Inclusiv is an organization that combines deep know-how with dynamic, on-the-ground local partner support in its surprisingly effective approach to reinventing financial services and making the ‘system’ work – in many cases for the first time - for millions
of individuals who’ve often been considered ‘not up to standard’ by traditional banking players. The New York-based nonprofit’s focus is on the people, companies and communities kept, or left, for too long out of the capital and investment game that drives
so much of what powers modern living and wealth creation in the country.
How do they do it? With a wide array of investors and supporters to start. Add in a talented staff with very strong technical expertise and Inclusive is a formidable force - creating and delivering financial empowerment programmes to more than 470 member
credit unions representing 18 million residents and more than $255 billion in assets across the US and Puerto Rico.
Our interview and spotlight on Inclusiv continues Finextra’s series on financial inclusion, examining the challenges facing the unbanked and underbanked, focusing on the issues involved and innovations that are providing ways to solve them.
Inclusiv offers a great lesson in employing the same know-how and networks once used to keep people out in its work as a prominent protagonist for its core clientele. It’s part of an evolving story in the financial world that demonstrates how sometimes the
tools and tactics for success are right in front of you. You just have to have solid plans and people in place to make sure they’re working to the advantage of those you’re serving.
Fifty years of advocacy, instruction, and alternatives
As it gets set to mark its 50th anniversary next year, Inclusiv serves as a key energiser behind multi-pronged efforts to open more avenues within the financial industry for those who have been disregarded or aren’t very well served by it– which represent
close to 18.6% of US households as of 2021, according to the FDIC National Survey of Unbanked and Underbanked Households.1
Calling Inclusiv’s financial empowerment strategies ‘standard’ in any way might seem hard to believe for an organisation whose focus since its founding in 1974 has been on
“closing the gaps and removing barriers to financial opportunities for people living in distressed and underserved communities.”
But it’s happening. Inclusiv has been steadily growing and expanding its formidable array of financial products and solutions for its members, especially over the past few years. It does this using methods and management techniques borrowed directly from
a system that has always made it much easier to take advantage of opportunities for those ‘inside the banking system’ – meaning those familiar with its principles, institutions, and nuances - than for those on the outside looking in. With several satellite
offices across the country and in Puerto Rico, Inclusiv also lives its mission - by insisting its constituent communities have a prominent position as the US Government doles out climate action and development funds as part of the recently passed Inflation
Reduction Act.
It started, and still does, with credit unions and community development
We interviewed Inclusiv’s director of financial empowerment, Megan Bolado, to find out just how the organisation has helped open new avenues to financial awareness, investment and operating capital, and hope for those who might have thought there were no
realistic roads to prosperity available in their particular geographic area, for local enterprise, or aimed at their level of income or personal wealth. Bolado’s first point of emphasis during our discussion, being relatively new to the organisation herself,
albeit with a background of helping the unbanked overcome the obstacles to financial inclusion, was to share her own amazement at the wide and deep reach Inclusiv has built while spreading success into and through communities throughout the country and across
its Caribbean commonwealth island cousin.
“Inclusiv started (by) coining the term Community Development Credit Union (CDCU) supporting all the work of
Community Development Financial Institutions (CDFIs). Then in 1994, we were instrumental in the creation of the CDFI Fund (administered by the US Department of the Treasury) and we're still part of that. CDFIs have grown tremendously over the
past 20 years, as we've seen more need in underserved communities.”
Bolado notes that Inclusiv is “really an intermediary…developed and designed to support credit unions.” And further, one that is closely focused on community development institutions under that designation, which Bolado describes as “credit unions that do all
the great work that regular credit unions do, but they also particularly specialise in serving low and moderate-income individuals and in communities where people are facing barriers.”
From poisoned roots, nurturing new financial opportunities
Asked to name some of the obstacles Inclusiv fights to remove, Bolado said: “Everything from structural racism, to (living and working in) ‘banking deserts’, to (other) financial barriers, that also are rooted in structural racism. So, all of the community
development credit unions that we work with, they really were formed and work and operate with a mission to support those in their communities that are facing those barriers…They do that through financial education and coaching but also through lending and
alternative lending.”
Inclusiv’s website says CDCUs specialise in providing:
- Fairly priced loans, including to members with imperfect, limited or no credit history
- A safe place to save and build assets
- A place to conduct transactions at reasonable cost
- Financial education and counseling for their members
- Products, services and support that can help members to free themselves from high-cost and predatory debt, gain control over their personal finances, and achieve economic well-being.
Bolado pointed out that a community-development credit union can become a CDFI, an entity that provides lending to low-income people and enterprises challenged by traditional models through using alternative means of credit or involving credit builder loans
or other approaches and products. “The whole goal of CDFIs is to reinvest into the community, so that the community can build wealth outside of the sort of other more ‘closed’ structures’” within the US banking marketplace that have historically been less
willing to include them.
Innovative programmes and strong staff support
Inclusiv provides significant technical support and education to its members as part of its core offerings, and, as Bolado put it, delivers “lots and lots of trainings” in multiple financial products, services, and disciplines.
“We bring (member credit unions) together to identify industry trends…to come together and (explore) potential solutions. We also do capital investments.” Because, Bolado points out, so much of the mission of Inclusiv and its member credit unions involves finding
and providing reliable sources of funding (through loans, grants, and guidance on how to responsibly manage them) for people and businesses where it hasn’t been that easy to find capital in the past. “You can talk about financial education, or you can talk
about different things (in banking), but really what the bottom line is, is that people need money.”
Inclusiv offers many programmes for its member institutions and is a key resource for helping them address compliance and other technical requirements. They also have advocated strongly not just on the sustainability side of financial inclusion but also
to level various ‘playing fields’ in financial services – for instance to support those who face the deepest discrimination in the housing market. Another example is how a recent programme Inclusiv designed to help address the impacts of the pandemic was very
successful in part because of the organisation’s expertise and advocacy for its membership.
Transforming vexing challenges into true opportunities for financial freedom
Not surprisingly, being effective in its mission required some new thinking on old, established models, something Inclusiv is very good at translating into opportunities for its marketplace. Bolado shared several of Inclusiv’s success stories over the past
few years:
*MDIs. Minority Depository Institutions have grown significantly over the past two years. Inclusiv has championed their development and fought against regulations that have prohibited small, low-income designated credit unions from
including secondary capital in their net worth.
*CDFI Rapid Response Program: In 2021, Community Development Financial Institutions received almost $300 million as part of pandemic-related aid. 25% of the funding, and 87% of the minority institutions that received this money were Inclusiv members,
meaning they could find ready assistance with programme guidance and compliance help to guide them in its deployment.
*Equitable Recovery Program. The ‘last’ of the pandemic emergency funds, this US Treasury programme distributed $1.73 billion in grants to 604 CDFIs in April 2023 – around one third of this assistance went to 203 credit unions as well as
cooperativas (similarly structured) in Puerto Rico, 86% of which were Inclusiv-member MDIs – and which comprised 25% of the total funding for the initiative.
Moving the needle for the unbanked and financially ignored, wherever they live
Inclusiv offers special skills to bring information and expertise together and deliver them in concert with their partners. They do it for communities in particular need of financial knowledge, access, and advice and serve so many needs, it’s difficult to
hone in on just how far the organisation has advanced (and expanded) since its inception. But there are more areas its leaders and partners would like to explore.
Its headquarters and satellite offices are in urban or suburban locales, including Albuquerque, New Mexico, Atlanta, Georgia, Madison, Wisconsin, and San Juan, Puerto Rico. We asked about possibilities for Inclusiv to assist the underserved in other places,
like outside the major metropolitan areas that are typically home to large low-income, high minority, reservation-based and/or immigrant populations?
Bolado said though the organisation is clearly targeted and busy executing at a very high level with all of its current members and programmes, “I think the whole (credit union and CDCU) movement is aware of this - to think about how we can better serve
more rural communities.”