Nov 06 2015

CDFI Credit Unions: Foundations for Success


A community development financial institution (CDFI) or low-income designation alone does not increase financial and social returns for credit unions. Directing the organizational mission toward community development will create the building blocks for a successful CDFI business model. 

Stacy Augustine
CEO/Managing Partner
CU Strategic Planning
Jamie Chase
Founding Partner
CU Strategic Planning
Charles Cockburn
CFO/Senior Consultant
CU Strategic Planning
Report Number 378

Executive Summary

The term community development is commonly used among development and social service organizations but not within the credit union system. Yet credit unions have been at the heart of community development since their inception. Many of them just don’t know it. In this report, we’ll use the term community development in its broadest sense, to refer to credit union efforts to improve the lives of their members, a mission shared by cooperatives everywhere.

Community development is a growing field and business model in the credit union system. Over 2013–2014 the number of community development financial institution (CDFI) credit unions grew by 28%, to 241. While this trend points to community development becoming a credit union business model of the future, it also recalls the credit union system’s genesis.

Despite credit unions’ legacy of member focus, there remains a great deal of confusion among credit unions concerning the field of community development. Misconceptions about the definition of low income consumer and concern over the potential for additional regulatory scrutiny have proven off- putting. Similarly, other practitioners of community development, including local and state government agencies and certain nonprofits, are largely unaware of credit union leadership in the field of community development stem-ming from the operating principles on which credit unions were founded.