$25-Million Campaign Boosted by Foundations, Financial Institutions, Faith-Based Investors

(October 29, 2007 – San Francisco, CA)  At its first-ever West Coast Financial Literacy Forum, held at the Federal Reserve Bank of San Francisco, the National Federation of Community Development Credit Unions (Federation) announced the successful launch of a major campaign to attract additional capital for credit unions serving low-income communities.

Addressing an audience of community development credit unions (CDCUs), the Federation’s Community Development Partner (CDP) credit unions, regulators, bankers, and investors, Executive Director Clifford Rosenthal reported that the Federation has obtained $8.5 million in investments and commitments toward its $25-million goal. 

The pacesetting investors include:

• The Ford Foundation
• HSBC Bank, National Association
• TD Bank USA, N.A
• U.S. Treasury Department Community Development Financial Institutions Fund
• Calvert Social Investment Foundation
• Trinity Health Corporation
• Catholic Healthcare West
• Mercy Investment Program

This fundraising campaign marks the 25th anniversary of the Federation’s Community Development Investment Program, formerly known as the Capitalization Program.

“We started our investment program in 1982 with little more than a vision,” explained Rosenthal, who participated in its original design. “Social investing, program-related investing by foundations, the Community Reinvestment Act (CRA) for banks – all these now-common capital channels were in their infancy at that time.  The Federation was virtually alone as a national intermediary raising funds from these sources and channeling them into grassroots institutions like CDCUs.”

Growth, Diversification Mark Community Development Investments Program

With the recent investments, the Federation currently manages over $35-million, which is invested in approximately 120 of the Federation’s member CDCUs across the United States.  “We have the most extensive, diversified portfolio of any community development financial intermediary,” Rosenthal said.  The Federation’s investments have gone to inner-city, rural, and reservation-based credit unions from Vermont to Hawaii, and over the last two years, it has made significant investments in CDCUs rebuilding New Orleans and the Gulf region. 

The Federation’s current campaign is a response to the growing success of CDCUs, Rosenthal said. “Virtually all our available funds are deployed.  Many of our CDCUs are growing strongly, and can make good use of additional capital.”  

Over the last decade, the Federation has steadily expanded its offerings of financial products to strengthen CDCUs to include:

• Federally insured deposits for general lending operations of CDCUs
• Deposits to share a portion of the default risk of anti-predatory lending
• Equity-like secondary capital to support fast-growing CDCUs
• Purchases of affordable mortgages originated by CDCUs, enabling them to free up their capital for additional lending to low- and moderate-income members

Options for Investors 

The Federation offers investors a range of investment opportunities with varying levels of return. “Our nominee deposit program, for example, makes it possible for investors to place up to $10-million in federally insured deposits in a widely diversified portfolio of credit unions,” Rosenthal noted.  Investments in the Federation’s CDCU Mortgage Center, LLC provide a higher yield than the federally insured deposit program and are “an excellent way to promote responsible, affordable lending at a time when it is more needed than ever.”

The Federation’s recent innovations have made it possible for credit unions to invest in various ways that were not previously possible, Rosenthal commented. “We look forward to expanding dramatically the movement’s investments in low-income communities over the next two years.” 

Detailed information about the Federation’s Community Development Investment Program is available on its web site by clicking here. 

Interested investors can contact Alice Greenwald at agreenwald@cdcu.coop, or (800) 437-8711, ext. 212.

© 2007 National Federation of Community Development Credit Unions.