The Federationlaunched the Capitalization Program for CDCUs in 1982, at a time when federal support for anti-poverty and community development programs was being cut drastically. Our concept was simple: create a central, national vehicle for socially concerned investors to provide funds for grassroots credit unions located in all corners of the United States.
Our initial investors were women's religious orders, which made small, unsecured loans to the Federation for us to redeposit in a portfolio of credit unions. In the mid-1980s, our Capitalization Program began to grow dramatically, thanks to investments from the John D. and Catherine T. MacArthur Foundation, the Sisters of Charity, and later, the Ford Foundation and the Presbyterian Church (USA) Foundation.
Until 1996, our investments in CDCUs only took the form of insured non-member deposits, for medium to long terms at below-market interest rates. In 1996, we began a transformation that would make us a virtual one-stop capital shop for CDCUs.
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Through our advocatcy with the federal credit union regulator, the National Credit Union Administration, we created secondary capital in 1982, a new financial tool available only to low-income credit unions. We soon raised a pool of more than $5 million in secondary capital, which we began to invest in our member CDCUs.
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Shortly after that success, we raised a nearly $2 million in equity grants to help CDCUs expand, thanks to investments from the Ford Foundation, the CDFI Fund, and the Citibank Foundation.
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In 1996, we obtained regulatory clearance for our Nominee Deposit Program, enabling us to increase dramatically the amount of insured deposits we can channel into local credit unions.
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We began offering Individual Development Account matching grants that helped CDCUs match the deposits of their low-income members who agreed to save in special accounts restricted to home purchase, postsecondary education, small-business development, or other wealth-building purposes.
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We introduced Microenterprise Collateralization Deposits to help CDCUs make loans to very small businesses.
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In 2002, the Federation introduced another new product: Predatory Relief and Intervention Deposits (PRIDEs™). By placing PRIDEs in our member credit unions, the Federation helps them make higher-risk loans to people who would otherwise be vulnerable to high-cost and predatory lenders, such as payday lenders, tax-refund anticipation lenders, automobile title lenders, and unscrupulous mortgage-finance operations.
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In 2005 we launched the CDCU Mortgage Center, LLC to bring a platform of mortgage services and products even closer to the smallest CDCUs and help expand mortgage finance options for credit unions serving low-income communities.
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By the end of 2005 we also launched our CDCU Secondary Market, which purchases both traditional and non-traditional responsible loans made by our member CDCUs in low-income communities. By purchasing these loans, the Federation is assisting CDCU replenish their loan capital to increase their impact in their local communities.
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In 2007 we launched a 3-year $25 Million Capital Campaign to grow our portfolio to more than $50 million under management.
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In 2011 we annoucned the largest single investment in Federation history, with a $10 million investment from Bank of America.
Today, the Federation's Capitalization Program manages more than $60 million from private-sector and public sources. Our portfolio includes nearly 300 different investments in;more than 180 institutions across the United States.
There is no better social investment than CDCUs -- grassroots, nonprofit, cooperative institutionsvowned and managed by low-income communities. And there is no better way for investors to reach the world of CDCUs than through the Federation's Capitalization Program.
Additional Information
Interested investors looking for additional information should contact Community Development Investment Program Director Alice Greenwald at: agreenwald@cdcu.coop, or (800) 437-8711 x221.
