Low-Income and Community Development Status Offer Opportunities to Consumers, Credit Unions
Upcoming trainings in Portland and Seattle will detail the benefits of low-income or community development designation, a status that helped Express Credit Union more than double membership and improve services and technology.
June 19, 2012
The everyday challenges credit unions face—the regulatory burden, competition and the impact of the recession—threaten to chip away at their ability to perform the core mission of serving people of modest means.
Toolkits offering proven expertise, regulatory flexibility and grant money could allow credit unions to serve successful consumers while empowering under-banked consumers to save and take financial responsibility. Credit unions can leverage those resources by earning designation as Community Development Financial Institutions (CDFIs), Community Development Credit Unions (CDCUs) or both.
The Northwest Credit Union Association (NWCUA) is teamed with The National Federation of Community Development Credit Unions (NFCDCU) to offer “how-to workshops” this month. The training is being offered in Portland on June 27 and in Seattle on June 28 and will outline benefits and best practices.
“We have found that too many credit union leaders are not even aware of how their financial institutions can benefit with CDCU and CDFI certifications,” said Pablo DeFilippi, the Federation’s director of membership. “There is some regulatory flexibility that comes with this status which allows credit unions to address many of their challenges, including limits other credit unions have on member business lending and raising supplemental capital.”
DeFilippi provided the Association with a detailed report on how community development certification benefits credit unions.
Community Development status meant a world of difference for Express Credit Union (ECU), allowing the Seattle financial institution to provide better services and technology, hire additional staff and ultimately more than double its membership.
“When Express became a designated CDCU and a member of the Federation in 2009, the doors to serving our current members—as well as those in our communities who are unbanked—opened up with unimagined success,” said Express President and COO Norma Hernandez. “We learned how to become a better credit union, how to become a natural part of thousands of low- to moderate-income families’ lives. We discovered that there are endless possibilities to helping our communities become stronger and stable.”
Express representatives plan to attend The Federation/NWCUA training to further leverage the benefits of a community development mission.
“Each CDCU can tell a story of beating the odds, helping the vulnerable and pursuing a mission that is as large as the American Dream and as specific as the future of a single child,” said the Federation’s website.
Credit unions of all sizes could be eligible for CDCU and CDFI designation.
A large credit union with CDCU resources could benefit an urban area by partnering with government and private-sector programs to revitalize neighborhoods and provide services to disadvantaged members.
The CDCU designation may also benefit rural credit unions and their members hit hard by the economy. While May unemployment levels in Washington and Oregon remained close to the national average of just over eight percent, try spinning an “improving economy” to folks in counties such as Grays Harbor, Wash., or Grant, Ore., where more than 13 percent of the population is out of work. CDCUs have the potential to breathe new hope into such communities, most of which were long ago abandoned by commercial banks and are now preyed upon by pricy check-cashing and predatory lending services.
Credit unions can earn additional designation as CDFIs from a regulatory agency. If leveraged properly, CDFIs have access to supplemental capital as well as exemption from the cap limiting member business loans (MBL) to 12.25 percent of their assets.
“The Federation can walk credit unions through the process of earning and leveraging designation as CDCUs and CDFIs,” DeFilippi said. “Keep in mind, since its inception, the CDFI fund has provided more than $1 billion to CDFIs with nearly $120 million in grants to credit unions. The Federation is the only national advocate for credit unions with CDFI certification or with a primary mission of community development.”
The training sessions in Portland and Seattle will provide not only information on the benefits of CDFI and CDCU certification but will help those already involved to take service to a higher level. The agenda includes presentations on foreclosure prevention and putting the low-income designation to work for the credit unions.
For more information, contact Alison Carr, the Federation’s membership and outreach officer, at 800.437.8711, ext. 203.
Questions or Concerns? Contact Matt Halvorson, Anthem Editor: email@example.com.