CDFI Spawns a New Credit Union

Community Development Financial Institutions (CDFIs) are known for being created out of a financial necessity, particularly in low-income communities. They are not known for creating something so significant that new credit unions are born out of their existence.

But, the credit union industry witnessed exactly that earlier in June.

Since its early days in the 1990s as a CDFI in South Central Pennsylvania, the Community First Fund has become a premier economic development organization providing more than 5,600 loans and investments totaling $355 million for businesses, and community and affordable housing programs.

Founded by a coalition of Black, Latino and white community leaders nearly 30 years ago, the Community First Fund has abided by its social justice statement, which reads, “We have marched silently with others over the past days, months and years to advance economic and social justice for disenfranchised individuals and communities. We work in solidarity with our brothers and sisters and are committed to aligning capital with justice so we may increase opportunities for economic prosperity for all.”

Through the passionate work of Community First Fund’s 70-person team and what appears to be a core community belief in the organization after three decades in existence, the Lancaster, Pa.-based Community First Fund Federal Credit Union opened its doors to members in June; it was described as a “transformational moment” for the growing community 80 miles west of Philadelphia.

“It was just a culmination of a lot of hard work and a passion to serve the community, and just realizing that that moment finally came where we can open,” ­Daniel Betancourt, president/CEO of Community First Fund FCU, said. “And it sounds dramatic, but we can open forever – once we open our doors, those doors are going to stay open for, I think, past my lifetime, but also serve the community hopefully for the next hundred years-plus.”

Betancourt has helped create a unique credit union and cooperative world in Lancaster. While he is the leader of the new credit union, he has also been president/CEO of the Community First Fund for the past 23 years. He selected six of the CDFI’s staff to become credit union employees and both organizations share the same executive leadership team.

“We’ve been serving Lancaster for 30 years by providing access to credit to entrepreneurs who want to make a positive change in the community,” Betancourt said. “With the credit union, our mission is to provide a pathway to financial stability for families. We’re excited to expand our service in the community and celebrate this milestone.”

That mission of the new credit union began in December 2020, when the Community First Fund announced it planned to launch the low-income designated credit union, using a portion of a $10 million philanthropic gift from MacKenzie Scott. A portion of those funds, with an additional $1 million raised from community partners, helped move the credit union’s charter application forward – and quickly.

According to Betancourt, the charter application was filed in January 2021 and approved by the NCUA five months later in June. “We understand that’s record time,” Betancourt proudly said. He added he understands why the process went so quickly, even during the early months of the pandemic.

“They [the NCUA] knew they were dealing with a sophisticated organization and every question that they had, not only did we have an answer, we had the deliverable that they were looking for and we got that to them in minutes or hours. We were able to advance our application by just being ready and having an organization and a staff that could respond on a moment’s notice,” he said.

This efficiency might be what brought NCUA Board Chairman Todd Harper from Washington, D.C. to Lancaster for the grand opening to cut the ceremonial ribbon.

“This is a wealth-building institution,” Harper said at the time. “Established by the community and for the community, it is at the very heart of our nation’s credit union system that was built on the principle of people helping people.”

In the decades of living and working in the area, Betancourt has seen the real economic struggles experienced by community members. The pandemic’s ripple effect on low-income communities, and now rising interest rates and inflation, have put even more strain on his community.

“We all know that it’s expensive to be poor. So it does concern us that when someone has an $800 car repair bill, they’re just going to have less money towards that because they would’ve applied the increasing cost of the inflation. So that’s where I think credit unions can help – where we can provide counseling, financial counseling, and those small loans and emergency loans that community members will need,” he said.

But being a numbers guy, he didn’t want to rely on anecdotal information to base his decision to open Community First Fund FCU. He wanted real research to back up what he and his team saw each day.

“We hired Franklin Marshall College and their research showed that about 27% of Lancaster was unbanked, and that’s countywide and underbanked,” he said. “And then for African Americans and Latinos it’s over 50%. So with that research and a strong application with the money in hand, we could not only show there was a demand, we could show that we can be successful in serving this low- to moderate-income community.”

Currently the credit union has more than 200 members and Betancourt’s goal is to have 500 members within the first year.

A long-time partner of the Community First Fund, M&T Bank’s Regional President for southeastern Pennsylvania Tom Koppmann was on hand for the opening of the new credit union. His bank actually committed $1 million to the credit union over the next five years to help with operating support.

“It’s a transformational moment that could help lift the entire community,” Koppmann said.

Santander Bank was the first bank partner to commit significant financial funding to launch the credit union.

“Investing in projects that help build strong and healthy communities is a key priority for Santander Bank, and we are proud to be a long-time supporter of the Community First Fund,” Santander Bank Executive Director, Corporate Social Responsibility Seth Goodall said. “The establishment of the Community First Fund Credit Union in Lancaster is a significant enhancement to the community and we congratulate Community First on reaching this important milestone.”

Koppman added, “This moment is about more than opening the Community First Fund Credit Union in Lancaster. This is about expanding access to banking and other financial services to communities in the area that have been underbanked for years.”

And that is Betancourt’s overall and incredibly serious goal: To provide financial access and education for the un- and underbanked for the years ahead.

“Our vision is to grow the credit union to $100 million in seven years. So we are raising capital. We have a capital campaign to strengthen our balance sheet. We already raised about $10 million in capital and intend to raise $20 million for our balance sheet for our retainer growth. We also hope to serve other low- to moderate-income communities beyond Lancaster in the next five-plus years.”