At the center of the NMTC program are Community Development Entities (CDEs). A CDE must be a domestic corporation, have a demonstrated mission of serving or providing capital to low-income communities or people, and maintain accountability to residents of low-income communities through representation on a governing or advisory board. They must also obtain and maintain CDE certification through the CDFI Fund at the Department of Treasury.
Most CDEs are affiliates of mission-driven organizations like CDFIs, for-profit entities, community development corporations, government entities, or banks. CDEs craft a high-impact business plan and apply to the CDFI Fund for NMTC allocation. If successful, they can begin to raise equity from investors and deploy it to projects.
Each year, applicants apply to the CDFI Fund for allocation. Applicants are primarily scored on (a) their track record of serving disadvantaged businesses and communities and (b) their plans for using an NMTC allocation to generate community impact in distressed areas.
The CDFI Fund’s 2021 presentation for potential applicants: