National Federation of Community Development Credit Unions (NFCDCU)

Single mother and cancer survivor Michelle, NFCDCU client

An association of credit unions that lift up underserved borrowers

Contact the National Federation of Community Development Credit Unions: Website | Facebook

In New York City in 1974, eight community development credit unions connected with each other because they shared a common mission. Unlike conventional banks or even regular credit unions, these community development credit unions (CDCUs) offered products and services tailored to low- and moderate-income people and communities, to help them achieve financial independence. Together, these eight CDCUs formed the National Federation of Community Development Credit Unions.

They didn’t stop there. The Federation members realized that they could be stronger and more effective at their mission to advocate for CDCUs with more members. They realized asset size didn’t matter when choosing which institutions could be included—what mattered was commitment to underserved communities.

So they opened membership up to all community development credit unions across the US. Community development banks and credit unions are certified by the US Treasury Department as having a mission to provide financially underserved low- and middle-income communities with fair and affordable financial services. That mission is first and foremost in their operations.

Over 40 years later, the Federation has grown a lot. It has 218 member CDCUs in all 50 states, with assets ranging from $1 million to over $8 billion. Today, the Federation offers a wide range of advocacy, educational, investment, marketing and outreach programs to support and assist CDCUs.

Pam Owens, senior vice president of organizational development and capacity building, says the credit union movement has “exploded” in the past ten years.

Much of this, she says, is due to an increased interest from the millennial generation.

“Millennials are taking a very active role in the in their finances and bucking mainstream financial institutions more so than people of previous generations,” Owens says. “They’re looking for ways to have impact with their dollars.”

By moving their money to CDCUs, millennials and others can make a difference, since these institutions provide financial services and products to all that are “safe, reliable, and affordable,” says Owens.

While some banks do provide such services, lower- income communities are often prey to institutions that care about profits over people. Mega-banks, in particular, may hit those communities hard with predatory loans and fees. And payday lenders, title lenders, and cash- advance outlets often pop up in these communities, taking advantage of people in need with exorbitant interest rates.

At CDCUs, members can see their money go back to families and businesses in their communities, instead of lining the pockets of bank executives and unscrupulous lenders. Owens gives the example of member Latino Credit Union, based in North Carolina, which created a loan program to help newly arrived immigrants pay for the costly process of obtaining citizenship.

“CDCUs are thinking way outside the box,” Owens says.“They’re part of helping to turn around economic injustice that is very prevalent in many communities across the country.”

She gives an example of Faith Community United Credit Union in Ohio, which 30 years ago, was seeing more and more community members preyed upon by payday lenders.These lenders typically charge 400 percent interest or more on their loans, trapping vulnerable customers in a never-ending cycle of debt.

The credit union developed “small dollar” loans to help people before payday, and let them pay back small debts at a low interest rate and without hidden fees. Owens cites this program as one of many examples of creative ways CDCUs help communities solve problems they’re facing.

CDCUs are for everyone, she says—whether you’re trying to make a difference or just trying to get a good rate on a loan or account. People also like being part of a community-based institution. Owens says.

Plus, there’s the fact that opening an account with a credit union means you’re part-owner and have a say in how the credit union operates. Instead of catering to shareholders, credit unions answer only to their members.

“The movement is definitely growing—there are over 100 million consumers using a credit union in the US today—and the fact that members have a voice is very important,” Owens says.“By putting any amount of money, from $1 to $1 million dollars into a credit union, you’re an equal owner.”