WASHINGTON (8/10/12)--Credit unions among the grantees of the latest round of the U.S. Treasury Department's Community Development Financial Institutions (CDFI) Fund will get a chance to show what credit unions can do for their communities.
The Treasury announced Monday it awarded more than $186.8 million to 210 organizations serving low-income communities, including credit unions or credit union organizations, to close its fiscal year 2012 grants and awards program. The awards included 25 awards to community development credit unions (CDCUs) and credit union organizations totaling more than $19.9 million.
Credit union awards represented 12% of the total CDFI Fund grants under this round, and 83% of the credit unions receiving awards are members of the National Federation of Community Development Credit Unions. The federation also was among grant recipients, receiving more than $1.4 million.
Sandra Lumbley, CEO of Kerr County FCU, Kerrville, Texas, which received nearly $1.1 million, said, "Our credit union is dedicated to serving the underserved, and this grant will be put to great use in our community." It will use the grant to increase specialized lending that helps low-income borrowers break free from predatory lenders.
"We serve many members that traditional financial institutions can't or won't," Lumbley added. "Our loans help people who believe that high interest payday and title loans are their only option."
Federation Interim President/CEO Pamela Owens said the CDFI Fund grant is just part of the story. "A recent study released by the CDFI Fund shows that CDCUs mobilize $10 in community assets for every dollar of capital, which is more than any other type of CDFI," Owens said. "We've known this for a long time, but were pleased to see the power of cooperative finance recognized by the CDFI study."
Communicating Arts CU in Detroit, Mich., received a $953,806 grant. CEO Hank Hubbard noted that the Detroit community has benefitted from the CDFI Fund in the past. "These grants allow us to reach out further into the impoverished areas of Detroit that other legitimate lenders cannot or will not go," Hubbard said.
The credit union also received a CDFI grant in 2011. "The 2011 funds allowed us to refinance predatory car loans for approximately 100 people, saving them an average of $80 per month," Hubbard said. "That's a total savings for the group of over $400,000 through the life of the loans." He noted that as members pay the loans back, the credit union can lend the money out again.
"The Federation has fought long and hard to ensure that CDCUs continue to receive their fair share of CDFI awards," explained Owens. "Today we've seen a more equitable distribution with some of the awards going to credit unions that are new to the fund," she said.
Award winners were:
- Bethex FCU, Bronx, N.Y., $95,500;
- Bridgeway CU, Poughkeepsie, N.Y., $99,999;
- Brooklyn (N.Y.) Cooperative FCU, $964,806;
- Caddo Parish Teachers FCU, Shreveport, La., $100,000;
- Citizens Community CU, Devils Lake, N.D., $1,453,806;
- Communicating Arts CU, Detroit, Mich., $953,806;
- Coshocton (Ohio) FCU, $151,000;
- Guadalupe CU, Santa Fe, N.M., $253,806;
- JetStream FCU, Miami Lakes, Fla., $92,500;
- Kerr County FCU, Kerrville, Texas, $1,084,187;
- Kingsville (Texas) Community FCU, $483,806;
- Latino Community CU, Durham, N.C., $1,453,806;
- Lower East Side People's FCU, New York, N.Y., $494,806;
- Molokai Community FCU, Kaunakakai, Hawaii, $375,900;
- NATCO CU, Richmond, Ind., $313,606;
- Neighborhood Trust FCU, New York, N.Y., $550,000;
- Opportunities CU, Winooski, Vt., $1,453,806;
- Pacoima (Calif.) Development FCU, $91,000;
- Prince Kuhio FCU, Honolulu, $363,800;
- Self-Help FCU, Durham, N.C., $1,453,806;
- Shreveport (La.) FCU, $1,253,806;
- Syracuse (N.Y.) Cooperative FCU, $100,000;
- TULIP CU, Olympia, Wash., $100,000.
In addition to the federation, awards to credit union organizations included The Support Center; the Bois ForteBand of Minnesota Chippewa; and the Lakota FCU Steering Committee.
The federation was instrumental in the campaign that established the CDFI Fund, and credit unions have received more than $135 million in awards since its inception. "These awards have had a strong, positive impact on the credit unions and the communities they serve," Owens said, "because CDCUs have used this capital to mobilize more than $1 billion in impact."
Applying for CDFI Financial or Technical Assistance is a highly competitive process, but the benefits are worth the effort, said Pablo DeFilippi, federation director of membership. "The CDFI Fund still represents the largest source of external capital available for community development financing," he said.
In a related development, U.S. Rep. Silvestre Reyes (D-Texas) Wednesday that announced that El Paso CU Affordable Housing LLC also received a grant in the CDFI program. The $98,400 federal grant will assist the city's affordable housing markets. "This grant comes at a crucial time for El Paso, and will help improve the lives of many, especially our underserved communities coping with the slow economic recovery," said Reyes.
The CDFI was established in 2001, serves low-income residents of El Paso County and is operated by local credit unions that organized their resources together to provide community programs to enhance services of credit unions. It provides first mortgage loans and development services to its underserved community and will use its FY 2012 Technical Assistance award to increase its capacity to serve that market.
"There is certainly more that needs to be done in terms of affordable housing issues, but this is undoubtedly a step in the right direction," he said.