Even without a Community Reinvestment Act (CRA) for credit unions, many are and have historically been active in community reinvestment. Press releases and local newspaper articles provide a sense of how credit unions are contributing to their communities throughout the year. One of the most frequent avenues credit unions pursue is philanthropic giving. Be it through a credit union’s foundation, employee fundraiser, or matching program, funds are continually being raised to donate to worthy causes.
A recent trend among some credit unions is to move beyond a charity model of community reinvestment to partnerships. This involves more than a donation and instead involves an exchange of resources that benefits both organizations and the groups they hope to serve.
Here are two examples from credit unions of different sizes and locations, that both believe in the power of partnership.
Hope Community Credit Union ($45 million in Jackson, MS) is a ten-year young credit union that has experienced astounding growth during the last few years. Much of the growth can be attributed to the approach Hope takes to meeting member needs. In the wake of Hurricane Katrina, the need for small loans was especially strong in the areas Hope serves. To be the most effective loan provider and reach those in need, the credit union developed partnerships with nationally recognized non-profits including Mercy Corp and ACCION USA.
Working with these groups the credit union was able to bring more than $10 million in financing to consumers, homeowners and small businesses; 650 zero-interest bridge loans to people waiting for insurance and government payments; and more than $800,000 to local faith- and community-based organizations.
Several hours north in Appleton, WI, Prospera Credit Union ($155 million) sought to address another important, but less evident issue: payday lending. In the 1990s Wisconsin removed restrictions on the amount of interest that could be charged on a loan, opening the door for a surge of payday lenders. Seeking to offer a viable not-for-profit lending alternative for the community, Prospera invited a select group of community members to discuss the idea of collaboration on this issue. What resulted is GoodMoney, a partnership between Goodwill Industries of North Central Wisconsin, FISC (Financial Information Service Center), and Prospera.
Launched in June 2005, GoodMoney has funded more than 4,000 loans for more than $1 million in loan volume and saved community members over $200,000 in fees. Understanding that this industry is about convenience, Prospera brought the GoodMoney service into all five of its branch locations by May 2006.
GoodMoney truly represents what credit unions have always been about—groups of caring people joining together to help themselves and others. Together, the operational, staffing, and financial resources of Prospera, the facilities and collaborative culture of Goodwill NCW, and the money management expertise of FISC create a unique force in the market that meets people wherever they are in life. And they do it in a place that is friendly, easy to find, and very near where many shop, work and live.
To learn more about successful partnership strategies check out our webinar, “Forging Successful Partnership to Serve Members and Communities,” brought to you by Callahan & Associates, Inc.