WASHINGTON — The National Credit Union Foundation's seventh and eighth Innovation Grants for 2008 will assist smaller credit unions manage governance issues and help lower income credit union members escape predatory car loans.
The Innovation Grants support the NCUF's REAL Solutions program. Winning grant applications will fund initiatives in financial education, transaction services, savings, credit or homeownership. NCUF has said that it will give out 14 grants this year.
The effort to help smaller credit unions came in a $30,000 grant to the New Jersey Credit Union League. According to the league, 60% of credit unions in the Garden State have less than $10 million in assets. "It's imperative that these credit unions have the resources to address all the challenges they face," said league President Paul Gentile.
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The NCUF made the grant in support of the league's Small Credit Union Task Force, which seeks to include various perspectives on small credit unions. Among topics the task force is looking to address are the lack of board involvement and participation at some credit unions; the lack of strategic planning or direction; lack of sufficient resources committed to improving the credit union; and sparking the desire to grow among some parts of management.
"Even some of the most committed small credit union managers are often too busy with day-to-day operational issues," Gentile related. "Time does not permit them to develop or implement long-term planning and growth strategies."
That's why NJCUL's Small Credit Union Initiative is focusing on strategic planning, board involvement and education.
"Through education, we strive to give board members and management the knowledge they need to better oversee and manage their credit unions," Gentile explained. "Our desire is to help boards and management work together to ultimately make each credit union a better financial institution for their members."
Twelve credit unions up to $20 million in assets have been accepted to participate in NJCUL's Small Credit Union Initiative. Each credit union must undergo a membership survey, operational analysis, and a facilitated peer review as part of their strategic planning.
NJCUL field representatives will provide continuous follow-up with each credit union for up to 24 months.
"We stressed to all credit unions that their board, management and staff have to be committed to ensure that their credit unions will be able to meet the changing needs of members 10 or 20 years from now," Gentile pointed out. "They must be willing to accept help from others and to help themselves."
NJCUL has committed to match the NCUF Innovation Grant with another $30,000. The New Jersey Credit Union Foundation is contributing another $10,000, according to the NCUF's announcement of the grant.
The NCUF money to help lower income members resolve some of their auto loan problems came in a $35,000 grant to the $7 million North Side Community Federal Credit Union.
North Side sought the grant as it became clear how important cars are to lower income credit union members. "Without affordable auto loans," North Side Community FCU CEO Ed Jacob observed, "many low-wealth families are unable to access the expanded job and housing opportunities that a car can help provide."
In an underserved area where many subprime auto lenders charge much higher rates than the 18% federal usury limit, North Side Community FCU will use its grant from NCUF to reach members who need to refinance subprime loans. The credit union will also target upside down loans, where members' outstanding balance exceeds their car's value.
"The time is right for credit unions to pilot programs based on the groundbreaking research supported by the National Credit Union Foundation in partnership with the Annie E. Casey Foundation by the Aspen Institute," suggested Jacob. "With our Innovation Grant, we will develop, test, and expand a model for a sustainable auto loan program that will help low-wealth borrowers who are historically not targeted by credit unions."
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