CDFI Fund Awards Almost $13 Million to Community Development CUs
The U.S. Treasury Department's Community Development Financial Institutions Fund has announced it will make almost $13 million available to qualified community development credit unions.
CDCUs that the fund has recognized as community development financial institutions were eligible to apply for the funds, which can be used to build up a CDCU's assets, underwrite a specific outreach or product or improve a CDCU's capabilities.
In this round of funding, a total of $12.7 million was awarded to 20 community development credit unions and to the National Federation of Community Development Credit Unions.
This might seem at first to represent a downturn from last year, but the numbers are somewhat skewed because the CDFI Fund benefited from economic stimulus money in 2009, the federation pointed out. Furthermore, there were two rounds of funding last year and the fund also allocated more money to CDCUs during its standard budgetary process.
And although more money-$17.2 million-was distributed last year, it went to only nine CDCUs as well as to the federation, which often applies for and receives CDFI money because of the programs it runs for its CDCU members, many of which are CDFIs.
CDFI Fund officials announced the awards at El Maguey y La Tuna, a restaurant in New York City that was funded in part by Lower East Side People's FCU, which received $750,000 from the CDFI Fund.
CEO Linda Levy said the award would help her credit union continue to pick up the small business lending slack from banks.
"We have almost tripled our small business lending this year, and a good part of that is due to the fact that the banks have stopped lending," she said. "We have been trying very hard to step into the fray, but it's been hard because we don't have a lot of capital, so this is really going to help us help the community."
Joy Cousminer, CEO of Bethex Federal Credit Union, put the funding in scriptural terms.
"Our credit union is exactly 40 years old," she said, "and when the Jews left Egypt they had to wander the desert for 40 years before they were allowed into the Promised Land. We are looking at this as our 40 years in poverty, and we have finally reached the border of the Promised Land thanks to the CDFI Fund."
Cliff Rosenthal, CEO of the National Federation, offered praise for the CDFI Fund as he accepted a $750,000 award on behalf of his group. "The CDFI Fund is an absolutely unique source of innovative funding, which has enabled us as a national entity to support hundreds of low-income credit unions across the United States," he said. "We've been doing this to help them build their capital during these very difficult times and to allow them to recycle their capital for additional lending...We are very grateful to this indispensable and irreplaceable federal agency."
Rosenthal also commended the fund for distributing more awards to CDCUs in recent years.
"The federation has fought long and hard to ensure that CDCUs continue to receive their fair share of CDFI awards," he said. "Today we've seen a much more equitable distribution with some of the largest number of awards to CDCUs in recent years, including various credit unions new to the fund. These awards will bring major impact to the communities served by CDCUs and CDFIs generally."
Mikal Gilliat, marketing director for Milwaukee-based Brewery Federal Credit Union, said his $32 million credit union received $600,000 from the fund, with $500,000 set aside to fund loan loss reserves on its payday loan alternative and other loan products aimed at the working poor. Brewery, he said, was one of the first credit unions in Wisconsin to offer a payday loan alternative as well as FHA-insured mortgage loans.
Gilliat said the CU had applied for CDFI money once before but had not received any. He attributed its success this time around in part to the development educator training he attended last year.
"The principles learned in DE training reinforce the need for an effective cooperative plan that not only meets the immediate needs of the credit union but the future needs of the community," he said. "Our success story of receiving this funding from the U.S. Treasury is more than money. I believe it should inspire the uninspired in our community and our movement."