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Gut Reaction: Revised CDFI Certification

The CDFI Fund released their final revised CDFI Certification Application on yesterday, December 7, 2023, after several rounds of public comment and recommendations from trade associations, consultants, and other stakeholders.


From my perspective, overall I believe the CDFI Fund accomplished what they set out to do, which was strengthen CDFI certification standards and deliberatlely affirm what it means to be a CDFI. This includes insuring that predatory lenders cannot become CDFI certified institutions while still providing the true difference makers the flexibility to develop loan products and other services that fulfill a community development mission.


There's still a lot to learn and dive into regarding the updated certification, but as I wear my small credit union CEO hat, I can't help but have some gut reactions on how these changes may affect our credit union and credit unions like ours. I share my reactions to a few of the new changes below. Jump in the comments and let me know what I missed or where we can expand the dialouge!


(1) Accountability - I'm a firm believer that if any institution is accountable to their target markets or members or customers, it's credit unions. After all, our governing bodies are made up of members that are elected by the very people that we're serving. While I see the purpose of these updated revisions and I understand the purpose is that we should ensure the people we say we serve are benefitting positively from our products and services, I fear the updates could create some burdensome, and quite frankly unnecessary, speed bumps for smaller credit unions that struggle to find volunteers as it is. Credit unions shouldn't have to prove accountability in my opinion, it's in our overall mission and governance structure already.


(2) Responsible Financing Standards - I applaud the CDFI for clarifying practices that are against community development standards and also allowing explanation of certain practices that deserve extra clarification of how they do promote community development. Overall, I think some of the practices outlined should be looked at by credit unions and evaluated to ensure they're having the results that are beneficial to the membership. I also believe it will exclude some predatory lenders from certification. The challenge on some items will be making core upgrades and other adjustments that could be burdensome to some small credit unions and again, that's my biggest fear in most of these revisions that smaller credit unions will be more adversely affected than others.


Overall, I strongly believe in the CDFI fund and what CDFI certified institutions stand for. I believe the application needed updating and I think they truly listened to concerns from those who took the time to comment. While adjustments will have to be made, our credit union members will continue to benefit and that is what matters most. While our industry still has work to do to ensure more credit unions can become certified, I have a positive outlook on the future and have confidence we can continue this dialouge with the fund.



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