For the first time, NCUA will make money available to low-income credit unions applying for Community Development Financial Institution status from Treasury's CDFI Fund. The approval process can be lengthy.
"These grants will help America's low-income credit unions remain viable and respond to the evolving needs of their members," NCUA Board Chairman Debbie Matz said in a release. "The funding to assist low-income credit unions in qualifying for a CDFI certification is a welcome addition to NCUA's long-standing grant program. CDFI-certified financial institutions have access to additional capital, which can help them create jobs and promote financial stability in some of our nation's most underserved communities."
Applications for the grants can be submitted online to the NCUA between Feb. 3 and Feb. 14, 2014.
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The agency's announcement said the $481,000 was the first round of technical assistance grants in 2014.
Currently, the NCUA recognizes 2,001 credit unions as low income.
The National Federation of Community Development Credit Unions, which runs a program to help credit unions win CDFI grants, applauded the announcement.
Pablo DeFilippi, the National Federation's director of membership, put both the NCUA support of credit union CDFI recognition and the National Federation's effort in the broader context of positioning credit unions to better serve low-income communities and members. "Let's remember, the CDFI certification is not the end unto itself, but a means to an end," he 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 National 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 1000 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 more credit unions applying will not necessarily result in credit unions presenting 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.
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