Rural Community Development Initiatives Program

Final Reports Offer Advice to Credit Unions Serving Rural Fields

The National Credit Union Foundation recently completed a three-year, $400,000 grant project with funding from the US Department of Agriculture’s Rural Community Development Initiatives (RCDI) program.

NCUF used these federal grant dollars to help five credit unions reach out to several of America's most impoverished rural communities.

Each credit union completed a final report that offers advice on how other credit unions can effectively reach out in their communities.

Read about the innovative projects and their lessons learned below:

Five Innovative Outreach Projects

HOPE Community Credit Union
Stuttgart, Arkansas

NCUF’s grant helped build HOPE’s lending and outreach capacity to small businesses in rural Eastern Arkansas. In collaboration with its primary partner, the Enterprise Corporation of the Delta, HOPE marketed its small business loan products to existing businesses and identified potential businesses in which to invest New Market Tax Credit (NMTC) funds.

1st Delta Federal Credit Union
Marks, Mississippi

1st Delta serves three extremely impoverished counties in Mississippi: Quitman, Tallahatchie and Panola counties. Median household income is only 50% of the national median; the homeownership rate is more than 20 percentage points lower than the national rate; and the area is blighted with more than 25 predatory lenders. NCUF's grant helped 1st Delta provide affordable financial services, credit counseling, and housing counseling.

LA DOTD Federal Credit Union
Denham Springs, Louisiana

LA DOTD Federal Credit Union focused on two parishes devastated in the fall of 2005 by Hurricanes Katrina and Rita. While the communities worked to bring back infrastructure (utilities, schools and roads) to pre-hurricane conditions, residents were still struggling to rebuild their lives. Many needed financial education to prepare for homeownership, and homeownership counseling to become first-time homebuyers. The credit union worked in partnership with churches and other faith-based institutions as well as employers in Calcasieu and Cameron parishes to train speakers to provide financial education classes and pre-homeownership counseling to survivors who were hardest hit by the hurricanes.

Opportunities Credit Union
Burlington, Vermont

In Vermont, as in most rural states, the cost of permitted building land and standard housing construction is rising much faster than the wages of low-income workers. As a result, traditional homeownership is becoming more and more difficult. For many, the only accessible form of homeownership has become manufactured housing located on land that is leased from owners of manufactured home parks. The credit union provided technical assistance and organizational support to help turn residents of manufactured home parks into homeowners. The credit union organized and trained residents on how these parks could be converted into cooperatives.

Sky Federal Credit Union, Livingston, Montana

NCUF's grant and technical assistance helped the credit union expand its capacity to promote homeownership through targeted savings and personal homeownership counseling. The credit union developed a housing counseling curriculum and outreach strategy that reached all members of this remote rural community.

Advice to Credit Unions from Final Reports

What advice would you give to other organizations planning a similar program? Please include strengths and limitations of the program. If you had the opportunity, what would you have done differently?

1st Delta Federal Credit Union

The main advice 1st Delta Federal Credit Union would give is to be aware of the limitations of your target audience. In this credit union’s case, many of their target audience could not attend one-on-one counseling for a variety of reasons, so they relied on group workshops in non-credit union venues at times suitable to the audience.

The strength of the program was in the partnerships. Limitations mainly related to the challenges associated with accessing the target audience.

If they could start the program again, 1st Delta FCU would spend more time on strategic planning, try not to achieve too much, and set realistic goals.

Hope Community Credit Union

The main advice that Hope Community Credit Union would give other organizations planning a similar program revolves around establishing and enhancing partnerships. In this type of program, the credit union said that building relationships with small business development organizations was crucial for them to be able to source leads. They also said it was important for them to build relationships with credit counseling services and to be able to refer clients for counseling at the appropriate time.

Like 1st Delta FCU, Hope Community CU found the strength of the program was in the partnerships. Limitations of Hope Community CU’s program mainly related to the lack of understanding and motivation of some participants. The credit union stressed the need to be aware that many people who want to start a business might have a good idea, but have very little knowledge about how to start a business, limited ability to manage a business, and rarely have sufficient collateral to get started.

LA DOTD Federal Credit Union

The LA DOTD Federal Credit Union program focused on working with the faith-based community to recruit volunteers to teach three financial literacy programs and then have churches host the training sessions.

The first piece of advice: Find two or three faith leaders with great standing and a track record of influencing others to action, then put these faith leaders out in front as the public face of the project to encourage and recruit trainers.

LA DOTD FCU also advises selecting several partners and several sites, then establishing a schedule of regular classes over an extended period of time.

The greatest strength of the LA DOTD FCU’s program was the range of partners in the community that were prepared to work with the credit union to improve financial literacy. Many different organizations partnered with LA DOTD FCU to enhance the scope and outcome of their program.

The most challenging limitation of LA DOTD’s program was establishing trust with their target partners. Many faith-based groups are hesitant to work with an unknown entity. It took the credit union some time to build credibility in the faith-based community.

If LA DOTD FCU could do something differently: They would focus on a couple of locations and work with a small group of trainers who are truly committed to serving in this role, then set up a schedule of regularly scheduled classes over a much longer period of time.

