The Relationship of Size & Leverage

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The National Credit Union Foundation, on pace to reach its impressive goal of $1 billion in funds, is turning its attention to using its deeper resources to leverage greater returns on the programs it underwrites.

Gary Officer, who took over as NCUF's executive director more than a year ago, said that among the biggest changes in the NCUF over that time is that it is now making much larger grants. But the size of the grants being funded is not the most important point, he said.

"We want to be successful in grantmaking," explained Officer. "You cannot get results with the $5,000 and $10,000 grants. You get results through transformative grantmaking, which can be leveraged with private funds."

Officer clarified that the Foundation continues to fund small grant requests, but added, "You just can't expect to change the world with a $5,000 grant. To be transformative requires much deeper grants."

The NCUF, which now has $325 million in funds on deposit and a goal of $500 million by year-end, looks for three key criteria in the projects it funds. According to Officer, those are:

A clear focus on addressing a major, unmet need.

Sustainability, including partners with which to work to ensure a greater likelihood of success.

An ability to leverage other, private sources of support. For the NCUF, those private sources have included private foundations, such as the Ford Foundation, and other corporate sponsors. It has also worked with agencies of the federal government.

Although the Foundation has funded projects from Appalachia to Los Angeles, Officer points to two efforts in Chicago as examples of funding that has made the kind of tranformative differences he cites. The first is Southside Community Credit Union, launched with help from the Foundation, 14 non-profit groups, the state government, the African-American community, and non-member deposits from larger credit unions. The credit union is now providing mainstream financial services, and referring members seeking mortgages to other credit unions.

Similarly, with North Side Community FCU, the Foundation has funded payday lending alternatives, including a lending program that seeks to "graduate" successful borrowers to other loans and services.

"I look for local partners who can leverage local dollars and help," said Officer. "You have to build that relationship with the local funding community and get yourself in the funding queue."

"People are sometimes hesitant about pursuing founding outside of the credit union movement," he continued. "I think of it as a value-added proposition. It's critical value added to do the things credit unions do and ought to do, such as service to the underserved."

Included in the Chicago project is a strong element of financial literacy enhancement, which Officer makes clear is no accident.

"Everything we do has a literacy component," said Officer. "It's also the component that's hardest to measure because it's a behavioral. And it's behavior that often becomes embedded. Our housing counseling and First Accounts program all have a financial literacy component."

An element of efforts in Chicago is also partnering the smaller credit unions with larger, more established CUs, something Officer said he wants to see more of. "The large credit unions have the resources, and the smaller credit unions are in the communities. We should do ourselves a favor here. If we don't serve consumers in underserved communities, then we lose them to payday lenders. It takes leadership to see the business rationale, especially among larger credit unions."

A veteran of the foundation community, Officer said his vision for the NCUF is based on growth and examining the National CU Foundation in the context of other foundations. He said he was immediately struck upon joining the NCUF that the $600-billion credit union community had just a $33-million foundation, whereas Fleet Bank alone had a $1.4-billion endowment for its foundation. "The comparison with what banks are doing has resonated with credit unions," believes Officer. "People are more aware of the need to be good public citizens."

The biggest misconception, he said, is that too many with credit unions continue to mistakenly see the Foundation as busy chasing federal dollars in order to fund just housing initiatives.

Officer said credit unions seeking grants need to have a "strong awareness of what the problem is that they want to address." He added that that the NCUF often sees applications for $5,000 from a small credit union seeking a computer upgrade, when it would be "better off spending $5,000 on a grant consultant and getting a $100,000 grant."

Officer has set a five-year goal for reaching its $1 billion in funds on deposit. Those funds from a variety of donors are placed in 90 day, 12-month and five-year certificates with corporate credit unions, with the NCUF using the interest earned to fund projects.

The NCUF has also worked to implement better measurements so that it can quantify the work it has funded. "Every proposal we get has to include baseline measures," he said, adding that once the baseline is established, benchmarks are also put in place for the project. "Big donors want to see big results," acknowledged Officer. "How do you prove value?" The answer, he said, lies in those benchmarks.

"Our growth is truly indicative of an industry that has to have a true national foundation to develop funding mechanisms to local programs," said Officer. "We want to compete with the best of what is out there in the foundation community, and we are getting there. We are really interested in developing innovative programs and initiatives that are geared toward the lower end of our economic system-and that's both rural and urban."

Among the initiatives sought, said Officer, are those that address an ongoing problem for credit unions: a lack of convenience. He noted, for instance, that check cashers are always located near major bus stops.

"Credit unions must have a much better sense of retail service," he observed. "It's up to credit unions-not as large versus small-but in the spirit of cooperation."

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