SAN FRANCISCO-A newly formed organization-the Credit Union Funding Access Team-has one goal in mind: to increase the amount of CDFI-certified credit unions.
With that certification, they will be eligible to apply for dramatically increased funding from the Treasury Department's CDFI Fund.
"This is a tremendous opportunity," said Bill Myers, a long-time advocate for community development by credit unions, and founder of the CDCU Alternatives Federal Credit Union in Ithaca, N.Y. "There is money on the table here for credit unions to serve their communities in new and better ways - build a new branch, upgrade their computer systems, open up lending to more small businesses."
The current round of funding is expected to reach $145 million, and for the first time, there is no requirement for matching funds. This increase of almost $100 million over funding in the 2008 fiscal year is part of the American Recovery Act signed into law on Feb. 17. The 2010 budget proposed by President Obama on Feb. 26 seems to maintain an elevated level of approximately $100 million for CDFI funding for the next fiscal year.
Myers said that credit unions traditionally have been under-represented in the CDFI fund-mainly because they have failed to become certified and submit a funding application. For the current round of funding, only 42 of the 260 applicants for funding were credit unions.
"There's something like 1,000 credit unions that are eligible," Myers said. "The number actually certified is about 200."
The main reason for this number, Myers said, is the "application process may seem daunting." "We spoke to a couple of credit unions that started the process and didn't complete it," he said. "The process is documentation heavy. We came across one credit union who started the process three different times."
He said the application questions include questions about the financial institution's board, areas the institution serves, and what the FI specifically does in those areas. "It's standard stuff," Myers explained, "but it's lots of standard stuff."
The Credit Union Funding Access Team hopes to ready as many credit unions as possible to access the funding pool, by helping them with the application process.
"We're a group of consultants that said 'There's a huge hole in the marketplace. Let's fill it.'"
Myers said that CUs seeking certification must start now, because the process is very time-consuming.
The time is now, Myers said. "The CDFI fund has a fairly reduced budget for the past eight years. Not only has the Obama administration doubled appropriation to this, but they've added stimulus funds," he said.
The idea for the team came when Myers was listening to a presentation in early March about this from the CDFI Coalition - which represents all financial institutions.
"I chatted around and asked 'Who's got the time? Who's got experience with this kind of thing?' It wasn't that hard," he said.
All of the Team members have experience in the application process, he noted. The other members are: Blake Myers, a freelance consultant in the community development finance industry; Paola Diaz-Torres, who created the Georgia Family Credit Union and its affiliate GA Development Center to meet the needs of the unbanked Latino community in Gwinnett County, Ga.;
Myers said that credit unions already designated "low income credit unions" by the NCUA are the best candidates for CDFI certification because they already have been able to demonstrate the low-income status of the majority of those they serve; and Molly Schar, who formerly served as a public affairs specialist for the NCUA.
