NCUF Changes Formula To Reflect Interest Reality

MADISON, Wis. – The National Credit Union Foundation has changed the way it distributes the proceeds from new investments to its Community Investment Fund to reflect the lower interest rate environment. Previously, a credit union that invested with the CIF earned the first 2% of return on the investment. The Foundation then took the next 2% and anything above that 4% total went back to the credit union. In the current low interest rate environment, explained Kris Hoffman, manager of donor relations for the Foundation, that effectively meant the foundation wasn’t making any money since the interest rates would never allow the CIF to reach its 2%. Under the new calculation, the returns on the three and five-year certificates of deposit will be split 50/50 with the CIF taking no more than 2%, but able to see some return if the rates never reach above 2%. The new calculation will only apply to new certificates of deposit, the Foundation said. Existing three- and five-year certificates will keep the old distribution arrangements.