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Free to Choo$e Initiative

Credit Union :Park Side
Assets :$118,700,000
Address :504 Railway Street | Whitefish, MT 59937

Details :

Partnership:

The Free to Choo$e program is a partnership between Park Side FCU and the Community Action Partnership of Northwest Montana to help families of low- and moderate-income take charge of their finances and start to lead lives of choice, not necessity.

The program provides three critical components:

  • Education
  • Ongoing support
  • Access to credit

Lil Dupree, development director for the Community Action Partnership, summarizes the program’s goal as, “We teach under-served, low-wealth households how to fish. We give them the tools to fish; we don’t just feed them.” That’s the education component. Ongoing support is provided in the form of mentors – business leaders – who stay in touch with the family for up to one year. Park Side FCU provides the access to a checking account and a small line of credit to families upon completion of the program.

Participant/Member Qualifications:

  • Families must complete a 12-class, structured financial literacy course – (4th graders to 8th graders attend separate Youth Program)
  • There are no income restrictions; the class is open to anyone who wishes to participate
  • Upon completion, participants can join Park Side FCU, where regardless of their past credit history, they are able to open a checking account, and if necessary, access a small line of credit

Rates, Fees, and Terms:

  • Participants are charged a co-pay of $5 per week for an individual and $10 per week for a family to attend the financial literacy classes (some scholarships are available), which includes dinner and child care for infants through 8 year olds
  • Park Side offers a $300 LOC to individuals who have completed the program with rates from 11.9% to 17.9%

Vendors/Systems Used:

  • FDIC’s “Money Smart” is the basis for the adult program with modifications
  • Wells Fargo’s “Hands on Banking” is the basis for the Youth Program

Target Market:

Families that are struggling financially and are ready to make a change to financial independence.

Marketing Strategy:

Initially, families were selected that had a connection or involvement with the Community Action Partnership. Word of mouth is now the best marketing tool to fill the classes. No advertising is necessary.

Program Results/Statistic:

  • 103 families (153 adults, 30 youth, and 95 children) have completed the 12-week course over two years
  • Retention rate was 95% the first year and 85% the second year
  • 90% of graduates request a mentor
  • The default ratio for the LOC is 3% – lower than the CU’s default ratio for other unsecured credit
  • 84% of graduates either increased their credit score or maintained their current credit score 12 months after graduation
  • 42 checking accounts opened with an average daily balance of $108.59
  • 58 LOCs opened with an average balance of $238.34

Member Benefits:

  • Families are building savings, paying off debt, and repairing credit
  • The whole family is involved in learning financial skills
  • Volunteer financial mentors meet monthly with each family for a year to offer guidance
  • Participants have the opportunity to establish a checking or a savings account and a small LOC with a mainstream financial institution

Additional Information:

The Community Action Partnership (CAP) of Northwest Montana is the largest non-profit in the area, serving four counties that covers over 13,000 square miles and a population of 141,000 people. The Free to Choo$e program was developed in response to Montana’s predatory lending problem. An extensive survey of low- to moderate-income households was conducted to explore the viability of attracting at-risk households to a financial literacy class. The basic necessities to attract participants included: dinner, child care, and classes for both adults and teens.

Park Side FCU was approached to assist with the credit component because it had a community charter and its mission matched that of CAP. For Park Side, it was a no-brainer. According to Dupree of CAP, “It took about 10 minutes to pitch the program to Jeremy.” Jeremy Presta is the CEO of Park Side and was one of the first people to sign up as a mentor for the program. Park Side and CAP worked together to develop the curriculum and other details of the program.

No perfect curriculum existed. FDIC’s “Money Smart” program provided the basis for the adult course, but additional modules were added, such as an insurance curriculum. “People didn’t know what questions to ask when it came to issues such as health insurance, workman’s compensation, COBRA,” says Claudine Maroon of CAP, its Asset Development Program Manager who is replacing Dupree, who is headed to Washington, D.C. to take over the national Community Action Partnership program. Agents from Western Insurance now attend the insurance session in order to answer participants’ questions. “It’s really become a popular session,” notes Maroon.

Generally, however, Maroon and Dupree have found that participants bond with their instructor. “They see their instructor more as a mentor with information to share, not THE expert,” states Dupree. People are also very willing to share personal information, notes Maroon. “They see themselves as a community of people going through the same struggles. A strong bond forms among them.”

The youth group is taught how to balance a check register, the importance of saving for desired items, and other life skills and financial information. The young participants are given monopoly money for attendance and for demonstrating financial skills. The monopoly money is accepted as real money – and the credit union matches up to $25 – if the youngster joins the credit union.

Dupree and Maroon tell the story of a participating mother and her two children shopping for groceries. When the mother dropped some questionable item into her shopping cart, the kids asked her if the item was “a want or a need.” The kids really get it, they state.

Graduation is a big event. Park Side provides a graduation party that includes cupcakes, decorations, and certificates. Graduating families dress up for the event and can invite other family members and friends to attend. For some, notes Maroon, it may be their first graduation. Mentors are also invited to begin their extended support relationship with graduates. A motivational/humorous speaker has been added to the graduation ceremonies.

For credit unions interested in starting a similar program, Maroon and Dupree suggest working with a nearby church that could offer a parish hall for a classroom, a nursery for day care facilities, and a kitchen for meals. Follow a strict time schedule, they warn, because these families have school and work the next day. The Montana Free to Choo$e program begins with dinner at 5:30 and classes from 6 to 8 pm. The program should be mildly structured so that there can be shared exchanges, but keep the program on track so that the 8 pm deadline is honored. Keep the language friendly, but simple and direct. They also suggest having an instructor or leader who has been in the participants’ shoes; someone who understands their situations. The atmosphere should be one where people are not being judged for decisions they made. They emphasize that money is emotional and that the instructors and leaders need to understand the philosophy of money.

Maroon and Dupree also stressed the importance of having participants provide a copayment. “It makes them feel invested in the program,” they state. “It becomes a matter of pride and if they are short one week, they insist on making it up the next week.” They found that those who ask for scholarships really need them. They are not looking for a free handout. Gas cards are also offered to those in need.

Presta concludes that finding the right partner for this kind of program is critical to its success. All parties have to be unselfishly motivated to achieve a successful conclusion. Although Park Side hasn’t necessarily grown from the program, Presta sees it as a long term investment in his community.