Treasury Proposal Would Change How CDFI Credit Unions Prove Accountability

A new Treasury Department proposal would change how community-development credit unions qualify for and maintain CDFI certification. The most consequential shift is from who sits on a governing board to what financial activity an institution can demonstrate in its approved target markets.

The September 30 Federal Register notice seeks comment through November 30. The CDFI Fund’s summary says the proposal follows review of nearly 1,400 applications submitted under requirements released in December 2023.

Board representation would no longer be the accountability test

The proposal would remove the separate Accountability section and the Native Communities Accountability subsection from the certification application. Instead of requiring approved board membership accountability to each proposed target market, the CDFI Fund would assess accountability through the institution’s financial-product and financial-services activity in those markets.

That is not merely a form change. A CDFI credit union that has relied on board composition as its primary evidence would need to show that actual products and services reach the communities named in its certification. The agency is asking whether minimum activity thresholds should apply separately to each approved target-market type.

Some existing target-market categories would be removed

The proposal would end eligibility for five race- or ethnicity-based Other Targeted Population categories: African American, Hispanic, Other Pacific Islander, Filipino and Vietnamese. The CDFI Fund proposes a one-year transition for currently certified institutions that rely on one of those categories to qualify under a remaining eligible target-market type.

Credit unions should identify which certification components depend on the affected categories, then test whether loan, deposit, service-area and member data can support an alternative eligible market definition. The proposal does not itself terminate a certification; it opens a comment process and describes the transition the agency is considering.

The application could add new evidence burdens

The CDFI Fund is also considering an annual application window, audited financial statements for questions tied to the latest fiscal-year balance sheet, a higher minimum number of closed financial products in a proposed target market and additional questions about prior administrative proceedings and compliance with other federal award programs.

The notice estimates 55 hours per respondent under the revised collection, but asks commenters to quantify added costs and burden. Institutions should distinguish the time needed to complete the form from the continuing work needed to collect, reconcile and govern target-market activity data.

The board decision-evidence standard offers a way to separate confirmed requirements, proposal-stage assumptions and management choices. The inventory and change-control playbook can help data teams preserve definitions, ownership and changes when certification measures come from several systems.

What to prepare before commenting

A useful internal review should map every approved target market to the current certification basis, governing source data, responsible executive, measured product and service activity, data-quality exception and proposed alternative if that market becomes ineligible. Boards should understand which federal programs or benefits depend on certification and what evidence management would need to preserve continuity.

For CDFI credit unions, the proposal shifts the center of gravity from representational structure toward measurable market activity. The comment record will be stronger when institutions can show, with evidence, where that shift improves accountability, where it creates blind spots and what transition period their data and operating systems realistically require.