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Oct 20 -- The Community Development Financial Institutions Fund (CDFI Fund), Department of the Treasury, requests comments from the public regarding the pre-approved Target Market assessment methodologies that entities applying for Certification as a Community Development Financial Institution (CDFI) may use to assess whether the recipients of an entity's Financial Products or Financial Services are members of a pre-approved Target Market. Capitalized terms found in this notice are defined in the regulations that govern the CDFI Program. Written comments must be received on or before December 19, 2022 to be assured of consideration.
To be a Certified CDFI, an entity must demonstrate that it serves at least one eligible Target Market (either an Investment Area or a Targeted Population). In addition, it must direct at least 60% of both the number and dollar volume of arm's-length, on-balance sheet Financial Products to one or more eligible Target Market components. Under the current policies and CDFI Certification Application, Applicants must describe and seek approval for each assessment methodology they have used and intend to use to confirm financing activity to their identified Target Market(s). Only those Target Market assessment methodologies that have been approved by the CDFI Fund may be used when compiling Target Market data.

In an effort to increase transparency and reduce burden through a revised CDFI Certification Application, https://www.cdfifund.gov/​sites/​cdfi/​files/​2022-10/​CDFI_​Certification_​Application_​Preview_​Final_​10322.pdf, the CDFI Fund intends to publish a list of pre-approved Target Market assessment methodologies that Applicants and Certified CDFIs may use and rely upon to demonstrate that they are serving their identified Target Market(s). Through the revised application and Annual Certification and Data Collection Report (ACR), Applicants and Certified CDFIs will select from a drop-down menu the options in the methodology list that they used for each of their Target Market components (i.e., Investment Area (IA), Low Income Targeted Population (LITP), or Other Targeted Population (OTP).

The proposed list of pre-approved Target Market assessment methodologies, which may be found on the CDFI Fund website (www.cdfifund.gov), reflects the primary assessment methods that have been approved by the CDFI Fund and are most commonly used by a majority of currently Certified CDFIs, but may not be a comprehensive list of all the assessment methodologies previously approved by the CDFI Fund. Because the CDFI Fund, to this point, has not specifically tracked approved Target Market assessment methodologies (and in part as a result of documentation system changes), the CDFI Fund may previously have considered and even approved a Target Market assessment method unique to a specific Applicant or Certified CDFI that does not appear on the proposed list.

Applicants that use one of the pre-approved options will no longer be required to describe the assessment process used to confirm financing activity to their Target Market(s) as part of the Certification Application or a Target Market modification. If an Applicant or Certified CDFI seeks to use an alternative or modified Target Market assessment method, it will be permitted to submit a service request through AMIS for consideration of that process to the CDFI Fund. If new assessment methodologies are approved, the CDFI Fund intends to update the list of pre-approved methodologies as appropriate, so that any newly approved methodologies may be available to other Applicants and Certified CDFIs as well.

Approved CDFI Fund Target Market assessment methodologies must be used exactly as approved unless and until modification of the method is authorized by the CDFI Fund. To use an alternative or modified Target Market assessment method when compiling Target Market data for the CDFI Certification Application, the new method must be approved by the CDFI Fund prior to submission of the application. Failure to use an approved assessment methodology (or maintain required documentation, as noted in the list) may result in the termination of a Certified CDFI's certification.

Through this Request for Comment (RFC), the CDFI Fund seeks feedback from the public on the proposed list of pre-approved Target Market assessment methodologies. The CDFI Fund also seeks any additional information beyond the questions below that members of the public believe would assist in establishing policies and procedures related to the Target Market assessment methodology. The CDFI Fund intends to consider the feedback received through this RFC prior to establishing a final list of pre-approved Target Market assessment methodologies.

FRN: https://www.federalregister.gov/d/2022-22767

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