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Woodstock Institute is pleased to release a case study of
the partnership between Community Action Project of Tulsa County (CAP) and
Tulsa Federal Employees Credit Union (TFECU).
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.
Faced with 6,500 clients repeatedly using the
expensive financial services of a growing payday loan industry, CAP sought
assistance from Woodstock Institute to help assist victims of predatory payday
lending, provide financial education programs and access to affordable loans
and services, and help build assets for their clients and the Tulsa community.
To date, the partnership has implemented many of the recommendations that Woodstock
made during its technical assistance and 772 of CAP’s clients deposited $958,988 into
TFECU accounts through federal tax refunds.
Including state refunds, CAP clients have deposited over $1 million into
TFECU accounts.
About Community Action Project of Tulsa
County
Community Action Project of Tulsa County (CAP) traces its
roots to President Lyndon B. Johnson’s War on Poverty Community Action movement
of the 1960s. CAP began in 1973 under
the name “Project Get Together.” In the
Fall of 1997, the Oklahoma Department of Commerce (ODOC) designated a new
non-profit, Community Action Program of Tulsa
County, as the county’s new community action agency. After consolidating with Project Get Together
and Tulsa Children’s Coalition in 1998, Community Action Program of Tulsa County
was renamed CAP. The reorganization
built on the strengths of its predecessors to provide low-income families
access to quality, affordable early childhood education. Today, CAP is a comprehensive anti-poverty
organization of 277 full-time staff with the threefold mission of: 1) improving
the financial circumstances and economic independence of families with young
children; 2) ensuring that children and families live in safe, secure,
nurturing communities; and, 3) the education and school readiness of very young
children. CAP runs an individual
development account (IDA) program and a free income tax preparation service for
low-income people and provides first-time homebuyers support and education
classes, down-payment assistance, and affordable rental housing to the entire
five-county Tulsa region, including the cities of Bixby and Broken Arrow.
CAP realized the need for credit union services in 2003
when they noticed many of their clients were not taking advantage of or were
unaware of the financial and educational services available to them. CAP also noticed that many clients were using
expensive financial services or falling victim to predatory lending practices,
particularly high cost payday lending.
Since payday loans became available in Oklahoma
in September of 2003, 388 payday lenders have opened, and more than 6,500 of
CAP’s clients have repeatedly used the service, making the need for additional
non-predatory financial services more pressing. CAP felt that a credit union partnership
would allow them to assist victims of predatory lending, provide financial
education programs, and offer affordable loans and services to their clients
and the Tulsa community.
To explore the options for partnering with a local credit
union, CAP approached Woodstock Institute to help identify potential credit
union partners and assist in the expansion of their relationship with the Tulsa
Federal Employees Credit Union (TFECU).
CAP had a longstanding relationship with TFECU and had worked with the
credit union in the past to open special low-fee accounts for low-income
families. TFECU also provided space in
one of their offices for CAP’s Earned Income Tax Credit (EITC) campaign and
free tax preparation service, which serves low-income families who qualify for
the federal EITC. During the 2005 tax season, over 250 volunteers contributed
more than 10,000 hours preparing tax returns serving 17,772 clients and
generating $23.8 million in refunds. CAP
was interested in building upon the success of their EITC and tax preparation
efforts by collaborating with a credit union partner to combat predatory
lending and provide financial literacy classes, but needed to identify a credit
union that was dedicated to these goals with a field of membership that would
accommodate CAP’s low- and moderate-income and minority clients.
Woodstock Institute identified several potential credit
union partners, however, their field of memberships (FOM), which determines who
can join the credit union, was too restrictive.
As a result, CAP decided to focus on expanding their relationship with
TFECU because its FOM includes everyone living and working in the Tulsa
area and its surrounding counties. TFECU
also has diverse services and products, 107 full-time employees in five
locations throughout Tulsa, more
than $366 million in assets, and over 55,000 members.
TFECU previously allowed CAP to use some of its office
space for its tax assistance program.
