On July 31, 2026, the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) issued a joint notice of proposed rulemaking to amend their Community Reinvestment Act (CRA) regulations. The agencies described it in a joint news release, and the OCC summarized it for supervised institutions in Bulletin 2026-35. The FDIC announcement confirms the joint rulemaking. The proposal was published in the Federal Register on August 12, 2026 (91 FR 52114).
Our first article on the proposal covered the asset-size thresholds and which institutions would be re-tiered. This article covers a different part of the notice: how community development grants and donations would receive CRA consideration, and what that could mean for the organizations banks fund.
Comments are due October 13, 2026. Nothing described below is in effect.
The proposal changes the basis on which a grant or donation qualifies. Two provisions stand out.
The proposed rule states that a bank "would only be permitted to receive CRA consideration for grants and donations directly used by the recipient for a program, project, or initiative with a primary purpose of community development in the bank's local community."
The proposed standard would place greater emphasis on the actual use of funds than on the general mission or status of the recipient organization. On the face of that language, a contribution to a qualifying nonprofit would not qualify on the strength of that organization's mission alone.
The proposal "would also impose a 15 percent cap on the indirect costs that recipients could incur as a part of administering a grant or donation." The cap applies to Large banks only. OCC Bulletin 2026-35 describes the corresponding obligation on the institution: Large banks would need to document that recipients of community development grants "do not have overhead costs in excess of 15 percent."
The documentation duty sits with the bank, though the threshold is measured on the recipient's side of the transaction.
The agencies illustrate it with a grant that had already received CRA consideration. The recipient provided homeownership counseling to low- and moderate-income individuals and health care services to individuals experiencing homelessness. Roughly 25 percent of the grant went to the organization's internal expenses and the remainder to direct service costs. Under the proposed rules, the agencies state, that grant "would not qualify as a CD grant for a large bank due to the recipient using over 15 percent of its proceeds for indirect expenses."
The notice leaves open what the 15 percent is measured against. The proposed rule describes a cap on indirect costs incurred "as a part of administering a grant or donation," and the agencies' example is grant-level, describing a recipient that used over 15 percent of that grant's proceeds for indirect expenses. OCC Bulletin 2026-35 describes the bank's duty differently, as documenting that recipients "do not have overhead costs in excess of 15 percent," which reads as a test on the organization rather than on the grant. The difference is material. A grant-level test can be addressed by structuring a restricted grant with a stated budget. An entity-level test would turn on the recipient's overall cost structure, and would reach organizations regardless of how any single grant is written. This is a productive subject for a comment.
Under the proposed thresholds, Large bank means more than $10 billion in assets, and the Intermediate category runs from $1 billion to $10 billion. Institutions that would be reclassified as Intermediate would not be subject to the indirect-cost cap, though the direct-use standard would still govern their grant activity.
Most bank giving programs are built on long-standing relationships with a set of local organizations. The proposal's requirements run to banks rather than to recipients: it does not regulate nonprofits, and it would not restrict which organizations a bank may support.
The practical effect is another matter. Because a bank would need to document how funds were used, and for Large banks that the recipient's indirect costs stayed under 15 percent, the conditions banks attach to their own giving could change. That reaches into the terms of the partnership.
Banks are accustomed to receiving CRA consideration for donations with relatively light documentation. The proposal changes that. To count a donation, a bank would need to show the funds were actually used for the intended program or purpose, not only that the recipient's mission fits the definition of community development. Donation programs would start to need the kind of impact reporting that grant-funded organizations already provide: what the money paid for, who it reached, and how that matches the stated purpose. Banks would face a choice between building that reporting into their donation programs or accepting that some giving no longer counts toward CRA.
Unrestricted funding is often the most useful money a nonprofit receives and the hardest to raise, because it covers the costs that no single program grant carries.
Under a direct-use standard, an unrestricted gift applied across a full organizational budget would be harder to tie to one program, project, or initiative with a primary purpose of community development.
Nothing in the proposal prohibits unrestricted giving. The question is whether the contribution receives CRA consideration, and that would turn on documentation the bank may not hold today. Program-restricted grants would be simpler to qualify, which is a change in the shape of the relationship and not only in the paperwork.
A bank would need to demonstrate how the recipient used the funds. Some of that can come from documents the bank already holds, such as a grant agreement, an approved program budget, or an invoice. In many cases, though, the recipient will hold the information the bank needs, particularly on how funds were spent after the fact.
For Large banks, the indirect-cost test points the same direction. A figure describing the recipient's indirect costs generally has to come from the recipient.
In practice, that pushes use-of-funds reporting into the grant agreement: a stated restricted purpose, a budget separating direct program delivery from administrative cost, and a report at the close of the grant period.
Organizations with development staff generally produce this already. A two-person organization may be asked for something it has never been asked for. Banks that want to sustain those partnerships may need to weigh the reporting capacity of the partner alongside the qualifying purpose of the program, and in some cases help the partner build the reporting.
