The Board of Directors of the National Credit Union Foundation (NCUF) made a strategic decision in January to begin the process of revenue diversification. The new partnership that NCUF has entered into with NCB, FSB (NCB) the thrift subsidiary of the National Consumer Cooperative Bank will provide the credit union community with another Community Investment Fund (CIF) program to participate in and support the programs and services that NCUF and the state credit union foundations (SCUFs) provide.
The funding pathway through corporate credit unions remains in place. For over ten years, the CIF with the corporate credit unions has proven to be a successful program that has enabled credit unions to support the philanthropic work of NCUF and SCUFs. The corporate credit union network is a generous investor in the Community Investment Fund and donates administrative time to CIF. This partnership is crucial to NCUF and the state credit union foundations. “If it wasn’t for the partnership with the corporate credit union network,” emphasized Tom Candell, NCUF Interim Executive Director, “critical programs such as REAL Solutions®, Innovation Grants, Development Education and the CUAid disaster relief program would never have been made possible. We look forward to our corporate credit union relationship continuing to support our programs and services.
Economic Stress Puts Strain on CIF
Over the past two years, the value of all CIF investments has declined to approximately $250 million, down from a peak of $370 million. During these past two years there have been a significant number of investments withdrawn for a variety of reasons. Several large certificates were withdrawn even though they carried a penalty and a stated rate of over 5%. Several withdrawals occurred because the investment return had dropped significantly. And unfortunately, some credit unions have withdrawn their CIF investments because they do not want to invest in corporate credit unions.
The resulting impact on NCUF and SCUFs has been a 50% drop in revenue from CIF investments. Consequently, the NCUF and SCUFs have had to scale back the amount of innovation grants available for credit union entities which provide much needed services to credit union members and their communities. In 2009, NCUF had over $2.0 million in grant requests, but was only able to fund $350,000, down from over $1.2 million in 2007.
When NCUF made the decision to diversify its funding sources, it was determined that staying within the cooperative community was imperative. “It was important to us when we went looking outside the corporate credit union network to stay within the cooperative family,” said Candell, “as the cooperative community’s bank, NCB is a natural fit.”
Talks began with NCB in the summer of 2009, to see if a CIF program with NCB was even possible. Several discussions followed as it was determined that a CIF program could be developed with NCB, FSB, a federally chartered thrift and wholly owned subsidiary of National Consumer Cooperative Bank. The work plan was presented and approved by the NCUF Board in January, 2010.
NCB is no stranger to credit unions and is pleased with the opportunity to expand their services to the credit union community. “Our partnership exemplifies the unique set of values we share as cooperatives and we are excited to expand the impact of NCUF’s philanthropic efforts and its innovative Community Investment Fund,” said Charles Snyder, Chairman of NCB, FSB.
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