Federation Advocates Expansion of CDFI Certification
Weathering the recent financial and economic crises has affected credit union financials, diluting net worth and inhibiting lending, particularly in low- and moderate-income communities. At the same time, the number of financially underserved consumers continues to grow. With more than 68 million unbanked and underbanked Americans, the market presents tremendous opportunities for the growth and relevance of credit unions willing to meet the needs of the underserved.
As the economy revives, more and more credit unions are finding new opportunities to rebuild their loan portfolios and increase their return on assets. Serving LMI consumers and financially underserved communities is the place where mission and opportunity come together for credit unions.
NCUA's push to increase the number of low-income designated credit unions has resulted in the designation of almost one-third of the entire industry. Low-income designation is a fundamental building block that provides critically important regulatory tools for credit unions to better meet the needs of low-income consumers.
At a time of unprecedented public interest in cooperative finance, many credit unions have been forced to turn away new members and new deposits to protect their net worth ratios.
The Importance of CDFI Certification
CDFI certification is one of the most valuable credentials available to community development organizations, and another important building block to access external resources. In addition to the $1.5 billion in capital grants that have been awarded by the CDFI Fund to date, CDFI certification is the gateway to attracting local recognition as a community leader as well as to accessing additional public and private sector funds.
Though most of the 2,000 low-income credit unions in the US are eligible, only 10% have obtained CDFI certification.
Currently, credit unions remain underrepresented among the ranks of certified CDFIs. Many eligible credit unions are discouraged by the application process, others by the historically low percentage of grants given to credit unions.
The Federation is the CDFI Intermediary for the credit union industry, having helped to establish the CDFI Fund in 1994. The Federation is launching a campaign in partnership with state leagues and national credit union industry leaders to change that trend and ensure that credit unions are able to access capital at the federal, state and local levels.
The Federation's campaign to increase the number of CDFI certified credit unions not only enables credit unions to access grants, but strengthens our collective voice in national CDFI Fund policy and grantmaking guidelines.
The Federation is the third building block available to credit unions interested in effectively serving the LMI market. Our CU Breakthrough consulting team can help you apply for certification or prepare for the certification process. Because CDFI certification is central to the Federation's work, CU Breakthrough consulting fees are designed to make certification accessible to credit unions prepared to take this step.
Contact the CU Breakthrough consulting team at CUBreakthrough@inclusiv.org to learn more about the Federation's proprietary, CDFI Fund-approved methodology that has helped over 100 credit unions get certified and receive grants.