Proposed De Novo Credit Union Reborn

Failure can either turn into a stumbling block or a stepping stone. And the community of North Minneapolis wants the proposed Village Financial Credit Union to be its stepping stone toward building a better future.

“[In] the first set of town hall meetings [in 2021], the community was extremely vocal about moving forward. They did not want us to keep repeating the story of the past,” Debra Hurston, executive director of the Association for Black Economic Power, said. “They knew about everything that happened – the mismanagement that took place – they wanted us to move forward.”

In 2017, the ABEP was established to launch a state-chartered credit union and other projects to serve North Minneapolis, a community that brings a long history of economic and racial disparities as well as concerned, proud residents who want to overcome them. But in 2019, the ABEP pulled its state charter application with the Minnesota Department of Commerce after suffering a major setback. Its former executive director was ousted for alleged financial misconduct, mismanagement, gross negligence and other issues. In October 2019, the ABEP board of directors publicly acknowledged these allegations and reported them to the Minneapolis Police Department.

Then on May 25, 2020, George Floyd, a Black man, was murdered by former Minneapolis Police Officer Derek Chauvin – who was later convicted – after kneeling on his neck for nearly 10 minutes. When the video recording of the gruesome incident was posted on social media and news outlets, it sparked one of the largest protest movements in U.S. history and a nationwide awakening for racial diversity, equity and inclusion.

The Floyd tragedy also motivated credit union leaders across the nation to address DEI challenges within their own organizations, reach out to minority groups within their communities and launch new initiatives.

Through the tumultuous years of 2020 and 2021, the ABEP continued its work through a microloan fund program that has already helped nearly 30 residents, a small business and a cooperative; it’s also been working on a project to create home ownership opportunities for Black people. And it never gave up on its goal to open a credit union.

In December 2020, Hurston was hired as the new leader of the ABEP. Her professional background, which includes years of experience managing various aspects of large and small organizations in the medical and financial services industries, gave her a unique perspective in association management. She served as director of marketing and communication for the Minnesota Bankers Association, and as executive director for the Illinois Optometric Association and Minnesota Chiropractic Association, before running her own consulting company to help associations accomplish their strategic, financial and administrative priorities.

Additionally, the ABEP’s impressive board member lineup includes Shane Hughley, an executive of currency payment systems at the Federal Reserve Bank in Minneapolis; Valerie Geaither, professor emerita of Community and Family Studies at Metropolitan State University; Gracie George, a risk management professional at U.S. Bank; and Ernest Draper, a certified financial planner.

Convinced that the ABEP had strong support to open a new Black-led credit union after holding its first series of community meetings last year, Hurston reached out to the African American Credit Union Coalition and Minnesota Credit Union Network.

Mark Cummins, president/CEO of MnCUN, said his organization has been working with the ABEP for years, and that after having conversations with Hurston, he became convinced the ABEP was serious about taking a different approach to making the credit union a reality.

“I think the different approach for me really came about from the perspective of a very valid concern about social justice in North Minneapolis, and what I was looking for was economic justice and economic stability as a way to bring the [social justice] about,” Cummins explained. “And the dedication [I saw] from ABEP [told me] that they were serious about it from an economic perspective, and that this was an avenue to bring that about. So certainly the conversations that [Debra and I] had rekindled the belief that this could actually happen, because it needs to be around the right sort of parameters and mindset from the business perspective of creating a financial institution in challenging circumstances. That’s where I got on board as an opportunity to really make a difference.”

Those challenging circumstances included disparities in housing, education, jobs and crime that have plagued North Minneapolis for decades. In 10 of the U.S. Census tracts – or smaller designated sections – of North Minneapolis, three tracts have poverty rates exceeding 40%, according to the Federal Reserve Bank of Minneapolis. Five of the census tracts showed poverty rates range from more than 26% to nearly 35%, while the ninth and tenth Census tracts have poverty rates of 14% and 10%.

Over the last few years, however, there have been positive signs of economic growth in North Minneapolis. In 2019, for example, the Federal Reserve Bank of Minneapolis produced a paper that detailed how people in the public, private and philanthropic sectors are partnering to overcome barriers that can keep businesses from opening and thriving on the Northside.

Reflecting the controversial trend of gentrification, the University of Minnesota’s Center for Urban and Regional Affairs published research on how North Minneapolis is slowly becoming attractive to a rising population of young white families because of the area’s undervalued housing stock and location adjacent to the amenities of downtown Minneapolis. What’s more, the Minnesota Assistance Council for Veterans announced in March the expansion of its mission to help veterans of color by building affordable housing on forfeited properties in North Minneapolis.

Village Financial plans to play an important role in helping North Minneapolis’ economy grow by providing financial services and products that can help members build wealth.

“I think what we need to understand is the area that Village Financial will serve is currently a financial desert, with the exception of an overabundance of payday lenders,” Hurston said. “And so a huge sweet spot for the credit union is providing services that don’t put you in this never-ending cycle of debt.”

Cummins pointed out that while North Minneapolis is completely underserved by banks and credit unions alike, the credit union industry is owning up to that.

“The other part from a community perspective is they have seen institutions come and go, and, what this community offers is the opportunity for a financial institution that is of the community, by the community and for the community that the community can believe in,” he said.

He also pointed out that even when the credit union opens its doors for the first time, it’s going to take a lot of hard work and some time for the community to trust that it is going to be there for the long haul to serve them and build economic wealth within their community versus exporting that wealth outside of the community.

“That’s what gets me excited about this project because it can really make a difference in an area versus just adding membership,” Cummins said. “This is about building economic wealth, this is about combating multigenerational poverty and giving people an opportunity to be a part of the mainstream financial system for their own benefit.”

Last April, MnCUN and the AACUC formally announced their partnership to support Village Financial.

“We fully understand and support the vision of ABEP for creating a Black-led financial institution at this critical moment in time, and in one of the most underserved communities in the country,” AACUC President/CEO Renée Sattiewhite said. “Our hearts and resources are pledged to help to catalyze the launch of the Village Financial Cooperative in any way that we can.”

In February, the ABEP launched a campaign to raise capital that will pay for the credit union’s post-opening operational expenses. As the philanthropic arm of the Minnesota Credit Union movement, the Minnesota Credit Union Foundation has established a special fund to receive donations from supporters, setting a goal to raise $1 million in capital from the credit union community.

Cummins reported the campaign is about halfway to reaching its goal due to contributions already made by Minnesota credit unions and individuals. In addition, Village Financial has secured $2.7 million in deposit commitments from credit unions in the North Star State.

“Contributions secured in now will be highly catalytic for ABEP and Village Financial, as they provide important grounding for the state charter application and NCUA application, evidence of traction as additional financial support from other sources are sought and operational sustainability during the first three years of opening,” Cummins said.

The completed state charter application is expected to be submitted to regulators in May.

In addition to accepting capital donations, deposit pledges and individual contributions within Minnesota, Cummins said contributions are also welcome from anyone in the credit union movement to support this effort.