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Impact Investing: Elevating Credit Union Futures

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By Matthew Royles, CNote
January 31, 2024

In recent years, the impact investing movement has surged from $502 billion in 2018 to an impressive $1.16 trillion in 2022. This momentum shows no signs of slowing down; in fact, 88% of institutional investors are planning to ramp up their impact investments in the coming year, according to Calvert Impact's 2022 Investor Survey.

These investors, ranging from individuals and foundations to corporations, seek to align their capital with positive societal or environmental change while earning financial returns. It's not just about where these investors’ money sleeps at night; it's about shaping a future that is both sustainable and equitable. As a source of funds, these investors present a compelling opportunity for credit unions seeking long-term capitalization and positive impact.

For the 70% of credit unions that said that growing deposits was a top priority for them in 2023, tapping into this swelling pool of impact investors is a strategic avenue that is increasingly being considered.

Each impact investor navigates their investment choices based on their own individual criteria. These can include geography, risk/return expectation, liquidity, specific impact objectives, and more. One powerful framework that has gained widespread adoption in the impact investing community is the United Nations Sustainable Development Goals (SDGs). These 17 goals encompass themes from poverty reduction to well-being improvement and environmental sustainability.

A variety of tools exist that you can use to pinpoint the SDGs that align with your credit union's impact. This not only helps credit unions showcase their commitment to positive change but also helps impact investors identify credit unions that align with their own goals. When credit unions join CNote’s Impact Cash® platform, we take them through a one-on-one process to help them identify their SDGs.

Partnering with impact investors opens up myriad opportunities for credit unions.

A recent report by the Global Impact Investing Network spotlighted a trend toward some of the world’s largest and most prominent corporations exploring this avenue to align their financial assets with their values. Corporate impact investments in credit unions can take several forms, including secondary capital, subordinated debt, and even deposits. Through CNote’s Impact Cash platform corporations have channeled impactful deposits to credit unions nationwide, providing a vital boost amidst the anticipated $3.3 trillion drop in deposits by 2024.

Kaua'i Federal Credit Union is an example of a credit union that is taking full advantage of the impact investing movement. Collaborating with CNote, a women-led technology platform, they accessed no-cost deposits from a diverse range of corporations. This influx of funds became a catalyst for Kaua'i Federal Credit Union, allowing them to champion local causes such as rental relief, environmental resilience, and economic diversification.

Monica Belz, CEO of Kaua'i Federal Credit Union, attests to the transformative impact of deposits from these corporations. "Impact investor deposits arrived at a pivotal moment for us," she shares. "We expanded our lending capacity, supporting local businesses and contributing to vital rental relief efforts within our community."

As the financial landscape evolves, credit unions stand at the crossroads of opportunity with impact investing. From the staggering growth of the market to the practical benefits for credit unions, the potential is clear. By aligning with impact investors, credit unions not only secure vital deposits but also pave the way for long-term growth and sustainability. The success of Kaua'i Federal Credit Union, in partnership with CNote, exemplifies the tangible impact that awaits those who embrace this movement.

Connect with CNote to learn more about how your credit union can partner with impact investors.

About CNote

CNote is a technology platform that provides a sustainable flow of non-member deposits that are low-cost and deliver consistent value. This service is available at no cost to CUNA member credit unions as arranged by CUNA Strategic Services.