Glossary

Community Development Entity (CDE)

Also known as: CDE

A domestic corporation or partnership certified by the U.S. Treasury's CDFI Fund as having a primary mission of serving low-income communities, through which New Markets Tax Credit allocation authority is awarded and Qualified Low-Income Community Investments are made.

CDE certification is a prerequisite to receiving an NMTC allocation but does not itself guarantee any credit authority -- certified CDEs compete in periodic, oversubscribed CDFI Fund allocation rounds for a share of the total NMTC authority Congress authorizes, submitting applications scored on organizational capacity, community impact track record, and the strength of their pipeline of qualifying investments, similar in spirit to how developers compete for 9% LIHTC allocations under a state QAP. A CDE must maintain accountability to the low-income communities it serves, typically demonstrated through community representation on its governing or advisory board, and once it receives an allocation, must deploy that credit authority into Qualified Low-Income Community Investments within a defined period or risk losing the unused authority, creating real deployment pressure that shapes how quickly and on what terms a CDE will negotiate with a prospective borrower. Real estate sponsors seeking NMTC financing do not apply to the CDFI Fund directly; instead, they must identify and negotiate with one or more CDEs holding available allocation authority willing to direct a sub-allocation to the specific project, meaning the CDE relationship, and its own compliance and reporting requirements layered on top of the project's, becomes an ongoing part of the deal structure for the life of the seven-year NMTC compliance period.