COVID-19 Federal Assistance e311


Housing & Rental Assistance, Workforce & Economic Development

Can a municipality use CRF or ARP funds to establish a Financial Empowerment Center, which provides free financial counseling to low-income residents?

Although Financial Empowerment Centers (“FECs”) are not expressly listed as an eligible use by the U.S. Department of Treasury (“Treasury”) municipalities can consider using Coronavirus Relief Funds (“CRF”) from the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act or Coronavirus Local Fiscal Recovery Funds (“CLFRF”) from the American Rescue Plan Act (“ARP”) to establish one, provided that the FEC’s services and operation comply with Treasury guidance. Municipalities may also consider using other funds, such as the U.S. Department of Housing and Urban Development (“HUD”) Community Development Block Grant (“CDBG”).

Coronavirus Local Fiscal Recovery Funds (“CLFRF”)

The ARP authorizes the use of CLFRF funds  “to respond to the COVID-19 public health emergency or its negative economic impacts, including assistance to households, small businesses, and nonprofits.”[1] The CLFRF Interim Final Rule published by Treasury provides guidance regarding eligible programs that provide such assistance to households, including:

  • food assistance;
  • rent, mortgage, or utility assistance;
  • counseling and legal aid to prevent eviction or homelessness;
  • cash assistance;
  • emergency assistance for burials, home repairs, weatherization, or other needs;
  • internet access or digital literacy assistance; and
  • job training to address negative economic or public health impacts experienced due to a worker’s occupation or level of training.[2]

Treasury explicitly notes that the eligible programs listed in the Interim Final Rule are non-exclusive, and other programs may be considered using Treasury’s evaluation criteria.[3]

Municipalities must assess and ensure that programs respond to negative economic impacts resulting specifically from the COVID-19 pandemic.[4] A recipient would likely satisfy the Interim Final Rule’s threshold requirement of a “negative economic impact” by: (i) experiencing unemployment; or (ii) suffering increased food or housing insecurity; or (iii) subsisting at a low-to-moderate income level.[5]

In addition, Treasury notes that certain types of services are eligible uses when provided in a Qualified Census Tract (“QCT”), or to families living in QCTs.[6] One such delineated eligible service is the funding of public benefits navigators in assisting community members with navigating and applying for available Federal, State, and local public benefits or services.[7] It would likely be acceptable if a Financial Empowerment Center (“FEC”) were to provide services to families in QCTs in applying for government benefits or services.

CLFRF costs must be incurred on or after March 3, 2021 and before December 31, 2024;[8] however, the fund’s period of performance extends through December 31, 2026.[9] In considering whether a cost is incurred, Treasury indicates that a cost must be obligated and adopts the definition of “obligation” as included in the Uniform Guidance.[10] Treasury has clarified that for eligible assistance provided to households, businesses, and individuals to address the negative economic impacts of the public health emergency, CLFRF funds may cover expenses incurred by a household, business, or individual prior to March 3, 2021, so long as this cost was not incurred by the municipality prior to March 3, 2021.[11]

Coronavirus Relief Funds (“CRF”)

If municipalities continue to have available Coronavirus Relief Funds (“CRF”) of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, they may consider using those funds to cover the establishment of an FEC. It is important to note that the timeframe for allowable expenses differs between CRF and CLFRF, and municipalities should be attuned to the anticipated and allowable expenditure dates when assessing which funding stream to use. To be eligible for CRF funding, proposed expenditures must meet three requirements: (i) be necessary and incurred due to the public health emergency with respect to COVID–19; (ii) not be accounted for in the budget most recently approved as of March 27, 2020 (the date of enactment of the CARES Act) for the State or government; and (iii) be incurred during the period that begins on March 1, 2020, and ends on December 31, 2021.[12] Generally, Treasury places the responsibility of determining whether a cost is necessary in responding to the COVID-19 public health emergency on the relevant government official.[13]

Guidance from Treasury further states that funds may be used to cover expenses associated with the provision of economic support in connection with the COVID–19 public health emergency and any other COVID–19-related expenses reasonably necessary to the function of government that satisfy the Fund’s eligibility criteria.[14] A municipality may be able to consider an FEC as provision of economic support in connection with the public health emergency if they are able to justify the connection of the public health emergency response. While the CRF does not provide specific considerations for this justification, municipalities may wish to use the considerations outlined above in relation to the CLFRF as a starting point for establishing this connection. In some instances, CRF funds have been used by municipalities to create economic support programs such as small business grant programs, programs to help hotels hire new employees, veteran business programs, and more.

Other Sources of Funding and Multiple Sources of Funding

Additionally, a municipality may consider leveraging HUD CDBG dollars to assist in establishing and sustaining an FEC.  CDBG funds “supports development of low-cost and affordable housing as well as work to improve and sustain infrastructure in disadvantaged regions and neighborhoods, and to support economic development and community service projects within communities.”[15]  According to the Cities for Financial Empowerment Fund Report, “…cities raised close to $1 million in federal funds for 2016 program operations.  Cities also learned from one another in pursuing federal funding: they shared their experiences of leveraging different types of federal funding and were able to point to one another as examples when working in their own local context.  While not without challenges, including additional reporting burdens, these federal funds were important sustainability sources, especially as they represented new uses of federal funding streams for these cities.”[16]  A municipality may amend their current CDBG Action Plan to realign existing CDBG dollars and/or apply new CDBG funds received to this activity, however, the activities must be eligible under CDBG.  

If municipalities are deciding between funding programs to cover costs, they should ensure that expenses are covered by one source or the other in order to prevent duplication of benefits. A municipality may in certain circumstances use both CRF and CLFRF funds to cover costs related to the establishment of an FEC; however, specific expenses may only be covered by one funding source. For example, a municipality could use CRF funding to cover eligible equipment and utility costs prior to December 31, 2021 but could switch to using FRF funding to cover equipment and utility costs after January 1, 2022.

Last Updated: June 10, 2021

[1] American Rescue Plan Act of 2021 § 9901, Pub. L. No. 117-2, amending 42 U.S.C. § 801, f Section 603(c)(1)(A) et seq.,

[2] Treas. Reg. 35 CFR 31 at [33], available at:

[3] Id. at 11.

[4] U.S. Department of the Treasury, Coronavirus State and Local Fiscal Recovery Funds: Frequently Asked

Questions (updated June 8, 2021), Q2.1. at 3,

[5] Treas. Reg. 35 CFR 31 at [33], available at:

[6] U.S. Department of the Treasury, Coronavirus State and Local Fiscal Recovery Funds: Frequently Asked

Questions (updated June 8, 2021), Q2.11. at 6,

[7] Treas. Reg. 35 CFR 31 at [22], available at:

[8] Id. at 97.

[9] Id. at 99.

[10] Id. at 98.

[11] Coronavirus State and Local Fiscal Recovery Funds Frequently Asked Questions as of June 8, 2021 at [14], available at:

[12] Coronavirus Relief Fund for States, Tribal Governments, and Certain Eligible Local Governments, Fed Reg Vol 86, No 10 at [4183], available at

[13] Id.

[14] Id. at 4184.

[15] An Evaluation of Financial Empowerment Centers: Building People’s Financial Stability as a Public Service, 2017, Table 23 Federal Funding Streams Supporting FEC Sustainability, at 111.

[16] Id. at 113.