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Community First Fund plans to open a credit union in Lancaster County this summer for those underserved by other lending institutions.
Helping to get that started will be money from a $10 million gift from philanthropist MacKenzie Scott, which the Lancaster-based lender just announced. The donation also will underwrite several other initiatives coming soon.
Dan Betancourt, Community First Fund president and CEO, called the gift “a game changer.”
Over the past four months, Scott has given more than $4.15 billion to 384 organizations across the U.S. In a post on medium.com, she wrote that a data-driven approach was taken to identify organizations with strong leadership teams and results, with special attention to those operating in communities facing serious food insecurity, high measures of racial inequity, high local poverty rates and low access to philanthropic capital.
The credit union will be the fund’s first experience providing consumer services. Typically, the community development financial institution has approved loans to entrepreneurs and small-business owners.
The goal, Betancourt said, is for credit union members to build up family wealth, whether it’s buying a home, setting up a college fund or saving for retirement. Members will have access to credit builder loans, such as car loans and mortgages, as well as financial education workshops.
Many of the unbanked or underbanked rely on check cashers, which cost money. But as Lisa Servon wrote in “The Unbanking of America,” check cashing works for them because they know the cost in advance, Betancourt said. In contrast, with a bank they may not be aware of what an overdrawn account would cost, he said.
Community First Fund Federal Credit Union is targeted to them. And the need is there.
Surveys by the Center for Opinion Research at Franklin & Marshall College show that about a quarter of Lancaster County residents are unbanked or underbanked, Betancourt said.
As a nonprofit, the credit union has members, not shareholders, and “its purpose is to serve its members,” he said. “All profits go back to the members.”
Anyone who lives, works, worships or attends school in Lancaster County can join the credit union, Betancourt said.
Community First Fund submitted its application Dec. 16 to federal regulators and hopes to secure approval by spring 2021.
Projections are for the credit union to open this summer at the lender’s 51 S. Duke St. headquarters, with five employees and startup capital of $3 million.
Betancourt said $150,000 of that $3 million, over three years, is being provided by Lancaster County Community Foundation. Sam Bressi, president and CEO of the foundation, said opening a credit union “is a natural next step” for Community First Fund.
“They’re perfectly suited to do this and be exceptional,” he said. “… We’re really proud to be part of it.”
The fund also has $600,000 in commitments of institutional deposits from the City of Lancaster, United Way of Lancaster County, Everence Federal Credit Union in Lancaster, Community Action Partnership of Lancaster County, Hope Credit Union from the Mississippi Delta area, and a credit union in New York City.
Betancourt said Everence is sponsoring the application and planning to provide back-office services to get things up and running.
If the startup goes smoothly, the credit union could expand into the York and Harrisburg areas in two or three years, he said.
Eventually, it could operate wherever Community First Fund is.
In addition to Lancaster, the lender has offices in Philadelphia, York, Reading, Harrisburg and Allentown.