Join the Bank On Initiative

The Challenge
Research from the Federal Deposit Insurance Corporation shows that there are many reasons consumers lack a basic transaction account: not enough money for the minimum balance; distrust of financial institutions; high or unpredictable fees; or identification, credit or banking history problems. Many Americans are driven to use expensive alternative financial services, including check cashers, payday lenders, and pawn shops that charge high fees for financial services that fail to help people get ahead. Without a checking account, families wind up paying too much for basic financial transactions and are hard pressed to build savings and assets.

Quick Facts:

• Close to 7% of U.S. households (approximately 14 million adults) are “unbanked,” without a checking or savings account.
• Almost 20% of U.S. households (approximately 50 million adults) are underbanked, meaning they still use some fringe financial services.
• Nearly 37% of unbanked and 45% of underbanked households earn less than $30,000 per year.
• Nationally, more than half of black households and 46% of Hispanic households are unbanked or underbanked, compared to less than 20% of white households.

Why do basic transaction accounts matter?

A basic transaction account is an important first step in establishing a mainstream banking relationship, depositing earnings securely, accessing credit, and saving for the future. Unbanked and underbanked individuals lose the cost savings and stabilizing benefits such an account provides, such as:

• Cost savings: The average unbanked person spends 5% of net income on unnecessary fees for alternative financial services. This can amount to $40,000 over a lifetime—a significant amount for those who can least afford it.
• Asset building: Without a bank account, a family lacks the ability to save reliably or automatically, or establish a banking relationship that can lead to accessing affordable credit for opportunities like a car, small business, or home mortgage.
• Public safety: Without a safe place to deposit their money, unbanked people are more likely to be victims of crime because they often carry large sums of cash with them or keep cash in their homes. Elderly, disabled, or undocumented immigrants can be particularly vulnerable.
• Financial stability: Research shows that being unbanked makes it harder to achieve financial goals like reducing debt and improving credit scores.

The Solution

The CFE (Cities for Financial Empowerment) Fund works directly with national and regional financial institutions to encourage the widespread availability of safe, low cost transactional products.

One key challenge facing unbanked and underbanked individuals has been a lack of safe and appropriate accounts offered by mainstream financial institutions, particularly those without overdraft.

The CFE Fund has worked closely with the Bank On National Advisory Board and other key stakeholders to develop the Bank On National Account Standards. Inspired by the Federal Deposit Insurance Corporation’s Model Safe Accounts Template, these standards provide local programs with a benchmark for account partnerships with financial institutions, including their local partners.

Click HERE for the current Bank on National Account Standards.
Potential Bank On funding grant opportunities and the Bank On Playbook may be found HERE.
If your credit union meets the requirements, apply free for national certification HERE.

Search the Bank On financial institutions in your state:

To learn more about the Bank On Initiative and how credit unions can get involved, watch our recorded webinar and then contact SECUF staff, secuf@lscu.coop to stay involved.

More than ever, 2020 has shown a spotlight on the incredible impact that credit unions make in their communities.  Whether it’s working around the clock to process Payment Protection Program loans, participating in social justice initiatives or giving their employees time off to vote, credit unions have consistently demonstrated their commitment to serving the needs of their communities.
But equitably meeting those needs in minority or low-income communities takes commitment and innovation.  That’s where the U.S. Treasury Department’s Community Development Financial Institution (CDFI) Program can help.
Created by Congress in 1994, the CDFI program was designed to combine federal money with private capital to help qualified financial institutions meet the need of under-served communities that typically lack access to affordable loans and safe financial services.
“When we looked at the needs within our community, we knew it was just too large a problem to solve on our own.  That’s why we started looking into the CDFI program,” says Kirk Mills, CEO of St. Louis Community Credit Union.  “As an example, we wanted to offer consumers an affordable alternative to predatory financial products and help get our members off the payday loan merry-go-round.  The benefits and grants from the CDFI program have allowed us to focus more of our lending activities on minority and low-income members who need it most.”

For more information about the certification, please review the video series CDFI — Introduction and Overview.

America's Credit Unions Mutual Group, in partnership with Inclusiv and with the support of the Southeastern Credit Union Foundation, is launching a CDFI Campaign. The program aims to educate credit unions not currently CDFI certified about the benefits of certification in serving members and local small businesses, and to create a network for existing CDFI credit unions to learn about and access additional resources.

As part of the awareness and certification campaign, Inclusiv will conduct an analysis of credit unions in target areas and provide technical assistance to credit unions interested in pursuing CDFI certification as well as to previously CDFI-certified credit unions whose certifications have lapsed. Inclusiv will be providing CDFI eligibility and certification services, along with training and technical assistance for CDFIs participating in the various CDFI Fund programs. Inclusiv is also hosting weekly learning sessions for credit unions that would like to learn more.

