% of their lending is directed to minority communities. Inclusiv, the leading credit union resource for financial inclusion and community development, was instrumental in establishing the CDFI Fund and continues to advocate for the inclusion of credit unions in the program. For more information about Inclusiv and the CDFI Fund, please visit their website. If you have further questions or concerns about the CDFI Fund, please contact League Regulatory Counsel Chris Noble, Esq. at email@example.com.