Opportunities Credit Union

Opportunities Credit Union’s first piece of advice: Connect with other partners nationwide to learn from best practices.

It’s also important not to be discouraged by the difficulty in serving this market. Know up front that there will be substantial, unanticipated hurdles and longstanding discrimination. Opportunities CU emphasized the importance of perseverance, recognizing the importance of serving this market, and not being afraid to be a pioneer in the field.

Finding the support to offer manufactured home loan programs, prior to secondary market development, was a great strength of Opportunities CU’s program. Another strength was the development of much-needed manufactured home products and assisting families in building equity through access to affordable capital. The program was limited by the lack of secondary market investors and institutions that are overly cautious and slow to change.

In hindsight, Opportunities CU would have focused on building awareness of the potential of new manufactured housing, and changing perceptions first. They would have focused on developing counseling, credit repair, and debt-repayment programs tailored to mobile home issues. They also would have sought subsidies to help move consumers out of predatory loans to help get them back on track.

Sky Federal Credit Union

Sky Federal Credit Union would strongly advise anyone undertaking such a program in the future to begin by preparing detailed strategic and action plans, then closely monitor the implementation and success of those plans.

Their other pieces of advice: Build partnerships, and don’t rely solely on traditional marketing techniques to promote the program.

If Sky FCU could start the program over again, they would seriously consider allocating a specific staff member to implement and manage the program rather than adding significant implementation and management tasks to already busy staff. They believe this would enhance the outcome of the program and significantly reduce the administrative burden their staff endured.

If an innovative approach was used successfully, please describe the program in detail for replication of other organizations and communities.

1st Delta Federal Credit Union and Hope Community Credit Union

1st Delta Federal Credit Union and Hope Community Credit Union both relied on perseverance in an economically challenged part of the country to achieve their goals. Their approach to implementing plans, building partnerships and leveraging their success off those partnerships were keys to their success. They achieved their targets through lots of hard work.

LA DOTD Federal Credit Union

LA DOTD Federal Credit Union’s project was innovative in several ways. It relied almost entirely on building relationships with faith-based organizations, political leaders and other community organizations, then training key people in those organizations to perform the majority of the work. The concept was to teach at least one person in each organization to provide financial literacy and home ownership training in their organization. It was a way to get maximum exposure using minimal resources.

LA DOTD FCU would encourage other organizations and communities to replicate this model rather than try to do all the work themselves. It is a unique way to achieve more with less.

Opportunities Credit Union

Opportunities Credit Union identified several innovative aspects of their manufactured housing counseling and lending programs, which they believe would greatly benefit low-income families if replicated by organizations in other communities. These include:
  • 1) Manufactured Home (MH) Loan Programs: Opportunities CU urges others to recognize the importance of serving manufactured home owners. Their MH loan program offers affordable loans to purchase manufactured homes. Many credit unions do not currently offer loans for this type of housing, yet it can be the primary source of affordable housing across America. Opportunities CU’s MH team has developed expertise in manufactured housing purchase and lending. Key elements include understanding unique characteristics of manufactured homes, knowledge of the retail environment, identifying reputable dealers, manufacturers and qualified appraisers with expertise in MH valuations, verifying sales price and value, requiring home inspections to confirm proper installation, and developing standard park owner/lender agreements and tailored pre- and post-purchase counseling.
  • 2) Purchase Subsidy Programs: Opportunities CU worked with the Vermont State Department of Housing and Community Affairs to access Vermont Community Development Program funds (which come through a federal program) to provide down payment assistance to create real opportunities for homeownership. In markets with severe housing price issues – particularly in rural states – manufactured housing represents the only affordable option. Programs that exclude manufactured housing may effectively eliminate any potential for homeownership.
  • 3) Tracker Series: Tracker credit-rebuilder and Tracker bill-pay – timed release of payments to creditors - are two signature Opportunities loan programs that the credit union has found particularly effective in helping re-establish credit and pay off debt. When members receive one of their Tracker loans, the loan amount is placed into a share savings account that is used to secure the loan. The individual makes payments monthly. At the end of the loan term, the loan amount (now their savings) is used for their goal, which is either a down payment or a debt repayment. The loan is reported to credit bureaus and helps to improve the member’s credit. With lower-income families carrying increasing credit issues and debt burdens often driven by medical expenses, these products are in particularly high demand to help people get back on track.
  • 4) Resident-Ownership Support: Building new models and partnerships to help individuals own the land beneath their homes is essential and replicable. Developing relationships with MH park owners to evaluate opportunities for resident ownership is one strategy. Opportunities CU would encourage outreach to park residents and educational programs that provide information about resident ownership. The credit union was able to gain support from the state housing department, other housing providers, funders and advocates, to increase awareness and make progress.
Sky Federal Credit Union
A final innovation that other organizations could use is Sky Federal Credit Union’s approach to project planning. They established a project committee, headed by a project coordinator. They prepared an innovative long-term strategy, which was then linked to detailed action plans for each month of the program. The plan involved regular meetings of the project committee to monitor progress and make adjustment to the plan where necessary.