Credit Unions Rediscovered by CDFI Fund

WASHINGTON – For community development credit unions that qualify as Community Development Financial Institutions, 2004 will go down as the year the U.S. Treasury Department’s CDFI Fund remembered them again. In 2003, the relationship between credit union CDFIs and the federal fund which had assisted their growth with various sorts of grants looked fairly bleak and stark. In 2003, the fund granted just over $1 million to four credit unions or credit union affiliated organizations, leaving out the National Federation of Community Development Credit Unions entirely. Even more serious, the fund announced that it was eliminating the Small and Emerging CDFI (SECA) program, the very fund under which most CDCU’s had applied for help. In its place, the fund said CDCUs should use the fund’s New Market Tax Credit program, an effort which seeks to reward businesses and other concerns with tax credits in response to their investment in CDFIs. But most CDCUs remain far too small to really be able to build the sorts of relationships with larger corporations thought to be most interested in the tax credit program. The practical result of the change, as the NFCDCU noted, was to cut CDCUs out of a program they had helped to found and supported since its foundation. But all that changed in 2004, as the CDFI Fund reversed its elimination of SECA and development assistance once again began to flow to CDCUs. Winners included the NFCDCU, 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.