As the end of the year approaches, both currently CDFI-certified credit unions and those applying for certification for the first time should focus on what they can do in the next two months—and into 2025—to ensure a smooth and successful submission to the CDFI Fund.
While meeting the 60% Target Market lending threshold in 2024 is critical, it's only one piece of the puzzle. Below are 10 actionable steps to help your credit union set up for success as we close out this year and move into the next.
Reach Out to Existing Target Market Members
Your current members are an excellent source of potential new loans. Review member accounts to identify those who may benefit from debt consolidation, refinancing, or who may be relying on alternative financial services like payday lenders. This proactive approach can help meet the Target Market lending requirement while also serving your members better. Our credit unions have shared some remarkable stories with us about the impact they’ve had on members by doing just that.
Promote Member Success Stories
In a similar vein, sharing the real-life impact of your credit union’s products and services with your membership can build trust and attract more engagement from your Target Market. Highlight success stories from members, whether it involves debt consolidation, small business loans, or credit building. These stories resonate with your community and demonstrate the tangible value your credit union provides.
Engage Community Partners for Mission-Driven Lending
Community partnerships are essential for reaching your Target Market. Strengthen relationships with organizations that align with your mission. These partners can help refer potential borrowers, particularly for loans that fulfill CDFI requirements. Engaging these community partners now will ensure a steady flow of mission-driven lending opportunities going into the new year.
Consider Loan Purchases from Other CDFIs
If you’re concerned about 2024 Target Market lending levels, you may want to consider purchasing loans from other CDFIs. Loan or participation purchases can be a strategic way to meet lending requirements this year, but not a sustainable long-term solution. Our team can assist your credit union with this process, but the time to start is now! If your credit union has already made loan or participation purchases in 2024, review those transactions to ensure they meet Target Market requirements. Ensure you have all the required borrower data—such as income level and geographic location—to confirm these loans contribute toward your lending goals.
Ensure Record-Keeping is Complete and Accurate
Accurate record-keeping is crucial for future CDFI reporting, including the Annual Certification Report (ACR) and Transaction Level Reports (TLR). Take time now to ensure all your loan data is correctly categorized and that records reflect the income, address, and other necessary data for each loan. Keeping clean, organized records will make it easier to demonstrate compliance when it’s time to submit your reports.
Ensure Bylaws Are Signed and Up to Date
Some requirements may seem perfunctory, but you still need to make sure you check them off. That includes having a signed, current copy of your bylaws on file that reflects any recent changes and are fully compliant with CDFI governance requirements.
Approve a Community Development Mission and Strategic Plan
Your community development mission statement is separate from your credit union’s mission statement and must reflect your credit union’s commitment to serving underserved communities. This document must be approved by your board and in place six months ahead of submitting your certification (or recertification) application to meet CDFI certification requirements. We worked with our credit unions earlier this year to develop their community development mission statements, and now that the recertification deadline has been extended there’s still time to put one in place if your credit union hasn’t yet.
Evaluate Board Accountability/Create an Advisory Board
The new CDFI Certification requirements include stricter requirements for board accountability to your Target Market. If your current governing board doesn’t meet these requirements, you can implement an advisory board – and we maintain that advisory boards can serve a strategic advantage whether required or not.
Staff Training
Investing in your team is key to long-term success. Equipping your staff with financial counseling skills, such as that offered by our HERO online financial counseling certification, empowers them to deliver effective financial counseling to your members. This training enhances the service you provide and strengthens your staff’s connection to your members. With better-trained staff, your credit union will be able to provide more targeted, impactful solutions to underserved members.
Facilitate Strategic Planning for 2025
Go into the new year with clear priorities by holding a facilitated strategic planning session. Create alignment across teams on strategies to accomplish mission-critical goals: by setting a focused direction now, you’ll ensure everyone is on the same page as you approach recertification and continue to build on your commitment to your members.
Finishing the Year Strong
By focusing on these ten steps in the next two months and into 2025, your credit union will find itself in a strong position for certification or recertification under the CDFI Fund’s new rules.
You can find more information about these topics by checking out our on-demand webinars from this year that cover the certification requirements, deadline extension, increasing target market lending and more. And if you have additional questions, we’d love to connect with you.