Nusenda Credit Union Foundation honored as 2019 Herb Wegner Memorial Award Winner
Nusenda Foundation recognized with Outstanding Organization Award
MADISON, WI (October 24, 2018) — In recognition of their commitment to serving the under-served through innovation and cooperative leadership, the National Credit Union Foundation (the Foundation) is pleased to announce Nusenda Credit Union Foundation as the recipient of the 2019 Herb Wegner Memorial Outstanding Organization Award.
Nusenda Credit Union Foundation will be one of three Herb Wegner Memorial Awards presented at the annual fundraising gala hosted by the Foundation at the Marriott Marquis on March 11, 2019, in conjunction with the Credit Union National Association Governmental Affairs Conference in Washington, D.C. Registration for dinner sponsorships and tickets will be available on the Foundation website (ncuf.coop) later this year.
“What Nusenda Credit Union Foundation has accomplished with their Co-op Capital Program is an excellent template and prototype for duplication and scale throughout the credit union movement,” said John Gregoire, Chair of the Foundation’s Wegner Awards Selection Committee and President of The ProCon Group. “Their targets and successes hit right at the heart of those consumers for who credit unions were organized to serve.”
Creating Innovative Lending Solutions
The Nusenda Credit Union Foundation (Nusenda Foundation) was founded in 2014 to better serve low-income people within New Mexico, specifically in the nine communities serviced through Nusenda Credit Union.
Shortly after establishment, the Nusenda Foundation began a discovery process to modify and scale one of Nusenda Credit Union’s existing loan programs, the SEG Pledge Loan. This microloan allows Nusenda’s business account holders to offer small dollar loans to their employees by pledging the employer’s savings account as collateral for the loan without requiring a credit check.
Recognizing that this type of loan could be life changing for the people they serve, Nusenda Foundation began analyzing other alternative lending models to identify best practices for replication. Additionally, Nusenda Foundation met with over 150 stakeholders in New Mexico to determine how to further adapt the alternative lending model to the unique needs of the community. Through this discovery and research, Nusenda Foundation created the Co-op Capital Program.
“I applaud the Co-op Capital Program and its risk-taking founders at the Nusenda Foundation for creating an entirely new financial product,” said Deanna Archuleta, Interim Director of Economic Development at Bernalillo County. “Regulations can make it difficult for institutions like banks and credit unions to innovate. Nusenda Foundation created this product in a way that meets all regulations that are there to safeguard our community while still finding a way to flip the way lending works.”
Co-op Capital is a collaborative lending model in which the loan application and underwriting process is redistributed to community-based organizations so that they become the “face” of the microloan program. This allows the borrowers in the community to access loans through trusted organizations in which they already have built relationships with. As loan payments are made, the funds held as collateral in savings accounts replenish and more individuals gain access to loans. Rather than a revolving loan fund, Co-op Capital uses a revolving collateral fund.
Co-op Capital’s approach challenges traditional and even alternative models of lending. As of Q1 2018, Co-op Capital has lent $663,466 to 363 borrowers, averaging $1,828 per loan and boasting only a 1% default rate. The Nusenda Foundation continues to scale this financial product, increasing geographic scope and depth of reach within communities.
Empowering and Serving the Under-Served
Co-op Capital is a community-based microloan program that democratizes access to capital for low-income populations, immigrant communities, people of color and other borrowers who face structural barriers to upward economic mobility.
Economic empowerment is a core tenet of Co-op Capital. Not only does the program save marginalized populations from high fees, it encourages recipients to build assets and start or expand small businesses. One of the requirements of the loan approval is to open an account at Nusenda Credit Union, and for many this is the first time they have had a financial home.
“This program allows families access to capital at low interest rates and helps them to establish their credit so that in the near future they can make use of more traditional financial services,” said Javier Martinez, Executive Director at the Partnership for Community Action. “By proving this lending model successful, we have the opportunity to uproot the notion that a consumer is only as good as their credit score.”
Co-op Capital uses the international model of community circle microlending, wherein loan recipients use peer empowerment for mutual self-help. Each partner organization offering Co-op Capital participates in three peer-to-peer learning sessions annually where they identify and share best practices. Co-op Capital recipients provide data and information to the program, and in some cases, each other, for continuous improvement.
In a diverse yet economically challenged state, the Nusenda Foundation serves as an anchor organization in the community. By widening access points to capital, Nusenda removes barriers to economic mobility, letting capital catalyze upward financial mobility in people’s lives and communities.
Strengthening a Community Through Cooperation
The Nusenda Foundation’s mission is to create stronger communities where the credit union’s members live and work through collaborative partnerships and by investing in innovative solutions to improve education, health, social, and economic outcomes.
The Nusenda Foundation’s many partners embody a spirit of cooperation. Co-op Capital began with three SEG members offering their own member-based services to promote the principle of cooperation among cooperatives – La Montañita (a farmer/grocer co-op), IATSE 480 (the local film union), and NOEL Corp (a concrete contractor).
Recognizing its effectiveness and the opportunity to adapt and scale the product, the Nusenda Foundation partnered with the University of New Mexico Foundation and Central New Mexico Community College to adapt the product for students in colleges and universities. Significant membership and asset growth, as well as expanded partnerships and sites offering Co-op Capital have followed, signaling that this work is effective and valuable in communities throughout the state.
Together with the University of New Mexico, the Nusenda Foundation worked to implement “Powering Success”, an adaptation of the Co-op Capital Program to students in need of emergency funding. Many of the university’s students are low income, and many of them will be the first in their families to graduate. Powering Success offers accessible small dollar loans to help these students stay on track while connecting them to important financial resources to set them up for a better financial future.
“The Nusenda Foundation supports the partnering organizations to ensure that they have the capacity to use Co-op Capital as a transformational tool that helps them deliver on their missions more effectively,” said Tara Gohr, Executive Director at The Grants Collective. “Co-op Capital helps the nonprofits to engage and support their constituents, which is empowering to the individuals and organizations.”
About The National Credit Union Foundation
The National Credit Union Foundation (the Foundation) is the charitable arm of the U.S credit union movement, serving as a catalyst for change in people’s financial lives. The Foundation works to ignite understanding and focus on member financial health, inspire and create opportunities for credit unions to leverage their cooperative values and respond quickly when disaster strikes. Through cooperative support and action, the Foundation helps people achieve financial freedom.