Community Development:

CDFI Fund Can Improve Its Systems to Measure, Monitor, and Evaluate Awardees' Performance

RCED-98-225: Published: Jul 15, 1998. Publicly Released: Jul 15, 1998.

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Pursuant to a legislative requirement, GAO reviewed the performance of the Community Development Financial Institutions (CDFI) Fund, focusing on: (1) the first round of awards in the CDFI and Bank Enterprise Award (BEA) programs and the strategic plan that the Fund developed under the Government Performance and Results Act of 1993; (2) the Fund's development of systems to measure, monitor, and evaluate the awardees' performance; and (3) BEA's impact on banks' lending and investment in CDFIs and distressed communities.

GAO noted that: (1) for fiscal year 1996, the Fund complied with the CDFI Act's requirements for negotiating performance goals and measures based on the awardees' business plans; (2) moreover, these goals and measures are consistent with the CDFI program's mission of promoting economic revitalization and community development; (3) however, because the CDFI Act provides no specific guidance for evaluating performance measures, GAO applied the Results Act's standards to the goals and measures that the Fund negotiated in assistance agreements with the 1996 awardees; (4) GAO found that the Fund could improve the nature, completeness, and specificity of these goals and measures; (5) GAO's evaluation of the awardees' assistance agreements revealed an emphasis on measures of activity, rather than on measures of accomplishment; (6) as a result, the assistance agreements focus primarily on what the awardees will do, rather than on how their activities will affect the distressed communities; (7) GAO's evaluation also revealed occasional omissions of measures for key aspects of goals and widespread omissions of baseline data and information on target markets; (8) primarily because of staffing limits, the Fund has just begun to develop mandated monitoring and evaluation systems; (9) given that most awardees have just recently signed their assistance agreements, it is still too early to assess their progress; (10) the impact of the BEA program on banks' lending and investment in CDFIs and distressed communities is difficult to isolate from the impact of regulatory and other economic incentives; (11) moreover, because the Fund did not require banks to report material changes in rewarded investments, it did not have a systematic way of learning about any such changes; (12) the Fund is not authorized to address what banks do with their award funds; however, most awardees have reported that they have reinvested at least a portion of their awards in community development activities; (13) the Fund's current strategic plan contains all of the elements required by the Results Act and suggested by the Office of Management and Budget's implementing guidance; (14) however, these elements generally lack the clarity, specificity, and linkage with one another that the act envisioned; (15) in addition, the plan does not describe the relationship of its activities to similar ones in other government agencies, and it does not indicate whether or how the Fund coordinated with other agencies in developing the plan; and (16) these difficulties are similar to those experienced by other federal agencies in implementing the Results Act's requirements.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Community Development Financial Institutions Fund has implemented new tools to encourage greater reporting of accomplishments. Since July 1998, the Fund negotiates at least one outcome-based performance measure in their award agreements. Second, the Fund is requiring awardees submit annual accomplishment (impact) reports of awardees progress meeting their outcome-based measures. No awardee is penalized on the basis of the greatness or modesty of its reported accomplishment, except that the Fund may penalize the awardee if it fails to submit a report.

    Recommendation: To strengthen performance measurement in the CDFI program, the Secretary of the Treasury should instruct the Director of the CDFI Fund to encourage the greater reporting of accomplishments by awardees. To allay the concerns described by the 1996 awardees, the Director could require that accomplishments be reported in each awardee's annual impact report. Accomplishment measures should include: (1) those that are, without limitation, negotiated with each awardee on the basis of the awardee's business plan; and (2) those that are, to the maximum extent practicable, related to the awardee's performance goals and measures.

    Agency Affected: Department of the Treasury

  2. Status: Closed - Implemented

    Comments: The Community Development Financial Institutions Fund implemented a systematic process that employs several staff persons to review the goals and performance measures of each draft assistance agreement.

    Recommendation: To strengthen performance measurement in the CDFI program, the Secretary of the Treasury should instruct the Director of the CDFI Fund to establish procedures for systematically reviewing each awardee's goals to ensure that the measures address all key aspects of the related goals.

    Agency Affected: Department of the Treasury

  3. Status: Closed - Implemented

    Comments: Since November 1998, the Community Development Financial Institutions Fund specifically included baseline and target market information within its assistance agreement contracts with the Fund's awardees.

    Recommendation: To strengthen performance measurement in the CDFI program, the Secretary of the Treasury should instruct the Director of the CDFI Fund to reformat the assistance agreement to include baseline dates and values and information on target markets.

    Agency Affected: Department of the Treasury

 

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