CDFI spawns a new credit union

Entrance to the Community First Fund FCU. (Photo: Community First Fund FCU)

Community Development Financial Institutions (CDFIs) are known to have been created out of financial necessity, especially in low-income communities. They are not known for creating something as big as new credit unions springing out of existence.

But, the credit union industry witnessed exactly that earlier in June.

From its beginnings in the 1990s as a CDFI in south-central Pennsylvania, the Community First Fund has grown into a leading economic development organization offering more than 5,600 loans and investments totaling $355 million for businesses and community and affordable housing programs.

Founded by a coalition of black, Latino and white community leaders nearly 30 years ago, the Community First Fund has lived up to its social justice statement, which reads: “We walked in silence with others during days, months and years to move the economy forward. and social justice for disenfranchised individuals and communities. We work in solidarity with our brothers and sisters and are committed to aligning capital with justice to increase opportunities for economic prosperity for all.

Thanks to the hard work of the Community First Fund team of 70 and what seems to be a core community belief in the organization after three decades of existence, the Lancaster-based Community First Fund Federal Credit Union, in Pennsylvania, opened its doors to members in June. ; it was described as a “transformative moment” for the growing community 80 miles west of Philadelphia.

Daniel Betancourt

“This was just the culmination of a lot of hard work and a passion to serve the community, and realizing that this time has finally come where we can open,” said Daniel Betancourt, President and CEO of Community. First Fund FCU. “And it sounds dramatic, but we can open forever – once we open our doors, those doors will stay open, I think, beyond my lifetime, but also serve the community hopefully for the hundred coming years and more.”

Betancourt has helped create a unique world of credit unions and cooperatives in Lancaster. Although he is the leader of the new credit union, he has also served as president and CEO of the Community First Fund for the past 23 years. He selected six CDFI staff to become credit union employees and the two organizations share the same management team.

“We’ve served Lancaster for 30 years by providing access to credit to entrepreneurs who want to make a positive change in the community,” Betancourt said. “With the credit union, our mission is to provide a pathway to financial stability for families. We are excited to expand our service in the community and celebrate this milestone.

This mission of the new credit union began in December 2020, when the Community First Fund announced plans to launch the designated credit union for low-income people, using part of a $10 million philanthropic gift. dollars from MacKenzie Scott. A portion of those funds, plus an additional $1 million raised from community partners, helped move the credit union’s charter application forward — and fast.

According to Betancourt, the charter application was filed in January 2021 and approved by the NCUA five months later in June. “We understand this is record time,” Betancourt said proudly. He added that he understands why the process happened so quickly, even during the first months of the pandemic.

“They [the NCUA] knew they were dealing with a sophisticated organization and with every question they had, not only did we have an answer, but we had the deliverable they were looking for and we got it to them within minutes or hours. We were able to push our bid forward simply by being ready and having an organization and staff that could respond at all times,” he said.

That efficiency might be what brought NCUA Board Chairman Todd Harper from Washington, DC to Lancaster for the grand opening to cut the ceremonial ribbon.

UCF Community First Fund staff assist members. (Photo: Community First Fund FCU)

“It’s a wealth-creating institution,” Harper said at the time. “Established by the community and for the community, it is at the very heart of our nation’s credit union system which was built on the principle of people helping each other.”

Over the decades of living and working in the area, Betancourt has witnessed the real economic hardship experienced by members of the community. The ripple effect of the pandemic on low-income communities, and now rising interest rates and inflation, have put even more pressure on his community.

“We all know that being poor is expensive. So we’re concerned that when someone has an $800 car repair bill, they’ll just have less money for it because they would have applied the rising cost of inflation. So that’s where I think credit unions can help — where we can provide counseling, financial advice, and those small loans and emergency loans that community members will need,” he said. declared.

But being a numbers guy, he didn’t want to rely on anecdotal information to base his decision to open the Community First Fund FCU. He wanted real research to back up what he and his team were seeing every day.

“We hired Franklin Marshall College and their research showed that about 27% of Lancaster was unbanked, and that’s the entire county and underbanked,” he said. “And then for African Americans and Latinos, it’s over 50 percent. So with this research and a strong application with the cash in hand, we could not only show that there was a demand, we could show that we can be successful in serving this low to moderate income community.

Currently, the credit union has over 200 members and Betancourt’s goal is to have 500 members in the first year.

A longtime partner of the Community First Fund, M&T Bank Regional President for Southeast Pennsylvania, Tom Koppmann, was on hand for the opening of the new credit union. His bank has actually pledged $1 million to the credit union over the next five years to help with operational support.

“It’s a transformative moment that could help uplift the whole community,” Koppmann said.

Santander Bank was the first banking partner to commit significant financial funding to launch the credit union.

“Investing in projects that help build strong and healthy communities is a key priority for Santander Bank, and we are proud to be a long-time supporter of the Community First Fund,” said Seth Goodall, Executive Director of the Santander Bank, Corporate Social Responsibility. “The establishment of Community First Fund Credit Union in Lancaster is a significant improvement for the community and we congratulate Community First on reaching this important milestone.”

Koppman added: “There is more to this moment than the opening of Community First Fund Credit Union in Lancaster. It is about expanding access to banking and other financial services to communities in the region that have been underbanked for years.

And that is Betancourt’s overarching and incredibly serious goal: to provide financial access and education to the unbanked and underbanked for years to come.

“Our vision is to grow the credit union to $100 million in seven years. So we are raising capital. We have a fundraising campaign to strengthen our balance sheet. We have already raised approximately $10 million in capital and intend to raise $20 million for our balance sheet for the growth of our mandate. We also hope to serve other low to moderate income communities beyond Lancaster over the next five years.

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