What a Turnaround; CDCUs Awarded Close to $7 Million from CDFI, Dwarfing the $1 Million From Last Year

WASHINGTON – The U.S. Treasury Department’s Community Development Financial Institutions Fund reversed course this year when it came to credit unions. Whereas last year the Fund only granted just over $1 million to four credit unions or credit union affiliated organizations, this year 10 credit unions or affiliated organizations received almost $7 million from the Fund. Among the winners include the National Federation of Community Development Credit Unions, which received $1 million, the North Carolina Minority Support Center, which received $500,000, the $12.4 million Lower East Side People’s FCU which received $560,000 and the Self-Help Ventures Fund, which is affiliated with the $174 million Self-Help Credit Union and which received $2 million. The Federation and credit union CDFIs strongly objected last year to the elimination of the CDFI Fund’s Small and Emerging CDFI (SECA) program under which most credit unions had previously applied for funds. CDFI reinstated the SECA program for 2004′s grant process. “While we always believe credit unions should be receiving a larger portion of the funding, we are delighted at the improved results of this round,” explained Clifford Rosenthal, executive director of the Federation. “Nineteen CDCUs received awards, as well as four other credit unions. We were also pleased that affiliates of CDCUs also received awards, as well as other Federation associates.” Six CDCUs received Financial Assistance Awards ranging from $99,000 to $1.42 million, for a total of $3,373,010. In addition to the Financial Assistance Awards, 14 Federation members also received Technical Assistance Awards totaling $621,445 (maximum size: $78,640), bringing the total CDCU awards of the two Fund components to $3,994,455. Financial Assistance Awards can go to many different aspects of a CDCU’s mission, whereas Technical Awards are generally targeted to a specific technical improvement. Elation was widely reported among CDCUs about the funding, especially including CDCUs which have not received money in prior years and viewed the award as a vote of confidence. “Wow, this is a moment of truth! We’re very excited we got this award!” exclaimed Yolanda Karp, President and CEO of the $2.7 million Hacienda Community CU. “We’ve acquired a good reputation here in the community, and in all of Oregon, and these funds will allow us to continue to expand and improve the programs we’ve started. This really helps!” The two-year-old credit union is headquartered in Portland, Oregon and it will use the $99,000 award to continue its work among lower income Hispanics across the state. The $24 million School Workers Federal Credit Union headquartered in Charlotte, North Carolina, plans to use the almost $58,000 it received to offer Internet banking and online debit cards to their members. “We are very excited and really appreciative of the award,” said Scales. “We work hard to try to do what’s right and take care of our members; now we can help even more,” said Saundra Scales, CEO of the credit union. The $1.7 million Buffalo Cooperative Federal Credit Union headquartered in Buffalo, N.Y. spoke to Federation staff about their award of over $22,000. “We’re flabbergasted and thrilled to have been awarded these funds,” said Kelly Mauerer, treasurer of the credit union. “These funds will allow us to send some of our board members and staff for training at the Federation’s CDCU Institute. We will also be able to implement a new and more aggressive financial literacy campaign, upgrade our computer systems and software, and strengthen our micro business program.” The Federation will use the $1 million Fund grant to seed a new program designed to help community development credit unions make more mortgage loans. “This is a tremendous vote of confidence in the power of CDCUs to promote homeownership in low-income communities,” said Rosenthal. “We’re grateful that the CDFI Fund is supporting this effort.” The Federation will use the $1 million to help found the Family Home Fund which will purchase non-conforming mortgage loans from CDCUs, enabling them to make more of them. Over the past five years, the Federation said, credit unions overall sold 42% of the mortgages on the secondary market whereas CDCUs only sold 7%. “CDCUs play a critical role in building wealth in low-income communities,” said Rosenthal. “The Family Home Fund will channel loan capital to CDCUs so they can help more of their members to build wealth in the most fundamental way – by becoming homeowners.” But while the Federation is pleased at the amount of the awards CDCUs received, Rosenthal noted that the jury is still out on whether the Fund has completely changed its attitude toward CDCUs. “For example, we don’t yet know how many CDCUs applied for funds and were denied,” Rosenthal said, “and we have heard from CDCUs who were not funded. We are looking forward to reviewing some of the applications that were denied to get a better idea of what the problems were.” -