When Nusenda Credit Union in Albuquerque, N.M., announced the addition of four new partners to its Co-op Capital initiative in November, it marked the further development of a lending program that builds community ties through relationships and trust rather than traditional credit models.
Nusenda’s Co-op Capital program is a character- and relationship-based program that provides microloans for low-income and underbanked entrepreneurs. The lending model provides access to capital through educational, cooperative, and nonprofit organizations that provide customized and impactful microloans for recipients.
The newest Co-op Capital partner organizations are:
The four new partners share the community values of the Co-op Capital Partners, which include 18 partner organizations supporting underserved business owners and individuals. The Co-op Capital program widens access to capital for groups typically shut out from traditional financial avenues due to a lack of collateral, credit, or alternative financing.
“It really comes down to two primary things: values alignment and readiness,” says Sara Keller, vice president of community engagement at the $3.8 billion asset credit union. “When we engage in conversations with new partners, it’s usually through relationships with our existing partners.”
But readiness is also related to values, Keller says. Administrating the Co-op Capital program requires a significant commitment of human capital from the partnering organization. Keller estimates that managing the program requires about a quarter of a full-time staff person.
“But in order for it to be successful the entire organization has to be ready to take it and understand the program,” she says. “At the onset, most of our partners have not taken anything like this on. So it's introducing not just a new program but an entirely new product and mindset into organizations that were not built to be lenders.”
That internal commitment from partners is among the keys to Co-op Capital’s unique lending model—and its approach to true collaboration with its partners.
“It totally shifts the way in which people think about how they can access capital,” says Keller. “It changes the way the credit union is thinking about providing capital. It gives an opportunity for organizations who, prior to partnering with Nusenda, probably wouldn't have considered themselves a proponent of capital, or they wouldn't have seen themselves in a system where access to capital exists.”
‘You have to invest in your community to make it come to life.’
But more than that, the Co-op Capital partners bring positive outcomes to the community. Amy Nigrelli, Nusenda’s chief marketing officer, cites Native Renewables, a women- and Native American-owned organization that provides solar power to the Navajo and Hopi reservations.
“This is another partner that we learned about through word of mouth that is serving a vital underserved community,” Nigrelli says. “Beyond the values, the readiness, and the commitment, this is a truly meaningful way for the credit union to serve deeper and serve in layered and meaningful ways. You have to invest in your community to make it come to life.”
Both Keller and Nigrelli say other credit unions can duplicate the Co-op Capital model. Keller notes Nusenda developed the concept from a series a “scoping conversations” with grassroots community organizers.
“First, we were just trying to gain understanding and build relationships and credibility,” she says.
Her next piece of advice is to start small.
“We have 18 partners now, but we started with one or two,” Keller says. “We started with partners who were already with us as select employer groups. They'd also already received funding from our foundation and other philanthropic programming before, so we had some established relationship and trust between our initial partner organizations and the credit union at the start.”
Relationships are at the heart of the program, she says.
“Even though it can feel sticky and uncertain and uncomfortable at times, what we are learning over and over again is that riskiness disseminates rapidly when there's trust and relationships at the center of this program,” Keller says.
She adds that Nusenda is looking to connect the concept to other credit unions.
“We’re working on an internal toolkit to help us operationalize the program, at least the areas that can be operationalized,” she says. “And we're trying to figure out how we can translate it into something that can be shared with other credit unions. We know we can't serve the entire country by ourselves. We'd love to figure out how other wonderful credit unions who want to do this work can do it in their own regions.”