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CRA: An Examiner's Perspective
Questions to Ask Workforce Development Partners

By

Douglas Yarwood

This article is part of a series on CRA best practices from an examiner’s perspective. Although this column focuses on CRA best practices for financial institutions, the content may provide insights to community development organizations working with financial institutions to meet credit and community development needs. As a disclaimer, this series is only meant to represent best practices; financial institutions should consider the information presented in context of the requirements or guidance of their primary regulator and the business needs of their financial institution.


Workforce development is a topic that arises often these days in community contacts conducted by examiners in both rural and metropolitan areas of the Federal Reserve’s Eighth District. Workforce development includes systems of training, educating and providing social services to working-age individuals that enable them to succeed in the labor force while also meeting employers’ demands for quality talent. When documenting workforce development activities (loans, investments and services), four questions should be routinely addressed: Who will the activity benefit? What is the intent of the activity? How is the activity structured? How will it be accomplished?

When determining the group that will receive the benefit (target group) in a project, it is important to ensure that there is a direct connection to target groups in the CRA. In many cases, the target group is indicated as veterans, minorities or individuals with disabilities, which does not always equate to the CRA definitions of low- and moderate-income (LMI) geographies or individuals, or distressed, underserved or designated disaster areas. In cases where activities are indicated to benefit women- and/or minority-owned businesses, there may not be a direct relation to the guidance if they do not also indicate that the recipient is a women- and/or minority-owned financial institution or that these businesses will meet the CRA definition of a small business.

Once the target group is identified, activities should clearly reflect the intent of the activity. Activities such as internships, apprenticeships, summer employment opportunities for youth, college work-study positions, job shadowing and transitional jobs programs may be considered under different purposes, depending on their intent. For example, if an activity results in permanent employment with a current small-business partner, it may qualify as economic development. Alternatively, if there is no permanent job creation at the end of training, the activity might count as community development services. Additionally, activities that increase the number of local middle-skill/middle-wage jobs, or increase the availability of technology or equipment, with the intent of attracting or retaining residents, businesses or small farms may count as revitalization and stabilization for distressed and underserved LMI or rural middle-income census tracts.

Since many workforce development activities occur over a longer period of time, it is important to identify the structure; in doing so, examiners will be able to better understand how the activity will be accomplished. Descriptions of structure should include activity partners and their role as well as information related to the success rate of any partner in the past with similar activities. Examples of partners may include state and local workforce development boards, educational institutions, business and industry associations, community-based groups, labor groups, and philanthropic and community organizations. The structure should also identify the strategies that will be pursued to assure accomplishment. These may include sector strategies or industry partnerships that may entail work-based training, career pathways or matrices for determining success in basic skills improvement.

By including answers to these four questions in descriptions of CRA activities, the examiner will more fully understand the workforce needs of the community and the bank's level of responsiveness in meeting those needs.

For more information on questions related to workforce development activities, please visit Engaging Workforce Development: A Framework for Meeting CRA Obligations.

Douglas S. Yarwood is a senior examiner at the Federal Reserve Bank of St. Louis.