SAN JUAN, Puerto Rico – Two events, the delivery of an oversized check and an unexpected, congratulatory visit from the new head of the Treasury's CDFI helped set the tone for what became a joyful, if cautious, celebration of the National Federation of Community Development Credit Union's 30th annual meeting. Joyful because a few people over the years doubted the Federation would ever make it that far and, in 1983, it seemed unlikely that the NFCDCU would make it an additional 30 days, not to mention 30 months or, remarkably, 30 years. The Federation had entered a dire part of its history. As federal funding dried up, the nine-year old organization's membership shrank by 50%. The 13 members of the staff had to be laid off, the office surrendered and the organization's operations forced to retreat to the home of its new (uncompensated) executive director, Clifford Rosenthal. But the reality of those dark days only served to make the delivery of the check that much sweeter. The $80,000 check came from a technical assistance grant from the NCUA, targeted to the Federation's CDCU Institute. The Institute, which meets twice a year on a college campus in New Hampshire, trains CDCU board members and staff about the ins and outs of running a credit union, applying for and working with grant money and making the decisions they will need to make to keep their credit union growing. “Training of board members and staff is vital to ensure that CDCUs will not just survive, but thrive in the future,” Matz said. Since it was founded in 1999, the CDCU Institute has provided training for more than 130 board members and staff from 86 CDCUs in 20 states. The NCUA grant will enable 30 more board members and staff to attend the CDCU Institute free of charge. The grant will reimburse tuition, room and board expenses. Those who also need assistance paying travel expenses may apply to NCUA on a case-by-case basis, “so we encourage you to apply,” Matz told the meeting to widespread applause. The unexpected executive visit from Art Garcia, the newly appointed head of the U.S. Treasury's Community Development Financial Institution's Fund, carried no check but remained nonetheless rich in significance. “We're used to CDFI heads who say they have had credit union accounts or that they generally support credit unions,” Rosenthal told the meeting, “but in Art Garcia we have someone who has a real history with credit unions and a real understanding of the sorts of work that credit unions do.” Garcia, who had made the trip to the Federation conference his first as a head of the CDFI Fund, told the meeting about his early experiences as a volunteer in credit unions which his father and father-in-law had helped found. One, San Ignacio, had been a faith based, one room credit union. “My father-in-law started a little one room credit union where he would go in and he would cut the wood for the little one room credit union's potbelly stove,” Garcia told the meeting. “When I finally got my start in a career in financial services it was as a volunteer on the board of the San Ignacio Credit Union.” Garcia's arrival and speech carries a particular importance as the relationship between CDCUs and the Federal fund they helped to create have been widely seen as difficult over the last two years. In 2002, grants mostly made through the Small and Emerging CDFI assistance component accounted for $2 million for individual CDCUs and an additional $2 million for the Federation, which administers CDFI funding as well on behalf of CDCUs that are too small to interact with the Fund directly. But in fiscal year 2003, the Fund ended the SECA program in favor of an emphasis on a program called the New Markets Tax Credit program. Under NMTC, businesses which make grants to qualified community development financial institutions can receive tax credits from the federal government for those grants. The new program was meant to move CDFIs, including CDCUs, away from a focus on the federal government for support and more toward looking to the private financial sector. But in practice what this has meant is that the CDFI Fund effectively stopped funding CDCUs and left many to hope for next year's round of funding. No credit union received money under the NMTC this year, for example. Garcia steered clear of the controversy, however, and did not take questions from his audience, opting instead to reassure them about his familiarity with credit unions and empathy for their work. Credit unions' work is not merely the financial services business, Garcia said. “It's the people business, the dream business, the business of helping people make their dreams come true. But I don't have to tell you that,” he added, “you live that every day.” Garcia's comments and the NCUA's check served as a counterpoint to some of the challenges that speakers touched upon both in plenary sessions and in break out sessions. Small CU Crisis In remarks prior to the check delivery, Matz told the meeting that she had members of NCUA's staff send her an e-mail every time a small credit union merged or closed and describing, briefly, the reasons for the closure. “Sometimes there are three or four e-mails in a day,” Matz said, adding that the rate had averaged one per business day for months. Matz cautioned the meeting that while CDCUs are very important to the overall credit union industry and their members, “this is not enough to preserve your future. You must overcome the threats to survival that all small credit unions face today.” “With all the threats to small credit unions' survival – and all the opportunities to grow – there has never been a more critical time to invest in your credit union's future,” Matz added, and urged CDCUs to focus on strategic planning, staff and board training and on partnering with larger CUs or outside organizations to meet their goals. But even that might not be enough as some small credit unions count on mergers as ways of leading them out of their sometimes significant financial problems or difficulties providing the products and services their members need. For example, when the North Carolina Minority Support Center reformed a struggling CDCU into the $8.1 million Generations Community Credit Union, it paved the way for Generations to merge with five smaller credit unions since it re-opened its doors with a revived and expanded charter (see story, page 1). Tanya Branch, vice president and CFO with the Support Center emphasized that merging the smaller credit unions had not been the first option, but that when faced with the likelihood of their closing had seemed the best option. “I hope we can say that we are done [merging small credit unions in North Carolina]” Branch said, “ but realistically I know we are probably not yet.” -

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