What is meant by reaching out to low wealth households?

Low wealth households lack the financial resources to help them through income disruptions or financial emergencies. They are asset poor. Given the state of the national economy, many more are joining the ranks of low wealth each day. Reaching out to these households mean offering affordable financial products and opportunities to build wealth. It may mean offering non-traditional products such as payday loan alternatives, credit builder programs, and small savers products. It may mean partnering with community organizations to provide VITA services, IDA programs, micro-business loans, and financial education.

Who are the low wealth households?

Eighty percent of households hold just 16% of total U.S. net worth distribution. So there are a lot of low wealth households to serve. Whereas even high income level households can fall into the definition of low wealth, those households most apt to have low wealth include: * Low- to modest-income households * Minorities * Young adults * Single parent households * Those with disabilities

Why should credit unions care?

Thirty million workers in the U.S. today between the ages of 18 and 64 earn $9 per hour or less. That equates to $18,800 per year and puts a family of four at the poverty level. An added burden to low wage families is the lack of common employee benefits such as health insurance, sick leave and even vacation time. A single catastrophic event such as an illness can leave these families without shelter or adequate food. Helping households of modest means is part of the credit union social mission. The credit union movement began because many consumers had little access to affordable financial markets. Unfortunately, that hasn’t changed. The need for credit union cooperatives serving under-served markets remains as strong today as it did 100 years ago.

What can credit unions do?

Many credit unions have long recognized that serving the ever-growing low-wage and low-wealth markets make good business sense. Affordable, but sustainable products and services help modest income households use more of their earnings to build wealth. The five examples of credit unions included here show a wide range of products, services and community partnerships that exhibit member and community commitment. The partnerships enable credit unions to stretch their effectiveness and outreach capabilities.

Documents / Articles

• Serving Diverse Members: A REAL Solutions Sensitivity Guide

• Building Assets while Building Communities, the Walter & Elise Haas Fund, 2006 – by Heather McCulloh

• Still Working Hard, Still Falling Short, Working Poor Families Project

• American Workers’ Struggles to Attain Financial Security: A White Paper – International CEBS Society and Alliant Credit Union

• CUNA & NCUF Reach Out Conference: Strategies for Serving Low Wealth, Immigrants & Youth – White Paper

• Building Community Assets: Growing Lower-Income Credit Union Membership Through Community and Credit Union Partnerships – Woodstock Institute

• CFSI Underbanked Consumer Study Underbanked Consumer Overview & Market Segments Fact Sheet

• From Poverty, Opportunity: Putting the Market to Work for Lower Income Families – Brookings Institution

• Mobile Financial Services and the Underbanked: Opportunities and Challenges for Mbanking and Mpayments – CFSI

• The Mind of Low- to Moderate- Income Savers – Filene Research Institute

• Helping Credit Unions Serve Low-Income Communities: Challenges, Strategies & Recommendations for Foundations – NED & LC

• Filene Report Advocates New Yardstick for Credit Card Debtors’ Ability to Repay – CU Times Article

• Low Wealth Household Resource List

• What Does Wal-Mart’s Latest Initiative Mean for You? – 6/2 Callahan & Associates

• Banks Are Missing Opportunities With Low-Income Customers – Wall Street Journal Article

Serving People with Disabilities

Documents

• Educating Democracy – Tax and Financial Service Needs of Working Americans with Disabilities

• IRS Research Report – Characteristics of Disabled Taxpayers Ages 18 to 59

The Life Simulation experience is designed to help credit union employees, volunteers and leadership begin to understand what it might be like to live in a typical low-income family trying to survive from month to month. In the simulation 40 to 80 participants assume the roles of up to 26 families. Some families are newly unemployed, some are homeless and others are senior citizens living on disability payments or raising grandchildren.

During the three hour activity, these “families” are struggling to make ends meet in the simulated month of four fifteen minute weeks. At the conclusion of the exercise (this is not a game), participants will be more aware to the daily realities of many American families. Walking in another’s shoes is a far more effective way to sensitize others to the needs of immigrants and other low-wage working families than from traditional diversity or classroom learning.

For more information, please contact Lois Kitsch at lkitsch@ncuf.coop or 407-616-2409.