Lower East Side People’s FCU

1. Lower East Side People’s FCU Meagan van Harte Director of Development Services

2. Not yours, not mine, but everyone’s Ni tuya, ni mia, de todos

3. Presentation Outline • Introduction • Credit Union History • Services • EITC Program • VITA Program • Program Budget • EITC/VITA Conclusion

4. Introduction Mission • To provide access to affordable financial services for all residents and businesses of the Lower East Side. • To stimulate the economic development of our community by providing a democratic alternative to banks and non-traditional financial entities, such as check cashers and predatory lenders. • LESPFCU is a financial cooperative that reinvests its members’ money in the Lower East Side to provide affordable credit as well as financial and development services.

5. Introduction Field of membership • Community Board #3, which comprises the area south from East 14th Street to the Brooklyn Bridge, and East from Fourth Avenue/Bowery to the East River • According to the 2000 US Census… Population: 111,867 36% were foreign-born; 64 % of all residents over age five speak a language other than English in their homes; 27% of households are female-headed, with children; and 56% of these families live in poverty.

6. Introduction Market Context: Membership • The largest portion of the LESPFCU’s membership is made up of low- and moderate-income individuals or households. • A large portion receives some form of public assistance. • Many are residents of the area’s several large public housing projects. • Many have traditionally depended upon mechanisms such as store credit, loan sharks, and check-cashing establishments for credit and financial services. These services are high-priced and non-secure, and do not promote savings or consumer education.

7. Introduction • Market Context: Community • One of the poorest communities in NYC. • Area in which immigrants have historically settled. • By late 70s many buildings had been abandoned or burned out by landlords unwilling to pay property taxes. • During the 80s the neighborhood became known as “Alphabet City” and it was synonymous with drug dealing and crime. • By the late 80s, long time residents and “new settlers” started to claim the neighborhood back and many buildings were rehabilitated and new ones built on vacant land. • By the early 90s the community had become vibrant again and home to a very diverse population. • Currently, the neighborhood is experiencing rapid gentrification.

8. Credit Union History • 1984: The last commercial bank closes its doors. • 1984-86: An outraged community starts to organize itself. • 1986: Receives Federal Charter • Supported by CRA legislation, LESPFCU opens in a former bank branch facility • 1986: It becomes one of the first Community Development Credit Unions in the country • 1987: Certified as a Low Income Credit Union by NCUA • 1996: Certified as a community development financial institution by the US Treasury Department

9. 1986

10. 2003 • $ 11 M in assets • 4,000 members • 15 employees • 2 branches • 6 ATMs • 13% net worth • PFI for 85% of members • Rated CAMEL 2 (for six consecutive years) • Leading community development credit union in NYC • Leading community financial development institution in the country

11. Financial Services • ATM Cards and access to 6 LESPFCU ATMs and to surcharge free ATM network • Bill payment • Business Accounts • Club Accounts • Con Edison Payment • Direct Deposit • Money Orders • Night Depositary Safe • Share –Club- Accounts • Share –ETA- Electronic Transfer Accounts • Share –IDA- Accounts • Share –Savings- Accounts • Share Draft –Checking- Accounts • Wires Transfers

12. Lending Products Consumer: • Credit Cards • Overdraft Protection • Signature Loans • Vehicle Loans (new and used) Housing: • Co-op Loans • Mortgages • Building Loans Commercial: • Micro enterprise loans • Small Business Loans

13. Development Services • Financial Literacy • Credit Counseling • Credit repair/building • Budgeting • Home-ownership Education • Technical Assistance to micro and small businesses • Individual Development Accounts (IDAs) • EITC Education • Free Tax preparation services (VITA)

14. EITC: Background • Brookings Institution and Progressive Policy Institute study • EITC: Biggest antipoverty federal program. Lifted 4.7 million families out of poverty. • 2002: $31 billion in EITC provided to 19 million low and moderate income taxpayers. • 2002: 14 billion EITC refunds unclaimed. • $1.75 billion diverted to commercial tax preparation firms • Seven cents of every EITC dollar is going to tax preparation providers.

