NEW YORK – Community Development Credit Unions perform very strongly when compared to similar development institutions which also get federal funding from the same sources, according to a study conducted by the National Federation of Community Development Credit Unions. The Federation’s study singled out CDCU data from a larger study, funded by the Ford Foundation, of the impacts attained by different branches of the CDFI industry. The goal of the Federation’s study was to provide a baseline showing how CDCUs compare to other CDFIs. The CDFI industry consists of community banks, loan and microenterprise funds, and CDCUs. The overall project from which the CDCU data was derived has grown in importance in recent years as the Congressional fight to fund the U.S. Treasury’s CDFI fund has become more intense. Congressional critics of the CDFI Fund and CDFIs have argued that the federal government has inadequate data about the impact CDFIs have on their local communities and have used that lack of data to partially justify their opposition to the Fund. The CDCU data is also particularly important because the CDFI fund in recent years has signaled that it is backing away from funding as many CDCUs. The data can help demonstrate that CDCUs are good places to invest CDFI funds. Rafeal Morales, spokesman for the Federation, explained that limited resources prevented the Federation from moving faster on the study, as did a desire to produce a strong report. “There is some lag time between when the data was collected and the report’s appearance because we have had limited time and funds available for analysis and write-up,” he said. “We wanted to produce a top-notch publication and we had to extend the production process over about a year and a half. With a template established, subsequent studies should have substantially less lag-time between data collection and the completed report.” How Are They Doing? The study documented that CDCUs were the most numerous of the CDFIs in 2000. On average, CDCUs are the oldest, smallest, and most minority-directed of CDFIs. The study further found that CDCUs specialize in small transactions to low-income individuals, although a significant proportion of CDCUs make larger loans to individuals (including mortgage loans) as well as loans to microenterprises, small businesses, and nonprofit organizations. The increased time that CDCUs have spent working closely with their communities meant that CDCUs reached 82% of all the individual clients that CDFIs reached in 2000, over 600,000 people. CDCUs also originated 86% percent of the CDFI industry’s loans in 2000, but averaged only just over $5000 or about 36% of the industry’s average. CDCUs are also the most self-sufficient of the CDFI sectors, the study found. Only 5% of funds came from outside of institutional sources, the report found, compared to 61% for the other CDFIs. CDCUs accounted for the majority of locally raised deposits in CDFIs: $1.5 billion or 60% of the CDFI industry total in 2000. The study also found that in 2000, CDCUs originated $635 million in loans and finished the year with $1.35 billion in their loan portfolio. The types of those loans were significant as well. In that year CDCUs made 76% of the total “personal development” loans that the CDFI industry made. CDCUs also made 96% of the car loans, a particularly significant factor in rural areas. CDCUs also closed 64% of the CDFI industry’s total home mortgages, according to the study. Federation Executive Director Cliff Rosenthal said that the Federation planned to use the report to lobby the CDFI Fund and the Congress in support of increased funding. But he added that the study’s key importance may rest in helping to educate lawmakers and others to the role credit unions play in community development. “This is a twenty year old story for us,” Rosenthal said. “People hear credit unions and they hear `personal finance’ and they don’t understand that helping credit union members improve their credit, get a car they need to get to work and save for a home are as vital to community development as is funding large projects.” -

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