National Credit Union Foundation Offers Community Investment Fund Alternative - Partners with NCB

The Board of Directors of the National Credit Union Foundation (NCUF) made a strategic decision in January to begin the process of revenue diversification. The new partnership that NCUF has entered into with NCB, FSB (NCB) the thrift subsidiary of the National Consumer Cooperative Bank will provide the credit union community with another Community Investment Fund (CIF) program to participate in and support the programs and services that NCUF and the state credit union foundations (SCUFs) provide.

The funding pathway through corporate credit unions remains in place. For over ten years, the CIF with the corporate credit unions has proven to be a successful program that has enabled credit unions to support the philanthropic work of NCUF and SCUFs. The corporate credit union network is a generous investor in the Community Investment Fund and donates administrative time to CIF. This partnership is crucial to NCUF and the state credit union foundations. “If it wasn’t for the partnership with the corporate credit union network,” emphasized Tom Candell, NCUF Interim Executive Director, “critical programs such as REAL Solutions®, Innovation Grants, Development Education and the CUAid disaster relief program would never have been made possible. We look forward to our corporate credit union relationship continuing to support our programs and services.”

Economic Stress Puts Strain on CIF

Over the past two years, the value of all CIF investments has declined to approximately $250 million, down from a peak of $370 million. During these past two years there have been a significant number of investments withdrawn for a variety of reasons. Several large certificates were withdrawn even though they carried a penalty and a stated rate of over 5%. Several withdrawals occurred because the investment return had dropped significantly. And unfortunately, some credit unions have withdrawn their CIF investments because they do not want to invest in corporate credit unions.

The resulting impact on NCUF and SCUFs has been a 50% drop in revenue from CIF investments. Consequently, the NCUF and SCUFs have had to scale back the amount of innovation grants available for credit union entities which provide much needed services to credit union members and their communities. In 2009, NCUF had over $2.0 million in grant requests, but was only able to fund $350,000, down from over $1.2 million in 2007.

Exploring NCB

When NCUF made the decision to diversify its funding sources, it was determined that staying within the cooperative community was imperative. “It was important to us when we went looking outside the corporate credit union network to stay within the cooperative family,” said Candell, “as the cooperative community’s bank, NCB is a natural fit.”
Talks began with NCB in the summer of 2009, to see if a CIF program with NCB was even possible. Several discussions followed as it was determined that a CIF program could be developed with NCB, FSB, a federally chartered thrift and wholly owned subsidiary of National Consumer Cooperative Bank. The work plan was presented and approved by the NCUF Board in January, 2010.

NCB is no stranger to credit unions and is pleased with the opportunity to expand their services to the credit union community. “Our partnership exemplifies the unique set of values we share as cooperatives and we are excited to expand the impact of NCUF’s philanthropic efforts and its innovative Community Investment Fund,” said Charles Snyder, Chairman of NCB, FSB.

How Does CIF Work?

The Community Investment Fund gives credit unions the ability to leverage their investments to support innovative credit union programs. CIF with NCB is designed as an alternative to the traditional CIF with corporate credit unions:

The CIF allows half of the dividend income to be returned to investing credit unions. The other half is donated to NCUF. In turn, NCUF disburses its half of the CIF dividends accordingly:
  • When credit unions designate the Credit Union Development Education Fund, the Pete Crear Fund, or the International Development Fund the donated dividend is disbursed as 42.5% directly to the particular fund, 42.5% to the credit union’s state foundation or league and 15% to NCUF to support its programs and services.

  • In 2009, following the death of Ed Callahan, the Callahan Fund’s namesake, NCUF’s board of directors voted to replace the fund with the Callahan Legacy Fund. The board appointed a committee to assist in determining the financial education project this fund will support. Currently, the fund supports the PBS series Biz Kid$. Credit unions can elect to have the half of the NCUF dividends shared as followed:
    • 1. 50% national program and 50% to state foundation
      2. 75% national program and 25% to state foundation
      3. 100% national program and 0% to state foundation.

Unique Features of Both CIF programs

There are a few unique features in both CIF programs credit unions should be aware of when deciding to participate in either CIF with NCB at www.CIFwithNCB.coop or the traditional CIF with corporate credit unions.

Unique Features of CIF with NCB

  • Products offered currently include Certificates of Deposit (CDs) with terms of 6-mo, 12-mo, 18-mo, and a liquid Money Market Deposit Account (MMDA) – all at competitive rates of interest.

  • Contribution levels to NCUF and SCUFs can be 50%, 75%, and 100% of the interest earned on the account.

  • A secure and easy online process to participate at CIFwithNCB.coop which requires the completion of two forms to get started:
    • 1. CIF Designation Form
      2. CIF with NCB Deposit Application
  • While NCB is a cooperatively owned financial institution, there is no requirement to purchase stock in NCB.

  • As a federally chartered savings bank, deposits at NCB are FDIC-insured up to $250,000 per Tax ID through December 31, 2013. On January 1, 2014, the standard insurance amount will return to $100,000 per depositor.

Unique Features of Traditional CIF with Corporate Credit Unions

  • Products offered currently include Certificates of Deposit (CDs) with terms of 2-years, 3-years and 5-years and a 90-day share account at all corporate credit unions.

  • Share account holders can more than double their dividends by transferring to fixed-rate CIF CDs (C-40 accounts at corporate credit unions).

  • No need to set-up a different account at another financial institution. Contact your corporate credit union to participate in the Traditional CIF.

  • NCUA has authorized corporate credit unions to waive the 90-day notice requirement when share account holders transfer directly to CIF CDs.

  • Corporate credit unions are regulated by the National Credit Union Administration and share deposits in participating corporate credit unions are currently insured and fully guaranteed by the National Credit Union Share Insurance Fund (NCUSIF).

Looking to the Future

The expansion of the Community Investment Fund gives all credit unions additional product choices to support NCUF and SCUFs. This partnership with NCB gives credit unions a reason to take a fresh look at CIF and the positive impact investing in CIF has on the credit union community.

About NCB (ncb.coop):

NCB, FSB (NCB) is a federally chartered thrift and a wholly owned subsidiary of National Consumer Cooperative Bank, a US government-chartered, member-owned cooperative corporation. Acquired in 1988, NCB has grown from a $9 million community savings bank into a national cooperative financial services company with more than $1.6 billion in assets.

NCB enables cooperative endeavors to grow and succeed. These enterprises are large and small. They serve rural and urban communities. They affect our lives everyday. NCB helps them by crafting financial solutions and delivering banking services tailored to their individual needs.

About the National Credit Union Foundation (www.ncuf.coop):

The National Credit Union Foundation is the US credit union movement’s primary national charitable program provider, fundraiser and grant-maker.

NCUF is funded primarily by investments in the award-winning Community Investment Fund (CIF) and by generous Supporters led by the Credit Union National Association, CUNA Mutual Group, Harland Clarke, CO-OP Financial Services, STAR, California & Nevada Credit Union Leagues, Card Services for Credit Unions, and Visa. All NCUF donors provide support that empowers NCUF and state credit union foundations to make a real impact in the credit union community.

NCUF continues to earn the Better Business Bureau seal of approval as an “Accredited Charity” for meeting all 20 BBB Wise Giving Alliance Standards for national charities.

Disclaimer

NCUF is not affiliated with NCB and is not a party to the contract between you and NCB related to the CIF-NCB Investor Program. NCUF will receive a contribution to NCUF in your name based upon the earnings (interest) split that you have selected. NCUF makes no representations or warranties regarding NCB and is not responsible for monitoring its operations.