What the CDE Application Really Tests—and Why Most Organizations Miss the Point
Joy Johnson
In my last article, I wrote about the power and politics of who gets to decide Community Development Entity (CDE) status—and why that decision shapes which neighborhoods see investment and which ones stay stuck explaining their worth.
What I promised next was this: a walk-through of what the CDE application process actually looks like, beyond the checklist and the jargon.
Not the play-by-play.
Not the cheat code.
But the truth behind what reviewers are really evaluating—and why so many well-intentioned neighborhood organizations quietly fall out of contention.
Let’s talk about that.
What is a Community Development Entity (CDE)?
A Community Development Entity, or CDE, is an organization certified by the U.S. Treasury to attract and deploy private capital into low-income communities—most commonly through the New Markets Tax Credit program.
In simple terms, CDE status allows an organization to sit between investors and neighborhoods, translating community priorities into investments that meet both public purpose and financial discipline.
But certification alone is not the prize.
What matters is whether an organization can use that designation responsibly—governing capital, managing risk, and deploying resources in a way that strengthens communities without compromising mission.
That distinction is where many applications succeed—or quietly fail.
The CDE application isn’t just paperwork—it’s a stress test
On paper, the CDE application looks technical: governance, track record, pipeline, accountability, deployment strategy.
But in practice, it’s something else entirely.
It’s a test of whether your organization:
Thinks systemically, not transactionally
Understands capital behavior, not just community need
Can translate lived experience into investable structure
Most organizations approach the application as a funding form.
Reviewers read it as a business model.
That gap is where momentum is lost.
What reviewers are really looking for (but rarely say out loud)
Here’s the part most people don’t want to hear:
Reviewers aren’t asking, “Do you deserve this?”
They’re asking, “Can we trust you with scale?”
They’re quietly evaluating:
Whether your governance actually functions—or just looks good on paper
Whether your pipeline reflects strategic intent or reactive opportunity
Whether your narrative signals readiness for capital—or fear of it
Strong mission alone does not carry an application.
Clarity does.
And clarity is not accidental.
The most common mistake: over-explaining need and under-explaining capacity
Neighborhood organizations are often experts at describing why investment is needed.
But the application is less interested in need than in control:
Who makes decisions?
How are risks assessed?
What happens when a deal goes sideways?
How do you deploy capital without stalling your core work?
When those answers are fuzzy, reviewers read hesitation—even when passion is clear.
Preparing without losing momentum is the real challenge
Here’s where many organizations get stuck:
They pause everything to “get ready” for CDE status.
They chase perfection instead of preparation.
They stop serving the neighborhood to study the system.
That’s backward.
The strongest applicants don’t slow down their mission—they structure it.
And that balance—between readiness and real-world operation—is exactly what most people ask me about after the fact.
Why I’m teaching this live (and not writing it all here)
There’s a reason I don’t put everything in articles.
Some things require:
Conversation
Context
Real examples
And yes—real questions from real organizations
The CDE process is too consequential to learn through fragments and assumptions.
That’s why I created this training.
🔓 Unlocking Capital: How to Become a CDE
A live training with Joy Johnson
This session is designed for:
CDCs and neighborhood-based nonprofits
Community leaders tired of chasing restricted dollars
Organizations ready to shift from grant survival to capital strategy
What we’ll cover (at a high level):
How the CDE application is actually reviewed
The red flags that quietly disqualify applicants
How to prepare without freezing your organization
What readiness really looks like—and how to build toward it
📅 Date & time: January 13th, 12:00pm
📍 Format: Live training
🎟 Register here:
This is not theory.
It’s about positioning your organization to decide, not just apply.
A final thought
CDE status doesn’t solve everything.
But it does change who gets listened to.
And once you understand how that door actually opens, you stop knocking randomly—and start moving with intention.
I look forward to working through this with you live.
Joy Johnson
With more than two decades of experience in community development, real estate strategy, and organizational leadership, Joy Johnson brings a seasoned, solutions-focused voice to the field. She is committed to helping communities and institutions avoid systemic pitfalls and build models that truly work. To reach Joy, call (216) 238-2235.