Your Proof of Concept should demonstrate to the NCUA that your proposal is well- thought-out and contains the four major elements crucial to success:
- Defining the credit union’s purpose and core values,
- Describing a field of membership,
- Identifying the amount and source of start-up capital, and
- Securing subscribers.
These elements are described below, along with an explanation of the criteria the NCUA will use to evaluate your PFCU in relation to these elements.
Drafting Your Responses for the POC Submission
Below provides guidance that can help you complete the POC submission successfully. In your POC narrative, be sure to address each bullet item related to the four critical elements shown below.
#1 - Purpose and Core Values
Identify and describe why the proposed field of membership would benefit from—and support—a new credit union.
Narrative Guidance on Purpose and Core Values
- Describe the economic environment.
- Explain the economic advisability for the PFCU—an essential factor in qualifying for a federal charter—and the degree of support from the field of membership.
- Discuss how the PFCU will benefit the membership and the community and the opportunities and challenges of local economic and market conditions.
#2 - Field of Membership
The organizing group must identify a field of membership that meets regulatory requirements.
Narrative Guidance on Field of Membership
- Identify a field of membership that meets the regulatory requirements.
- Discuss the number of potential initial credit union members and the potential for membership growth in its first few years, as well as how you arrived at those figures.
#3 - Capital Funding Plan
The organizing group must identify and explain funding sources to cover start-up costs, absorb net operating losses until the PFCU achieves positive earnings, and maintain adequate capital.
Note: Start-up capital is not a loan, investment, or non-member deposit. It is a donation pledged as capital for the formation of the credit union.
Narrative Guidance on Start-up Capital
Your response should explain:
- How much start-up capital is needed, based on the proposed services and operating structure.
- What sources will provide start-up capital.
- When pledged funds will be contributed.
- Whether you are submitting commitment letters now. The NCUA expects commitment letters from all donors pledging money before Phase 3. You can submit commitment letters, if available, with the POC submission.
#4 - Subscribers
The organizing group should identify seven individuals needed for the formation of the credit union.
Guidance on Subscribers
When choosing subscribers, think about the collective knowledge and backgrounds subscribers will need. Consider individuals who have:
- An ability to manage their own personal finances effectively.
- Educational or work experience related to finance, accounting, business, or banking.
- A willingness and ability to actively engage and commit the time necessary to create the chartering plans and application.
Documentation Required for Phase 1
Refer to the list below to ensure your POC submission includes all required items in Phase 1:
- Acknowledgment that subscribers completed research on credit unions and the NCUA’s Regulations
- Proposed name selection
- Purpose and Core Values statement
- Field of membership description
- Capital funding plans
- Subscriber information
- Identification of your interest in obtaining a:
- Low-income designation (LID);
- Community Development Financial Institution certification (CDFI); and/or
- Minority Depository Institution (MDI) designation
Submitting the POC online
We encourage you to submit your Phase 1 information using our online portal. To enter the required information that you have just assembled for Phase 1 online:
- Go to the Chartering page on the NCUA website.
- Click on the link to “Chartering Proof of Concept tool on CyberGrants.” You will be redirected to the NCUA Chartering Proof of Concept login page. As a first-time user, you will need to set up a password before proceeding. When you submit the information, you will be emailed an acknowledgement.
The NCUA will review your response to each critical element in the POC submission and determine whether your concept is sound. If there are deficiencies in your submission, the NCUA will notify you, and you will have an opportunity to resubmit a revised file.
The NCUA strives to complete its review and respond within 60 calendar days of the POC submission. If we find your group’s concept is sound, we will inform you in writing and provide a preliminary field of membership approval and confirmation of the credit union name we have reserved for you. The letter will indicate you have satisfied the requirements of Phase 1 and that you should begin preparing a complete charter application. Instructions for completing the application are detailed in the next chapter on Phase 2.