U.S. Department of the Treasury Proposes to Eliminate Race- and Ethnicity-Based Target Markets, Make Other Potential Changes to CDFI Certification Requirements

On September 30, 2026, the U.S. Department of the Treasury’s CDFI Fund published a Notice of Information Collection and request for public comment regarding proposed changes to the requirements for becoming and remaining certified as a Community Development Financial Institution (“CDFI”) that could have wide-ranging impacts on the CDFI industry.

The Proposed Changes

1. Elimination of Eligible Target Markets. Most significantly, the Department of the Treasury’s CDFI Fund is proposing to remove multiple Target Markets currently eligible for CDFI certification. If the proposed changes were to take effect, the CDFI Fund would no longer allow any Other Targeted Population (OTP) Target Market types that are based on the race and/or ethnicity of the borrower. Specifically, the CDFI Fund would remove the following categories from eligibility:
   • Other Targeted Population–African American
   • Other Targeted Population–Hispanic
   • Other Targeted Population–Other Pacific Islander
   • Other Targeted Population–Filipino
   • Other Targeted Population–Vietnamese
   
   The notice also states that it would give a one-year transition period for CDFIs that currently rely on one of the Target Markets above to qualify under one or more of the remaining eligible Target Market types. If a currently certified CDFI with an approved Target Market component based on one of the OTPs above (or any other Target Market based on race or ethnicity) were unable to be recertified under the revised application, then it would lose its certification status.
2. No More “Accountability” through Board Representation. Second, the notice states that the Department of the Treasury would remove the separate section for “Accountability” from the Certification Application. Currently, a CDFI must demonstrate “accountability” to each component of its Certification Market through board representation. Under the proposed changes, a CDFI applicant would instead demonstrate accountability by its activity in its Target Market(s).
3. Changes to Application Questions. Third, the notice also states that it would add questions to the application regarding the applicant’s and any relevant affiliate’s history of administrative proceedings and compliance with other federal award programs. Further, the subsection labeled “Board and Executive Staff Demographic Information” will be removed except for the following two questions: (1) total size of governing leadership body and (2) total size of “Executive Staff.”
4. Other Changes. Finally, the CDFI Fund is considering the following changes to the application and review process in its request for comments: (1) transitioning from year-round application submissions to a set annual submission schedule, (2) requiring the submission of audited financial statements, (3) raising the minimum threshold for financial products closed during the most recent fiscal year (currently at one), and (4) potentially setting minimum thresholds of activity per Target Market, which would require CDFIs that serve multiple Target Markets to meet the threshold for each individual market.
   

Next Steps

The CDFI Fund is accepting public comments on the proposed changes through November 30, 2026.

For questions on the proposed changes, how to submit a public comment, or to work through issues in preparation for the proposed changes to take effect, contact Corinne Curtis, Sarah Harper, John Muhs or an attorney in our Impact Investing Group.