Community Development Credit Unions: Securing and Protecting Assets in Black Communities

Abstract

Credit Unions, with a hundred year history, and Community Development Credit Unions (CDCUs), with a 30–40 year history of serving the under-served, have only recently begun to be recognized by some of the media and the progressive community as “safe havens” and fair lenders. There is little independent, academic research, however, that investigates and evaluates the ways that credit unions are community-rooted and responsive to local needs, and/or their achievements in this area. This paper reports on preliminary qualitative research this author has conducted to help us understand how community development credit unions in Black communities in the U.S. provide affordable financial services, and especially help their clients/members to preserve assets. Major findings include: all CDCUs note that they charge lower rates for their products, and provide higher interest or dividends when possible; both which enable members/customers to save money and build assets. CDCUs work closely with their members to personalize services, to help them avoid loans they cannot afford, and to educate them enough to make sound financial decisions and preserve their assets. Many give some direct options to their members to avoid “payday loans” with check cashing and other predatory lenders. In addition, most CDCUs are deeply involved in their communities, and the bigger ones actually provide donations, encourage their employees to volunteer in the community and are generous employees (creating jobs with benefits and job ladder opportunities). Some are able to help finance affordable housing and contribute to other community economic development projects.