Frequently Asked Questions
What
is NCFCU?
The
Northcountry Cooperative Federal Credit Union (NCFCU) is a
community development credit union started in 2003 by members
of the Northcountry Cooperative Development Fund (NCDF). NCDF
is a community development loan fund with 25 years' experience
serving the needs of new and growing community-based cooperatives
and their members.
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What
is a "community development" credit union?
A community
development credit union (or CDCU) is a credit union dedicated
to meeting the needs of under-served populations, particularly
low- and moderate-income members and their communities.
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How
is NCFCU different from NCDF?
Both NCDF and NCFCU
share the same mission of promoting economic democracy through
cooperative enterprise. The two organizations also share the
same address and staff members.
The primary
difference between NCDF and NCFCU has to do with insurance
and government regulation.
Insurance
– Funds invested in NCDF are not insured, because such insurance
does not exist for community development loan funds. NCDF
board and staff protect members' investment through a variety
of self-regulatory practices, such as carefully screening
every loan and maintaining adequate reserves. NCFCU, on the
other hand, is a federally-chartered credit union, and as
such, all deposits are insured up to $100,000.
Regulation – NCDF is an unregulated financial institution,
and can make whatever loans its staff and board feel are fiscally
prudent and consistent with its mission and values. Because
NCDF can be more flexible in its lending, investors in NCDF
bear a higher degree of risk. NCFCU, on the other hand, is
a regulated financial institution, and must operate under
strict limitations which govern the size and types of loans
it can make.
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Why
was NCFCU started?
NCFCU was started
to complement and expand the scope of existing NCDF services.
Initially, NCDF focused mainly on commercial loans, serving
the needs of the growing market of consumer, worker and producer
cooperatives dotting the upper Midwest. Several years ago,
NCDF expanded its reach and started lending as well to housing
cooperatives and their members. In the process of making loans
in the housing market, two things became apparent: 1) housing
cooperatives have tremendous potential to serve the home ownership
needs of low- and moderate-income households; and, 2) NCDF
did not have nearly enough capital to meet the needs of the
housing sector.
While
many cooperatives and supportive institutions have placed
funds with NCDF over the years, the amount of money that they
are allowed to deposit in an uninsured account typically is
limited. In addition, because of disclosure issues and certain
limitations stemming from its cooperative legal status, NCDF
is not the most effective way to receive the savings of individual
investors who want to support the cooperative movement.
As an
insured, regulated institution, NCFCU addresses these constraining
factors, offering the potential to raise large amounts of
capital for affordable housing, and allowing the wider co-op
community to invest in cooperation. While NCFCU will not initially
be permitted to make commercial loans, some of NCDF's most
popular housing co-op loans make perfect credit union products.
NCDF and NCFCU together will serve a much larger range of
borrowers and investors.
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Why
should I put my money in NCFCU?
NCDF was started
25 years ago by a handful of Twin Cities area cooperatives
that couldn't get a loan from a conventional lender. Similarly,
NCFCU is being started because conventional lending institutions
are not effectively serving borrowers in the co-op housing
market. In addition, on the investor side, conventional investment
vehicles typically don't allow savers to target their funds
on local community development efforts the way NCFCU can.
NCFCU
offers cooperative-minded individuals and organizations a
way of supporting affordable housing in their local communities,
and encouraging the growth of the cooperative movement.
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How
is a deposit in NCFCU different from a deposit in other socially
responsible investment funds?
Most socially-responsible
funds invest in stock of companies that meet various social
screens. These companies are engaged in activities around
the country, and often around the world. Unlike these public
companies, NCFCU makes loans to small cooperative enterprises
and their members who are located in the investors' communities.
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Our
organization is already an investor in NCDF. Should we keep
those funds in NCDF, or move some or all of our money to the
credit union?
If you represent
a cooperative organization, please consider keeping your existing
funds in NCDF. While funds invested in the credit union are
insured, regulations severely limit the volume and size of
housing loans made by NCFCU for at least several years. For
this reason, NCDF will continue to make some housing loans,
and will also be the main source of commercial loans to consumer,
worker and producer cooperatives. NCDF needs your funds to
directly support its work with growing and developing cooperative
businesses.
We are
encouraging individuals to put their savings to work for the
cooperative community by joining NCFCU. We are encouraging
cooperatives and supportive organizations to open an NCFCU
account as well, but to keep a good share of funds with NCDF,
thereby supporting NCDF's small business lending. We need
both organizations to be strong in order to meet the needs
of the widest possible range of cooperatives and their members.
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What
kind of loans will NCFCU be making?
Initially, NCFCU
will focus on “share” loans, which are loans made to persons
purchasing units in affordable housing cooperatives. We anticipate
that, in addition to housing loans, NCFCU will eventually
be permitted to make smaller commercial loans.
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What
kind of services does NCFCU offer? Do you have checking accounts?
NCFCU offers share
savings accounts and term certificates of one and two years.
In the future, we plan to add IRA accounts, and a range of
other savings products. We do not plan to add checking accounts
and other retail services anytime soon.
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What
are rates on share savings accounts?
Please see the link
to the rate sheet at the top left of this page. As a new credit
union, NCFCU is restricted in the size of dividends it can
pay on shares.
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How
can I join?
NCFCU's field of
membership includes all members of NCDF (cooperatives and
individuals), as well as members of NCDF's cooperative members.
Individuals can become members of NCDF—and therefore eligible
to join NCFCU—by purchasing a $10 share of stock in NCDF.
Cooperatives can become members of NCDF—and eligible to join
NCFCU—by purchasing stock in NCDF, the cost of which is based
upon a sliding scale. Call us for details. For more information,
call us at 612-331-9103, or email info@ncdf.coop
.
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Copyright ©
Northcountry Cooperative Federal Credit Union. All rights
reserved.
219 Main Street SE, Suite 500, Minneapolis, MN 55414
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