Group aims to form black-led credit union in north Minneapolis
Thursday, July 27, 2017
Finance & Commerce (July 27, 2017) - A north Minneapolis group is working to raise $5 million and sign up 5,000 members for what would be Minnesota’s only black-led financial institution formed in this century.
The institution would be a federally chartered credit union known as Village Trust Financial Cooperative and would open by the end of 2018, said Me’Lea Connelly, director of the Association of Black Economic Power, which is organizing the effort.
“It’s really important that there is a black-owned and black-led financial institution in our community,” Connelly said. “For us to be able to anchor that in north Minneapolis says a lot about this community.”
Until the 1950s, a black-led credit union operated in St. Paul’s Rondo neighborhood.
The new association announced the Village Trust Financial Cooperative name for the credit union at a member pledge drive last month at New Rules at Lowry Commons, which Connelly described as a black-owned co-working and event space in north Minneapolis.
The association sought suggestions for the credit union’s name, looking for ideas that Connelly said reflected “the spirit of cooperative economics in north Minneapolis” and “black economic connections to the history of the black community in general.”
The word “village” appeared in several suggestions along with the idea of rebuilding trust with the community, Connelly said.
The association has received about 500 pledges so far without much publicity or marketing yet to support the campaign, Connelly said. Plans are to launch a membership pledge incentive program once the Village Trust brand is in place, Connelly said. Incentives likely will be “branded swag” such as T-shirts or coffee mugs for those who make monthly pledges or commit to signing up 10 or more members.
The association hopes to raise $5 million through member pledges and donations, although Connelly would welcome a total closer to $10 million.
“I think 5,000 members and $5 million would be really healthy and a really promising show of belief and trust in this community,” Connelly said.
In signing a pledge, a member must provide contact information and an expected monthly account balance, Connelly said. The association also is encouraging members to take a survey to learn what products and services they want Village Trust Financial Cooperative to offer. The hope is that some will make one-time or monthly donations and recruit additional members.
The Association of Black Economic Power will report expected deposits to the National Credit Union Administration, an independent federal agency that issues charters for and oversees federal credit unions, and also is writing a business plan to submit to NCUA.
“They want to see that we’ve got community support and that we’ve got a healthy number of pledges,” Connelly said. “They also want to see that we’ve got a certain amount of capital behind us to insulate the risk that we might be taking. … Honestly, I think it’s less about risk and more about showing there are other partners that have skin in the game to make sure that this project is a success.”
Village Trust Financial Cooperative would join Minnesota’s three minority-led credit unions, which have 2,756 members and more than $6.9 million in assets, according to the National Credit Union Administration’s 2016 Minority Depository Institutions Report to Congress.
The three are Nett Lake-based Northern Eagle Federal Credit Union, Mahnomen-based White Earth Reservation Federal Credit Union, both identified by NCUA as American Indian-led; and Minneapolis-based Transit Operations Federal Credit Union, described as Asian-American- and black-led.
In all, Minnesota has 120 credit unions with 1.7 million members and $22 billion in assets, said Andrea Molnau, communications director for the Minnesota Credit Union Network. While total credit union membership and assets have grown over the last decade, the number of credit unions has been declining largely as economies of scale, technology costs and regulatory compliance issues have driven mergers.
Village Trust Financial Cooperative would be the state’s first new state- or federally chartered credit union since Nett Lake-based Northern Eagle Federal Credit Union opened in 2013, Molnau said. The other most recent openings were the Catholic United Financial Credit Union in 2001 and Crow Wing Power Credit Union in 1999.
The credit union network has provided the Association of Black Economic Power with some resources and contact information. “We are advocates for the credit union industry; we’re excited about the opportunity for them,” Molnau said.
The Association of Black Economic Power formed in late 2016 as an offshoot of Blexit, a community organization founded after the police shooting of Philando Castile “to cultivate the practice of economic civil resistance,” according to the association’s website.
The Twin Cities had a black-led credit union as late as the 1950s, Connelly said, based at the Credjafawn Social Club in St. Paul’s Rondo neighborhood.
“The black community in Minnesota has a really rich history of economic power and economic growth and cooperative economics,” Connelly said. “A lot of that was interrupted by [Interstate] 94 going through the Rondo neighborhood and things like redlining and other systematic issues that were targeted toward this community. So this has happened before and we’ve been successful before.”