Faith Community United CU is a 47-year-old community credit union which started out as a church credit union and now has 3000 members and $6 million in assets. This CDCU is one of two credit union partners in the Cleveland IDA Program, a four-year demonstration launched in 1998 and managed by the WECO Fund (Working for Empowerment through Community Organizing). The project offers a 2-to-1 match to assist individuals with incomes up to 200% of the federal poverty rate to achieve first-time home purchase, business start-up, post-secondary education or job training. Participants must save a minimum of $20 per month and may receive a maximum of $1500 in matching funds. FCUCU manages the accounts and provides one-on-one counseling and assistance to IDA participants. Additional partners include the Cleveland Housing Network, Youth Opportunities Unlimited, Consumer Credit Counseling, and the Urban League, which offer IDA participants various related programs and services such as economic literacy classes, peer support meetings, budgeting assistance, and training for homeownership, business development or higher education.
"Empowering people who live, work or worship in Cuyahoga County."
Faith Community United CU (FCUCU) was chartered in 1952 as Mt. Sinai Baptist Church Credit Union, when it was housed within an African American church on the southeast side of Cleveland. An early mission statement reads:
The Faith Community United Credit Union, Inc. is a financial cooperative, owned by its members, who primarily live within Cleveland’s inner city. It exists for the financial benefit of the membership.
Our credit union, because of the basic fact that a majority of our members are in the lower strata of the economic ladder, has served a special educational purpose. Historic under achievement of educational and economic information on the part of a large number of our members has motivated us to expand our efforts to teach thrift and the wise use of credit. Just as a family is obligated to develop strong wholesome children, we maintain that it is our responsibility to develop a viable financial membership community.
We seek to maintain the credit union’s long-term financial stability. Fostering the credit union’s philosophy of cooperation among inner city institutions, i.e., credit unions, businesses, and community agencies, is one of our goals.
Over the decades, FCUCU has grown beyond the church boundaries to serve a wider geographic area and a community-wide mission. The most recent charter revision after an extensive strategic planning process in 1995-96, for example, redefines the "field of membership" (FOM) as persons "who live/work/worship in Cuyahoga County. [The credit union] exists for the financial benefit of the membership and the community at large."
As a CDCU (community development credit union), we advocate revitalization, education, community development and rekindling of community pride and volunteerism. We seek to maintain the credit union’s long-term financial stability and foster the credit union’s philosophy of "people helping people" by initiating partnerships with other institutions, i.e., credit unions, churches, businesses and community agencies.
Currently at 3500 members and $6.5 million in assets, FCUCU is the largest African American credit union in Ohio. Services have expanded considerably in the 1990s to include a wider range of savings options and credit plans, including CDs, IRAs, payroll deduction plans, direct deposits, checking accounts ("share draft accounts" in CU lingo), electronic fund transfers, ATM machines, direct utility bill payments, first and second mortgages and home improvement/home equity loans, student loans, auto and business loans, and two kinds of VISA cards, including a step-up VISA Credit Builders share-secured card to help members safely improve and establish their credit histories. A goal for 1999 is to "offer more credit counseling seminars" for members and the community, in order to increase their access to loans to meet their goals. FCUCU receive its formal CDFI designation ("Community Development Financial Institution") from the U.S. Department of Treasury in 1996.
Current members are 99% African American, 60% female, 50% over 65 years of age, 40% receiving public assistance, and only 11% with household incomes above $30,000. But now with a countywide FOM – Cuyahoga County, which has seen a 46.5% increase in its poverty rate from 1980 to 1994 – FCUCU has the opportunity to broaden its membership and increase its asset base toward becoming a more stable community institution to serve all the financial needs of low-income residents.
FCUCU is one of the first faith-based credit unions to formulate and begin to implement a "succession plan" for the board and organization. Like many (perhaps most) CDCUs, FCUCU has many devoted, long-time, even founding members who continue to serve in key leadership positions: as officers on the board, for example, and as manager of the credit union. Until fairly recently in its history, FCUCU was staffed entirely by volunteers, and volunteers continue to augment the organization in important functional areas. But volunteers are harder and harder to recruit, as in the nonprofit sector as a whole. Membership growth and diversification of services has made staff continuity and specialized training both necessary and possible through hiring and ongoing professional development for staff. By 1996, the credit union employed 6 full-time employees plus part-timers and volunteers. As for the board of directors, the credit union has already begun to take steps to move past this critical juncture by recruiting new members and beginning to rotate board membership on a systematic basis.
Like every CDCU in this study, FCUCU is a creature of its own unique history and context. While FCUCU is now recognized as a leading model for faith-based credit unions with a community development mission – indeed, one of its founding members and longtime Treasurer and manager, Mrs. Rita Haynes, helped to found and now chairs the national coalition of faith-based CUs as part of the National Federation of CDCUs – there were some controversial years when the separation of the credit union from Mt. Sinai Baptist Church had painfully to be worked out. What emerged was an independent financial institution, in its own former bank building since 1991 (leased for $1.00/year), whose membership is no longer limited by church affiliation, but whose mission and guiding principles continue to be firmly grounded in commitment to "spreading the word through service." In a geographic area which gradually lost every one of its banks and saw the rapid increase of pawn shops, high-priced check cashers and rent-to-own agencies in its struggling business districts, FCUCU has grown rapidly in recent years as the single community-owned and governed financial institution serving its largely unbanked and disenfranchised population. In this setting, FCUCU serves a membership with a wide range of financial and literacy skills – from illiterate members who depend on the credit union to hold and write checks for their bills each month, to members who step-up through the ladder of services to become home-owners and small business entrepreneurs, and who may regularly access their accounts via computer and the new automated phone teller system.
The credit union had access to several unique resources to achieve this transformation, in addition to the talent and dedication of its energized leadership. In particular, a 1988 grant secured by FCUCU from the Lilly Endowment (an Indiana-based foundation) and channeled through a partner organization, WECO – Working for Empowerment through Community Organizing, directed by George Barany – supported the exploration of how faith-based CUs could serve their larger communities in inner-city neighborhoods, and how that might be done in Cleveland. Many years earlier, Mrs. Haynes and her board colleague, Elizabeth Ahart helped to launch the Inner-City Association of Minority Credit Unions in their city; for the Lilly project, the 49-member CUs formed a base to meet regularly with WECO to learn and explore options for a more community-oriented CU mission. This was WECO’s first experience with credit unions, and the partnership with FCUCU developed into a lasting relationship which has benefited both organizations, including the joint IDA Project described below. A follow-up grant from Lilly supported a strategic planning process and implementation which formalized FCUCU’s status and its enlarged mission as a CDCU, and reaffirmed its lasting collaboration with WECO, which owns the former bank building that houses the credit union.
The credit union also has an external network which is unrivaled among the credit unions in this study. Several longtime credit union leaders have been vocal and socially active on issues of institutional discrimination and racist public policy and practice, both locally and at the state and regional levels. As a result, though they have created some uneasy relationships in the public and business sectors, they also have built relationships of trust and mutual respect with several key public officials and civic leaders. One key ally moved up from being the city mayor to a state elected official, and is a continuing resource on policy issues such as the state’s IDA legislation and the regulation of Ohio state-chartered credit unions such as FCUCU. The credit union maintains an uncommonly cordial working relationships with its state regulators, and the manager serves on boards or committees of several organizations which hold significance for the credit union, such as the Greater Cleveland Growth Association, the Urban League, WECO, and the Ohio Credit Union Foundation. She has also been instrumental in promoting the concept of faith-based credit unions nationally through her workshops for the annual Baptist convention since 1994, and less formally before that.
IDA PROGRAM PROFILE
FCUCU first learned about IDAs from the National Federation of CDCUs, which had been funded to provide VISTA volunteers to a limited number of CDCUs to start IDA programs, and also to help them with modest "savings match" grants. The manager presented the concept to the credit union board and to the WECO board, where she served as vice president. As a result, WECO sought and secured funding to launch an IDA demonstration project, with two credit union partners to hold the accounts, including FCUCU. (The other partner, Corey Methodist Church Credit Union, is a small faith-based CU which is in the process of expanding to become a CDCU.)
The IDA program was launched in May 1998 with orientation of participants at WECO, followed by economic literacy classes, credit counseling, and asset-specific training – in home ownership, small business development or planning and orientation for advanced education or job training – by partner organizations, including the Cleveland Housing Network, Youth Opportunities Unlimited, Consumer Credit Counseling, and the Urban League. At the orientation meeting, participants were given the choice of the two credit unions to hold their accounts, and while most participants chose Corey in both the first and second rounds, there are interesting differences among the two groups and also in the subtle changes that seem to be taking place as the program becomes better known and trusted by residents.
The Corey participants are required to make only a $5 initial deposit to open an account, plus a $1 fee and the required $20/month IDA deposit required by the IDA Program. At FCUCU, IDA holders are required to make their standard $50 initial deposit, plus the $1 fee and the required $20/month IDA deposit. At FCUCU, however, the IDA holders become regular members, with the same privileges as all other members, which is not the case at Corey. FCUCU’s IDA holders, for example, are eligible for checking and other savings accounts, as well as use of the ATM machines (though not the VISA cards, since credit card abuse is one of the earliest and strongest lessons in the economic literacy program). IDA account holders who sign up for direct deposit are also eligible for a "Grace Loan" against their paycheck, with 2 months to pay it off. FCUCU also keeps regular, convenient business hours, unlike Corey which (like most small credit unions) is open infrequently, depending entirely on volunteers.
Possibly because of FCUCU’s combination of the high initial deposit and the conveniences of full regular business hours and access to other financial services, all of its IDA holders work and most receive direct deposit of their paychecks; this is in contrast to Corey, which has a mixture of welfare recipients and working IDA holders. According to the current IDA manager at FCUCU, Ms. Bernice Lenix, another characteristic of her program participants is that 10 of 24 were already members of the credit union (who qualified under the stringent program requirements), and an increasing number are inquiring as a result of word-of-mouth through member and neighbor networks.
Recruitment directly from among FCUCU members may continue to snowball, since IDA informational materials are included in mailings and in the newsletter, and tellers and loan officers refer IDA-eligible members to Ms. Lenix when appropriate. In her early months as the program VISTA, Ms Lenix also made presentations about FCUCU and IDAs at community events and distributed information at community gathering sites, on local radio and in local newspapers. Although those efforts seemed at the time to result in few eligible inquiries, she now sees results in word-of-mouth referrals which clearly came from some of those early contacts. Now, however, her related work has grown to where she has little time to spend at sites like these.
Most of the direct recruitment, fortunately, is conducted by WECO, as part of their funded role in this project; they also are responsible for raising the match funds. These two major tasks are among the most difficult for CDCUs to undertake, since the tasks are not integral to the regular work of these heavily understaffed financial institutions, and the fundraising especially is not usually within the specialized skill set of CDCU staff members. With these two headaches handled elsewhere, FCUCU is freed up to focus on integral support services such as credit and financial counseling and step-up financial services which encourage and assist members to build assets and constructive habits toward longterm financial stability.
No outcome assessments have been completed yet on this program, though national evaluations are currently underway and new insights should be available within the next year or so. But anecdotal evidence seems to show that there is a wide range of potential benefits for IDA holders besides the eventual asset purchase. Program staff at the various partner agencies report, for example, that participants have demonstrated many significant lifestyle changes, such as choosing savings over cable TV, and "paying themselves first" (savings) before funds are allocated to other pressing costs; one mother reported that, by having her check direct-deposited and funds automatically transferred to her IDA account, she has been able to "say no" to her kids’ pleading for money for candy and other luxuries she knows they shouldn’t have anyway. Others believed they could NEVER save, yet now they’ve proven to themselves that they can. Several participants have gotten "better jobs" as a result of the program training and a "new outlook." Although these anecdotal successes can’t prove the point, they give hope and optimism to participants, program staff and, it seems, to the community which carries the news to others.
There are always challenges in any innovative community program, especially one which requires the collaboration of such a wide range of organizations with different missions, histories and personalities. But the opportunities seem to outweigh any drawbacks for everyone interviewed for this study, and innovations and creative expansion seem to be the preferred goals. Right now, for example, FCUCU is exploring a similar collaboration with Habitat for Humanity to meet the growing interest in home-ownership within FCUCU’s field of membership. Newly updated computer systems and technical improvements seem likely to free up more staff time for financial counseling and development of members at the entry levels. IDA holders are, by definition, unsophisticated consumers of financial services who will initially require extensive, and therefore costly support services. In the long run, however, FCUCU – as well as the other CDCUs in this study – sees IDA holders as the leading edge of their future stable membership, and part of a better future for their community.
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