Lower East Side People

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Lower East Side Peoples FCU

• Meagan van Harte
• Director of Development Services

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• Not yours, not mine, but everyones
• Ni tuya, ni mia, de todos

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Presentation Outline

• Introduction
• Credit Union History
• Services
• EITC Program
• VITA Program
• Program Budget
• EITC/VITA Conclusion

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Introduction

• Mission
• To provide access to affordable financial
  services for all residents and businesses of the
  Lower East Side.
• To stimulate the economic development of our
  community by providing a democratic alternative
  to banks and non-traditional financial entities,
  such as check cashers and predatory lenders.
• LESPFCU is a financial cooperative that reinvests
  its members money in the Lower East Side to
  provide affordable credit as well as financial
  and development services.

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Introduction

• Field of membership
• Community Board 3, which comprises the area
  south from East 14th Street to the Brooklyn
  Bridge, and East from Fourth Avenue/Bowery to the
  East River
• According to the 2000 US Census
• Population 111,867
• 36 were foreign-born
• 64 of all residents over age five speak a
  language other than English in their homes
• 27 of households are female-headed, with
  children and
• 56 of these families live in poverty.

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Introduction

• Market Context Membership
• The largest portion of the LESPFCUs membership
  is made up of low- and moderate-income
  individuals or households.
• A large portion receives some form of public
  assistance.
• Many are residents of the areas several large
  public housing projects.
• Many have traditionally depended upon mechanisms
  such as store credit, loan sharks, and
  check-cashing establishments for credit and
  financial services. These services are
  high-priced and non-secure, and do not promote
  savings or consumer education.

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Introduction

• Market Context Community
• One of the poorest communities in NYC.
• Area in which immigrants have historically
  settled.
• By late 70s many buildings had been abandoned or
  burned out by landlords unwilling to pay property
  taxes.
• During the 80s the neighborhood became known as
  Alphabet City and it was synonymous with drug
  dealing and crime.
• By the late 80s, long time residents and new
  settlers started to claim the neighborhood back
  and many buildings were rehabilitated and new
  ones built on vacant land.
• By the early 90s the community had become vibrant
  again and home to a very diverse population.
• Currently, the neighborhood is experiencing rapid
  gentrification.

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Credit Union History

• 1984 The last commercial bank closes its doors.
• 1984-86 An outraged community starts to organize
  itself.
• 1986 Receives Federal Charter
• Supported by CRA legislation, LESPFCU opens in a
  former bank branch facility
• 1986 It becomes one of the first Community
  Development Credit Unions in the country
• 1987 Certified as a Low Income Credit Union by
  NCUA
• 1996 Certified as a community development
  financial institution by the US Treasury
  Department

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1986
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2003

• 11 M in assets
• 4,000 members
• 15 employees
• 2 branches
• 6 ATMs
• 13 net worth
• PFI for 85 of members
• Rated CAMEL 2 (for
• six consecutive years)
• Leading community
• development credit union
• in NYC
• Leading community financial development
  institution in the country

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Financial Services

• ATM Cards and access to 6 LESPFCU ATMs and to
  surcharge free ATM network
• Bill payment
• Business Accounts
• Club Accounts
• Con Edison Payment
• Direct Deposit
• Money Orders
• Night Depositary Safe
• Share Club- Accounts
• Share ETA- Electronic Transfer Accounts
• Share IDA- Accounts
• Share Savings- Accounts
• Share Draft Checking- Accounts
• Wires Transfers

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Lending Products

• Consumer
• Credit Cards
• Overdraft Protection
• Signature Loans
• Vehicle Loans (new and used)
• Housing
• Co-op Loans
• Mortgages
• Building Loans
• Commercial
• Micro enterprise loans
• Small Business Loans

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Development Services

• Financial Literacy
• Credit Counseling
• Credit repair/building
• Budgeting
• Home-ownership Education
• Technical Assistance to micro and small
  businesses
• Individual Development Accounts (IDAs)
• EITC Education
• Free Tax preparation services (VITA)

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EITC Background

• Brookings Institution and Progressive Policy
  Institute study
• EITC Biggest antipoverty federal program. Lifted
  4.7 million families out of poverty.
• 2002 31 billion in EITC provided to 19 million
  low and moderate income taxpayers.
• 2002 14 billion EITC refunds unclaimed.
• 1.75 billion diverted to commercial tax
  preparation firms
• Seven cents of every EITC dollar is going to tax
  preparation providers.

