ST. LOUIS -- For the first time ever, Choices Federal Credit Union is looking forward to hiring some staff.
The three-year-old, $277,000-asset community development credit union has managed with volunteers so far. Volunteers provide teller services for the eight hours a week (over two days) that the credit union is open. They keep the books and juggle the regulatory requirements that Chairman Phillip Minden said actually take up more time than helping members. And volunteer manager/CEO Kathy Schweitzer, keeps the place organized and moving forward day-to-day.
"Right now Kathy puts in 20 or 30 hours a week for the credit union in addition to her other job that actually pays the bills," Minden said. "So we are definitely looking to help pay her a little something so that she can cut back at the other job."
Minden expects to pay Schweitzer something for the first time out of the proceeds of a technical assistance grant of over $86,000 that the CU won from the U.S. Treasury Department's Financial Institutions Fund this year. The small credit union also won a $25,000 financial assistance grant as well that Minden said will, in part, help Choices continue to build its equity.
Choices is among the smallest, if not the smallest, of the 13 credit unions to have received CDFI money this year, a distinction that Minden said Choices earned through its persistence through the process.
"We definitely had some help and advice from [the National Federation of Community Development Credit Unions], and I had meetings with the CDFI Fund staff and attended several Web events they held, so we had help through the process but it was definitely a long process."
Minden, a senior business developer for Fannie Mae in St. Louis, said he was the one to write the successful grant application. The CDFI Fund estimated that it takes about 100 hours to complete the full application, even after it streamlined the process and made it all electronic.
Brian Gately, director of technical assistance for the federation, said that the agency's 100-hour estimate sounded about right and noted that the competition for each year's grant money was stiff enough that it meant applications had to be close to perfect.
"You have to remember that applicants need to fill these things out just like they say, even more than with other agencies," he said. "It can be a difficult process."
Choices has 177 members now and serves the employees, volunteers and clients of 15 local social service agencies, including Habitat for Humanity, Beyond Housing/NHS, Catholic Charities Housing Resource Center, the Urban League, Better Family Life and Employment Connection, among others.
Minden explained that he and other organizers decided to found the credit union in 2005 after it became clear to them that just helping lower income Americans to buy a home was not enough to necessarily get them started in a relationship with a bank or credit union.
"It really began to be absurd," he said. Because lower-income mortgages often have a requirement that the new homeowner put money away each month to pay for upkeep on the home, some of the nonprofits that were helping them obtain mortgages became de facto bankers.
This worked OK, despite causing the nonprofits extra work, except that they noticed the homeowners would come in and get a check for some home repair and take it up the street to the check cashers to cash it and pay the 5% fee.
"It really got to where it just made no sense for these people to have managed to have gotten into their own homes but still have no real access to financial services, so we decided we needed to help them," Minden said.
"The mission of Choices is to prepare its members to enter the financial mainstream," Minden said. "We have never seen ourselves as a direct competitor to local banks and credit unions, rather, a stepping stone for future customers of these lending institutions."
Minden explained that one of the biggest challenges Choices faced so far has been handling the back office work and gaining the expertise it needed. He said that some of the larger credit unions in the state had stepped forward with nonmember deposits for Choices but that none had, so far, come forward with offers of guidance or back-office support.