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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
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 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