Long process, lasting benefits
Starting a credit union from scratch might seem “overwhelming,” says Tawney Brunsch, executive director at Lakota Funds in Kyle, S.D., but “you absolutely can do it. It’s a matter of being devoted to it, having the right people on task, and not giving up.”
Lakota Federal Credit Union submitted its charter application in April 2010 and, a bit more than a year later, is awaiting approval. If approved, it will be located in the heart of the Pine Ridge Indian Reservation, where 40,000 inhabitants are spread out over 3,125 square miles.
Lakota Funds—a key sponsoring organization—is a community development financial institution (CDFI) providing only small-business loans. “In serving those needs,” Brunsch says, “you’re aware of the big need here for consumer financial services. About 80% of the population is unbanked.”
Brunsch came to Lakota Funds in June 2008 as a business loan portfolio manager after eight years as a branch manager and loan officer at Black Hills Federal Credit Union in Rapid City, S.D. Soon she and Lakota Funds’ former executive director started to talk about opening a credit union on the reservation.
“I had never thought about starting a credit union,” Brunsch says. “It sounded impossible, but the first thing I did was order the [organizing] manual from the Federation.”
Other help came from Black Hills Federal Credit Union, which served as a mentor. A grant from the Native American CDFI Assistance program, under the U.S. Department of Treasury’s CDFI Fund, allowed the group to hire the Federation’s Brian Gately as a consultant for one year. “He was a sounding board for us all the way through submitting the business plan and charter application,” Brunsch says.
Organizers have raised nearly $75,000 in start-up capital, and various organizations and individuals have made deposit commitments totaling $650,000 once the credit union has a charter. Brunsch doesn’t know if and when that will be. But once the credit union opens, the plan is to offer savings accounts, direct deposit, ATM cards tied to savings accounts, online access, and other basic services.
“Six months after we open the doors, we’ll dive into consumer lending,” she says. “Most of that will be used-auto loans and other secured loans for horse trailers, four wheelers, and so on, as well as signature loans.”
Besides raising start-up money, creating a credit union is an exercise in patience, Brunsch says. “You can’t be discouraged by how long it takes,” she says. “This credit union will change people’s lives for generations. They’ll be able to build assets, rather than living on a cash basis and being unable to track and plan their spending. This is going to be worth the wait.”
NCUA OFFERS CHARTERING ASSISTANCE
NCUA’s Office of Small Credit Union Initiatives fosters credit union development and the effective delivery of financial services by small credit unions. It’s led by Bill Myers, founder and former CEO of Alternatives Federal Credit Union.
The office administers the Community Development Revolving Loan Program, which supports low-income designated credit unions serving low-income communities.
Credit unions can enroll in the NCUA’s Small Credit Union Program for assistance with strategic management or operational issues. To qualify, NCUA says you must be a:
Contact your examiner if you’re interested or find more information at ncua.gov.