Credit unions which decide to seek recognition as Community Development Financial Institutions will soon be able to apply for NCUA grants to help them achieve that goal.
CDFI recognition, or certification, is made by the U.S. Treasury Department's CDFI Fund. Once recognized as a CDFI, a credit union can apply for grants from the fund.
The NCUA has confirmed that it will soon make applying for CDFI recognition an activity for which a credit union can apply for a technical assistance grant.
The agency would not confirm any details of the grants, such as preconditions that might have to be met in the grant application or the amount of money available.
But in the 2013 round of technical assistance grants, the agency made $1.18 million available to low-income credit unions to help them with tasks as diverse as moving out of manager's homes to purchasing computers and training board members and staff.
Currently, NCUA recognizes 2001 credit union as low income.
The National Federation of Community Development Credit Unions, which runs a program to help credit unions win CDFI recognition and to write winning CDFI grants, applauded the news that NCUA would soon make money available to help low income credit unions win certification.
The federation initially said it understood that NCUA would make up to $2.500 per credit union available, but Pablo DeFilippi, the federation’s director of membership, later downplayed that number, suggesting it was the NCUA's announcement to make.
DeFilippi confirmed on Tuesday that the federation's effort to help credit unions achieve CDFI recognition, an effort he heads called CU Breakthrough, charges $2,500 to help a credit obtain CDFI recognition.
DeFilippi put both the NCUA support of credit union CDFI recognition and the federation's effort in the broader context of positioning credit unions to better serve lower-income communities and members.
“Let's remember, the CDFI certification is not the end unto itself, but a means to an end,” DeFilippi said. “CDFI certification, like being recognized as a low-income credit union, is a building block or tool a credit union can use to better serve its members.”
DeFilippi said the federation hoped that if more credit unions become recognized as CDFIs that will, in turn, help change how the CDFI Fund tends to look at credit unions. “Right now there are roughly 1,000 CDFIs,” DeFilippi said, “and about 35% of them are credit unions. But credit unions typically only receive a much smaller percentage of the CDFI grants. We hope having more credit union CDFIs will help change the dynamic of the CDFI industry.”
DeFilippi acknowledged that simply having more credit unions will not necessarily result in credit unions having stronger grant applications, but he pointed out that having a larger pool of credit union candidates increased the chances that credit union grant applications would win a bigger portion of the CDFI grant funding in each round.
UPDATE: NCUA annouced on December 4 that up to 40 credit unions will be able apply for grants of $2,500 per credit union to support efforts to be certified as Community Development Financial Institutions by the U.S. Treasury Department's CDFI Fund.