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  You are here:  PublicationsMaine Organic Farmer & GardenerSpring 2014Credit Union   
 A Credit Union for the Local Food Economy? Minimize


By Scott Budde, Project Director

What if a credit union were created that focused on the unique needs of small, sustainably run farms and related businesses? This is the central question of the Maine Food System Credit Project (MFSCP) – a feasibility project sponsored jointly by MOFGA and Maine Farmland Trust.

Sam May, a Slow Money Maine and MOFGA board member who chairs the project’s advisory board, explains: “Maine is perhaps the best place to consider such a proposition. Credit Unions are quite popular here, and with MOFGA and Maine Farmland Trust, we have two large, growing membership organizations at the heart of the local food movement. We also hope to include more specialized membership organizations, such as the Maine Cheese Guild, the Maine Grain Alliance and the Maine Brewers Guild.”

The MFSCP combines two related efforts of the past two years. Within Maine, it grew from proposals within Slow Money Maine. Across the region, it extends the ideas behind the Better Harvest FCU Research Project. The projects have united to explore how a new type of financial institution could spur the growth of a stronger, more sustainable local food economy in Maine.

While credit unions continue to grow in popularity – particularly in Maine – starting a new credit union has become increasingly difficult. The chartering process is long and complicated, with recent examples taking 18 months to complete and with applications running more than 500 pages. In addition, any new credit union will need substantial grant funding to get off the ground.

Even with such potential hurdles, however, creating a new credit union could be an attractive option for several reasons:

• Credit unions can offer government-guaranteed deposits to their members. Those deposits can then be lent out. With about $30 billion in total deposits within existing Maine credit unions, a new credit union would need only a small portion to meet potential loan demand.

• Because credit unions are nonprofit tax-exempt cooperatives owned and controlled by their members, those same members can protect against “mission drift” and generally receive more competitive rates on deposits and loans than from for-profit institutions.

• Such a credit union, because it is specialized, can be more flexible and knowledgeable in how it evaluates potential loans to small farms and related business than is often the case for existing banks and credit unions.

The MFSCP began on October 1, 2013, and expects to conclude by June 30, 2014, culminating in a determination of the feasibility of chartering a credit union. A core aspect of the project is to complete detailed interviews with farm and business members of the organizations mentioned above. The findings from these discussions inform the potential business model for the credit union and the ultimate decision about whether to proceed with fundraising and a charter application.

For more information on the MFSCP, please contact Scott Budde, project director, at Scott.J.Budde@gmail.com.


  

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