Completing the “Percent LMI Served” field on your findCRA nonprofit profile is an important part of showing how your organization aligns with CRA and garnering bank support. As banks often rely on this calculation to determine which organizations to support, it is critical that you complete this percentage accurately.
Under CRA, low-income is defined as “an individual income that is less than 50 percent of the area median income or a median family income that is less than 50 percent in the case of a geography” and moderate-income is defined as “an individual income that is at least 50 percent and less than 80 percent of the area median income or a median family income that is at least 50 and less than 80 percent in the case of a geography”. So how do you calculate this income?
First, you’ll need to determine in which Metropolitan Statistical Area (“MSA”), Micropolitan Stastisical Area (“MiSA”) or Metropolitan Division (“MD”) the counties you serve are located.
- Make a list of all the counties your organization serves including the state where they are located.
- Visit the Bureau of Economic Analysis website and access their helpful online search tool.
- Using the online search tool, review the “Counties in Metropolitan Stastistical Areas”, “Counties in Micropolitan Statistical Areas” and “Counties in Metropolitan Divisions” under the dropdowns to determine if the counties your nonprofit serves are in an MSA, MiSA or MD.
- Not every county in the U.S. is located in an MSA, MiSA or MD, and in those cases, those counties are considered to be “nonmetropolitan” counties within a state, which you can confirm on the same online search tool by viewing the “Nonmetropolitan counties by state” dropdown.
- Compile a list of the counties you serve and for each one, write down the name of the MSA, MiSA, or MD its located in or if it’s not in one of those areas, the fact that the county is in a nonmetropolitan area in the state.
Once you’ve identified where the areas your nonprofit serves are located, you’ll next need to determine the percentage of LMI clients served for each area. To do this:
- Visit the FFIEC’s website and review the list of the annual Median Family Income Reports.
- Select the PDF or Excel report for the current year.
- On the list, find the applicable MSA, MiSA, or MD that you identified above listed alphabetically or if you have counties in a nonmetropolitan area, scroll to the bottom of the list and find the “nonmetro portion” for the state that applies to your organization.
- Identify the current year’s “Est. MSA/MD Median Family Income” in the far right column.
- Using that income number, to determine the low-income level for the area, multiply the income by 0.50. For example, if the area income is $63,400, multiply that by 0.50 [$63,400 x 0.50 = $31,700]. That gives you the upper limit for low-income in that area of $31,700 meaning that anyone making $31,700 annually or less living in that area would be considered low-income.
- To determine the moderate-income level for the area, multiply the income by 0.80. Using the same example as before, if the area income is $63,400, multiply that by 0.80 [$63,400 x 0.80 = $50,720]. That gives you the upper limit for moderate-income in that area of $50,720, meaning that anyone making between $31,701 and $50,720 annually living in that area would be considered moderate-income.
Again, it is important that you accurately calculate and complete the percent LMI served on your findCRA nonprofit profile. A bank may request additional information for their documentation purposes to support your calculation; so be sure to document how you determined the percent LMI served.
Also, the Interagency Q&As on CRA provide a listing of other income characteristics that qualify for CRA. You can also utilize these income characteristics as a basis for determining the percent of LMI individauls served by your organization.