Michael Bartlett

Credit Union Journal

September 4, 2006

A partnership between Fresno County FCU and the Fresno West Coalition for Economic Development (FWCED) has helped more than 50 lower-income people join the CU and begin building assets, according to a new study.

The Chicago-based Woodstock Institute, which says its mission is to research, develop and promote ways to bring economic resources to lower-income and minority families and communities, released the findings as part of a case study.

The FWCED is a non-profit organization founded by a group of community residents who wanted to bring a grocery store to their isolated neighborhood. After succeeding in its first effort, FWCED continued to fight for improved access to additional services for the neighborhood.

25% Using Payday Lenders

According to the FWCED, it realized the need for comprehensive financial services in 2003 after a survey conducted by community leaders found 25% of Fresno West residents used payday loan products. Three payday loan outlets located in the neighborhood carried a 456% APR on their short-term loans, the maximum allowed by California usury law. A FWCED survey of 900 low-income Fresno residents indicated 95% of respondents were interested in using credit union services; check cashing and wire transfers were cited as the most needed services. With no nearby bank branches and residents having to travel considerable distances to reach the closest financial institution, FWCED sought out a credit union partner.

Marva Williams, senior vice president of the Woodstock Institute, met with representatives of FWCED and FCFCU in early 2005 to broker an agreement on the structure of the new association. However, FWCED and FCFCU had difficulties negotiating how to expand the credit union's FOM to include the residents of Fresno West.

The credit union was reluctant to add Fresno West's zip code as a geographical field of membership because the zip code extends into a rural area to the west of town, which would have the effect of adding additional rural communities.

To ensure the partnership targeted FWCED clients and protected the integrity of FCFCU's membership base, Woodstock Institute suggested an associational FOM be added to the credit union's charter. Once FWCED clients complete a money management workshop, they are eligible to join the Fresno West Association. Among the benefits to the FWA is an invitation to apply for membership in FCFCU.

FWCED held an official press event to formally announce the partnership at the installation of an FCFCU ATM at the area grocery store-the same grocery store that prompted the group's existence seven years earlier.

Lessons Learned

The Woodstock Institute said its participation in facilitating the partnership between Fresno County FCU and the FWCED demonstrated several important lessons that were essential to making the partnership work, including:

• The community organization did its homework. It conducted two studies in 2003 researching consumer demand for credit union services.

• The CU was flexible in revising its FOM through the addition of the Fresno West Association.

• NCUA regulation facilitating the adoption of underserved communities was crucial to the CU being responsive to Fresno West residents.

• Credit unions and associations sometimes need to step back and consider all alternatives. FWCED and FCFCU had hit a road block until the Woodstock Institute identified the ability to establish an associational add to FCFCU's field of membership.