However there was little discussion of expanding its relationship by extending
its membership to CAP’s low-income and immigrant clients. CAP’s relationship with TFECU had never been
solidified with the credit union’s upper management nor had they discussed
collaborating on any efforts outside of the credit union providing space for
CAP’s tax assistance program. The space
that TFECU offered CAP had a separate entrance, was not integrated with any of
the credit unions operations, nor did the credit union supply any staff to
assist with the tax preparation program.
Woodstock’s
first step toward offering CAP technical assistance was to establish the goals
of the partnership. CAP’s goals for the
partnership include combating payday lending by offering affordable credit
union services and products that cater to their low-income clients and to
provide financial education while subsequently expanding the credit union
membership by steering participants to the credit union for their financial
needs.
As a second step, Woodstock Insitute suggested that CAP
stress the benefits of the partnership to the credit union. CAP extended and invitation to TFECU to work
more closely with them in which they highlighted ways to capitalize on Tulsa’s
new markets- the growing Hispanic population that nearly tripled between 1990
and 2000. By offering innovative
financial services targeted at low- and moderate-income consumers, expanding
outreach and marketing to Hispanic consumers, and offering financial literacy
training to Spanish speaking clients, TFECU would be able to grow its
membership. CAP also encouraged TFECU to
promote volunteer opportunities for credit union employees and expand hours and
space for tax preparation services.
Woodstock
brought TFECU upper management on board by facilitating a meeting and planning
process that brought together the concerns of the credit union and the goals
identified by CAP. After some
negotiations with Woodstock and CAP
and exploration of the benefits offered by expanding the relationship created
by the tax assistance site, such as increased membership and cross selling
opportunities, the partnership identified several areas of collaboration:
- Tulsa CAP will
train tax preparers at the Tulsa Federal Employees Credit Union site on the
consumer advantages of credit union membership and the services and products
that the credit union can provide to tax filers. The tax preparers will also be given credit
union marketing materials for distribution.
- TFECU will
assign a customer service representative to educate consumers on the products
and services offered at the credit union and to help them apply for credit
union membership. The credit union will
give consumers the option to open accounts with zero balances- the first
deposit will be made when the tax refund was received. Further consumers will be encouraged to sign
up for direct deposit, strengthening their relationship with the credit union.
- CAP and TFECU
will track the tax filers that join the credit union over a period of at least
one year to determine the tenure of their credit union membership, account
balances, and cross-selling opportunities.
- Tulsa CAP and
TFECU will purchase and install parking signs to direct tax filers to
designated parking areas.
- CAP and TFECU
will partner to leverage CAP’s home counseling and mortgage loan incentives with
TFECU’s mortgage program. CAP’s
first-time homebuyer program offers both pre- and post-purchase counseling and
financial management. The services are
offered in both English and Spanish and are designed to help low-and
moderate-income clients. Down-payment
and closing cost assistance is also offered (up to $2,000). In 2005, the program provided information to
5,200 clients and assisted 88 families with down-payment and closing costs.
- CAP will offer
financial literacy classes to credit union members that have a high number of
non sufficient funds charges to prevent account closure.
Woodstock Institute also provided informational resources
to both TFECU and CAP about financial products that are most successful with
low- and moderate-income consumers. Woodstock
also provided TFECU with assistance in marketing to low-income and Spanish
speaking consumers and recommended that TFECU begin accepting the Matricula
Consular Card as identification to open an account. By offering their marketing material and
financial education classes in Spanish and increasing their outreach efforts in
areas that have higher concentration of Hispanic residents, TFECU was able to
increase their membership among this population. Woodstock
also recommended that TFECU accept the Matricula card as identification.
To date, the partnership has implemented many of the
recommendations that Woodstock made
during its technical assistance and 772 of
CAP’s clients deposited $958,988 into TFECU accounts through federal tax
refunds. Including state refunds, CAP
clients have deposited over $1 million into TFECU accounts. The outcomes have made the credit union much
more optimistic about marketing to and expanding membership with lower-income
and minority consumers in Tulsa.
Lessons Learned
- Getting credit
union management involved in the partnership is critical for effective
collaboration.
- The existing
tax assistance service attracts potential members and gives both organizations
the opportunity to promote education and credit union membership.
- Being one of
the first tax assistance sites to offer refund splitting is a benefit of Tulsa
CAP.
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