Start Credit Unions to Save Credit Unions
The CU De Novo Collective is a band of volunteers with two closely linked missions: help new credit unions get started, and help smaller credit unions survive and thrive.
How did this get started, and how did we get to the point where the CU De Novo Collective Foundation is actually raising capital to start new credit unions?
Purpose and Passion
Back in 2020, a few different groups of frustrated, passionate credit people started meeting regularly on Zoom. They had different passions in life, but they all had something in common: they wanted to start new credit unions to serve groups of people who were not being adequately served by any existing banks and credit unions.
This included some revolutionary ideas, such as starting a new credit union for LGBTQ+ people, a credit union for formerly incarcerated people, and another for students and alumni of Historically Black Colleges.
There are many other groups as well who want to start new credit unions; people brought together by a shared heritage or culture, people with non-mainstream life experiences, people overcoming challenges, people who live in banking “deserts”, and many other kinds of communities.
Yes, we still need new credit unions, and we always will. But there’s a fundamental problem…
We forgot how to start new credit unions
What brought the “Collectivists” together was frustration; despite the incredible growth of the credit union movement in its early days (there were nearly 24,000 CUs in the US in 1969), consolidation has taken a heavy toll over the years; currently there are only about 4,500 US credit unions, and the number is shrinking fast due to hundreds of mergers. There were 149 mergers in 2023, and 181 in 2022.
At the same time, the barriers to starting a new credit union have increased tremendously; the process is long, arduous, badly outdated, and poorly supported by NCUA or even the state leagues. The conventional wisdom is that you need $1,000,000 or more in donated capital to get a new credit union off the ground, and the technology and regulatory requirements are heavy and expensive.
You can’t start a credit union with some cash in a cigar box any more. Although that’s exactly how many of today’s largest CUs got started; in fact, quite a few proudly display their original cigar box and paper ledgers.
By contrast, there’s plenty of help available if credit unions want to merge, and the process has become routine. In a nutshell, somehow it’s no one’s job any more to start new credit unions, but there are plenty of people and resources devoted to merging credit unions.
Not all mergers are bad, of course, and some are needed, but each credit union merger does involve change, significant expense, and a loss of something unique. With each merger, a little more of the diversity, heritage, community, purpose, and original vision of at least one credit union fades, and the credit union movement burns a little less brightly.
Progress, and hope
From it’s start as a support group, the CU De Novo Collective soon started taking action. For example, the Collective’s CU superstar leadership has engaged with NCUA leadership directly many times, and one result has been a new “Provisional Charter” process, adopted in 2022.
It’s already bearing fruit, as several provisional charters have been granted, and there are currently 63 de novo credit union charters in process at NCUA. And in the last two years, eight new charters have been granted!
In addition the community of vendors serving the credit union movement has stepped up. For example CU Policy Pro has graciously agreed to give de novos access to their incredible library. The CU De Novo Collective maintains a list of de novo-friendly vendors and partners as well (including iDiz Inc!). For our part, iDiz Inc. has been part of the Collective from its earliest days. We’ve donated branding and marketing expertise, and we built and maintain the website.
A new cigar box
Of course, there’s much more to be done. The biggest, and most obvious barrier is capital; raising a million bucks is tough, and the communities who need de novo CUs the most are those that will have the most trouble raising that amount.
However, the CU De Novo Collective Foundation is turning that conventional wisdom on its head. We’re getting back to credit union roots with a modern take on the old cigar box. If you want to launch a brand-new full-service credit union that can do everything, yes, you do need a million bucks. Two million is even better.
But if you limit services to just a few of the most essential, leverage new technology, and lean on the resources and expertise of the credit union movement as a whole, you can get a credit union off the ground and growing with as little as $100,000 in capital.
The CU De Novo Collective Foundation and its partners will provide start-up grants, seed funding, and donated, discounted, and scholarship support to new credit union charters, ensuring they have the necessary capital and support to launch and sustain their operations.
Help support the future and growth of the credit union movement
The CU De Novo Collective Foundation is now a 501c3 corporation and is currently raising money for capital grants for startup credit unions. As your credit union is working on next year’s budget, consider making a donation to help more credit unions get started and succeed.
Nothing less than the long-term viability, uniqueness, and vibrancy of the credit union movement is at stake. By supporting the ability of new credit unions to innovate and respectfully serve new groups, and for smaller specialty credit unions to thrive, you can help support the future of the entire credit union movement.
Together, we can start up the credit union growth engine again! That’s the core of the original credit union spirit, and that never goes out of style.
As we mentioned a few weeks ago the CU De Novo Collective is one of our primary passion projects here at iDiz Inc. We believe deeply in the power of the credit union movement to make the world a better place, and we’re proud to support the CU De Novo Collective and its Foundation on its journey from idea to action with donations of expertise and resources; branding, website, marketing, and growth strategy. If you also serve the credit union movement, get in touch and pitch in!
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