Silicon Valley Community Foundation (SVCF) recently invested $8 million in Self-Help Federal Credit Union to support the credit union’s work to provide responsible financial services to low- and moderate-income individuals, businesses and nonprofits in Silicon Valley and throughout the Bay Area.
Based on Self-Help’s average loan sizes, SVCF’s $8 million investment will provide enough capital to finance the equivalent of 58 mortgages, 3,745 personal loans, 665 car loans, or 11,204 credit-builder loans to a diversity of borrowers.
“We are continually evaluating opportunities to use our investment capital to deepen the positive impact we can make in the communities we serve, and in a manner this is aligned with our grantmaking priorities,” said Bert Feuss, senior vice president of investments at SVCF. “Self-Help’s impressive track record of improving the lives of low-income families in the Bay Area gave us the confidence that this investment will make an impact in local communities.” The investment was made following extensive due diligence and investment committee review, he noted.
Self-Help Federal Credit Union members, staff and guests celebrate the opening of the new San Jose branch in October 2016. Photos courtesy of Self-Help Federal Credit Union.
SVCF has been investing a portion of its Capital Preservation Pool, a short-term investment option for donors and nonprofits with funds at SVCF, in deposits at local Community Development Financial Institutions (CDFIs) and community banks for several years. As of June 30, 2017, the pool held $143 million in deposits at five local financial institutions.
The investment with Self-Help Federal Credit Union is the first in a series of planned non-insured deposits in high-impact CDFIs, Feuss said. Non-insured deposits expand SVCF’s ability to invest cash reserves beyond money funds and insured deposits, which has been the approach up until now. Self-Help’s responsible consumer, mortgage and auto loans seek to steer consumers away from predatory providers. For example, while it is not unusual for car loan borrowers to pay 20 to 30 percent interest on loans offered by sub-prime lenders, Self-Help offers similar loans at a 7 percent interest rate.
Most Self-Help members are low-income families with low household wealth and limited or impaired credit histories.
“We dig deep to assess applicants’ true ability to repay a loan, not just their credit scores,” said Steve Zuckerman, president of Self-Help Federal Credit Union.
Zuckerman notes that SVCF’s investment will help Self-Help Federal increase lending at its recently relocated and expanded East San Jose branch office, as well as at other Bay Area branches.
SVCF is researching other high-performing CDFIs for additional investment, Feuss said. Read more about SVCF’s investment philosophy and how SVCF invests its assets to provide charitable capital that will serve Silicon Valley for years to come.