**DEPARTMENT OF THE TREASURY**

**CFDA 21.020 COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS PROGRAM**

**I. PROGRAM OBJECTIVES**

The Community Development Financial Institutions (CDFI) Program is
administered by the Community Development Financial Institutions Fund
(CDFI Fund), a wholly owned government corporation within the Department
of the Treasury. The CDFI Program is designed to facilitate the creation
of a national network of financial institutions dedicated to community
development by providing financial and technical assistance to CDFIs.
Assistance under the CDFI Program is intended to enhance the ability of
CDFIs to make loans and investments and provide services to distressed
communities and individuals who have been unable to take full advantage
of the financial services industry (12 CFR sections 1805.100 and
1805.101).

**II. PROGRAM PROCEDURES**

The CDFI Program provides CDFIs with: (1) financial assistance in the
form of grants, loans, equity investments, deposits and credit union
shares; and/or (2) technical assistance in the form of grants. Financial
and technical assistance are provided through a competitive nationwide
evaluation and selection process. After selection, each CDFI Program
award recipient will enter into an assistance agreement, which will
include performance goals and other terms and conditions.

In order to be eligible to apply for assistance, entities must meet or
propose to meet specific CDFI eligibility criteria (12 CFR sections
1805.200 and 1805.201(b)). CDFIs include, among others, entities such as
community development banks, community development credit unions,
depository institution holding companies, non-profit loan funds,
micro-enterprise loan funds and community development venture capital
funds.

**Source of Governing Requirements**

The CDFI Program is authorized by the Community Development Banking and
Financial Institutions Act of 1994 (Pub. L. No. 103-325, 12 USC 4701,
*et seq*.). The CDFI Program implementing regulations are codified at 12
CFR part 1805 and can be found on the Internet at
http://www.treas.gov/cdfi.

**III. COMPLIANCE REQUIREMENTS**

**In developing the audit procedures to test compliance with the
requirements for a Federal program, the auditor should first look to
Part 2, Matrix of Compliance Requirements, to identify which of the 14
types of compliance requirements described in Part 3 are applicable and
then look to Parts 3 and 4 for the details of the requirements.**

**A. Activities Allowed or Unallowed**

> 1\. *Financial Assistance* - The CDFI Fund may provide financial
> assistance intended to strengthen the capital position and enhance the
> ability of a CDFI Program award recipient to provide financial
> products and financial services. However, the CDFI Fund does not
> require CDFI Program award recipients to account for the actual costs
> incurred using financial assistance amounts (12 CFR sections 1805.300
> and 1805.301).
>
> 2\. *Technical Assistance* - The CDFI Fund may provide technical
> assistance to build the capacity of a CDFI or an entity that proposes
> to become a CDFI. Such technical assistance may include training for
> management and other personnel; development of programs, products, and
> services; improving financial management and internal operations;
> enhancing a CDFI\'s community impact; or other activities deemed
> appropriate by the CDFI Fund. The CDFI Fund will prescribe the
> specific authorized uses of such technical assistance amounts for each
> CDFI award recipient in a schedule to the assistance agreement. Such
> schedules also may be supplemented by letter agreements (12 CFR
> section 1805.303).
>
> 3\. *Community Partnerships* - Assistance provided upon approval of an
> application involving a community partnership shall only be
> distributed to the CDFI Program award recipient and shall not be used
> to fund any activities carried out by a community partner or an
> affiliate of a community partner (12 CFR section 1805.302(c)).

**B. Allowable Costs/Cost Principles**

> The provisions of OMB Circular A-122 apply to non-profit CDFI award
> recipients, but only for costs associated with technical assistance
> amounts, because the CDFI Fund does not require CDFI Program award
> recipients to account for actual costs incurred using financial
> assistance amounts.
>
> The assistance agreement will set forth the specific types (e.g.,
> general purpose equipment, professional services, training and travel
> costs associated with such training, etc.) of direct costs that each
> CDFI Program award recipient may incur using technical assistance
> amounts. The CDFI Program award recipients have generally requested
> such types of direct costs in their applications for technical
> assistance.

**E. Eligibility**

**1. Eligibility for Individuals** - Not Applicable

> **2.** **Eligibility for Groups of Individuals or Area of Service
> Delivery -** Not Applicable

**3. Eligibility for Subrecipients**

> A CDFI Program award recipient may not distribute assistance to an
> affiliate without the consent of the CDFI Fund (12 CFR section
> 1805.302(b)).

**G. Matching, Level of Effort, Earmarking**

**1. Matching**

> a\. *Financial Assistance* - Each CDFI Program award recipient must
> match financial assistance provided by the CDFI Fund under the CDFI
> Program with an amount that is at least comparable in: (1) form to the
> type of financial assistance provided by the CDFI Fund; and (2) value,
> on a dollar-for-dollar basis, to the financial assistance provided by
> the CDFI Fund. Such match must come from sources other than the
> Federal Government, and must consist of non-Federal Government funds.
> For example, funds provided to a CDFI pursuant to the Housing and
> Community Development Act of 1974 are generally considered to be
> Federal Government funds, and may not be used to meet the match
> requirements. Funds used to satisfy a legal requirement for obtaining
> funds under a Federal grant or award program may not be used as a
> match for financial assistance under the CDFI Program. The applicable
> time frame for raising the match is set forth in the Notice of Funds
> Availability (NOFA) published in the *Federal Register* for each
> funding round. The most recent NOFAs can be retrieved from the
> Internet at http://www.treas.gov/cdfi (12 CFR sections 1805.500
> through 1805.504).
>
> The amount of financial assistance disbursed by the CDFI Fund to a
> CDFI Program award recipient will not exceed the amount of match that
> the CDFI has in hand. As a result, the CDFI Fund may make multiple
> disbursements of financial assistance as the CDFI Program award
> recipient receives the requisite match funds.
>
> b\. *Technical Assistance* - There is no match requirement for
> technical assistance amounts under the CDFI Program (12 CFR section
> 1805.303(d)).

**2. Level of Effort** - Not Applicable

**3. Earmarking** - Not Applicable

**L. Reporting**

**1. Financial Reporting**

> a\. SF-269, *Financial Status Report* - Applicable to Technical
> Assistance

b\. SF-270, *Request for Advance or Reimbursement* - Not Applicable

> c\. SF-271, *Outlay Report and Request for Reimbursement for
> Construction Program* - Not Applicable

d\. SF-272, *Federal Cash Transactions Report* - Not Applicable

**2. Performance Reporting** - Not Applicable

**3. Special Reporting**

> a\. *Semi-Annual Report (OMB No. 1505-0154)* - This report is due from
> each CDFI award recipient within 60 days after the end of each
> semi-annual period, or within some other period as may be agreed to in
> the assistance agreement (12 CFR section 1805.803(e)(2)).
>
> *Key Line Items* - The following line items contain critical
> information.
>
> 1\. Item 1 - Quantitative information relating to financial and
> managerial soundness covenants, except that the auditor is not
> expected to test the analysis of factors contributing to any failure
> (if applicable) to meet any financial soundness covenants.
>
> b\. *Annual Report (OMB No. 1505-0154)* - This report is due from each
> CDFI award recipient within 60 days after the end of the CDFI award
> recipient=s fiscal year, or by such alternative deadline as may be
> agreed to in the assistance agreement (12 CFR section 1805.803(e)(3)).
>
> *Key Line Items* - The following line items contain critical
> information.
>
> 1\. Item 1 - Quantitative information relating to Performance Goals.