What is a CDCU?

A Community Development Credit Union (CDCU) is at its heart simultaneously a Financial Institution, a Neighborhood Institution, and a Learning Institution.

A Financial Institution
As a Financial Institution a CDCU operates as a credit union. Being a financial cooperative, the credit union is a nonprofit organization owned by its members through deposits, or "shares", and operated by its members through a one-member one-vote principle. Its mission is to promote saving and thrift among its members and to loan funds to members at reasonable rates.

A CDCU's mission is broader than that of a regular credit union in that it serves predominantly low-income members. It steps in to fill the gap in financial services unmet by other financial institutions. To meet the needs of its members a CDCU offers low-balance, interest bearing savings accounts, grace loans, and affordable equity. Often it operates as the only alternative to predatory lenders, check cashing stores, and pricey ATMs in the neighborhood, which collectively drain a community's capital resources and promote dependence on a cash-based economy.

As an agent for neighborhood revitalization, a CDCU reinvests the money of its members and nonmembers into loans and services that preserve and expand a community's assets. Non-members may make deposits, but the CDCU makes loans to its members only. While banks and savings banks invest the majority of their deposits elsewhere, a CDCU reinvests and recycles neighborhood deposits preventing the outflow of neighborhood dollars. Thus the money that is redirected back into the community by the CDCU is put to use as capital for local businesses and housing projects.

A Neighborhood and Learning Institution

The CDCU's mission to revitalize the neighborhood often is made possible through collaborations with other CDCUs and community partners. Thus, the CDCU often takes on the role of facilitator, organizer and community leader.

As a CDCU struggles to succeed in redirecting capital back into the community, one of the most important elements for success is member education. The need for education is especially true in low-income neighborhoods where predatory, makeshift financial operations abound. Knowledge of the neighborhood's economics and the importance of saving to increased personal assets is a fundamental step in breaking the cycle of dependence and increasing self-sufficiency. These small successes are the cornerstones for greater involvement and participation of the underserved in the credit union and therefore to increased community capital.