15. EITC: Background • New York City facing most challenging economic conditions in decades. • About 18% of New Yorkers eligible for EITC do not claim it. • $312 million went unclaimed last year. • NYCHA estimates that public housing residents in Lower East Side failed to claim $10 million last year.

16. EITC: Key Partners • COMMUNITY BASED ORGANIZATIONS • NYC Mayor’s EITC COALITION • INTERNAL REVENUE SERVICE • THE NEW YORK CITY FINANCIAL NETWORK ACTION CONSORTIUM (NYC-NAC) • NYCHA • NYC Council Member M. Lopez • NY Congresswoman N. Velazquez

17. EITC: Education Program LESPFCU: • Provided significant staffing resources • Promoted and coordinated the EITC community forums • Delivered on-site presentations to community partners • Implemented a Public Relations campaign • Distributed mass mailing through monthly newsletters and community partners • Produced outreach materials

18. VITA site Project • Lack of Volunteer Income Tax Assistance (VITA) in Lower East Side • Lack of financial institutions willing to open accounts to the “unbanked” • Huge EITC-eligible population • Abundance of commercial tax preparation firms (3 H & R Block and 2 Jackson Hewitt)

19. VITA: Key Partners THE INTERNAL REVENUE SERVICE (IRS) • E-filing certification in record time • On-site training to LESPFCU staff and volunteers • Program implementation support • Reputation • Credibility • Outreach

20. VITA: Key Partners • IRS • The Robin Hood Foundation • NYC Consumer Affairs Department • NYCfNAC • NYCHA • Community Based Organizations • Volunteers

21. EITC/VITA: Budget Personnel Expenses Year 1: $20,900 Year 2: $58,300 OTPS Expenses Year 1: $12,250 Year 2: $21,900 Total Expenses Year 1: $33,150 Year 2: $80,200+

22. EITC/VITA: Evaluation STRENGTHS • Institutional support to implement program • Knowledge of community • Credibility • Facilities layout • Technology (fast internet connection and LAN) • Expertise of LESPFCU volunteers that managed VITA site • Development of key partnerships early in the process • Technical and financial assistance

23. EITC/VITA: Evaluation STRENGTHS • Effective Public Relations campaign • Effective outreach strategy • E-filing capability • Bilingual capability • Clear process layout and quality control mechanisms • Internal control and safekeeping procedures • Reputation

24. EITC/VITA: Evaluation WEAKNESSES • Logistical problems with volunteers: arrival time and attendance • Need a more knowledgeable volunteer base • CU operations and VITA operations not compatible • Could not always handle overflow • Increased pressure to LESPFCU staff

25. EITC/VITA: Evaluation OPPORTUNITIES • Strong city-wide efforts to support EITC/VITA projects • More receptive external funding sources • Satellite sites • Partnerships with accounting schools • Good rapport with accounting firms • Strong partnerships already developed: NYC Department of Consumer Affairs; New York City Council; Manhattan Borough President; Public Advocate • Track record and institutional expertise • Possibility of processing tax returns for self-employed individuals and retired

26. EITC/VITA: Evaluation THREATS • Commercial tax preparation firms targeting their marketing efforts • Regulatory and compliance requirements increasing

27. EITC/VITA: Conclusion • EITC/VITA good fit for CUs serving low income communities, as these programs target the same population that we serve • Excellent opportunity to reach unbanked families • Great tool to bring people into the financial system. LESPFCU opened 72 new accounts (47% of which were first accounts) • Supports our mission of fostering the economic development of our communities; - LESPFCU processed 1,682 returns (only 14% paper filed) - Representing $1,743,439 in refunds - of which $867,628 was EITC (State and Federal) - saved over $252,300 in tax preparation and refund anticipation loan fees • saw a drastic increase in senior citizens filing with us

28. EITC/VITA: Conclusion • CUs are ideally suited for EITC/VITA, as we can also provide accounts for direct deposit of tax refunds • Program implementation requires planning and institutional support • Represents a significant financial cost to CU • Management and operation of VITA site imposes additional pressures on credit union staff • Availability of technology and technical support is paramount