Woodstock Institute is pleased to release a case study of the partnership between Spokane Neighborhood Action Programs (SNAP), Numerica Credit Union, and Washington State Employees Credit Union.  This partnership received technical assistance from Woodstock as part of the Building Community Assets program, which seek to increase low- and moderate-income enrollment at mainstream credit unions by partnering with non-profit organizations at four sites across the country.  Wanting to transition Neighborhood Assets from a pilot program to a full service operation, SNAP sought assistance from Woodstock to help develop and market products tailored to low- and moderate-income consumers; to oversee the development of the program’s organizational structure; and to help define the terms of the partnership.  To date, the program has registered 551 clients and graduated 57 into full credit union membership helping those individuals to build assets.

About Spokane Neighborhood Action Programs and Neighborhood Assets

Spokane Neighborhood Action Programs was formed in 1966 as an initiative of Spokane’s Catholic Charities; in 1985, with three locations and multiple neighborhood programs, it became its own entity, independent of Catholic Charities.  SNAP’s mission is to help low-income and other vulnerable populations transition from crisis to sustainability by advocating for programs, policies, and resources that maximize individual capacities and provide human services, housing, and economic opportunities.  With a staff of a 120 full-time and 30 part-time employees, SNAP offers comprehensive case management and emergency services such as “sack dinners”, emergency housing, substance abuse programs, and life skills programs.  They also offer energy bill assistance, mortgage assistance, and affordable housing development.  In 2003, SNAP paved the way for Riverwalk Point 1, a 52-unit affordable housing development financed by a number of government and private-sector partners.  The organization serves the entire city of Spokane with three urban outreach centers and a rural center that operates seasonally and serves some of the surrounding rural population.  Most recently, SNAP received technical assistance from Woodstock Institute to help expand its limited service credit union branch from a pilot project to a full service operation and increase the number of low-income members.

In early 2003, SNAP identified nearly 13,000 clients who lacked access to financial services and conducted a survey of financial services needs among their constituents.  Kerri Rodkey, SNAP’s economic development manager, recalls conversations with SNAP clients that led them to pursue a partnership with a credit union.  “On almost a daily basis I heard clients talking about losing their money or having their money stolen and being unable to pay their rent or meet other basic needs,” said Rodkey.  Of the 257 respondents to a SNAP financial services survey, 46 percent had no checking account, 33 percent were using fringe-banking services, and 91 percent indicated they would be interested in using SNAP-sponsored financial services if they were available.

Based on this market research, SNAP decided to pursue partnerships with area mainstream credit unions because local banks were either not interested in the program or were interested but felt they could not fully commit to the program.  Instead, SNAP decided to pursue a partnership with one of the areas credit unions, which had a higher level of commitment to serving SNAP clients who were shut out of the financial mainstream.  With help from Washington Credit Union League, SNAP searched for likely credit union partners based on their commitment to the program and the ability to identify a key staff person within the credit union who was dedicated to expanding their membership to low-income customers.  In the end, SNAP selected two credit unions, Numerica Credit Union (Numerica) and Washington State Employees Credit Union (WSECU), to give clients a choice and to encourage competition.  SNAP, Numerica, and WSECU negotiated the terms of the accounts that would be opened for the Neighborhood Assets program, but the credit unions are free to offer different affordable products to try to entice customers to join their credit union.

Numerica, which currently holds about two-thirds of accounts initiated by SNAP, has a community field of membership (FOM).  A community FOM means anyone in the Spokane area can become a member.  Numerica has 195 full-time employees, over 64,000 members, and over $530 million in assets.  As many as 50,000 of Numerica’s members reside in the Spokane and Coeur D’Alene, Idaho metropolitan region and are served by ten branches within the area.  A very homogenous region, Numerica has very few members that are immigrants or minorities.  The average age of Numerica’s members is 49 years old and the average annual income is around $30,000.

SNAP’s second credit union partner, WSECU, has a FOM limited to city, county, state, higher education or public school employees, and relatives of current members, but wanted to reach out to the low-income community within its FOM.  WSECU has 338 full-time employees, 130,000 members, and over $1 billion in assets.  Forty-three percent of its members are in the middle- or upper-income range and 54 percent are over 40 years old.  The credit union serves its members at its 19 branches located throughout the state of Washington.

About the Partnership

Woodstock institute provided the expert guidance and technical assistance necessary to transition the pilot partnerships the full-scale Neighborhood Assets program.  In January 2005, Woodstock helped SNAP negotiate a memorandum of understanding (MOU) with each of the credit unions to outline the duties and obligations of SNAP, Numerica, and WSECU.  The MOU’s describe:

• SNAP’s obligations to host services in its conference room;

• how much staff time the credit unions will contribute to the Neighborhood Assets program; and

• each party’s financial contributions to the program. 

Both credit unions currently operate from the conference room of a SNAP office, which has a door leading directly in from the street and credit union signage on the exterior.  Staff from Numerica and WSECU operates the credit union two days a week, providing membership services and conducting credit union business.  A SNAP staff member is also on site to refer clients to other SNAP programs, such as their homelessness prevention services, affordable housing services, or their small business purchasing/loan services.