Current CDFI Credit Unions are eligible to apply for a portion of the $1.25Billion allocated to CDFI by February 25th.

Priority for this first round of funds is likely to be given to Minority Depository Institutions. To have this designation, your credit union must:

1. Have a membership that is more than half minority.
2. Have a Board that is more than half minority.

These qualifications should be self-reported by the credit union to the NCUA. More information can be found HERE.

Register here for more information and to be included in the weekly learning sessions, being held each Wednesday at 3pm EST (beginning January 6th).

Benefits of the CDFI Program
Mission driven credit unions are dedicated to financial inclusion, and the ability to apply for capital or technical assistance grants is often a top draw for credit unions.  In September 2020, the CDFI fund awarded grants totaling $45.8M to 111 credit unions.
Additional benefits of the CDFI program include:

• Access to additional training resources.
• Exemption from the NCUA’s member business lending cap.
• Membership in a learning community of like-minded credit unions to share ideas.
• Limited exemptions under the CFPB Qualified Mortgage and Ability-to-Pay rules.

What a CDFI Credit Union Looks Like

Not every credit union will qualify as a CDFI.  There are seven tests for CDFI certification, most of which are automatic or easily fulfilled by most credit unions.  A good CDFI candidate makes it their primary mission to provide development services like financial education and coaching for those community members who need it most.  That commitment can be seen in the makeup of their governing or advisory boards, providing a reflection of the communities they serve.
The real hallmark of a CDFI credit union is that their lending activities are predominantly focused on target populations in economically depressed areas, low-income communities, or other historically under-served populations.

Dispelling the Myths

It’s a common misperception that the CDFI certification is primarily for small credit unions.  In fact, asset size is not a qualifying factor and currently there are 39 CDFI certified credit unions with more than $1 billion in assets.  But the impact of CDFI grant dollars is magnified in a small credit union.
“We are a $50M credit union with only 22-1/2 staff members,” says Kate Laud, President and CEO of Opportunities Credit Union in Vermont. “We’ve gotten multiple grants from the CDFI fund.  Those dollars have helped us run our business efficiently and cost effectively.  The result has been increased lending for immigrants, minorities and low-income members in every county in Vermont.”
Because of the low mortgage rates, Opportunities Credit Union has seen mortgage activity in 2020 equal to 270% of their 2020 plan.  “Over a third of our mortgages in 2020 have been made to immigrants and refugees,” says Laud.
Another common misperception is that it is just too risky to focus on under-served communities.  Terry Ratigan from Inclusiv states that their research shows quite the opposite.
“The median community development credit union actually outperforms the median non-CDFI in earnings, lending, asset growth and membership growth,” says Ratigan.  “We have documented these results in both our 2018 and 2020 Inclusive Finance reports.”
Comparable findings have been independently reported by NCUA and America's Credit Unions in public presentations.

Becoming and Staying CDFI Certified

Some credit unions may feel they just don’t have the time to pull together the data and the application to initially become certified.  That time invested directly translates into benefits for your members.  “You have to understand your WHY--you don’t become a CDFI unless it is truly part of your mission and business strategy as a credit union.  It takes intentional commitment expanding who you serve and you have to be able to demonstrate your plan for any grant dollars received from the CDFI fund,” says Mills.
Applications for CDFI certification can be accepted any time but there are two times a year (September and March) where the NCUA offers a streamlined application window.  This can significantly reduce the data gathering burden for credit unions.

Taking Action

As a League, we are committed to the success of credit unions.  Government funding for the program can change from year-to-year and there are currently legislative proposals for unprecedented levels of funding.  We want to make sure all credit unions who qualify can take advantage of all CDFI benefits.  Inclusiv is holding weekly informational meetings for credit unions interested in the CDFI program.  Again, register here to learn more:  CDFI Education Sign-up

Does your credit union have a high priority of community development and assisting members to move from Financial Crisis to Stability, Security, Well-Being and Prosperity?

Part of the credit union philosophy is believing in the power of collective impact and we recognize that “It Takes a Community” to serve the needs of low-to moderate-income individuals, families and households. We value learning and connection with peers and are always looking for community organizations that are mutually beneficial for credit unions to develop partnerships with.

Partnering with community organizations leads to:

• Greater credit union awareness
• Networking opportunities
• Potential new members
• Financial education resources
• Professional development
• Stronger grant applications and more opportunity

The Southeastern Credit Union Foundation works closely with and encourages credit unions to find out more about the following “umbrella” organizations. Although the names are state specific, the reach of each organization is not.

 

 

Click HERE for Grant Writing Tips for Community Development Projects.

