As an industry, we often talk about the credit union mission of “serving the underserved.” When it comes to credit union advocacy, however, we are often caught up in pursuing technical policy, fighting for increased flexibility or defending against harmful regulations – valuable and very necessary pursuits for sure, but not ones that always translate directly into tangibly and visibly helping credit unions provide vital, low- or no-cost, accessible financial services to the people, families and communities we serve.
The Michigan Credit Union League (MCUL)’s advocacy team, along with our CDFI-certified members, teamed up with the state’s non-depository CDFI community on an ambitious idea to flip that script this session.
Michigan is home to more than 50 CDFI-certified entities, with credit unions making up half of that universe. Our CDFI credit unions put these federal resources into programs that directly benefit their members – programs that target critical areas of need, like alternative mortgage or small business lending.
These CDFIs are spread across the state serving both rural and urban communities from Detroit to Grand Rapids, heading north all the way into the Upper Peninsula. As Michigan emerges from the pandemic, we have found ourselves with billions in state budget surplus funds and the perfect opportunity to tell our state policymakers about the fantastic work that CDFIs do in Michigan.
We have worked constantly over the past months to educate the state legislature about what CDFIs are and can do, and how they could be perfect partners to get these unprecedented state resources into the hands of the people and communities that desperately need them. With the finalization of the FY2023 budget, the state allotted $75 million in general funds to be distributed among Michigan CDFIs for permissible uses.
This funding is a transformational opportunity for CDFI institutions, and the discussion over the past year around it has significantly highlighted the benefits of CDFI certification. We hope other credit unions will evaluate whether certification is right for them. That said, while we are excited for this opportunity, we are watching current federal developments carefully.
As the CDFI Fund moves into an extended pause on acceptance of applications and modifications, and revamps their application and certification process, credit unions and other institutions around the country – including several in Michigan – have been deemed out of compliance with certification requirements. These notices have come with little guidance as to why or how to fix the issue, as well as very little time to do so.
Looking ahead to the next iteration of target market investment area maps, MCUL worries the number of these in Michigan will continue to shrink, just as they did between 2013 and 2018, even though many of these areas haven’t experienced growth in service or wealth. This leaves us to wonder if perhaps it might be time to revisit some of the certification criteria (for example, what about lending activity to ALICE households?).
Overall, there is plenty to be positive about here. We expect that the number of certified institutions will grow, and with that growth, help channel more federal resources and opportunities into our communities. New state funding will provide yet another opportunity to show our local policymakers what we can do and how well we do it. And hopefully, all this effort will open doors and generate ideas that help credit unions remain viable, independent and strong while finding new ways to serve their members – which is always our most important mission.