Easy impact: Investing in CDFIs changes communities

What do Johnson City, Tenn. pastor Brandon Waite and Security Federal Bank of Aiken, S.C. have in common? Both know that when they invest in mission-driven lenders known as Community Development Financial Institutions (CDFIs), their money is helping move mountains in the lives of people in economically distressed communities.

For Waite and Security Federal, the CDFI is Appalachian Community Federal Credit Union (ACFCU). On a day when a Washington Post article outlines predatory lending’s often crushing effects on working people, it’s especially relevant to highlight the impact of investing in a mission-driven lender, whether you’re a bank depositing $250,000 at below-market rates or a family choosing a financial institution.  

Brandon Waite

Security Federal is among more than a dozen ACFCU-investing banks that recently learned they had received “Bank Enterprise Award” funds from the U.S. Treasury Department’s CDFI Fund. The performance-based program awards institutions that increase their investments in mission-driven lenders. ACFCU’s prominent role as a go-to depository CDFI is a clear indication that the credit union is “walking the walk” as it carries out its mission.

In ACFCU’s case, the deposits help support the kind of work that prompted Brandon and Kristen Waite to become members.

“It is far too easy, I think, to get access to very high interest loans that help people meet their immediate needs, they think, by giving them a quick influx of cash,” says Waite, of Grandview Christian Church. “Ultimately that just traps people in a cycle of never being able to pay off those loans and constantly being pushed further into poverty by the decisions that they’ve made.”

The problem is grave nationwide. It’s exacerbated by Tennessee laws that earn the state a spot in the National Consumer Law Center’s “Terrible Two” along with Mississippi in NCLC’s August 2017 report on predatory installment lending. NCLC referenced Tennessee having “amended its lending laws in 2014 to allow non-bank lenders to make cash advances at 279%.

ACFCU Financial Coaching Specialist Adam Taylor, left, has
helped member Leslie Brady escape predatory loans. 

Waite learned about ACFCU’s financial coaching, credit-building loans and other opportunities because Grandview Christian works with local families that often need financial counseling. “We reached out to ACFCU and they sent somebody over to meet with these families to provide some financial counseling,” Waite says.

“Before the credit union I didn’t know that there was a bank or another credit union or anything like that that was out there trying to help families who have been caught in this cycle escape from it… Without some kind of extra outside help there’s almost no hope that they’re going to be able to pay off these predatory loans.”

When the Waites learned that CDFI credit unions count on their members’ deposits and borrowing to help achieve the mission, they joined other community members such as Kathleen Moore, who explains in this video why she and her husband made the switch.

“All the features that we enjoyed about the bank we were at before are here at the credit union, so that made it easy to switch,” Waite says. “After you’ve made that initial investment of time to switch over to the credit union your money is not only working for you, it’s working for the other people in your community. And knowing that you can do something to help people in a real and tangible way that doesn’t really require much of you after a little initial work, I think that can motivate people to make the switch.”

Across the country, people and institutions are investing to help CDFIs create positive change for economically distressed communities and families who aspire for something better. Consumers can join a CDFI credit union and help the cause with a car loan, checking account or deposit account. Institutions can make deposits at rates that enhance a CDFI’s ability to fulfill its mission.

(Jeff Keeling is vice president of communications and community relations for Appalachian Community Federal Credit Union.)