(July 19, 2007 – New York, NY) The National Federation of Community Development Credit Unions today announced a $25-million capital campaign aimed at increasing investment in community development credit unions (CDCUs), which specialize in serving low-income communities. So far this year, the Federation has received initial investments and commitments totaling more than $5-million from foundations, social investors, and banks.
The campaign marks the 25th anniversary of the Federation’s Community Development Investment Program, formerly known as the Capitalization Program, which has expanded rapidly in recent years.
“We started the program in 1982 with little more than a vision,” explained Federation Executive Director Clifford Rosenthal. “Social investing, program-related investing by foundations, the Community Reinvestment Act (CRA) for banks – all these now-common capital channels were in their infancy. The Federation was virtually alone as a national intermediary raising funds from these sources and channeling them into grassroots institutions like CDCUs.”
The field has grown enormously over the last decade, aided especially by the U.S. Treasury Department’s Community Development Financial Institutions (CDFI) Fund. The Federation is a federally-certified by the Treasury Department as a CDFI, as are 100 or more credit unions, and has received some $7-million in grants and loans from the fund.
The Federation’s Community Development Investments Program currently manages nearly $30-million, which is invested in approximately 120 of the Federation’s member CDCUs. “We launched this campaign, because we had a good problem,” said Rosenthal. “Virtually all our available funds are deployed. Many of our CDCUs are growing strongly, and can make good use of additional capital.”
The first $5 million in investments toward the Federation’s $25-million goal have come from the Ford Foundation, TD Bank, the Calvert Social Investment Fund, regional foundations, and religious organizations. Additional commitments of nearly $2.5 million are pending.
Funds raised for the Federation’s Community Development Investments Program will be provided to CDCUs in two forms: as deposits and secondary capital; and through purchases of affordable home loans from CDCU portfolios by the Federation’s CDCU Mortgage Center, LLC. “Our deposit program offers investors complete security of principal, because the funds we place are fully insured,” said Rosenthal. “Investors seeking a higher rate of return can invest in our mortgage program.”
“We are especially eager to engage credit unions and credit union organizations in our Community Development Investments Program,” he continued. “It’s a great way for the credit union movement to show its leadership in serving the residents of low-income communities.”
© 2007 National Federation of Community Development Credit Unions.