Achieving CDFI Certification: A Guide for Credit Unions under the New 2023 Guidelines
This blog post outlines the new CDFI certification guidelines released in 2023, and outlines the approach an institution needs to take to become CDFI certified.


In 2023, the Community Development Financial Institutions (CDFI) Fund introduced new guidelines aimed at enhancing the impact and reach of CDFIs. For credit unions seeking to achieve or maintain CDFI certification, understanding and adapting to these guidelines is crucial. This blog post will provide a concise approach to help credit unions navigate this process successfully.
Understanding CDFI Certification
CDFI certification is a designation conferred by the CDFI Fund, a part of the U.S. Department of the Treasury. It recognizes financial institutions that are dedicated to providing financial services to underserved markets and promoting community development. Certified CDFIs are eligible for various federal programs and financial assistance, which can significantly bolster their capacity to serve low-income communities. Read more about CDFIs, benefits to members, and benefits to the financial institution in our recent blog post here.
New 2023 Guidelines: Key Changes
The 2023 guidelines introduced several important changes to the CDFI certification process, focusing on increasing transparency, accountability, and impact. Key changes include:
Impact Requirements: CDFIs are now required to demonstrate a more explicit and measurable impact on their target markets. This includes showing tangible outcomes of their financial activities in underserved communities.
Target Market Definition: The definition of target markets has been refined to ensure that CDFIs are genuinely serving low-income and underserved populations. This includes stricter criteria for defining the geographic and demographic segments that qualify as target markets. CDFIs must now provide more detailed evidence that their financial products and services are reaching these designated target markets.
Enhanced Reporting Standards: The new guidelines introduce more rigorous reporting requirements. CDFIs must submit detailed reports that track their activities, impact, and compliance with the target market requirements. Regular audits and reviews will be conducted to ensure ongoing adherence to these reporting standards.
Minimum Product Volume: CDFIs are now required to ensure that at least 60% of their product volume (by amount and dollar) is directed toward low-income individuals and communities. This change is intended to reinforce the mission-driven nature of CDFIs and ensure they remain focused on serving underserved populations.
Increased Transparency and Accountability: The 2023 guidelines place a stronger emphasis on transparency in how CDFIs operate and report their activities. This includes more frequent and detailed public disclosures about the use of CDFI resources and their impact on target markets. CDFIs must also implement internal controls and governance measures to ensure compliance with these new standards.
Steps to Achieve CDFI Certification
Assess Eligibility: Ensure your credit union meets the basic eligibility requirements, including having a primary mission of promoting community development and providing financial services to low-income individuals and underserved communities.
Define Target Market: Clearly define your target market in accordance with the new guidelines. This involves identifying the geographic areas and demographic segments you aim to serve.
Develop Impact Metrics: Establish robust metrics to measure and demonstrate the impact of your financial services on the target market. This could include tracking loan distributions, financial education efforts, and community development projects.
Prepare Documentation: Gather necessary documentation that supports your application, including financial statements, strategic plans, and evidence of your impact on the target market.
Submit the Application: Complete and submit the CDFI certification application through the CDFI Fund’s online portal. Ensure all sections are thoroughly filled out and supported by the required documentation.
Implement Enhanced Reporting: Set up systems to comply with the new reporting standards. This includes regular monitoring and reporting of your impact metrics to ensure ongoing compliance and transparency.
Engage with the Community: Continuously engage with your target market to understand their needs and refine your services. This ongoing engagement helps to maintain your relevance and effectiveness in serving the community.
Leveraging Float for Achieving CDFI Compliance
float can play a pivotal role in helping credit unions meet the new CDFI guidelines, especially regarding the 60% low-income volume by dollar and product guideline. By reporting on-time rent, utilities, and telco payments, float helps low-income members build and improve their credit scores. Our platform subsequently enables increased lending opportunities to thin credit file and subprime members without added risk (we target a 10% increased approval without increased delinquency) and change to your loan origination systems. If you’re interested in learning more, send an email to partner@withfloat.io or fill out the form below.
Conclusion
Achieving CDFI certification under the new 2023 guidelines is a strategic move for credit unions dedicated to community development. By understanding the new requirements, defining clear target markets, and leveraging innovative solutions like Float, credit unions can enhance their impact and secure the benefits of CDFI certification. This not only fosters financial inclusivity but also strengthens the overall health and resilience of the communities they serve.
For more detailed information on CDFI certification, visit the CDFI Fund’s official website.