Nearly $8.8 million invested in CDCUs/LICUs in 2007

(February 5, 2008 – New York, NY)  According to year-end numbers, 2007 was a record year for the National Federation of Community Development Credit Unions’ (Federation’s) Community Development Investment Program.

Formerly known as the Capitalization Program, the Community Development Investments Program celebrated its 25th anniversary in 2007 with a rebranding and the launch of an ambitious capital campaign aimed at raising $25 million over three years, to bring total assets under management to just over $50 million.

Highlights for 2007 include the following all-time records for the program:

• Investments and commitments raised in a one-year period: $10.5 million
• New investments in member CDCUs in a single year: $8.8 million
• Total assets under management: $38.4 million
• CDCUs participating in program: 121
• Number of investors: 32

Community Development Investments: A Historical Perspective

Since 1982, the Community Development Investments Program has helped credit unions strengthen their finances and expand their impact on low-income communities. CDCUs, like all credit unions, raise deposits which they relend to their members. But in low-income communities, raising deposits from people with little disposable income is a major challenge. Congress recognized this in 1970, when it gave low-income credit unions the exclusive right to raise deposits from “non-members,” organizations and individuals outside the primary field-of-membership of these credit unions.

Currently, the Community Development Investments Program provides CDCUs not only with deposits, but also loans in the form of secondary capital (highly subordinated debt).  In addition, the program has managed several special grant programs in the past few years, including the:

• Community Development Relief and Rebuilding Fund, which raised nearly $1 million to assist low-income credit unions rebuild and reestablish operations following the devastation of hurricanes Katrina and Rita in 2005;
• Alternative Products to Payday Lending (APPLe) Grants, which encouraged CDCUs to expand or develop responsible loan products to combat predatory lenders; and
• Bridge Grant Project, which made grants to “mainstream” credit unions, in partnership with CDCUs whenever possible, to reach out to low-income populations within their fields of membership.

“We launched this program 25 years ago with a vision that if we could raise grant funding and low-interest debt, we could begin investing in member CDCUs at below-market rates, helping them implement high-impact programs to better serve their communities,” explained Federation President/CEO Clifford N. Rosenthal, one of the architects of the Federation’s investment program.   “We originally estimated that the spread-income on a $5 million portfolio would make the program self-sufficient,” Rosenthal added.  “However, 25 years since inception our portfolio has grown to nearly $40 million under management, far beyond our initial expectations, but current projections show that $50 million under management will make the program completely self-sustaining.”

Over the past 25 years, many foundations, banks, religious organizations, and other institutions have invested in CDCUs through this program. The Ford Foundation; Bank of America; HSBC Bank; Presbyterian Church (USA) Foundation; Mennonite Mutual Aid; Calvert Foundation; John D. and Catherine T. MacArthur Foundation; JPMorgan Chase; and the federal CDFI Fund are just a few major investors.  A full list of investors is available by clicking here.

The Federation hopes the 25th Anniversary Capital Campaign will encourage more organizations within the credit union system to support the development efforts of CDCUs by contributing to the program, and is currently in negotiations with a $2.5 billion in assets credit union to manage a portfolio of non-member deposits in CDCUs.

Interested investors should contact Alice Greenwald, Director of the Community Development Investment Program, at agreenwald@cdcu.coop, or at (800) 437-8711, x212.

To learn more about the Federation’s capital campaign and for additional information about the Community Development Investment Program and its offerings, please click here.