Frequently Asked Questions

A community development credit union (CDCU) is a credit union with a mission of serving low- and moderate-income people and communities. CDCUs specialize in serving populations with limited access to safe and affordable financial services, including low-income wage earners, recent immigrants, and people with disabilities.

Inclusiv has used the term community development credit union since our inception in 1974, when our founding credit unions developed it. Credit unions serving underserved communities and committed to supporting their members financial independence self-designate as CDCUs when joining Inclusiv.

As credit unions, CDCUs are:

• Nonprofit and tax-exempt (but not a charity)
• Cooperatively owned and governed -- one member, one vote
• Regulated, fully-insured financial institutions

CDCUs specialize in providing:

• Fairly priced loans, including to members with imperfect, limited or no credit history
• A safe place to save and build assets
• A place to conduct transactions at reasonable cost
• Financial education and counseling for its members
• Products, services and support that can help members to free themselves from high-cost and predatory debt, gain control over their personal finances, and achieve economic well-being.

Every CDCU was founded on the belief that those who work hard deserve the opportunity to achieve financial security. Each CDCU can tell a story of beating the odds, helping the vulnerable, and pursuing a mission that is as large as the American Dream and as specific as the future of a single child.

Inclusiv is an association of credit unions that serve economically disenfranchised communities, but is not a credit union itself. Inclusiv is a nonprofit, community development financial institution (CDFI). As a financial intermediary, Inclusiv invests capital in its member CDCUs.

A low-income credit union, or LICU, is a credit union that has obtained an official low-income designation from either the National Credit Union Administration or a credit union’s state supervisory authority. A credit union qualifies for low-income designation if over 50% of its members are "low income". Per the National Credit Union Administration a low-income credit union is one: "...where a majority of its members either earn less than 80 per cent of the average for all wage earners as established by the Bureau of Labor Statistics, or whose annual income falls at or below 80 per cent of the median household income for the nation."

Low-income designated credit unions (LICUs) can access funds and regulatory exemptions otherwise not available to traditional credit unions.  Benefits include:

• The ability to accept non-member deposits from Inclusiv or other sources outside the credit union’s field of membership
• The ability to receive investments of secondary capital from sources such as Inclusiv
• Eligibility for an exemption from the statutory 12.25 percent cap on member business lending
• Eligibility to receive loan funds and grants from the National Credit Union Administration’s Community Development Revolving Loan Fund
• Receive other type of funding such as Community Reinvestment Act (CRA) funds from banks, and certain funds from the US Treasury’s Community Development Financial Institutions (CDFI) Fund.

Learn more about Inclusiv’s investment offerings for low-income credit unions.

Often, the term "community development credit union" is used interchangeably with "low-income credit union." The great majority of CDCUs have low-income designation -- however, many credit unions with low-income designation are not CDCUs.

Here's the distinction:

Designation as a "low-income" credit union must come from the National Credit Union Administration (or occasionally, a state regulatory agency). This designation gives a credit union certain special powers, such as the right to accept non-member deposits and secondary capital.

Only members of Inclusiv are "community development credit unions." Community development credit unions have access to the wide range of services and programs offered by Inclusiv. Designation as a CDCU does not, by itself, give a credit union the legal power to accept non-member deposits or secondary capital; low-income designation is still required.

Beginning in the 1980s, Inclusiv spearheaded efforts to create a federal CDFI Fund to support community development finance in low-income communities. We helped coin the term “CDFI,” and in 1995 we joined our partners in celebrating the birth of the U.S. Treasury Department's CDFI Fund.

The CDFI Fund certifies mission-driven financial institutions serving disenfranchised communities as Community Development Financial Institutions (CDFIs). To obtain the CDFI Certification, credit unions must have a primary mission of promoting community development by providing activities directed towards improving the social or economic conditions of low-income people or certain target markets and demonstrate that at least 60% of their financial services activities are directed to  low-income consumers and underserved populations.  Credit unions have long been a critical sector of the CDFI industry and Inclusiv remains committed to ensuring that this sector continues to grow and thrive.

Inclusiv has assisted over a hundred credit unions with their CDFI certification and/or recertification process.

Obtaining CDFI certification from the US Treasury Department’s CDFI Fund makes credit unions eligible to:

• Participate in and/or to receive Financial Assistance and Technical Assistance Awards (up to $2 million a year)
• Receive deposits from institutions participating in the Bank Enterprise Award Program
• Utilize the CDFI Fund Community Investment Impact System to measure and demonstrate impact
• Participate in other government programs such as the Community Development Capital Initiative (CDCI) that the US Treasury Department offered in 2010 through which 48 credit unions received $70 million in long term a low cost secondary capital) or other public or private programs that might become available.
• Participate in the Federal Home Loan Bank's community development program, which provides low cost lines of credit to promote affordable housing lending programs
• Participate in the Bureau of Indian Affairs (BIA) loan guarantee program
• Future participation in the CDFI Bond Guarantee Program that may become the largest source of secondary capital ever made available to eligible CUs.

Inclusiv has assisted over a hundred credit unions with their CDFI certification and/or recertification process.

CDCUs make up an important segment of the CDFI movement. The majority, but not all of Inclusiv member CDCUs are also certified CDFIs by the U.S. Department of Treasury's CDFI Fund. CDCUs are eligible to apply for CDFI certification from the U.S. Department of Treasury's CDFI Fund, and Inclusiv regards all CDCUs as CDFIs within the meaning of the CDFI Act.