Framework for Decisions VALUES. Organization. People we serve. Church & Community

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2 Mission We proclaim the gospel vision of Jesus Christ as our mission by serving the needs of individuals and families, especially the poorest, and working with Church and community for justice, peace, and compassion in society.

3 Framework for Decisions Organization VALUES People we serve Church & Community

4 Service area

5 #1 referred by 211-Info Line

6 Populations & services Families & individuals Behavioral health counseling Homelessness prevention Adoptions Job Services Families First Housing Financial literacy & asset building Early childhood intervention Youth mentoring Disaster survivors Mental health counseling Case Management Relief Supplies Adults with Disabilities Resource referral Advocacy for independence Pregnant women in crisis Counseling Sanctuary for Life Medical care Seniors Job Services Foster Grandparents Prison Ministry Ex-offender housing Family support groups Pre-release programs Immigrants Legal services Relocation for Refugees

7 To create a community/financial institution partnership to establish a self-sustaining microloan investment fund that would initially offer an alternative to payday loans and other financial services to low-income customers. The partnership would grow into an enterprise fund for economic development and neighborhood improvement. Purpose

8 Key Differences Kansas Loan Pool Project -- Baton Rouge Micro Loan Initiative KANSAS BATON ROUGE Security Security 100% from NFPs Community Contribution, Shared Dependency NFPs Self Lender Risk None Shared Loan Servicing Financial Institutions NewCo Objective Escape Predatory Loans Micro Enterprise Fund Duration Temporary Long Term/Permanent Ownership None (program manager & borrowers) Shared via NewCo INCENTIVES Aligned Misaligned Competing Aligned Misaligned Competing

9 Research Highlights BRLA has 78 payday loan storefronts. (Most of any LA city.) Residents borrowed 246,937 payday loans. Residents paid $11.7 million to borrow payday loans. Quarter Total Fees and Interest Paid Total NSF Fees Paid 1st Quarter $2,730,094 $47,321 2nd Quarter $2,999,489 $45,519 3rd Quarter $2,871,299 $55,734 4th Quarter $2,903,205 $52,847 TOTAL $11,504,087 $201,420 Source: LBP analysis of data from the Louisiana Office of Financial Institutions

10 Lenders are concentrated in lowincome and majorityminority communities Research Highlights

11 Residents with lowincomes, renters, people of color, and divorcees are most likely to use payday loans. Research Highlights

12 Neighborhood A: Eden Park

13 Neighborhood B: Brookstown Brookstown

14 Neighborhood C: Delmont Place

15 Alternative Fund: Findings A community-based stand-alone payday loan alternative fund in Baton Rouge isn t sustainable because: Responsible lending won t raise enough revenue Critical mass of customers missing Perpetual state of fundraising As a result, we propose a shared value model of lending: Leverages pre-existing organizational infrastructure Creates synergistic relationships instead of competitive ones Uses limited resources more efficiently Builds stronger coalitions in Greater Baton Rouge area

16 Alternative Fund: Theory of Change If we Help customers exit their payday loan debt cycle Provide them with financial education Partner with banks to provide access to mainstream financial products Then we Help clients improve financial literacy better manage their finances Help credit unions and banks access new customers, improve their public image, and earn CRA credit Help Baton Rouge reduce poverty, improve public welfare, and enhance quality of life

17 Alternative Fund: How it Works Client receives small dollar loan, which must be used to repay a payday loan or auto title loan Average loan size: $750 Interest rate: 6.25% Loans per year: 10 Repayment period: 24 months Projected success rate: 85% Projected default rate: 15% Client must attend mandatory financial education sessions led by a certified community partner: Jump$tart, Neighbors FCU, Campus Fed, E Federal, H&R Block, 100 Black Men of Metro Baton Rouge

18 Alternative Fund: How it Works Once the client repays the loan and completes the financial education course Direct case management ends. The client is introduced to Bank on Baton Rouge members. Those institutions paying Participation Fee receive priority access to graduates and can will have their products featured during the financial literacy program The fund still works closely with banks to monitor graduates progress. Organizational effectiveness measured in three ways: Loan success rate How many people receive a mainstream product Graduates become part of the Community Investment Committee

19 Conclusion / Q&A There is a large opportunity to run a successful fund that: Helps residents repay debts and become bankable customers. Creates synergistic relationships instead of competitive ones. Reduces Baton Rouge s poverty rate and improves quality of life.