Helping Banks Verify That Services Reach Low- and Moderate-Income Communities and Individuals
The Community Reinvestment Act (CRA) encourages financial institutions to help meet the needs of low- and moderate-income (LMI) neighborhoods and individuals, and they earn credit for doing so. The CRA defines the term “LMI” as communities/neighborhoods with income levels that fall into certain ranges, as determined by the U.S. Census Bureau. A low-income community has a median family income of less than 50 percent of the area median income. A moderate-income community has a median family income that is at least 50 percent of but less than 80 percent of the area median income.
When thinking about CRA opportunities, it is important to focus on services, activities, and lending that benefit LMI individuals and LMI neighborhoods. Use the methods below to help banks verify that activities you implement are, in fact, serving LMI communities.
Census Data for Geographic Areas
The Federal Financial Institutions Examination Council’s Geocoding/Mapping provides Metropolitan Statistical Area/Metropolitan Division demographic information about particular census tracts, including income, population, and housing data.
Recipients Receiving a Needs-Based Public Benefit
The Federal government pays various public benefits on an income and a needs-based basis. Needs-based benefits are based on current poverty guidelines and resource limits. Examples of these public benefits include Supplemental Security Income (SSI), Medicaid, the Supplemental Nutrition Assistance Program (SNAP), the U.S. Department of Housing and Urban Development (HUD, for housing vouchers), Temporary Assistance for Needy Families (TANF), and the Low-Income Home Energy Assistance Program (LIHEAP).
State and Local Workforce Data
There are several state and local employment and economic data sources in the public and private sectors that can help you identify LMI communities. These include the Bureau of Labor Statistics (BLS) Regional Information Offices, State Labor Market Information, and the U.S. Department of Agriculture’s (USDA) county-level data sets.
A Case Example
A local organization engaged a bank to provide financial counseling and job training support to individuals with disabilities. Because the organization is located in a high-income community, the bank needed confirmation that its services reached LMI individuals. The local organization provided data that showed that 80 percent of the individuals served received Medicaid (a needs-based benefit partly based on poverty guidelines and resource limits). While the organization was not physically located in a low- or moderate-income census tract, the individuals who participated in program activities met the criteria for the bank to receive CRA credit.