 

CDFI Resources:

• Provides a forum for cross-sector communication and collaboration among national CDFI leaders through its Industry Leadership Forum.
• Promotes sound public policy related to CDFIs through education and advocacy.
• Monitors the activities of the CDFI Fund, the federal program created to support CDFIs nationwide.
• Sponsors the CDFI Institute, a cross-sector, national policy conference designed to build capacity and promote networking and collaboration.
• Produces an E-newsletter to inform colleagues and associates of major news affecting the CDFI Field.
• Operates an educational and informative website on community development finance

• A dynamic collaborative community designed and built just for the CDFI industry.
• Knowledge exchange, content curation, idea incubation and professional networking.

• The CDFI Fund conducts monthly CDFI Certification Conference Calls which are intended to serve as a forum for potential CDFI Certification Applicants, certified CDFIs, and other CDFI certification stakeholders to ask questions and discuss CDFI certification and the CDFI certification process. All credit unions are welcome to join in.

• Access Instructions

  To access conference calls participants need to call the toll-free number (800) 475-0421 and dial in the numeric Participant Pass-code “6784582“. No prior registration is necessary. Please note the dial in process is automated. The conference call will have a moderator to direct the Q&As.

  CDFI Certification Conference Call Schedule 2021

  • Thursday, January 21, 2021 – 3:00pm – 4:00pm Eastern

  • Thursday, February 18, 2021 – 3:00pm – 4:00pm Eastern

  • Thursday, March 18, 2021 – 3:00pm – 4:00pm Eastern

  • Thursday, April 15, 2021 – 3:00pm – 4:00pm Eastern

  • Thursday, May 20, 2021 - 3:00pm – 4:00pm Eastern

  • Thursday, June 17, 2021 – 3:00pm – 4:00pm Eastern

  • Thursday, July 15, 2021 – 3:00pm – 4:00pm Eastern

  • Thursday, August 19, 2021 – 3:00pm – 4:00pm Eastern

  • Thursday, September 16, 2021 – 3:00pm – 4:00pm Eastern

  • Thursday, October 21, 2021 – 3:00pm – 4:00pm Eastern

  • Thursday, November 18, 2021 – 3:00pm – 4:00pm Eastern

  • Thursday, December 16, 2021 – 3:00pm – 4:00pm Eastern

The Southeastern Credit Union Foundation partnered with Avadian CU and the Metro Birmingham Children’s Business Fair to hold a Biz Kids workshop on Saturday, 11/02 at the UAB football practice Legacy Pavilion. Kids learned what it takes to start a business and will be working on their own business ideas for a showcase in April!

It was so nice to meet you and everyone at the workshop Saturday. You all breathed life and excitement into Shea and Claire, they are still flying high. They can't wait for the next gathering. We have had a rough couple of years and this was a great encouragement for all of us! Thank you for all your hard work and travel to make this happen. We will not take this opportunity for granted!
~Parent of 2 BizKid Workshop Attendees

Let us know what your CU is doing in the community! Send a brief story and pic to secuf@lscu.coop.

To date, with assistance from the SECUF, twenty-one affiliated credit unions in Alabama and Florida have been CDFI certified and awarded Community Development Grants totaling $13,290,250.00.

CDFI grant winners in the Southeast for 2020 were as follows:

Credit Union	State	Year	CDFI	Amount
Phenix Pride FCU	Phenix City, AL	2020	CDFI-TA	$125,000
Alive CU	Jacksonville, FL	2020	CDFI-TA	$125,000
Community South CU	Chipley, FL	2020	CDFI-FA	$557,000
GTE FCU	Tampa, FL	2020	CDFI-FA	$500,000
Guardians CU	West Palm Beach, FL	2020	CDFI-FA	$557,000
Manatee Community FCU	Bradeton, FL	2020	CDFI-TA	$125,000
Suncoast CU	Tampa, FL	2020	CDFI-FA	$657,000
Tallahassee Lean FCU	Tallahassee, FL	2020	CDFI-FA	$650,000
TOTAL				$3,853,000

In 2019, CDFI grants were awarded to forty-four credit unions throughout the United States, three of which were LSCU-affiliate credit unions.

Community Credit Union of Florida, GTE Financial and Phenix Pride Federal Credit Union were awarded a total of $1,689,000 to invest in community development projects.

In 2018, a total of 48 credit unions in the U.S. and Puerto Rico were granted awards. Two LSCU affiliated Florida credit unions were granted more than $1.4 million:

• Suncoast CU - $950,000
• Innovations FCU - $500,000

In 2017, five LSCU affiliated Florida credit unions were granted almost $3.4 million:

• Community CU of FL - $596,500
• Community South CU -$776,500
• Fairwinds CU - $686,500
• FSU CU - $500,000
• GTE FCU - $776,500

In 2016, three Florida credit unions were granted more than $4.6 million in grant funding, the most granted to credit unions in any one state:

• Suncoast CU - $1,400,000
• Guardians CU - $1,483,000
• Tallahassee Leon FCU - $1,768,250

Thank you to the following credit unions for supporting Community Development Across Alabama, Florida and Georgia through grant funding: