Introduction The National Federation of Community Development Credit Unions helps build bridges for credit unions to underserved markets. Better Directions provides the bridge that can change the economic outlook for seniors who have worked their whole lives only to find that economic security is beyond their reach. We are bringing the right financial products and services at credit unions to low-to-moderate income seniors and access to benefits and other budget and financial counseling services at community partners. We are expanding opportunities for seniors through these partnerships. Everyone benefits when institutions in the community combine their products and expertise to serve this market. Nine credit unions in eight states have partnered with local community agencies that work with seniors to provide useful and targeted financial products from savings to investments; products that can help ease financial insecurity by getting seniors into savings and out of high cost consumer loans. We are working to reach seniors where they are. And the credit unions are benefiting from access to multigenerational members. In the first 18 months of the program seniors opened almost 6000 savings accounts, over 1000 took out an affordable consumer or debt consolidation loans and over 500 accessed a CD. More than 1300 seniors received a benefits checkup via a partnership referral. Now we are expanding the Better Directions network to credit unions across the country; providing our research on the needs, the experience of credit unions with products and partnerships and working to limit elder financial abuse. The National Federation of Community Development Credit Unions 39 Broadway, New York, NY 10006***info@cdcu.coop*** www.cdcu.coop
What we are addressing According to research from the National Federation of Community Development Credit Unions (Federation) and the National Council on Aging (NCOA), older adults in the United States are facing increasingly acute financial pressures that include inability to pay for basic needs, lack of savings and high debt. They are disproportionately susceptible to financial scams and targeted by financial predators of all stripes. With the ranks of low-income seniors growing, and millions of Baby Boomers reaching retirement age in a depressed economy, financial security for older adults has become a major area of concern for mission driven financial institutions and major national advocacy agencies. Economic Security Facts $27,000 The Average Unsecured Debt Balance for seniors over 65 11% Percent of adults 64-74 contributing 40% of their income toward paying down debt. Av average of $4000 of this debt is for medical expenses 77% Number of adults ages 65 and over who depend on social security for some or all of their monthly income Almost 20% The number of seniors who live at less than 150% of Federal Poverty Level Since 2007 older adults have lost an average of 20% of the equity in their homes $10,325 Average credit card debt of adults 65 and older 28% Percent of home delinquencies and foreclosures in 2007 by older adults $2000/$500 Ratio of emergency expenditures to savings of low-income families 96% Number of Americans aged 65-69 who have income below the poverty threshold have retirement savings of less than $10,00 and 3.6 million live in unbanked or underbanked households
Ms. Zelaya at Mid Cities Credit Union, Compton, California Benefits for Better Directions/Silver Lining Members What is Better Directions In 2011 Federation has launched Better Directions, a nationwide initiative to help seniors achieve economic security. Between 2011 and 2012 nine community development credit unions (CDCUs) and nine economic security (ESI) sites around the country created programs to assist this community; working to insure access to basic transaction services, savings, affordable and appropriate loan products and investment opportunities. Better Directions is funded by the Atlantic Philanthropies, through its Aging Program, which seeks to help vulnerable seniors become financially secure and advancing supportive measures by effecting long-term change. Participating credit unions are offering a variety of innovative product to assist older adults struggling with their finances, and creating partnerships to leverage existing resources in their communities. As part of its Better Directions/Silver Lining program, Mid Cities Credit Union has helped new and existing members 65+ get into reasonably priced loans. Mid Cities Credit Union refinanced Ms. Zelaya auto loan from another financial institution and saved her over $2,400 per year. Ms. Zelaya joined the credit union s Silver Lining program and took advantage of the special 7.50% APR auto refinance program and cut her auto payment nearly in half. Ms. Zelaya s son was so impressed- he joined Mid Cities Credit Union. How it Works The financial products and services in the Better Directions are accessed through: direct marketing to credit union members and the local community referrals from partner agencies (including members referred to the partner by the credit union who subsequently access an appropriate product) referrals from agencies other than official partners By collaborating with expert local organizations, CDCUs can be sure that they have maximized their efforts and the agencies serving older adults can be confident that they are sending their clients to responsible and trusted financial institutions. The Federation also has key national partners in this initiative including the National Council on Aging, the National Disability Institute and Wider Opportunities for Women, whose state-by-state Elder Economic Security Index is a nationally recognized measure of true economic security. Accomplishing our Goals The development of a comprehensive program of products, services and partnerships that ensure that the low-income aging establish or build their relations with responsible financial institutions and have access to appropriate savings, loan and investment products which in turn generate income, savings and increased levels of economic security.
Who we are serving Low-to-moderate Income Seniors, ages 55+ living below the Elder Economic Security Index Have insufficient Income Have not accessed all their benefits Are susceptible to unscrupulous lenders Pay higher interest rates on auto, construction, personal loans Carry unsustainable debt Have little or no emergency savings Care for children and grandchildren Are at risk of losing their home How do we measure economic security? A sample chart form the Wider Opportunities for Women Elder Index for California that shows the wide discrepancy between Federal Poverty Guidelines and the basic economic needs of seniors as measured by the Elder Index. The Federation is partnering with Wider Opportunities for Women (WOW) using their Elder Economic Security Index, a geographicallybased measure of income adequacy for elders that incorporates essential costs, including housing, health care, transportation and longterm care and developed with the Gerontology Institute at the University of Massachusetts, Each participating CDCU can use the Elder Index for their community to inform their decisions about products and services. The Federation will be using these indices as a baseline economic security goal.
Better Directions in Action As part of their commitment to serve low and moderate income seniors, Credit Unions in the Better Directions program provide a continuum of targeted financial products CDCUs reach older members and seniors in a variety of ways Working with and marketing to existing older credit union members Developing partnerships with non-profit social service agencies Working with the local departments of aging Marketing to the community more broadly Credit Unions partner with community agencies that serve seniors Recognizing early on that a key to success of was to build relationships between CDCUs and organizations serving seniors in their communities the Federation worked with the National Council on Aging to facilitate partnerships between CDCUs and community-based Economic Security Sites (ESI) for the aging to deliver holistic approaches to economic security for this population ESI Sites provide services that can help build economic security The nine ESI sites in the Better Directions program work with CDCUs and other community partners to improve the economic security of older adults by providing a comprehensive, person-centered assessment, an economic action plan, and assistance navigating public and private community resources. The sites offer several programs designed to make it easier for eligible individuals to find and apply for benefits to improve their lives and can coordinate with their CDCU partners to offer benefits checkups at the credit union.
Joanne B. at East River Development Alliance (ERDA) FCU, Long Island City, New York Joanne B. came to ERDA, a community development agency, in October 2011 because she was behind on her rent and having trouble managing all of her bills. Ms. B. became ill and fell behind on all of her bills. Key Better Directions Touch Points Members services staff at the CU Better Directions Brochures at CU Benefits Checkups and debt counseling at partner agency Tax Time-Tax Counseling for the Elderly Financial Literacy Programs Programs run for seniors through government and non-profit agencies As soon as Ms. B. started working with a financial counselor at ERDA, she began to feel that her situation was manageable. We sat down and we made a plan, like a menu for me to follow, she said. Six months later, Ms. Butler had paid all her back rent and was out of the court process. Ms. B s financial counselor referred her to the ERDA Federal Credit Union. She opened a savings account at and has been savings 20% of her income each month. It s a good start for me; my age is not stopping me. The Credit Union is giving me a chance to still grow instead of saying I m too old I m too old. Ms. B has already saved $1500 in her account and has opened an account for her grandson
Better Directions Sites 2012-1013 Better Directions Sites June 2013 CDCU East River Development FCU NY NY East River Development Alliance CDCU Holy Rosary FCU Kansas City MO Don Bosco Senior Center CDCU North Side Community FCU Chicago IL Northside Community Resources CDCU Cooperative Federal FCU Syracuse NY Catholic Charities CDCU Mid Cities CU Compton CA Los Angeles County, Community and Senior Services CDCU Opportunities FCU Burlington VT Association of Africans Living in Vermont CDCU Pyramid FCU Tucson AZ United Way of Tucson and Southern Arizona CDCU Fairfax FCU Fairfax VA NCOA Northern Virginia Workforce Resource Center CDCU Municipal Employees Credit Union Baltimore MD Baltimore Cash Campaign
Products and Services offered at Better Directions CDCU sites Products Checking/Transaction Accounts New accounts opened by seniors Customized checking Better Directions silver Lining Share Certificate Features $5-$25 Seeded deposit by CU Sample Features: No overdraft fees/ one monthly fee for multiple overdrafts. Free w/ no minimum balance, overdraft protection APR 0.80% Savings Savings Rewards Commitment Special award deposit after promised deposits. 5% reward over 12 month savings period Senior Savers Club Accounts,Savings Earning 0.05%-2.25% account, Certificates, Money Market, IRA Matched Savings 6 month savings period matched Savings Rewards Commitment Special award deposit after promised deposits. 5% reward over 12 month savings period Senior Used Auto Rates starting Starting at 3.99% Loan Products Credit Repair Loans Credit Repair with Savings Debt Consolidation Loans Reverse Mortgage Sample Terms: $500-$5,000 up to 36 month repayment as low as 5% APR. $500 into a savings acct. Shares frozen as security for the loan over 6 months Consolidate with at 12% Reduced fees Alternatives to Payday Sample Terms: Up to $3000 over 90 days from 16%-28% and Loan Senior Auto Loan Rates Starting as low as 2.5% Used Auto Rates starting Starting at 3.99%
Other Services Senior Borrow and Save-combining small dollar loan with required savings Go Direct/US Treasury Program Homebuyer Matched Savings Program Free Automated Rent Payments Free Identity Theft Protection Free CU ACCTS for up to 3 Grandchildren Mending Fences Successful completion of small dollar loan + savings earns a 6% return on interest + application fee refund. Enrolling members in Treasury Direct for people who are Social security beneficiaries who receive direct deposit Helps seniors build savings and develop assets Support for Home Repair or Refurbishment Community Collaborations Financial Education Workshops Sample Topics One-on One Counseling Sample Topics Tax Preparation Seniors Socialize & Save Together Series Senior Resource, Benefit Enrollment Fairs Financial Education Workshops Sample Topics One-on One Counseling Sample Topics What can my Credit Union do for me? Accessing/ Managing Public Benefits Living on a Fixed Income Credit Fundamentals Money Management Identity Theft Counseling Community Outreach/Tenant Advocacy Financial Frauds and Scams Understanding Your Credit Score One-on-one Homeownership Financial Counseling Retirement and estate Planning Medical planning Social Security Planning VITA/Tax Refund Preparations for Seniors Workshops designed to help fixed income seniors find areas they can save within their current expenditures Provides resources from financial, healthcare, to housing What can my Credit Union do for me? Accessing/ Managing Public Benefits Living on a Fixed Income Credit Fundamentals Money Management Identity Theft Counseling Community Outreach/Tenant Advocacy Financial Frauds and Scams Understanding Your Credit Score One-on-one Homeownership Financial Counseling Retirement and estate Planning Medical planning Social Security Planning
Additional Better Directions Staffing at CDCUs Full-Time Vista Volunteers Seniors employed via SCEP programs* Older Employees providing counseling and workshops *SCEP-Senior Community Employment Program Measuring Success on the way to Economic Security Data collected from the Better Directions pilot looks art economic progress resulting from access to benefits, budgeting, financial counseling and financial products that increase savings, reduce debt, keep seniors out of high-cost alternative credit products and provide low-entry investment opportunities. In the data collected by CDCUs, the savings and checking numbers include seniors previously unbanked or underbanked. On the loan side CDCUs are making alternative to payday loans, small dollar loans with a savings components (borrow and Save) and other consumer loans. We have provided an analysis below of the savings to senior from utilizing these products as alternatives to high-cost products regularly available to borrowers with little expendable income and below 650 credit score. Many seniors served in the program are barely meeting expenses and would therefore be subject to high-cost, sub-par loans or not eligible because of poor credit. While the highest uptake for products was basic savings and checking, the CDCUs were also successful at moving seniors out of high cost loan products such as payday, offering seniors responsibly- priced consumer loans, loans with savings and low-entry price (i.e. $25-$50) CDs. In 18 months the 9 Better Directions CDCUs have helped low and moderate income access age-friendly products and services totaling over $65MM including $47.3 MM in 6000 savings accounts. Products Accessed # $ Avg Savings Accounts 5756 $ 47,359,248 $ 8,228 Auto Loans 221 $ 2,177,590 $ 9,853 Debt Consolidation 307 $ 1,250,260 $ 4,073 Other Consumer 548 $ 2,831,110 $ 5,166 Small Dollar Loans 47 $ 94,352 $ 2,007 CDs 542 $ 12,110,884 $ 22,345 Totals 7421 $ 65,823,444
The data collected by the economic security sites includes information on the number of referrals from and to CDCUs as well as the value of benefits accessed. These sites have collected demographic data as well which gives us a snap shot of the seniors who have been impacted by the program. 69% were over the age of 60. The average income of clients was $1324/mo. or $15,888/yr. and seniors were carrying average debt of over $5000. The average benefit amount accessed $147or $1764/yr.; an average increase in income of 11%. Coupled with the value of the access to appropriately priced products, debt consolidation and or investments the economic impact is significant. 9 Economic Security Sites Reporting 2012-2013 1291 Clients Served-Referred to or from CDCU Total Served 1291 Age 55-61 31% 62-64 14% 65-69 20% 70-74 14% 75-79 12% 80+ 9% Gender Female 66% Male 34% Race White 55% Black or African-American 39% Asian 6% American Indian or Alaska Native.4% Native Hawaiian or Other Pacific Islander.2% Ethnicity Hispanic 29% Non-Hispanic 71% Benefits Accessed Average cash value of benefits accessed/mo $147 Intake Data 3/12 As of 3/13 Average Monthly Income (Dollar Amount) $1,324 $1371 Average Savings (in CDCU account) $395 $445 Average Debt (Dollar Amount) $6012 $5718
Holy Rosary FCU in Kansas City, MO Rose, a widow renting a home in Kansas City, came to us for a Benefits Checkup. It seemed that every month she was coming up short on her utilities and was having trouble keeping the kitchen stocked. After filling out the easy online questionnaire we discovered that Rose was missing out on benefits from her husband s military service. She had been struggling ever since losing her husband. All benefits from the VA had stopped when he passed. It turns out she is entitled to widow s benefits! The program also determined that she is also eligible for utility assistance from the Salvation Army. Rose has applied for both and already received the immediate relief of utility assistance. The paperwork has been filed with the Veteran s Administration and the new benefit, discovered with Benefits Checkup, should be starting soon. We are hoping with her new budgeting skills, learned from Holy Rosary that she will finally succeed in stretching her money to the end of the month. Alfred rents a home in Kansas City, MO. He came to us with a problem: He had a large payday loan that had fallen delinquent. He had recently had to take another smaller payday loan from a different lending company in order to make his payment to the first payday lender on time. Now realizing he had two loans with very high interest rates as well as problems paying the first one along with his other bills, he knew he was in over his head. We were able to consolidate those two payday loans, also including a couple of high interest store credit card balances he had, all into one loan with a single affordable payment. Alfred signed a pledge to not approach any other payday lenders during the time he was paying Holy Rosary back without seeking help from us first. We broke the payday lending cycle before it spiraled out of control and Alfred now is working on budgeting with us in order to save up an emergency fund so he never feels the need to approach a payday lender again.
Better Directions is a program of the National Federation of Community Development Credit Unions 39 Broadway, Suite 2140, New York, NY 10036-3064 212-809-1850 212-809-3274 fax For more information contact Melanie Stern mstern@cdcu.coop or visit www.betterdirections.org And see our Better Directions Video at http://www.betterdirections.org/current-news/ For more information on Federation programs visit www.cdcu.coop