January 6, 2015

Lakota Federal Credit Union Receives U.S. Treasury Certification

As 2014 came to a close, the Lakota Federal Credit Union and its Board of Directors is celebrating another major milestone in the young credit union’s development – certification from the U.S. Department of Treasury as a Community Development Financial Institution (CDFI). The certification, officially granted on December 18, 2014 after a lengthy application and intensive review process, verifies that the Lakota Federal Credit Union has met several requirements, including: having a primary mission of promoting community development, predominantly serving and maintaining accountability to an eligible target market (the Pine Ridge Reservation), being a financing entity, providing development services, and being neither a government entity nor controlled by a government entity.

Lakota Federal Credit Union Staff – (left to right) Beatrice Curry, Whitney O’Rourke, Shayna Richards

“The application really goes beyond being able to show what products and services you are offering. Being certified shows that you go further than that – in that we are providing technical assistance, such as credit coaching,” says Tawney Brunsch, Board Chairperson of the Lakota Federal Credit Union. If a credit union member doesn’t qualify for a loan, the staff sits down with them, reviews their credit report, and makes suggestions on what needs to be cleaned up. If the individual desires more intensive assistance, the Lakota Federal Credit Union taps into its broad partnership network to provide a variety of education and training so that its members can achieve their personal financial goals.

For example, a credit union member can work with a success coach at Lakota Funds, also a certified CDFI on the Pine Ridge Reservation, to develop a monthly budget and savings plan to pay down debt. Lakota Funds also offers Credit Builder Loans in amounts up to $2,500 that a borrower can use to pay off negative credit items and strengthen their credit score. These loans are paired with one-on-one assistance to increase the borrower’s success in achieving their personal financial goals.

“It is a challenge serving the market we are in, but it works out really well because the Lakota Federal Credit Union can utilize Lakota Funds and other partners to assist,” says Brunsch. Other partners offer various types of courses that help people improve their financial management skills. The Great Plains Native Asset Building Coalition (www.greatplainsnativeassetbuilding.org) offers a free online course, “Money in Motion,” that addresses topics such as setting goals, keeping records, and utilizing credit. The end result is a more bankable and financially savvy population where approximately a quarter of the population has never had a bank account and operates on a cash-only basis.

The Lakota Federal Credit Union’s new certification will allow them to access larger amounts of funding from the U.S. Treasury’s CDFI Fund. Now that they are certified, they can apply for up to $1 million in financial assistance annually. Prior to certification, the maximum application amount was limited to $150,000. Currently, the credit union has a pending application to the CDFI Fund for $750,000. Should it be awarded, Brunsch says, “It will not only support the credit union’s operating costs, but it will increase our ability to provide our members with greater access to loan capital. We will have a significantly greater pool of capital that we can loan from, and that’s what it is really all about – creating opportunity by providing basic financial tools.”

The notice of certification came shortly after the Lakota Federal Credit Union celebrated its second anniversary in November 2014. By 2014 year-end the credit union had built its membership base to 1,856 and more than doubled its loan portfolio and assets from the previous year. As of December 31, 2014 the credit union had approved over $2 million in loans, and had $3.5 million in assets.

“The phenomenal growth of the Lakota Federal Credit Union just goes to show the critical need for basic financial services on the Pine Ridge Reservation. I think about what it was like for people before we opened, and then the impact we have had in just two short years – how much a bank account and a loan can change a person’s life. It amazes me every day,” says Brunsch.