MADISON, Wis. (7/10/12)--CUNA Mutual Group has provided three community development credit unions (CDCUs) in California an interest-free, $1.25 million deposit to stimulate development in their underserved areas.
The three credit unions participating are Northeast Community FCU, San Francisco; Faith Based FCU, Oceanside, Calif.; and the California operations of Self-Help FCU, an affiliate of Self-Help CU, Durham, N.C.
The zero-interest deposits to credit unions from CUNA Mutual are part of the California Department of Insurance's California Organized Investment Network (COIN). Since 1997, the COIN program has spurred insurer investment in underserved and rural communities statewide by providing modest tax benefits and fair returns to investors.
The three CDCUs each received one or two deposits of $250,000 and have discretion on where to spend the investments in their areas to encourage community development. In return, CUNA Mutual and other investors in the program receive tax credits.
"This pilot program for CUNA Mutual Group is a win for everyone involved," said Cami Douglas, vice president, corporate tax, CUNA Mutual. "It helps us live out our mission of helping credit unions and their members, and gives credit unions the opportunity to provide loans or other support to small businesses and non-profits in economically disadvantaged communities."
California's insurance commissioner, Dave Jones, called out several insurers and financial institutions for their participation in the COIN program, in a press release.
"Today, we thank UnitedHealthCare, Blue Shield of California, CUNA Mutual Group and CSE for stepping up to the plate and making major community development investments," Jones said.
The COIN program allocates $2 million annually in tax credits to support $10 million in community development investments. Under the COIN tax credit program, investors invest a minimum of $50,000 as equity or a zero-interest loan with a Community Development Financial Institution (CDFI) for 60 months. In exchange, the investor receives a state tax credit.
The CDFIs use the funds to provide loans or other support to small businesses and non-profits that serve economically disadvantaged communities. After 60 months, the loans are repaid.