The majority of community development financial institutions in the U.S. should be credit unions. And, the entire credit union industry and its members would benefit if they were.
That was the vision that energized advocates as they helped credit unions make their way down the sometimes frustrating path toward being recognized as CDFIs by the U.S. Treasury's Community Development Financial Institutions fund.
If more credit unions were CDFIs, the advocates reasoned, a greater share of CDFI funds would go to credit unions, further advancing their efforts to broaden member service.
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"Credit unions were the original and first financial institutions founded purely for community development and serving people of modest means," wrote Jamie Chase, founder of CU Strategic Planning, a Tacoma, Wash., consultancy that specializes in helping credit unions become recognized as CDFIs, in an email exchange with CU Times.
"Over the last decade, loan funds dominated the community development field and in many respects are seen by grant funders as owning that market niche. As a result, loan funds win more grants to serve low income people and there is only so much money in the pot. That tide is now turning. Where once the loan funds had the stronger trade association, now the National Federation of Community Development Credit Unions is making impressive strides under Cathie Mahon's leadership and the big player in the industry, the Opportunity Finance Network, is now for the first time collaborating with credit unions," she added.
Pablo DeFilippi, the federation's vice president for membership, agreed that credit unions have been under represented as CDFIs, particularly when viewed through the lens of how much work they are already doing to help low income Americans improve their financial stability. Credit unions have never been terribly good at telling their own stories, DeFilippi pointed out during a recent interview, but now that reluctance can mean they and their members miss out on resources they really need. He added that the federation also assists credit unions seeking to become CDFIs and acts an advocate for credit unions with the CDFI Fund, an institution credit union leaders helped create.
Chase and DeFilippi face a challenge. As of Dec. 15, the CDFI Fund listed 808 certified CDFIs. Of those, 492 were loan funds, 177 were credit unions, 76 were banks or thrifts, 50 depository institution holding companies and 13 were venture capital funds.
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