How do underserved areas, LIDs and CDFI certifications differ?

Underserved Areas, a Low-Income Designation (LID), and Community Development Financial Institution (CDFI) Certification can all play in a vital role in Credit Union growth. Learn about which path is best for your institution.

This post is meant to serve as a primer to better understand the differences between Underserved AreasLIDs and CDFI Certification. While superficially similar, they each play a role in providing different benefits to your credit union in serving underserved communities and low-income populations. We will explore each of these three concepts from a functional standpoint to better understand their nature and benefits.

What is an Underserved Area?

The Federal Credit Union Act defines an underserved area as a “local community, neighborhood, or rural district” that is an “investment area” as defined in Section 103(16) of the Community Development Banking and Financial Institutions Act of 1994. Underserved areas are not granted or certified for a specific credit union. They exist as independent geographic areas for expansion and are available to federally-chartered Multiple Common Bond Credit Unions (those with Select Employee Group-based Field of Membership) and state-chartered credit unions with parity provisions. Underserved areas act as “community rules” for a Federal Multiple Common Bond.


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