Whether a recipient's indirect costs fall under 15 percent depends on how indirect costs are measured, and the answer will not be uniform across a bank's partner list. The agencies' own example, at roughly 25 percent, describes an organization whose grant had already received CRA consideration under the current rules.
Because the cap reaches Large banks only, a given organization's exposure would depend on which institutions fund it. A community partner could face one set of documentation expectations from a bank above $10 billion in assets and a lighter set from a smaller funder in the same market.
Charter type would matter too, and in a way it never has before. Because the Federal Reserve did not join the proposal, the indirect-cost condition would not reach a Fed-supervised bank at any asset size. A $15 billion state member bank would have no cap while a $15 billion national bank would. For a community partner, that means the documentation a funder asks for could depend not only on how large the bank is but on which agency supervises it, a distinction most nonprofits have never had reason to track.
If qualification turns on documented use of funds, the organizations best positioned to remain fundable are the ones already equipped to document. Whether that shifts community development dollars toward larger and better-staffed recipients, and away from the smaller organizations closest to the need, is a fair question to raise while the comment period is open.
None of this is prohibited under the proposal. The change is evidentiary. A bank would need documentation of use, not only documentation of the gift. Institutions that already require use-of-funds reporting from the organizations they fund would have much of what the proposed standard describes. Institutions that fund on a letter and a check would have more to build, and so would their partners.
For each grant, a bank may need to know and be able to demonstrate:
Under the current rules, a qualification decision can rest largely on the recipient and the purpose. The proposal would push that record down to the level of the individual grant and its proceeds.
Most of that record has to come from the partner, and it can be gathered now. Useful questions for a recipient organization include:
Asking them changes nothing about a bank's current obligations, and it produces the record the proposal describes if the rule is finalized.
The relevant platform capability is the RiskExec Community Development software module. In its Qualified Investments submodule, a grant record supports:
The figure the proposed 15 percent cap would turn on is a recipient's indirect-cost percentage. Institutions that want to begin tracking direct and indirect grant amounts before a final rule can review field configuration options with their RiskExec representative. As the agencies move through the rulemaking process, RiskExec will evaluate whether additional fields, validations, or reports are appropriate.
For related guidance on documenting qualifying activity, see Building a Strategic Qualified Investment Program Under CRA. Institutions reviewing their broader CRA program can also see the RiskExec CRA compliance software module.
Nothing here is final. Current classifications, examination procedures, and reporting requirements stay in effect. The comment period closes October 13, 2026.
Four things worth doing before then:
We walked through the re-tiering analysis and the grant provisions in more depth on our August 12 webinar, available on demand.
The proposal would limit consideration to grants and donations that the recipient uses directly for a program, project, or initiative with community development as its primary purpose.
For Large banks, it would also apply a 15 percent condition to indirect administrative costs associated with a grant.
It would depend on how the recipient used the funds. The proposed standard places greater emphasis on the use of the grant than on the general mission or status of the recipient organization.
A qualifying organization would not by itself establish qualification for the contribution.
The proposal would impose a 15 percent cap on the indirect costs a recipient incurs in administering a grant or donation. It applies to Large banks only, which under the proposed thresholds means institutions with more than $10 billion in assets.
OCC Bulletin 2026-35 describes the corresponding duty on the institution: Large banks would need to document that grant recipients do not have overhead costs above 15 percent. The agencies give an example of a grant that had already received CRA consideration, where roughly 25 percent of the funds went to the organization's internal expenses, and state that it would not qualify for a Large bank under the proposed rules.
The notice and the bulletin describe the measurement differently, and whether the 15 percent applies to the individual grant or to the recipient organization is an open question.
No. The proposal addresses whether a contribution receives CRA consideration, not whether a bank may make it.
Unrestricted giving could be harder to document against a direct-use standard, since a gift applied across a full organizational budget is harder to tie to one qualifying program or initiative.
The proposal regulates banks, not recipients. It would impose no direct obligation on a nonprofit, and the documentation duty would sit with the funding institution.
The practical effect could still reach the recipient. A bank may ask for a grant agreement stating a restricted purpose, a budget separating direct program delivery from administrative cost, and a report on how the funds were used. Where the 15 percent cap applies, a Large bank would also need a figure for the organization's indirect costs. Organizations that already report use of funds to other funders would have most of this in place.
Not directly. The Federal Reserve Board did not join the OCC and FDIC proposal, so state member banks would remain subject to the Federal Reserve's current CRA rules unless the Board takes separate action.
For grants, that means neither the direct-use standard nor the 15 percent indirect-cost condition would apply to a Fed-supervised bank at any asset size. Two similarly sized banks in the same market could ask a community partner for very different documentation depending on which agency supervises them.
