The Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) have released proposed updates to the Community Reinvestment Act (CRA) regulations. Whether you are leading a community nonprofit in South LA, managing affordable housing projects in the Eastside, or overseeing CRA compliance for a bank in Downtown Los Angeles, these proposed changes could reshape how financial institutions and community organizations partner.
Key Summary & CRA Rule Changes
Refocused Emphasis on Core Lending
Under the new guidelines, retail lending evaluations will focus on a bank’s major product lines. This allows institutions to direct capital toward products that match local credit demand rather than spreading resources across non-essential lending categories.
Updated Bank Tiering
The proposed rules raise asset size classifications to reflect growth in the banking sector:
Small Banks: Assets below $1 billion.
Intermediate Banks: Assets between $1 billion and $10 billion.
Large Banks: Assets above $10 billion.
This tiering relieves community banks of heavy reporting burdens, letting them concentrate on direct local relationship lending.
Modernized Operations & Strategic Plans
Banks will be permitted to maintain public files and CRA notices electronically via their websites. In addition, the rule simplifies and streamlines the process for developing and approving custom strategic plans to better fit specialized bank business models.
How Proposed CRA Changes Impact Nonprofits
Strict 15% Cap on Indirect Costs / Overhead for Grants
The Rule: For large banks (assets over $10 billion), a community development (CD) grant or donation will only qualify for CRA credit if the recipient nonprofit’s indirect/administrative costs do not exceed 15% of the grant amount.
Nonprofit Impact: LA nonprofits receiving grants from large banks will need to ensure administrative overhead stays within this 15% threshold. Grant recipients will also be required to provide documentation, including a written commitment to use funds locally, an attestation regarding indirect costs, and financial records (such as IRS Form 990 and operating budgets). Pass-through or indirect grants to funding intermediaries will face tighter restrictions, favoring nonprofits that directly deliver services.
Expanded Opportunities Outside Traditional Branch Footprints
The Rule: Banks meeting baseline credit performance in their primary physical assessment areas can receive CRA credit for CD loans, investments, and grants in areas outside their branch footprint.
Nonprofit Impact: Nonprofits in “CRA deserts” (underserved or rural areas with few bank branches) may see increased interest and funding opportunities from regional or national banks. Conversely, nonprofits in highly competitive “CRA hotspots” may experience more competition for local funds as banks gain flexibility to direct capital to broader regional initiatives.
Clearer Categories and Standards for Community Development
- Affordable Housing: Expressly includes naturally occurring affordable housing (unsubsidized rental housing affordable to LMI tenants). Nonprofits partnering with banks to acquire or preserve unsubsidized affordable housing will have clearer guidelines for obtaining CRA funding.
- Civic Assistance (formerly Community Services): Covers support for education, low-cost student loans, healthcare, homeless shelters, and workforce development/job training programs.
- Economic Development & Technical Assistance: Eliminates the subjective requirement to prove specific LMI job creation for small business loans and explicitly covers technical assistance and support services provided to small businesses and farms. Nonprofits offering technical assistance or business counseling can more easily secure bank sponsorship.
- Revitalization & Stabilization: Introduces recognized focus areas such as Indian country and Tribal lands, essential community facilities (e.g., schools, health clinics), and essential community infrastructure (e.g., transit, water). It also broadens eligibility for disaster recovery and explicitly includes projects that assist LMI communities in preparing for or withstanding natural disasters.
Pre-Approval Certainty for Innovative Projects
The Rule: Banks can seek optional pre-confirmation from regulatory agencies to verify if a novel loan, grant, or investment qualifies for CRA credit.
Nonprofit Impact: Nonprofits proposing innovative community financing projects can collaborate with partner banks to secure agency confirmation upfront, reducing regulatory risk.
Join the Conversation
As these proposed rules undergo public review through October 13, 2026, local collaboration between bankers and community leaders is more vital than ever.
Make a Public Comment: