By Stacy Augustine
Long before 1994’s Riegle Act created the Community Development Financial Institution (CDFI) Fund, there were credit unions. Which means long before the term community development finance existed, working people were already practicing it. They pooled their savings, extended fair credit to one another, and built stability in neighborhoods that traditional banks overlooked.
Credit unions, as we know, were created to make financial opportunity available to people who were excluded from the financial mainstream.
Establishing the CDFI Fund formalized a certification that recognizes the vital, measurable work that both depository and non-depository financial institutions perform in underserved markets. This credential acknowledges the longstanding work that credit unions have been doing for generations. Long before community development was recognized through federal certification, credit unions were delivering vital, measurable impact in underserved communities through their cooperative, people-focused mission.
This century-old commitment makes credit unions the original community development financial institutions.
A Legacy of Community Finance
Credit unions were born from self-determination. In the early 1900s, working families and immigrants who lacked access to fair credit came together to create cooperative financial institutions that put people before profit. By pooling their savings and lending to one another based on trust and shared accountability, they built a model that transformed not just their communities but an entire financial landscape.
By financing small businesses, family farms, and homes, the first credit unions helped members gain stability and gave their communities the means to build lasting wealth. They were practical, personal, and deeply rooted in place. The cooperative principles they practiced—financial inclusion, shared responsibility, and reinvestment in community—became the foundation of what we now call community development finance.
What began as an act of necessity became a model of empowerment. Today, mission-driven credit unions continue that tradition by expanding access to fair, affordable financial services and creating pathways to ownership, stability, and dignity. This is the heart of the credit union movement and the enduring measure of its impact.
The Modern Expression of an Old Mission
As the tools evolve, the purpose remains the same. Modern credit unions (if they’re truly community-minded) can continue to live their founding mission in new ways, demonstrating that cooperative finance is as relevant today as it was a century ago.
Flexible Underwriting and Inclusive Product Design
Cooperative lending practices were built around understanding members’ real circumstances. The member who once brought a personal reference to the credit union’s credit committee may now fill out a loan application on their phone, but the principle remains unchanged. Whether through alternative credit scoring, flexible loan terms, or AI analysis, and whether they have a CDFI certification or not, community development-oriented credit unions continue to find ways of saying “yes” to member needs.
Financial Coaching and Member Support
Helping members improve their financial well-being is part of every credit union’s DNA. Financial counseling, budgeting workshops, and business coaching are modern expressions of that same cooperative instinct. They ensure that members not only get loans but also gain the knowledge and confidence to thrive with them.
Community Partnerships
Early credit unions were formed around parishes, neighborhoods, and workplaces. Today, many have expanded those connections to partnerships with nonprofits, schools, and municipalities to extend that same commitment to collective progress. Collaboration helps credit unions reach deeper into their communities while remaining anchored in local relationships.
Impact Measurement
Impact reports can track and showcase community outcomes, from affordable housing loans to small business growth and member financial stability. Measuring these results strengthens credit unions’ mission and demonstrates their value to members, policymakers, and partners. For a purpose-driven organization, this is a measure of community accountability (whether that community is geographic or SEG-based) and not just a marketing exercise.
The Role of CDFIs as Partners in the Movement
CDFI certification, with its structured standards and annual reporting requirements, has strengthened how CDFI credit unions demonstrate and document their community impact. This discipline has elevated our entire movement’s ability to show, with clarity and accountability, how cooperative finance changes lives and communities.
The rigor that CDFIs apply to measuring outcomes benefits the broader credit union system. As all credit unions face growing expectations to show how their financial performance aligns with their social purpose, the practices established through CDFI certification help the cooperative movement distinguish itself from other financial institutions. The framework encourages consistency, transparency, and a stronger narrative about the value we create.
Woven Into the DNA
Yet credit unions have always served their communities with this mission at heart—whether or not they are CDFI certified. Many deliver the same community-focused outcomes without meeting every requirement for CDFI certification, because service to people of modest means is woven into the DNA of the movement. Credit unions were doing the work of community development long before federal CDFI certification existed. In that sense, credit unions are the original community development financial institutions.
Together, certified and non-certified credit unions continue to advance opportunity, inclusion, and fair financial access, demonstrating that cooperative finance remains a powerful force for community well-being.
Stacy Augustine is president of CU Strategic Planning.
