Exploring Grant Opportunities from the Financial Sector

In 1977, the federal government enacted the Community Reinvestment Act (CRA) to encourage federally insured depository institutions (banks) to proactively meet the credit needs of low-to-moderate income (LMI) households and/or neighborhoods.

Banks are regularly reviewed and rated on activities that support LMI areas and families when compared to their peers in geographic areas through a variety of qualifying activities.  And often, banks are given special recognition for innovative, collaborative, or creative activities.

In the not-for-profit community, there is often a misunderstanding of the regulation and the opportunity to leverage it to gain support from your local bank.  Often, not-for-profits see it as a golden opportunity for direct financial support through grants and donations.  While others may have heard of the CRA, it and the opportunity it provides is as elusive as a double rainbow.  Yet direct community development grants are scarce and the opportunity for creative, collaborative support is extraordinary for organizations that support LMI individuals or neighborhoods.

But what qualifies as LMI?

The Federal government tracks and records income for families and geographies (based on census tracts) to determine various income ranges using the median income of an area.

A LMI household is one that’s annual income is under 80% of the median.

For a census tract, the median household income is compared with the greater geography with LMI areas being designated as those below 80%

For example, in Chicago, IL the median household income is approximately $52,500.  Households with annual income under $42,000 and neighborhoods with a median income of $42,000 or less would qualify.

I think my constituents or neighborhood qualify.  What about the services I provide?

Under the CRA, there are four primary areas where financial institutions may impact LMI households or areas:

  • Affordable housing – typically, affordable housing results from lending or investment activities that create or support the provision of housing units that are deemed affordable to low-to-moderate income families.
  • Community Services – If your organization seeks to provide childcare, education, health services, social services, or legal services to those struggling financially, your request may qualify.
  • Economic Development – does your organization promote job creation or skill development? How about the re-development of an Empowerment Zone or small business development?  If so, it’s likely that a banker would be interested in supporting efforts.
  • Revitalization or Stabilization – These are activities that bring essential services to underserved areas, improved distressed properties, or revitalize federally designated disaster areas.

You mentioned donations may be scarce.  How then can a bank help?

As active community partners built to support the financial needs of the areas they serve, banks are often inundated with requests for donations small and large.  However, under the CRA, typically lending and investment activities are given more weight and preference.  Bankers often look to develop multi-faceted projects that incorporate lending or investments with community service and financial support.

For example, if you work with an organization that seeks to ensure safe, secure housing for low-to-moderate income seniors, you could collaborate with a bank to develop a long-term plan that will revitalize mixed-use (residential and commercial) space that will create affordable housing, encourage small business development, and revitalize a distressed area.

Or, if your organization provides social services, a banker may be interested in supporting your long-term plan to expand facilities, hire additional staff, and ultimately grow your service network.

Regardless of the activities, banks will be more interested in long-term plans to support their community with a combination of benefits that may include things such as:

  • Low (or no) interest financing
  • Pooled or shared investment opportunities with other banks for community-minded organizations
  • Opportunities that allow their associates to be more involved and serve their community through volunteerism within the scope of their expertise
  • And yes, grants that support your overall mission.

To learn more about the CRA, its history, and application, I would strongly recommend visiting the following sites:

Federal Reserve History


Concordia University Chicago | Master’s of Grant Writing, Management, & Evaluation

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