Samuel Corum/Bloomberg
A recent op-ed by Ryan Ellis (
The U.S. financial system is stronger and more inclusive thanks to hundreds of community development credit unions around the country that support individuals and communities in building financial security, affordable homeownership and small-business growth. Credit unions’ not-for-profit cooperative status enables them to serve communities overlooked by traditional financial institutions with affordable, accessible financial products with the proceeds recycling within communities in the form of lower cost loans, more support services, and higher returns on savings.
Many of these credit unions have been certified by the U.S. Department of Treasury as CDFIs, enabling them to leverage public and private capital to expand their reach and impact serving low-income and underserved communities, building a more inclusive financial system.
Leading national banks and impact investors invest in community development credit unions, channeling capital in the form of deposits, equity and long-term subordinated debt into these on-the-ground community lenders to reach and serve people and communities the banks are unable to serve. Community development credit unions serve communities across the country, from Alaskan communities only accessible by boat or plane to rural Puerto Rico and everywhere in between.
Credit unions have played a vital role in the CDFI movement since the very beginning, and they continue to fill gaps in financial services and credit access in low-income communities across the country. Not only were credit unions included in the Riegle Act, the CDFI Fund’s authorizing legislation, they were explicitly featured alongside community development banks for their ability to accept deposits. Because of their structure, CDFI credit unions are ideally suited to leverage modest federal investments from the CDFI Fund into lasting impact that promotes economic vitality and financial independence among low-income Americans.
This is how they do it. In 2023, using the same CDFI Fund dataset Mr. Ellis referenced, CDFI credit unions had more than $204 billion in loans outstanding to their members — that’s more than 13 million loans, primarily directed to low- and moderate-income people and small businesses. Like CDFI loan funds and banks, CDFI credit unions must demonstrate that 60% or more of their lending is targeted to qualifying low-income borrowers and communities and reaches populations historically underserved by the financial system.
Because credit unions lend their members’ deposits, they have strong incentives to make affordable, well-underwritten loans, and CDFI credit unions take this one step further. They have an explicit community development mission and business model. To support these goals, they pair their lending with development services, like financial education and coaching, first-time homebuyer education and small-business support services, which reached more than 4.8 million people in need of these supports. CDFI credit unions reached 75% of all people who received development services from a CDFI in 2023 while making up only about a third of all certified CDFIs.
Government grants, like support from the CDFI Fund, made up only 0.6% of the average CDFI credit union’s income in 2023. But the magic of CDFI credit unions is in what happens next. When CDFI credit unions receive awards from the CDFI Fund, they don’t just lend the money out as a handful of new loans, they leverage it. That’s why CDFI credit unions make up less than a third of all CDFIs but together with the CDFI banks account for more than 90% of the total assets of CDFIs. Like their bank counterparts, CDFI credit unions are able to mobilize deposits from their local communities and members to grow assets and scale their lending. The model allows for a small amount of equity, like a grant from the CDFI Fund, to go a long way toward delivering impact.
CDFI credit unions have used CDFI funding to expand their mortgage lending programs, helping formerly homeless Americans achieve their dreams of homeownership. They help young people in rural areas build credit and life skills by providing agricultural loans to support participation in 4H and similar programs. They help small businesses in their communities thrive. Every CDFI credit union offers programs and services tailored to their communities’ and members’ unique needs.
The attacks on the credit union tax-exempt status and the purpose of the CDFI Fund contradict this well-demonstrated impact. Investments in these community-based lenders build stronger, healthier communities. Over the past 30 years, the U.S. banking system has become more inclusive and better able to reach main street businesses, homebuyers and consumers as a result of the CDFI Fund and all the sectors that comprise the field. Support for the fund and field has been bipartisan and has managed to span myriad political and commercial divides. Year over year, the CDFI field has earned the backing of not just our communities but large financial trade organizations like the American Bankers Association and America’s Credit Unions. This support is due to the tangible benefits we collectively deliver to people who need us and how our work strengthens the overall financial system along with local economies.