LANCASTER, Penn.–How a chance meeting played a role in why one person was eager to join a start-up credit union, as well as how the CU itself came to be, has been detailed in a new report, which describes the new CU as “embodying the original, long-forgotten vision for community development finance.”
The report by Next City, a nonprofit news organization that published the story on its site at nextcity.org, shares how Leo Rodriguez in 1993 was seeking $10,000 in start-up capital to open his own hair salon in Lancaster, Penn. The banks he turned him down. That’s when during a meeting with a childhood friend he was introduced to a new local loan fund that is now called the Community First Fund and which invests in Black, Hispanic, immigrant and other entrepreneurs whom traditional financial institutions weren’t interested in serving.
Rodriguez got the loan, and then over the years lessons in how to run a business, followed by additional loans as the business expanded.
As CUToday.info reported, earlier this year, Community First Fund was given regulatory approval to open a traditional financial institution, a credit union. Rodriguez was one of the first members of the new Community First Fund Credit Union. He’s moving all his personal and business accounts over, according to Next City.
The Model
According to the report, which details how few new credit unions are now being chartered, CFFCU is modeled partly after Hope Credit Union in Mississippi.
“The very fact that a new credit union is chartering is something noteworthy,” Clifford Rosenthal, the former president of the National Federation of CDCUs (now Inclusiv), told Next City. Rosenthal also helped establish Lower East side People’s Federal Credit Union in 1986. “And it’s especially significant in the CDFI world that this loan fund has used its resources to establish a credit union, which in the optimal scenario will operate side by side with the loan fund and hopefully achieve some real synergies.”
The report goes on to further explain how the idea for Community First Fund FCU began to take root and the steps it went through as it sought its federal charter, including its efforts to get organizations to make not just transformational deposits, but multi-year pledges.
A Surprise Investment
The credit union received a $2 million surprise influx of capital as part of a larger donation MacKenzie Scott made to Community First Fund.
Community First Fund converted its headquarters into its first credit union branch, serving the Lancaster metropolitan area’s 550,000 residents. The credit union eventually plans to open six total branches and also leverage online and mobile banking to serve Community First Fund’s entire footprint, which now includes Philadelphia and crosses state lines into Delaware and parts of New Jersey, according to the report.
The full story can be found here.
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