Educating and delivering financial services to low-income, underserved residents and businesses
Abstract
Faith Community United Credit Union is a financial cooperative owned by its members who live, work, and worship in Cuyahoga County, Ohio. It is a certified Community Development Financial Institution with a faith-based philosophy of "people helping people." It has been providing affordable financial services for the underserved community of southeast Cleveland for nearly fifty years. This effective practice was submitted by Rita L. Haynes, CEO.
Issue
Members of poor and underserved communities are often denied services from mainstream financial institutions. As a result, the poor are left without hope of property ownership or of ever building wealth.
Action
Individuals are offered ownership in an established financial cooperative. By purchasing shares in the Faith Community United Credit Union (FCUCU), individuals gain access to services and learn the difference between using what belongs to someone else and owning their own institution. As a faith-based organization, FCUCU has found it helpful to constantly highlight their faith in God and in each other, even though the primary objective is to conduct business transactions. For instance, the name Faith Community United Credit Union highlights their goal to unite and develop the faith community and promotes their mission of "people helping people."
Becoming a Member
Each new member is given a "welcome bag" full of information on the credit union and its services. An identification card is issued to each member for use in cashing checks. Members are given a brochure that explains the mission, hours, and services of FCUCU.
The amount of new information to comprehend can overwhelm new members, especially those with poor literacy skills. Therefore, it is important to have volunteers make follow-up phone calls to new members, offering explanations about any programs that are unclear to members. This follow-up is a way of verifying information as well as a means of cross-selling products.
Products and Services
One of their most popular loans is one that was developed to compete with the paycheck advance industry. It is called an "Amazing Grace Loan" because it is not based on the merits of a credit report; a member's need for a loan is fulfilled based on FCUCU's trust in the member. Compared to what would have been paid for similar services at a paycheck advance business, the member saves a great deal of money and gains a feeling of ownership in their financial institution.
FCUCU teaches savings with the Grace Loan product by having members agree to save a part of their recognized savings in a restricted savings account. This savings account carries matching life insurance and pays dividends.
FCUCU also educates by charging fees for abuse or delinquency, of which the member is informed of in advance.
Additionally, the website offers much valuable information for members and nonmembers, including tips on home ownership, debt consolidation, financial aid and financial emergencies, and resources for small businesses.
Context
FCUCU serves a low-income community in Cuyahoga County who mostly live on the southeast side of Cleveland, Ohio. Their field of membership is defined as those who live, worship, and work in Cuyahoga County. The majority of their members are African-American who live in this Empowerment Zone community or attend church in the community or work for a company in the community. There are few banks servicing this area, which is very densely populated with homes and businesses in need of repair. The Department of Treasury's Community Development Financial Institutions Fund certified FCUCU as serving a low-income community.
Outcome
The number of FCUCU shareholders has grown to over 4000 members with assets of $7.7 million owned by the people who live in the community. They are able to borrow money to repair or purchase homes and are able to receive financial services daily, such as check cashing, payroll deduction, ATM, money orders, travelers' checks, wires, financial counseling, loans and saving products from an institution they own.
The churches themselves — of various denominations — are members of the credit union and have borrowed money to repair, expand, build, and equip day care centers, and other related services. The churches also call on FCUCU to teach financial literacy to their parishioners.
Evidence
FCUCU was started in 1952 by a handful of volunteers who had each saved 25 cents a week until they had accumulated enough money to obtain a State Charter; it was staffed by volunteers and open only one day a week. In 2002, FCUCU will celebrate its 50th anniversary with a projection of over 5000 members, $8 million in assets, five paid staff members, two AmeriCorps*VISTA members, and 50 other volunteers. It is open five and a half days a week with ATM access and offers both debit and credit cards. FCUCU piloted the Cleveland Saves program sponsored by the Consumer Federation of America.
Posted On
August 30, 2001For More Information
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