New CDCU to Serve Latinos Chartered in Atlanta - National Federation of Community Development Credit Unions

Organizing Interest Up, But Process Remains Difficult

Paola Diaz-Torres proudly displays her new charter certificate with Georgia CU Affiliates CEO Mike Mercer.

(January 5, 2009 - Atlanta, GA) For over two years, organizers in Georgia have been working diligently with the National Federation of Community Development Credit Unions (Federation) to organize a new community development credit union (CDCU) that will serve the primarily low-income Metro-Atlanta Latino community. Efforts that began in 2006 have finally come to fruition as the Georgia Family FCU recently received its charter from the National Credit Union Administration (NCUA).

Paola Diaz-Torres, who will serve as CEO of the new CDCU, explained that their “goal is to break down the cultural and functional barriers that stand between low-income immigrant residents and mainstream financial services.” The new CDCU seeks to end the cycle of poverty that many new Americans are trapped in, by providing financial education, leadership opportunities, and culturally-appropriate financial products. “Our project aims to serve low-income individuals from the Hispanic community who struggle to build assets due to a lack of financial sophistication or access to affordable financial products,” she added.

The credit union is looking to start up a sizable operation with the capacity to serve a significant portion of the largely underserved community. Organizers are currently looking for additional supporters to help spread the word about their efforts and to serve as conduits to leverage additional resources for the credit union.

“I especially want to thank the Federation for all the technical assistance it provided on this project. The knowledge and experience they shared with us, their support in developing our relationship with the regulators, and the networking opportunities they made available were indispensable to our success,” she explained. “The organizing process is so hard and discouraging that the friendship and support from the CDCU movement was instrumental in keeping our project moving forward. There were moments when we were encouraged to throw-in the towel, but the staff of the Federation provided friendship and moral support to keep us going.”

Too Few Credit Unions Being Chartered

Georgia Family FCU's recently awarded charter from NCUA.

The Georgia Family FCU is one of very few newly chartered credit unions this year, a trend the Federation would like to see change. “During the 1980s and 90s, NCUA was especially active in chartering new credit unions across the nation,” explained Federation President/CEO Cliff Rosenthal. “Some of those institutions did not make it, but others have become some of the nation’s premier credit unions serving people of modest means.”

“In the past, communities could come together, develop a basic business plan, pool together their limited resources and they could start a credit union,” said Rosenthal. “These days, it is virtually a requirement that organizing groups raise hundreds of thousands of dollars of start-up funds in order to satisfy NCUA requirements. We think the barrier to chartering has become too high.”

This is a major challenge, particularly in the current economic downturn, which has seen philanthropic activities markedly decrease. Georgia Family FCU was fortunate that in addition to the pledged deposits from their proposed membership, it was also able to raise nearly $1 million in combined cash and in-kind donations for their start-up, with major funding from the Atlanta-based Marcus Foundation.

According to Rosenthal, the Federation has seen an increased interest by groups seeking to organize their own community-controlled financial institutions. “Nearly 50 percent of our technical assistance is now being devoted to helping organizing groups across the nation, but the process is extremely difficult and time consuming,” he said.

There seems to be some hope, as NCUA recently announced that it would be centralizing the chartering process at its headquarters in Alexandria, VA. This is a recommendation Rosenthal made to newly appointed NCUA Chairman Michael Fryzel, and one he hopes will make credit union start-ups a realistic option for disenfranchised communities across the nation.

In 2008 alone the Federation assisted CDCU organizing groups throughout the country including:

Casa de Maryland in Silver Springs, MD
Collaborative Support Programs in Clifton, NJ
East River Development Alliance (ERDA) in Long Island City, Queens
Express CU in Seattle, WA
Fondo Internacional para el Desarrollo de los Migrantes (FIDMI) in Washington, DC
Georgia Family FCU (opening in early 2009) in Atlanta, GA
Haitian Evangelical Credit Union (proposed) in West Palm Beach County, FL
Inspire Community Development FCU (proposed) in Battle Creek, MI
Kalamazoo CDCU (proposed) in Kalamazoo, MI
NCI Community CU (open as of Dec. 6, 2008) in Houston, TX
Bergen County CU (proposed) in Bergen County, NJ
Pascua Yaqui Tribe in Tucson, AZ

Despite the challenges, many communities want to be in control of their economic destinies, and for many, that path begins with creating their own financial institutions.

Diaz-Torres recommends other organizers take advantage of the expertise and networking opportunities offered by the Federation and its member CDCUs. “The amount of information I received from the Federation and other groups and credit unions that have gone through the chartering process has been indispensable. People shared financial projections and details of contractual relationships, which helped us tremendously.”

Groups interested in assistance organizing a credit union are encouraged to contact Federation Director of Technical Assistance Brian Gately at bgately@cdcu.coop, or (800) 437-8711 x201.