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EITC Background

• New York City facing most challenging economic
  conditions in decades.
• About 18 of New Yorkers eligible for EITC do not
  claim it.
• 312 million went unclaimed last year.
• NYCHA estimates that public housing residents in
  Lower East Side failed to claim 10 million last
  year.

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EITC Key Partners

• COMMUNITY BASED ORGANIZATIONS
• NYC Mayors EITC COALITION
• INTERNAL REVENUE SERVICE
• THE NEW YORK CITY FINANCIAL NETWORK ACTION
  CONSORTIUM (NYC-NAC)
• NYCHA
• NYC Council Member M. Lopez
• NY Congresswoman N. Velazquez

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EITC Education Program
LESPFCU

• Provided significant staffing resources
• Promoted and coordinated the EITC community
  forums
• Delivered on-site presentations to community
  partners
• Implemented a Public Relations campaign
• Distributed mass mailing through monthly
  newsletters and community partners
• Produced outreach materials

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VITA site Project

• Lack of Volunteer Income Tax Assistance (VITA) in
  Lower East Side
• Lack of financial institutions willing to open
  accounts to the unbanked
• Huge EITC-eligible population
• Abundance of commercial tax preparation firms (3
  H R Block and 2 Jackson Hewitt)

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VITA Key Partners

• THE INTERNAL REVENUE SERVICE (IRS)
• E-filing certification in record time
• On-site training to LESPFCU staff and volunteers
• Program implementation support
• Reputation
• Credibility
• Outreach

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VITA Key Partners

• IRS
• The Robin Hood Foundation
• NYC Consumer Affairs Department
• NYCfNAC
• NYCHA
• Community Based Organizations
• Volunteers

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EITC/VITA Budget

• Personnel Expenses
• Year 1 20,900
• Year 2 58,300
• OTPS Expenses
• Year 1 12,250
• Year 2 21,900
• Total Expenses
• Year 1 33,150
• Year 2 80,200

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EITC/VITA Evaluation

• STRENGTHS
• Institutional support to implement program
• Knowledge of community
• Credibility
• Facilities layout
• Technology (fast internet connection and LAN)
• Expertise of LESPFCU volunteers that managed VITA
  site
• Development of key partnerships early in the
  process
• Technical and financial assistance

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EITC/VITA Evaluation

• STRENGTHS
• Effective Public Relations campaign
• Effective outreach strategy
• E-filing capability
• Bilingual capability
• Clear process layout and quality control
  mechanisms
• Internal control and safekeeping procedures
• Reputation

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EITC/VITA Evaluation

• WEAKNESSES
• Logistical problems with volunteers arrival time
  and attendance
• Need a more knowledgeable volunteer base
• CU operations and VITA operations not compatible
• Could not always handle overflow
• Increased pressure to LESPFCU staff

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EITC/VITA Evaluation

• OPPORTUNITIES
• Strong city-wide efforts to support EITC/VITA
  projects
• More receptive external funding sources
• Satellite sites
• Partnerships with accounting schools
• Good rapport with accounting firms
• Strong partnerships already developed NYC
  Department of Consumer Affairs New York City
  Council Manhattan Borough President Public
  Advocate
• Track record and institutional expertise
• Possibility of processing tax returns for
  self-employed individuals and retired

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EITC/VITA Evaluation

• THREATS
• Commercial tax preparation firms targeting their
  marketing efforts
• Regulatory and compliance requirements increasing

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EITC/VITA Conclusion

• EITC/VITA good fit for CUs serving low income
  communities, as these programs target the same
  population that we serve
• Excellent opportunity to reach unbanked families
• Great tool to bring people into the financial
  system. LESPFCU opened 72 new accounts (47 of
  which were first accounts)
• Supports our mission of fostering the economic
  development of our communities
• - LESPFCU processed 1,682 returns (only 14
  paper filed)
• - Representing 1,743,439 in refunds
• - of which 867,628 was EITC (State and
  Federal)
• - saved over 252,300 in tax preparation and
  refund
• anticipation loan fees
• saw a drastic increase in senior citizens filing
  with us

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EITC/VITA Conclusion

• CUs are ideally suited for EITC/VITA, as we can
  also provide accounts for direct deposit of tax
  refunds
• Program implementation requires planning and
  institutional support
• Represents a significant financial cost to CU
• Management and operation of VITA site imposes
  additional pressures on credit union staff
• Availability of technology and technical support
  is paramount