National Federation of Community Development Credit Unions

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National Federation of Community Development
Credit Unions

• Returning Prisoners and Financial Services
• What Role can CDCUs Play?
• Presentation by Cliff Rosenthal to NCCED Forum

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The Federation.

• Building community wealth since 1974.
• National Federation of
• Community Development Credit Unions

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Todays Presentation

• Introduction to CDCUs and the Federation
• Examples of CDCUs in Action
• Conclusion Role of CDCUs

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Whats a CDCU?

• A financial institution with the specific mission
  of serving low-income people and neighborhoods
• Cooperatively owned/Community controlled
• Regulated, insured, and bonded
• Nonprofit (but not a 501c3)
• An independent corporate entity
• Commty Devel.Financial Instiution (CDFI)
• Savings, loans, transactions, finl. ed.

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Why CDCUs?

• Local ownership, funding, and management
• Retain capital and income within communities
• Set credit priorities (e.g., type of lending)
• Serve people who otherwise would not be served
  unbankable, immigrants, people with
  disabilities, returned prisoners
• Platform for other services (e.g., financial ed.)

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Profile Typical CDCU

• Age 30 years
• Assets 1.4 million
• Membership 1,000
• Total revenue 130,143
• Average loan size 3,500
• Typical loan loss rate less than 2

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CDCU Sponsors Partners

• Faith-based
• CDC-affiliated
• Housing organization
• Other nonprofits
• Neighborhood-based/free standing

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What Services?

• Credit
• Small, unsecured loans for family needs
  medical, clothing, tuition, debt consolidation
• Microenterprise and small-business loans
• Housing loans (limited-equity co-ops small 1
  4-family mortgages home repair)
• Savings
• Low minimum balances
• Payroll deduction X-mas Clubs
• Individual Development Accounts (IDAs)

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More CDCU Services

• Transactions
• Direct deposit
• Check-cashing
• ATM access
• International money remittances
• Other Services
• Financial Literacy, Counseling, Community
  Education (e.g., EITC campaign)

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What CDCUs bring

• CDCUs are local institutions that
• Build assets
• Target low-income people
• Put service before profit
• Offer opportunities for empowerment -- membership
  ownership
• Specialize in hard to serve populations
• Already serve people with disabilities and have
  some partnerships
• Have a national network The Federation

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Whats the Federation?

• National Federation of Community Development
  Credit Unions, Inc.
• 501C(3). Founded 1974. HQ NYC.
• 225 credit unions in 42 states, DC,PR 800,000
  members - 3 billion assets
• Leader in Community Development Finance (CDFI)
  industry
• Sister organization to NCCED

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The Federations Services

• Supply Capital to CDCUs
• Advocacy CDFI, National CU Administration
• Management consulting orgg. assistance
• Education and Training
• Special programs VISTA, faith-based CU network,
  Latino CU network, Youth CU, Disability Outreach
• Research

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CDCUs in Action

• Food Processors CU (Modesto, CA)
• Faith Community United CU (Cleveland, OH)

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Food Processors CU

• Predominantly Latino community, including many
  farmworkers and other immigrants
• 50 million in assets

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Moneyense Partnership

• With First Step Perinatal Program
• Court-ordered residential program (6 8 mos.)
• Mandate clear up drug/alcohol addiction or lose
  public assistance
• Many have felonies
• Teach money management skills
• Women required to save 30 of p.a. funds in an
  umbrella account in name of First Step
• Can withdraw when finish program, or open acct.

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Faith Community United CU

• East side of Cleveland
• Former bank facility (CRA deal)
• Original base one church, grew to several,
  became community-wide

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Faith Community CU

• Many incarcerated men have accounts at CU keep
  open while imprisoned
• May receive SSI funds in account
• Spouse or family members may access acct.
• Some released prisoners work for company that
  provides payroll deduction to CU
• Financial counseling, but not a separate prog.
• Loans family member co-signs first loan,
  thereafter borrow on own
• Many have physical or mental disabilities

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Partnership is key

• Faith Community CU
• Churchs prison ministry refers former prisoners
  to CU to open accounts
• Shreveport FCU (Louisiana)
• Partner with faith-based community organization
  that has grant through State Corrections Dept.

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Obstacles to re-integration

• Need for financial education
• Difficulty of opening accounts (ChexSystems)
• Poor credit history
• Vulnerability to predatory lenders (payday
  lending, etc.)

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Where CDCUs could help

• Experience with high-risk populations
• More willing to open accounts than banks
• Knowledge of community / family members
• Experience in managing special accounts (e.g.,
  IDAs)

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Managing risk

• Federations Capitalization Program
• PRIDEs Predatory Relief and Intervention
  Deposits
• Shares risk of CDCU lending to victims or targets
  of abusive lending
• Microenterprise collateralization deposits

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Conclusion Role of CDCUs

• Financial literacy coupled with action
• Open accounts
• Make loans help reestablish credit (personal
  loans, microcredit, other)
• Partnerships with faith-based and other community
  organizations
• Knowledge of community recognition of social
  capital
• Reintegration
• Membership / ownership / inclusion

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To contact us

• National Federation of
• Community Development
• Credit Unions
• 120 Wall Street, 10th Floor
• New York, NY 10005
• 212-809-1850 ext. 216 crosenthal_at_cdcu.coop
• or visit us at

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On the Web

• www.cdcu.coop