An organization that has been attempting for years to start a new credit union to serve the lesbian, gay, bisexual and transgender community said it will partner with an existing institution and plans to open for business in June 2019.
Andrew Tasakos, co-founder of Equality Washington, the Seattle-based not-for-profit foundation behind the project, said in an interview the group had originally planned to go after a state charter but that idea has been scrapped. Instead, Roswell, N.M.-based Florist FCU will in essence serve as a parent company for the new credit union, Equality CU. Florist's charter includes all 50 states.
Equality is working with the National Credit Union Administration to convert Florist's charter to an "umbrella" that would also cover Equality. The two entities would share back-end resources such as accounting and online banking systems, but the start-up would have its own board and branding.
NCUA spokesman John Fairbanks said credit unions are permitted to operate under separate brands if they follow proper procedures in ensuring they do not confuse members. For example, they cannot suggest the different names are different credit unions.
The Equality group, which began efforts to launch a credit union in 2014, found that 37% of the country's LGBT community lives in the South. Many live in places where the law does not prohibit credit discrimination based on sexual orientation or gender identity, Tasakos said. So the scope of the project needed to expand beyond the state of Washington.
After 2016 came and went with no federal charters being awarded, four were granted in 2017. Raleigh, N.C.-based Civic Federal Credit Union in December became the final federal charter granted in 2017.
Tasakos said it seems as if regulators are hesitant to grant new charters. "It's incredibly difficult," Tasakos said of the chartering process. "Who wants more children to babysit?" He said the team was advised that finding an existing credit union to serve as a partner would be the easiest and quickest way to get the project off the ground.
Under a new charter, Equality CU would have been limited in the products it could offer. Tasakos said regulators would likely only have allowed it to offer savings accounts for the first year with checking and small auto loans following in subsequent years. "Our community has the need and desire to have robust products and services available sooner rather than later," he said.
In addition to standard home and car loans, Equality CU may offer loans for adoption costs and to cover surrogacy. The credit union will survey the community to see what other products and services are needed, Tasakos said.
The NCUA's Fairbanks said he was not aware of any existing credit union focused exclusively on serving the LGBT community. He added that an association based on celebrating or advocating for a particular demographic group is acceptable if it meets the associational common bond requirements, such as having activities, requiring dues and holding regular meetings. However, a federal credit union cannot just serve people based on being part of the LGBT community. That concept is similar to the agency not being able to charter a credit union where the field of membership includes only people from a particular country, he said.
Equality CU wants to raise about $450,000 in 2018 before entering phase two of fundraising, which will entail finding $5 million to $10 million of capital needed for reserves. The NCUA requires that for every $100,000 a credit union has in deposits it must have $7,000 in reserves.
In terms of existing funding, Tasakos said only that the organization does not have a large war chest of money in place. The group held a recent fundraiser that did not raise tons of money but did bring awareness to the project. And its supporters now include Cleve Jones, who co-founded the San Francisco AIDS Foundation. "He believes in this very much and is going to be working with us," Tasakos said.
Tasakos works as a mortgage loan originator for Florist FCU, and the credit union is donating the proceeds from mortgages that Tasakos originates to fund the Equality CU project.
The group is still not sure if it will use physical branches. If so, they would likely be located either in Seattle or San Francisco, Tasakos said. Florist FCU is able to serve members all over the country out of one small branch in New Mexico because of its online and mobile banking channels, and Equality could do the same, Tasakos said.