The AFFORD Act: A Bipartisan Win for Community Development Finance

CDFI Fund’s 60% of loan dollars rule is ripe for discussion

Michael Beall, CXO, CU Strategic Planning, a Callahan Company

When nearly one-third of the U.S. Senate comes together to support anything these days, it’s worth paying attention. The recent introduction of the Advancing Financial Opportunities through Revitalizing and Developing CDFIs (AFFORD) Act, with Senators Steve Daines (R-MT) and Mark Warner (D-VA) leading 28 co-sponsors, tells us something important: CDFIs have proven their value across the political spectrum.

I’ve spent years working in Washington, and I can tell you this level of bipartisan support doesn’t happen by accident. It happens because leaders of both parties believe Community Development Financial Institutions (CDFIs) deliver real results in rural communities and urban neighborhoods, in red states and blue states, for working families who need access to affordable housing, small business capital and fair consumer lending.

The AFFORD Act arrives at an encouraging moment for community development finance. Congress just secured full funding of $324 million for the CDFI Fund in FY 2026, ensuring that CDFIs can continue their important work serving underserved communities. Combined with the broad bipartisan backing for this new legislation, it’s clear that policymakers recognize CDFIs as essential partners in community economic development.

The bill’s provisions that include requiring Treasury to testify annually before Congress both increase transparency and enable the CDFI Fund to shine a light on how CDFIs have a powerful impact on their communities. Recent Filene Research Institute data, with contributions from CU Strategic Planning, highlight that CDFI credit unions achieve far stronger member and loan growth than their non-CDFI counterparts.

The heart of the AFFORD Act, particularly for credit unions, is the CDFI Fund Transparency Act which requires the Treasury to testify annually before the Senate Banking and House Financial Services Committees on CDFI Fund operations.

When the CDFI Fund shares success stories with Congress, it helps policymakers understand why this funding matters. When credit unions’ work gets highlighted in congressional testimony, it reinforces the value of cooperative credit unions and community development finance. And on the other side of the coin, by requiring public disclosure of how the CDFI Fund is implementing programs established by law, shines a light on the barriers that current and hopeful CDFIs are facing under the current certification requirements and the ramifications of those barriers. For instance, if we see a significant drop in the number of certified CDFIs, is the Fund serving its purpose of promoting economic revitalization and community development through investment in and assistance to these institutions?

For CDFI credit unions nationwide, this visibility is valuable for maintaining CDFI Fund support as well as the credit unions’ tax-exempt status. Your work serving members who have been historically abandoned deserves to be seen and understood by the people who make funding decisions.

With FY 2026 funding secured, we have two immediate priorities. First, we need Congress to help resolve the delayed FY 2025 funding so successful grant applicants can access those resources. Second, we need to launch the FY 2026 grant process so institutions can plan their programs effectively.

Timing matters. CDFI credit unions plan strategically around grant cycles—hiring staff, launching programs, opening branches and developing partnerships. Predictable funding timelines help credit unions maximize the impact of every dollar.

Looking ahead to FY 2027, sustained funding will be essential. That $324 million appropriation might sound like a lot, but remember, CDFIs leverage that into billions of dollars in community lending. The economic ripple effects extend far beyond the initial investment.

The AFFORD Act’s transparency provisions create an excellent opportunity to discuss how certification requirements are working in practice. Frankly, we need to have this conversation—and Congress needs to have conversations with CDFI leadership.

CDFIs currently must make 60% of the number of loans and 60% of the dollar amount of loans to their target market (low- to moderate-income consumers or borrowers in distressed geographic areas), with only a very narrow path for exception to that threshold. The intent is a noble one: to ensure CDFIs stay focused on their mission. But how does that play out in reality in depository CDFIs like credit unions and community banks?

Suppose, for example, that a CDFI credit union makes 1,000 loans totaling $50 million annually. They’re doing great work: 750 loans (75%) go to members in the credit union’s certified target market, demonstrating a clear focus on that target market. The catch is that those 750 loans might only total $25 million (50% by dollar amount) because they’re smaller consumer loans, auto loans and credit-building products.

Meanwhile, 250 loans (25% by number) of the example credit union’s loans go to members outside the target market, totaling $25 million (50% by dollars) because they include larger mortgages, home equity loans and small business financing. This is a credit union that meets the needs of its community while clearly serving its target market.

While our example credit union passes the number test with flying colors, well above the 60% threshold, it fails the dollar test at 50%. This CDFI would risk losing its certification, despite clearly prioritizing their target market and delivering exactly the kind of accessible, affordable lending CDFIs were created to provide. A CDFI credit union making 75% of its loans to a certified target market shouldn’t be at risk of losing its certification as a CDFI.

We’re seeing this play out with credit unions that have been excellent CDFIs for years. And if we don’t address it, we could see the number of CDFI credit unions decline significantly.

We urge the CDFI Fund to consider these results. The time for a review of its 60% loan volume and 60% of the loan dollars requirement is now, to help ensure that credit unions can continue their community development work without being caught in regulatory contradictions.

The beauty of the AFFORD Act is that it creates a forum for exactly this kind of constructive conversation. Annual congressional testimony allows us to examine whether policies are achieving their intended outcomes and adjust when they’re not.

From my perspective, the AFFORD Act is exactly what effective policymaking looks like: support what’s working, create channels for improvement and maintain bipartisan commitment to community development.

The credit union model has always been focused on serving members and communities that other institutions overlook. CDFI certification confirms your hard work, and financial awards amplify that mission. The AFFORD Act helps ensure that both policymakers and the public understand and support this vital work.

I’m optimistic about what lies ahead. The data show CDFI credit unions are thriving. Congress has demonstrated ongoing support, and new mechanisms could be established to encourage productive dialogue on how to make community development finance even more effective.

Mike Beall is Chief Experience Officer at CU Strategic Planning, a Callahan company providing comprehensive consulting services exclusively for mission-focused credit unions. For more information, visit www.custrategicplanning.com.