TACOMA, Wash.—The Environmental Protection Agency’s $27-billion Greenhouse Gas Reduction Fund is the largest climate investment in U.S. history--and it’s also the largest grant opportunity ever presented to credit unions, according to one firm that is sharing advice on when and how CDFIs—and all credit unions—can apply for the dollars.
“This is potentially a $10-million-per-credit union grant,” said CU Strategic Planning President Stacy Augustine, noting there are several “hubs” to apply for these grants, including Opportunity Finance Network and through Inclusiv.
As CUToday.info reported, the number of credit unions offering environmentally friendly products over the next six years is predicted to double or even triple.
About the Fund
The Greenhouse Gas Reduction Fund consists of three programs, with CDFIs specifically focused on the Clean Communities Investment Accelerator (CCIA), according to Augustine.
She said the CCIA hubs, which will be distributing their funds as subgrants to CDFIs and other community lenders, are:
- Opportunity Finance Network, receiving $2.29 billion
- Inclusiv, receiving $1.87 billion
- Justice Climate Fund, receiving $940 million
- Appalachian Community Capital, receiving $500 million
- Native CDFI Network, receiving $400 million
How Awards Will be Distributed
“These five will be distributing their awards as capitalization funding, technical assistance subawards and technical assistance services to community lenders, so that they in turn can provide financial assistance to deploy distributed energy, net-zero buildings, and zero-emissions transportation projects where they are needed most,” Augustine said. “One hundred percent of capital under the CCIA is dedicated to low-income and disadvantaged communities.”
While the grant hubs were announced several months ago, applications for credit unions to apply for the dollars are not yet open. Nevertheless, Augustine said the business implications of the grants are too significant to delay strategic preparation for the application process for a $10-million CCIA grant—which has more than 500 pages of EPA policy guidance.
‘Don’t Delay’
Stacy Augustine
“Sophisticated credit unions do not put off planning for this—for the risk and compliance of launching new products and multi-year loan growth,” Augustine said. “The hubs, which are advocacy organizations, may not fully understand the time it takes for executive teams to even design a new product, manage core-processing upgrades or evaluate CECL implications for example. It is unwise for highly regulated financial institutions not to pre-plan and even start board discussions before jumping into a $10-million grant application.”
Augustine noted, for example, CU Strategic Planning works closely with credit unions for more than a year before they apply for the $1-million CDFI Program Financial Assistance awards. She said the company is taking the same planning approach with the $10-million per credit union Greenhouse Gas Reduction Fund applications.
Eight Key Steps
That preparation, Augustine said, includes eight key steps:
- Evaluation of the credit union’s current efforts toward lending for energy efficiency
- Doing homework on green energy and energy-efficient lending
- Working on the credit union’s policies for loans for energy efficiency projects
- Developing/implementing implement stand-alone loan codes for the energy-efficiency lending currently provided for tracking purposes
- Learning about the lending sectors in energy efficiency
- Determining if the credit union is already offering any green energy products
- Familiarizing the organization with state and federal green energy programs and potential rebates
- Tailoring the CU's green energy lending program to the local community
Committing to the Plan
“Our financial team works with the CFO of the credit union, the CLO, and other lending experts…We also work with CEOs and boards,” explained Augustine. “Our team is an extension of the credit union’s executive team. Almost all federal grants for CDFIs are three- to five-year business plans the credit union is committing to—a plan for how the grant funding will increase loan growth.”
Augustine added the business plans CU Strategic Planning has developed with credit unions have secured nearly $1 billion in grants for credit unions over the last 15 years.
Planning to Win
“We are aware of over 30 credit unions that are preparing to apply for the Greenhouse Reduction Fund grants,” Augustine said. “But it’s important to remember that applying should mean planning to win. If you’re not already addressing the complex operational requirements that come with accepting up to $10 million, you’re already behind before the application even opens.”
CU Strategic Planning is offering a workbook for credit unions to start planning. It notes that Inclusiv will provide technical assistance but is not the only provider of subgrants, and even with $1.8 billion in funds, not the largest award funder, as noted above.