SNAP also laid out its goals for the partnership with Numerica and WSECU, which include improving the money management practices among low-income, unbanked clients by offering credit union membership, savings incentives, financial literacy training and targeted financial products.  SNAP hoped enroll 500 low-income, unbanked people as new credit union members; provide financial literacy training and counseling to at least 400 members; develop regular savings habits among at least 100 members; develop and market affordable loans; and graduate at least 100 members into higher level services such as checking accounts, ATM cards, IDA’s, home mortgages, vehicle loans, or other banking services.

In the developmental stages of the program, SNAP identified some areas of concern that they felt might be impediments to reaching their goals of the program.  Some concerns were structural; some were administrative and some were procedural.  Based on these concerns, Woodstock identified areas where they could be of assistance and the other parties involved in the program identified problems that they could help in overcoming.  Marva Williams, Senior Vice President of Woodstock Institute, led a meeting in Spokane with key players from all three organizations where they established a vision for the the partnership, developed objectives for meeting goals of the vision, and drafted a business plan.  The vision reflected what each organization felt was important to the program’s success such as serving a diverse market, having clear measurable outcomes, offering products that meet target customers needs, and moving the program towards financial sustainability.  Woodstock Institute also identified several actionable goals within that vision that they could help SNAP meet––serving a diverse market, measurable success, and moving toward sustainability.   As part of this process, stakeholders established objectives for meeting the goals, identified challenges and obstacles to meeting the goals, and developed a business plan that accounted for the challenges and obstacles.  For example, SNAP wanted to serve a diverse market by providing affordable financial services to the working poor, but recognized that they did not know what the needs and demands of that demographic were.  As part of the business plan, SNAP and the credit unions included market analysis and a marketing plan to ensure that they offered appropriate products for their diverse clientele.

In addition, Woodstock helped SNAP identify funding sources for the program, which was a major concern of SNAP in transitioning the partnership from a pilot program to a full-service program.  Woodstock also assisted by providing valuable resource materials on funding for credit union partnership programs, marketing to unbanked consumers, and affordable financial products.

SNAP contemplated providing cash services, such as check cashing, on-site through the Neighborhood Assets program, but questioned the feasibility this service given the increased complexity this service would require.  To help SNAP evaluate its options, Woodstock Institute used information from the National Federation of Community Development Credit Unions to identify the pros and cons of, and alternatives to, handling cash on-site.  Handling cash would have required additional staff time and expertise, a greater financial commitment from the Neighborhood Assets program, more complicated bookkeeping, and additional space.  After examining the feasibility of taking on these added costs, SNAP decided to use alternative measures of providing cash services, such as making deals with local banks and check cashers to use their cash services for a reduced cost or for free.

SNAP designed Neighborhood Assets so that a person who enrolls in the program graduates to “full membership”- which includes a checking account, ATM card, and debit card- following a series of steps meant to provide enrollment incentives to their customers.  Basic membership starts with a savings account and once a client has saved $50, SNAP provides a matching grant.  As of June 2006, 28 people received the $50 match.  At this point in the program, SNAP requires clients to attend a money management class where their debt situation is reviewed.  If the clients show no progress in budgeting, saving, and paying off delinquent debts after a yearly evaluation, then they are given another year in the program and reevaluated.  If no improvements are made then the account is closed.  If however, they attend at least one class and one individual counseling session and make progress in budgeting, saving, and paying off debt then they are “graduated” into full credit union membership.

Since its inception in April 2004, Neighborhood Assets has registered 551 clients and graduated 57 into full credit union membership with such benefits as checking account and ATM privileges as of June 2006.  Over 235 people have attended fincnail counseling and financial education  classes.  This has enabled many of the new low-income credit union members to make significant debt reduction payments and begin to build assets.
The ongoing success of Neighborhood Assets is in part attributable to the ability of SNAP’s staff to recognize and eliminate potential barriers to the success of the program.  With financial literacy and counseling being such vital components of the program, enrollment and attendance form classes and counseling sessions is critical.  Despite recognizing the importance of developing incentives to bring people to these events, SNAP overestimated the impact they would have on program participation.  SNAP also underestimated the difficulty they would encounter while trying to get people to participate in the financial literacy classes and counseling sessions. 

In response, SNAP has developed a relationship with a local business that requires their employees to have direct deposit.  This relationship has resulted in many new customers.  Competition from other banks has recently reduced the impact of the partnership, but SNAP is continuing to adopt new approaches for growing Neighborhood Assets.  The steady growth and success of Neighborhood Assets and the adaptability of those who run the program are both reassuring signs that the partnership will continue to enroll new members and offer SNAP’s unbanked and underbanked clients the opportunity to enroll in a credit union to meet their financial needs.

Lessons Learned

• Collaboration with local employers is important for non-profit/credit union partnerships.

• Working with multiple financial institutions increases the reach of partnerships and promotes healthy competition between the institutions which helps keep the credit unions engaged in the program.

• Changing the savings behavior of low-income consumers requires a long-term, complex strategy which includes improving the financial services that are offered.

• Obtaining long-term financial support for asset development is challenging and requires an active, on-going search for new streams of funding.

• The education requirements and the mechanism of “graduating” into full credit union membership were critical components of the program which contributed to its success by weeding out inactive, unsuccessful accounts and kept the credit unions from expending too much effort and financial resources on those clients.

• Components of a credit union partnership program that “weed out” inactive, unsuccessful accounts- like the education requirements for “graduation” into full credit union membership- are critical to a partnership programs success because they eliminate wasteful spending of scarce resources which could otherwise threaten the programs existence.

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