Asset-Building -- Pathways to Family Economic Security Memphis, TN Thursday, November 5, 2009

1. Asset-Building -- Pathways to Family Economic SecurityMemphis, TNThursday, November 5, 2009 Atlanta Prosperity Campaign – Express Refund Loan & Savings Program (ERLS)

2. SUSTAINABLE ASSET DEVELOPMENT MAKING MOREMONEY MANAGING MONEY SAVING MONEY ECONOMIC SUPPORTS Atlanta Prosperity Campaign Financial Stability with a Pathway to Sustainable Asset Development Homeownership, Microenterprise, Retirement and/or College Savings, New Jobs/Careers Career Path Assessment, Educational/Vocational Training & Planning, Admissions & Financial Aid Counseling, Support Services Credit Counseling, Financial Literacy, Credit Repair, Benefits Planning Savings Plans and Strategies, Banking Services and Basics Food Stamps, Medicaid, TANF, EITC and other Tax Credits, PeachCare, Access to Food

3. Reaching the Population Volunteer Income Tax Assistance (VITA) Program Beyond taxes. VITA becomes the portalto help low-income families access economic supports and financial services. Benefits Outreach Program Access to economic supports (public benefits), including food stamps, Medicaid, PeachCare, energy assistance etc. Atlanta-area EITC Coalition Forum for members to learn about community services. Breaking down “silo” mentality. Statewide EITC Coalition Increase access to EITC and food stamps. Reach rural areas of state. Advocacy at state level. Early stage of development

4. Our Challenge VITA is at a competitive disadvantage, which creates roadblocks to asset-building: • High-cost commercial tax preparation services • High-cost check-cashing services • High-cost Refund Anticipation Loans (RALs)

5. Our Solution • Piloted the Express Refund Loan & Savings Program (ERLS) in tax season 2009. • Two components: • Checking/Savings Program • Express Refund Loan (ARAL-type product)

6. Checking/Savings Program • 45% of our clients did not have a bank account. • Partnered with four financial institutions who provided on-site customer service representatives (branch-level). • Agreement with FIs to offer second-chance banking product to clients.

7. Express Refund Loan • Low-cost alternative to RAL (Express Refund Loan) • Partnered with Atlanta City Employees Credit Union • Loan Amount - $500 - $5,000 (based on federal refund, not state refund) • Fee Structure (can vary by FI) • $25 CU membership fee (refundable after 6 months) • 18% annualized interest rate (for 15 days) – range of $4.00 - $37.00 • Turnaround – average 48 hours (must ensure clean TaxWise reports before processing the loan documents).

8. Express Refund Loan • Two high-volume VITA sites. One local Credit Union. • Financial Services Specialist (FSS) at the VITA site manages the entire loan process. • FSS discusses pros and cons of Express Refund Loan with the client, before tax return is processed. • Client completes LoanLiner Application, Credit Agreement, Loan Notice, disclosures, and other forms at VITA site. • Client must be an accountholder at the CU (can sign up on-site). CU pre-designated account numbers for VITA program.

9. Express Refund Loan • Refund will be direct deposited into this account. • VITA Site Coordinator ensures that the return is free and clear of any debt obligations (TaxWise). • Once clear, all documents are sent to CU, for final approval. CU contacts the client. • CU places a hold on the checking/savings account for the amount of the loan. • When the refund is deposited into the account, the loan amount, plus interest is transferred to pay off the loan.

10. Express Refund LoanProcess Flow

11. ERLS Program Results in Year 1 • 105 bank accounts opened • $97,000 deposited through VITA • 89% remain open today • 12 loans • average loan was $3,700 • average fee/interest was $32 ($25 membership fee, $7 interest)

12. ERLS Program Plans for 2010 tax season • Checking/Savings Program • Engage three additional FIs to provide services at VITA sites (total of seven) • Loan Program • Expand to five VITA sites • Expand to four financial institutions • Promote the program to the community • Look at possibility of using a CDFI loan pool

13. Lessons Learned • Contract with an experienced entity to help start up loan program (policies and procedures). • Clearly define expectations of each partner (signed MOU). • Start small and build foundation. Then add new partners for the future. • The loan program is more suited for smaller financial institutions. • Locate loan program at VITA sites that have the capacity & supportive services available (credit counseling, financial literacy, etc.).

14. Lessons Learned • Have a financial specialist (FSS) to manage the loan program. The FSS works closely with the VITA Site Coordinator. • The Site Coordinator needs to be properly trained on reading TaxWise reports to check debt indicators. • As part of training, include specific client scenarios. • FI needs complete buy-in from its board and management. • The value-added service to the FI is not the low-cost loan. The value-added service is the opportunity to engage with new customers.

15. Thank You Carter Elliott Manager – Atlanta Prosperity Campaign Atlanta Community Food Bank (678) 553-5900 carter.elliott@acfb.org www.atlantaprosperity.org