The Bottom LineThe Bottom Line

Black-Led Credit Union In Minneapolis Forges Ahead

Village Financial is seeking to become the first new state-chartered credit union in Minnesota in 15 years, and it’s on track to open its doors later this year.

(Photo by Michael Adams)

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As Me’Lea Connelly was walking into her first meeting last year with newly elected Minneapolis Mayor Jacob Frey, she had no idea how much funding to request from the city to help launch a black-led credit union on the north side of Minneapolis.

What she knew was her pitch. The credit union, Village Financial Cooperative, was a direct response to systematic disinvestment on the predominantly black north side, encapsulated in the moment of Philando Castile’s death in July 2016 (see Next City’s previous coverage). Minority-owned credit unions across the country are closing at the rate of one per week, so her proposal was urgent.

Connelly had been delivering a version of that pitch for about a year at that point, raising deposits by going door-to-door, canvassing at bus stops and other places where her neighbors on the north side gathered. By the time she and Patrick Troska of the Jay and Rose Phillips Family Foundation walked into Mayor Frey’s office that day last year, Village Financial Cooperative had amassed over 1,100 deposit pledges totaling more than $3 million — and that was now part of her pitch to the mayor.

“We were simply saying, ‘Guess what, 1,100 black community members on the north side decided they were going to do this and they’ve already put down $3 million and we’re asking you to come behind them and to acknowledge and affirm the commitment they’ve made,” Connelly says. “It wasn’t coming in with our hands out, we came in with a full deck, and I think that he respected that and he decided it was something that was important and that he needed to get behind.”

Village Financial Cooperative hopes to fill in the gap left behind by other more conventional banks and even other credit unions. Predatory lenders have jumped into the gap left behind by the retreat of the mainstream banking system. African-Americans are twice as likely to live within 2.5 miles of a payday lending storefront, compared with all Minnesotans. Even more importantly, the credit union intends to finance the growth of cooperatively-owned businesses that provide better pay and benefits, including ownership benefits, than more conventional employers.

Connelly and Troska had been here before. Less than a year prior to meeting Frey, they had sat down with previous Mayor Betsy Hodges, to deliver an earlier version of their pitch. But when the moment came, and Mayor Hodges asked what would be helpful, Connelly only asked for $50,000. Troska, who was also at that meeting, couldn’t believe the missed opportunity.

“I’m thinking to myself, ‘Girl, you gotta dream bigger,’” Troska says. “When we left the place Me’Lea asked me, ‘How’d I do?’ And I said well you did great, but in the future you need to think bigger, you need to go after bigger money, you need to ask for more, the city’s got more money than $50,000.”

Unbeknownst to Connelly and Troska at the time, Hodges managed to get them the $50,000 in her last budget before losing her re-election. (They found out later when the city called them after the election was over.)

Then in early 2018, there they were again, Connelly and Troska, walking in to meet with the new mayor.

“We had completely forgotten about that conversation with [Mayor Hodges], and as we were walking into the meeting with Mayor Frey, I started realizing, ‘Oh god, we never thought about what if he asks us how much do we want?’” Connelly says.

Once again delivering the pitch, but panicking on the inside, Connelly went over the numbers in her mind. The credit union would need to have about a million dollars a year for at least a few years before it becomes financially sustainable. She thought about the years of oppression, the years of systemic racism, the redlining, that black people suffered under the hand of institutions that are also under the purview of their city.

“I thought just for reparations’ sake, the city of Minneapolis can come in and cover half of the bill,” Connelly says. “If our community members are willing to put in $3 million, then that’s the least our city can do.”

The moment came. The mayor asked how much. Connelly asked for $500,000 a year for five years.

“I looked over at Patrick and his eyebrows were like off his head,” Connelly says.

“She was bold, she was big,” Troska says. “Part of her evolution as a leader is understanding how to go into those conversations and ask big. You only get what you ask for, rarely do you get more than that.”

And the mayor said yes.

Then, during his first state of the city address not long after that, he publicly announced his commitment to partially funding the credit union, starting with $500,000 in that year’s budget request to city council. Then he pulled out his checkbook and committed to depositing some of his own personal funds in the credit union.

Connelly couldn’t stop there. She needed to follow up with city council members during the budget negotiating process. Her numbers continued to grow — by the end of 2018, they had 1,750 deposit pledges totaling $4.25 million. In December 2018, Village Financial became the first new state-chartered credit union in Minnesota in 15 years, and it’s on track to open its doors later this year.

“I think the numbers had an effect on council members. We were constantly reporting there’s still momentum for this work,” Connelly says. “So that was another four months of us lobbying city council and letting them know how important it was that they kept that number and not only that but it was important they knew we were asking for a multiple-year commitment.”

The numbers kept growing because the organizing never stopped. Last summer, the Association for Black Economic Power (the nonprofit created to sponsor the credit union) created its Ambassadors program, training 10-20 interested members a month to become evangelists for the credit union.

“There was a lot of excitement, they would pledge, and then they would email us, saying when could they move their money, what else could they do, so we just needed to put that energy to use,” Connelly says. “Instead of us saying just wait we’re going to open soon, we decide to say come on in, we’ll train you more, and we’ll send you out, and give you the same mandate that we’re carrying.”

Troska, whose foundation also charged him with opening up his Rolodex to help the credit union fundraise, also leaned on some of those foundation peers to pledge deposits for the credit union — in addition to grant funding.

This first year of city funding, as reported by local news outlet WedgeLIVE, consists of a $90,000 grant and a $410,000 loan that the city will forgive upon Village Financial Cooperative reaching certain benchmarks: opening its doors this year (it’s on track to close the lease on its location in the next couple weeks); providing at least 30 financial literacy class sessions serving at least 300 residents; enrolling at least 500 members with checking or savings accounts; and holding at least six major outreach events by the end of the year.

Connelly doesn’t regret not asking the city for more, but she has thought about it. “I’m kind of curious,” she says. “But seeing our city council members go on and on and on about how proud they were, how excited they were to pass this, how this is a historical moment. That, to me, was so much validation for our community.”

“It also taught me a lesson about representing my people, that they deserve the best, and I gotta get over my insecurities and my doubts and I need to ask for what I know they deserve,” Connelly says.

EDITOR’S NOTE: We’ve clarified remarks Mayor Frey made in his first State of the City address.

This article is part of The Bottom Line, a series exploring scalable solutions for problems related to affordability, inclusive economic growth and access to capital. Click here to subscribe to our Bottom Line newsletter.

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Oscar is Next City's senior economic justice correspondent. He previously served as Next City’s editor from 2018-2019, and was a Next City Equitable Cities Fellow from 2015-2016. Since 2011, Oscar has covered community development finance, community banking, impact investing, economic development, housing and more for media outlets such as Shelterforce, B Magazine, Impact Alpha and Fast Company.

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Tags: minneapoliscredit unions

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