Deadline Approaching To Take Advantage Of CDFI Fund Grants
HOLLYWOOD, Calif.-The clock is ticking for credit unions to prepare their applications for grant awards from the U.S. Treasury Department's CDFI Fund.
That is the message from Jamie Chase, who carries the unusual title of Founder and Instigator of Goodness for Tacoma, Wash.-based Credit Union Strategic Planning. She told Credit Union Journal Community Development Financial Institution (CDFI) certification is the "most valuable resource" available to credit unions today because it opens the door to grants that average $500,000-capital that can go straight to loan loss reserves.
"Credit unions can get $2 million in grant money every year, up to $5 million over three years," she said. "There are $10-million credit unions that get $500,000 all the time. This program gives these credit unions the resources to do what they are already doing anyway, which is do service in the community."
According to Chase, credit unions with CDFI certification are safely deploying loans and often have 100% loan-to-share ratios. She pointed out this is in stark contrast to the 0% loan growth being projected by CUNA.
"The CDFI Fund has been successful for decades, through both Republican and Democratic administrations," she said. "The grants can be booked as 'other income' immediately, meaning it can go to capital reserves or loan loss reserves."
Armed with grant money, she continued, CUs can go after higher-risk borrowers rather than competing with banks and each other for A and B paper. "This increases revenue, does good in the community and is good business," she said.
All CUs are eligible for these grant awards as long as they are CDFI certified. Chase said in recent years there have been a handful of $1-billion credit unions applying, along with many in the $200 million to $300 million asset class.
So what is the problem? Time. Notice of funding availability will be released in August, but Chase said writing a grant application takes "a lot of research." Typically, an application will run to 45 total pages, including 13 pages of financials. With such a long lead time required, she said CU Strategic Planning can only help so many clients.
In 2010, CUSP wrote 17 grant award applications and turned down 16 CUs that waited too long to launch the process. Chase said the plan for 2011 is to write 30 applications, but she still expects a waiting list.
"We are writing and winning more of these awards for credit unions than anyone in the nation," she declared. "We help credit unions get a bigger share of the grant money, which typically tends to go to community banks. But as a result, we had to turn away those credit unions who contacted us at the last minute in 2010."
And "last minute" doesn't even mean when funding availability is announced. Chase said CUSP will not take on any new clients after July 31, and credit unions from previous years are on its list already.
Western Bridge Corporate has helped CU Strategic Planning get the word out regarding the grant program by hosting a series of workshops. Chase said the corporate views passing on the knowledge as "another resource for education of its member credit unions."
Specialists In Grant Applications
CUSP also enjoys a strong relationship with the National Federation of Community Development CUs, she said. Chase appeared on a panel at the Federation's recent annual conference here.
"We feel the National Federation is our trade association," she said. "If not for the Federation's lobbying of the CDCI [Community Development Capital Initiative], credit unions would not have been included. Even though the Federation does not give us an official endorsement, we give workshops together because the Federation wants its members working with grant writers that are winning these awards."
Keep an eye on the calendar, she advised CUs considering applying for grant awards from the CDFI Fund.
"When the notice of the awards comes out, it is too late to work with the good grant writers. There are firms that serve banks, and there are consultants that write only one application per year for one credit union. Our firm is the only one I know of that has multiple experts."