Is CDFI Certification a Good Fit for Your Credit Union? Hint: Just Do It!
By building the capacity of a nation-wide network of specialized financial institutions serving economically distressed communities, low-income people are empowered to enter the financial mainstream. The community-based organizations that make this possible are called Community Development Financial Institutions—or CDFIs—and they are dedicated to serving market niches that are often underserved by traditional financial institutions. The first step to utilizing many of the CDFI Fund’s programs is CDFI Certification.
The Cooperative Credit Union Association, in partnership with Inclusiv and with a panel of CDFI-certified credit union leaders, recently examined the process and benefits of certification for credit unions and their communities.
Since 1974, Inclusiv has been a leading resource for financial inclusion and community development, and is the only national CDFI-certified financial intermediary for credit unions. They support 385 CDFI-certified credit unions through advocacy efforts, research, and pilot programs to promote financial inclusion and fight abusive lenders. Through the CDFI Fund, these credit unions have access to grants and secondary capital totaling $12.2 Billion in 2021.
Chriselle Martinez, Inclusiv CDFI Program Director, explained the streamlined qualification and application process developed in 2016 by the NCUA and the CDFI Fund. During announced ‘qualifying rounds’ applicants submit required data to NCUA for analysis. Once qualified to use the streamlined application, there are a few more steps, including downloading documents from NCUA, prior to submitting the application to the CDFI Fund for a certification decision, which can take 30-60 days.
Martinez also pointed out that Standard Certification, accepted by the CDFI Fund on a rolling basis, is an alternate option for application. Inclusiv provides free CDFI eligibility assessments for all members and assists members with both Standard and Streamlined CDFI applications. Additionally, Inclusiv, in partnership with CUNA Mutual Group, maintains a library of videos to help credit unions become CDFI-certified or MDI (Minority Depository Institution) designated, and offers weekly ‘Office Hours’ for additional guidance on CDFI Certification.
Pablo DeFilippi, SVP Inclusiv, led a lively discussion among the panelists focused on their CDFI journeys, including why they sought certification and the challenges and opportunities in, along with their aspirations for, their communities.
Blanche Jackson, CEO of Stepping Stones Community FCU in Delaware, noted that, as a $4 million credit union, providing access to capital to her community was difficult, and the CDFI Certification enables her to provide services not readily available in her community. She hopes that her credit union's small-dollar mortgage loan programs will assist members in transitioning from renters to home-owners, sparking neighborhood revitalizations throughout the community.
Jodi Rathburn-Briggs, SVP and Chief Lending Officer at Greylock FCU in Massachusetts, shared how access to the CDFI Fund, with Inclusiv’s support, has enabled her credit union to embrace financial inclusion as a core value, with the belief that “past performance does not guarantee future results.” She shared that 64% of members participating in financial coaching have improved their credit scores, increasing member loyalty as delinquency rates have dropped. The credit union turned a $686,000 grant into $15 million of lending, amplifying the positive impact on the financial well-being of their members – one family, one story at a time.
Tim Smith, SVP, CFO/Treasurer of Workers CU in Massachusetts, said the credit union has redefined their approach to providing banking services to their members, offering personalized financial coaching to all members. With the alternate source of funding gained through CDFI Grants, the credit union ensures members have the tools they need to improve their quality of life. Smith noted that the impact of CDFI participation is not limited to the members- his staff has also benefited from knowing that they are able to make a difference in each member’s life.
Walt Laskos, CCUA’s Chief Communications Officer and host, reminded credit unions that, even though the CDFI Certification process may seem daunting, with many steps involved, the Inclusiv team is prepared, and willing, to guide you every step of the way.
Are you still wondering if CDFI Certification is a good fit for your credit union? As Smith says, “Just do it.” There is nothing to lose and a world of opportunity to gain.
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