Dropping Interest Rates Bring Changes To Community Investment Fund

November 12, 2001

FOR IMMEDIATE RELEASE
Contact: Tom Dunn
(608) 231-4002
tdunn@cuna.com

MADISON, WI – In response to continuing drops in interest rates, the National Credit Union Foundation (NCUF) announced today that it has revised the distribution formula for the Community Investment Fund (CIF). The continued drop in rates has had an adverse effect on CIF, making it so that credit unions' charitable intent in participating in CIF was not being realized under the old formula.

"CIF was never intended to be a static program, but one that is flexible in response to the market and the giving environment," says John Fiore, chairman of NCUF and president/CEO of Motorola Employees Credit Union, Schaumburg, Illinois.

The NCUF Board has adopted the following revisions to CIF:

• A new 90-day account has been created that will be a 50/50 split between the investor and NCUF. This provides the most flexible option for investors who want to keep funds in a 90-day account rather than tying them up at low rates for an extended period of time. The current 90-day account, which calls for a minimum 3% return to the investor and maximum 2% return to NCUF, will be dissolved February 1, 2002.
• A new 5-year fixed-rate CD has been created to offer higher returns, both for the investor and for NCUF (and state foundations, by way of NCUF's quarterly distributions to participating states).
• The distribution formula on all new fixed-rate CDs, whether 3 or 5-year, has been revised. The new distribution will be the first 2% to the investor, the second 2% to NCUF, with any additional funds in a rate environment exceeding 4% going to the investor.

"These changes are intended to keep CIF a viable option for charitable donations and for funding credit union development initiatives," says Pat Brownell, executive director of NCUF. "Representatives of state foundations, leagues and corporate credit unions – as well as U.S. Central – recognize the need to change and endorse these new formulas."

U.S. Central has agreed to waive all requirements/penalties/fees for credit unions moving funds from the current 90-day account into any of the other, more attractive options.

CIF is a three-way partnership between NCUF, the Association of Corporate Credit Unions (ACCU) and the American Association of Credit Union Leagues (AACUL). It is NCUF's primary mechanism for funding credit union development at the local, state, national and international levels. Currently, more than 320 credit unions, one state credit union foundation and one state credit union league are invested in CIF, which stands at over $44 million.

For additional information on the changes, contact Kris Hoffman at 1-800-356-9655, ext. 4397. For investment information, contact your corporate credit unions.

Established in 1980, NCUF is the U.S. credit union movement's primary charitable and fundraising organization for worldwide credit union development. The foundation has given more than $8.4 million in grants, including $5 million to international development, $1.6 million for domestic credit union development, $2 million for disaster relief at home and abroad, national model programs and scholarships. Visit the Foundation's web site at www.cuna.org/ncuf.html.

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