In addition, the Fund’s overall performance is subject to the Results Act and the Office of Management and Budget’s (OMB) implementing guidance. Stronger Performance Measures Would Provide a Better Basis for Monitoring and Evaluating the CDFI Program’s Accomplishments

While the assistance agreements that the Fund negotiated with awardees in the CDFI program satisfy the CDFI Act’s requirements for performance measurement, they include more measures of activity (what the awardees will do) than of accomplishment (how the awardees’ activities will affect distressed communities) and do not always include measures for key aspects of goals. As the CDFI Act requires, these assistance agreements include performance measures that (1) the Fund negotiated with the awardees and (2) are generally based on the awardees’ business plans. As of January 1998, the Fund had entered into assistance agreements with 26 of the 31 awardees for 1996. While the measures in the agreements included most of these elements, they generally lacked baseline values and dates. Refining the awardees’ goals and measures to meet Results Act guidance will facilitate the Fund’s assessment of the awardees’ progress over time. Mandated Monitoring and Evaluation Systems Are Not Yet in Place

Although the Fund has developed reporting requirements for awardees to collect information for monitoring their performance, it lacks documented postaward monitoring procedures for assessing their compliance with their assistance agreements, determining the need for corrective actions, and verifying the accuracy of the information collected. Impact of BEA Awards on Banks’ Investment Activities Is Difficult to Assess

In the BEA program, as of January 1998, about 58 percent of the banks had completed the activities for which they received the awards and the Fund had disbursed almost 80 percent of the $13.1 million awarded in fiscal year 1996. In addition, more complete data on some banks’ investments are needed to guarantee that the increases in investments in distressed areas rewarded by the BEA program are not being offset by decreases in other investments in these distressed areas. Furthermore, the Fund cannot be assured that the banks’ increased investments remain in place because it does not require banks to report any material changes in these investments. Banks have multiple incentives for investing in CDFIs and distressed areas. Reinvestment in community development is consistent with the goals of the BEA program. The Fund’s strategic plan does not explicitly address the relationship of the Fund’s activities to similar activities in other agencies or indicate whether or how the Fund coordinated with other agencies in developing its strategic plan. According to this official, the revised strategic plan, which the Fund expects to complete by August 1998, proposes to incorporate changes to the plan’s strategic goals, including the elimination of the two that are organizational rather than strategic; a new format for presenting goals and objectives that links benchmarks and planned evaluations to each goal, along with key external factors that could affect the Fund’s progress toward that goal; a budget structure that aligns the program’s activities with sources and uses of funds to better track the resources required to implement the program’s goals and objectives; a performance goal that measures the ability of the Fund to leverage its resources with those of the private sector; and an identification and description of crosscutting organizations and programs that duplicate or compliment the CDFI Fund’s programs.
Why GAO Did This Study

GAO discussed the preliminary results of its ongoing review of the administration of the Community Development Financial Institutions (CDFI) Fund, focusing on: (1) the first year's performance of the CDFI and Bank Enterprise Award (BEA) programs and opportunities for improving their effectiveness; (2) the Fund's progress in developing performance measures for awardees and systems to monitor and evaluate their progress; (3) the impact of the BEA program on banks' investments in CDFIs and distressed communities; and (4) CDFI's progress in meeting the strategic planning requirements of the Government Performance and Results Act of 1993.

What GAO Found

GAO noted that: (1) as of January 1998, the Fund had entered into assistance agreements with 26 of the 31 CDFIs that received awards in 1996; (2) these agreements include performance goals and measures that were based on the business plans submitted by awardees in their application packages and negotiated between the Fund and the awardees, as the CDFI Act requires; (3) these agreements are consistent with the program's objectives; (4) using the Results Act for guidance, GAO found that the performance measures in the assistance agreements generally assess activities rather than accomplishments reflecting the results of activities; (5) GAO further found that although the performance measures in the assistance agreements are generally related to specific goals, they do not always address all key aspects of the goals, and most assistance agreements lack baseline data that would facilitate tracking progress over time; (6) the Fund has developed reporting requirements for awardees to collect information for monitoring their performance and is developing post-award monitoring procedures for assessing their compliance with their assistance agreements; (7) the Fund currently does not have a system for evaluating the impact of awardees' activities; (8) although the Fund has disbursed about 80 percent of the fiscal year 1996 BEA awards funds, it is difficult to determine the extent to which the program has encouraged the 38 awardees to increase their investments in distressed communities; (9) in addition, some banks do not collect all of the data on their activities needed to guarantee that increases in investments under the BEA program are not being offset by decreases in other investments in these distressed areas; (10) furthermore, the Fund cannot be assured that banks' increased investments remain in place because it does not require banks to report any material changes in the status of these investments; (11) the CDFI Fund's strategic plan contains all of the elements required by the Results Act and the Office of Management and Budget's associated guidance, but these elements generally lack the clarity, specificity, and linkage with one another that the act envisioned; (12) although the plan identifies key external factors that could affect the Fund's mission, it does not relate these factors to the Fund's strategic goals and objectives and does not indicate how the Fund will take the factors into account when assessing awardees' progress toward goals; and (13) in addition, the plan does not describe the relationship of its activities to similar activities in other government agencies.