Appendix J: Why Financial Institutions Want to Partner with AFI Projects |
The Corporation for Enterprise Development, in The Individual Development Account Program Design Handbook: A Step-by-Step Guide to Designing an IDA Program1, offers the following selling points to underscore when recruiting a financial institution partner:
Publicity and public relations. Banks and credit unions are in business with the public. A good reputation and strong name recognition are important assets. Participating in a well publicized and well run IDA program can generate both.
Deposit of matching funds. AFI matching funds in the Project Reserve Account are attractive deposits for financial institutions because they are generally large sums of money that involve little account activity (until program participants make qualified withdrawals) and are deposited for long periods.
New customer development. AFI Project participants are a source of new customers for financial institutions. Although IDA accounts themselves may not generate profits for a financial institution, successful IDA participants are likely to conduct more profitable business in the future at the financial institution with which they have already established a relationship through their involvement with an AFI Project.
Community commitment. Many financial institutions have a stated mission to serve and respond to the needs of their communities. IDA s are an ideal way for financial institutions to do this while operating within their own industry.
Generate other business. Participating in an AFI Project can lead to other forms of new business for financial institutions, whether from friends or relatives of an IDA participant or the finance departments of a sponsoring organizations or project partners.
Community Reinvestment Act credit. The Community Reinvestment Act, requires banks to invest in their communities. AFI Project involvement can count toward CRA credit. For more information on the Community Reinvestment Act and how it works, visit the Web site for the National Community Reinvestment Coalition, http://www.ncrc.org .
Also understand that some banks are eager to participate in AFI Projects, while others are not. You may need to approach multiple institutions before finding the right partner, or you may have more than one participating financial institution. It is possible to have one bank, for example, handling the Project Reserve Account, and one or more other banks holding participant IDAs. You would need specific and different agreements with each one, of course.
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1 You may access this document at http//:www.cfed.org.