Community Development Credit Unions Paving the Way to Financial Freedom

The National Federation of Community Development Credit Unions (the Federation) was established in 1974 by a coalition of credit union leaders dedicated to revitalizing low-income communities.  Our mission is to help low- and moderate-income people and communities achieve financial independence through credit unions.  The Federation provides capital investment, technical assistance, education and training, and advocacy support to strengthen community development credit unions – also known as “CDCUs” -- that serve low-income, urban, and rural communities across the nation.

CDCUs are credit unions with a special mission of serving low- and moderate-income people and minority communities beyond the reach of banks and mainstream credit unions.  They focus their attention and services on populations generally considered the hardest to serve, including low-income wage earners, recent immigrants, and people with disabilities.

CDCUs are:

• nonprofit and tax-exempt (but not a charity)
• cooperatively owned and governed -- one member, one vote
• government-regulated, fully insured financial institutions.

CDCUs provide:

• fairly priced loans, including to members with imperfect, limited, or no credit history
• a safe place to save
• a place to conduct transactions at reasonable cost
• financial education and counseling for its members
• products, services, and support that can help members to free themselves from high-cost and predatory debt, gain control over their personal finances, and achieve economic independence.

In this time of financial and economic turmoil, it is important to note that CDCUs have been providing safe, secure, and affordable loans in low-income communities for more than seven decades.  Credit unions in general – and CDCUs in particular – did not engage in the abusive and irresponsible lending practices that have upset global financial markets.  While credit unions did not cause the problems we face today, they are committed to providing solutions that protect the hard-earned assets of individuals, families and communities for decades to come.

The Federation’s Disability Initiative is aligned with the credit union philosophy of people helping people. The commitment to provide safe, reliable and affordable financial solutions for people with disabilities (PWD) has been the goal of the initiative since its inception in 2002. With the support of our partner organizations, the Federation has tested effective ways to extend financial services and outreach to PWD through community development credit unions.

Our Research Department collected data from CDCUs and disseminated information on capacity building services for PWD to our national network of about 300 CDCUs; helping to shape new strategies to provide financial education and services to the disabled community.

Research has shown that the communities traditionally served by CDCUs include a substantial portion of people with disabilities.  While relatively few CDCUs track information on members with disabilities, a Federation survey showed that 75% of these credit unions find many of their members receiving at least one type of disability benefit payment on a regular basis.  The survey also showed that 58% of these CDCUs had a relationship with institutions serving the aged or disabled and 70% of surveyed CDCUs indicated that they had at least one product or service specifically tailored to people with disabilities.
Credit unions traditionally offer a variety of products and services that meet the needs of PWD such as on-line and telephone account access, special trusts and savings accounts. State Employees Credit Union of North Carolina and Veridian Credit Union of Iowa expanded their menu of services to include large print and Braille statements.

The Federation’s Education and Training Department developed a disability module, Building Bridges, Breaking Barriers, to enhance its educational curricula offered through the CDCU Institute™ and the Teach One, Teach Many financial literacy instructor training program. Financial education and training opportunities were provided at the Federation’s national conferences on serving the underserved and regional trainings to credit unions and other non-profit organizations. To date, over 880 credit union personnel have been trained and have provided financial education to over 22,000 members, 1,800 of which were individuals living with disabilities. 

Each year the Federation hosts a financial education forum featuring presenters from the National Disability Institute (NDI) and the World Institute on Disability (WID). The forums highlight the increased need for financial education resources in our society.

To assist credit unions in providing loans to PWD for much needed equipment and technology, the Federation developed a product called Assistive Technology PRIDE™.  The Assistive Technology PRIDE™ (Predatory Relief and Intervention Deposit) is a low-interest, non-member deposit for low-income designated credit unions wishing to serve this segment of their membership by making loans for special equipment.  PRIDE™ helps credit unions that have established, or are planning to establish, anti-predatory lending programs to combat abusive lending practices in their communities.

What’s Next for Credit Unions
Starting in 2009, the Federation will participate in an Asset Accumulation and Economic Self-Sufficiency (AAESS) Project along with the National Disability Institute, the World Institute on Disability, and other disability-focused organizations to coordinate industry wide credit union outreach to people with disabilities and their families. The AAESS project proposes to assist the mainstream financial service industry to improve the asset accumulation and self-sufficiency for this targeted population. 

Specifically, the Federation will host webinars on ADA compliance and other current issues; facilitate discussions on vocational training opportunities in the financial services industry; and provide technical assistance to credit unions to enhance and modify loan products such as auto loans, housing, and assistive technology.