Two Detroit-Area CUs Reach Out to Low-Income Families
DETROIT -- For two Detroit-area credit unions, tax season is an opportunity instead of a headache.
Dearborn Village Community Credit Union and Communicating Arts Credit Union are working with the Community Tax and Resource Center in southwest Detroit to provide financial guidance to the area's low-income families.
Although the pilot project is currently active only during tax preparation time, backers hope it could eventually become a year-round effort.
The Michigan Credit Union League explains the center was launched by the Accounting Aid Society and funded through a $114,600 grant from the Skillman Foundation. The center is linking its tax services for low-income households with local community groups that provide asset-building tools and education.
In addition to free tax-filing services to those who qualify and an invitation to credit union membership, visitors to the center can also receive information on heating bill assistance, legal services, building toward home ownership, Individual Development Accounts, property tax screening and self-employment/micro-enterprise programs.
Accounting Aid chose southwest Detroit for the center based on an existing partnership with State Rep. Steve Tobocman (D-Detroit), who is providing office space, volunteers and property tax screening. Tobocman's office has hosted one of the agency's tax sites for the past three years.
Southwest Detroit, located about two miles outside downtown, has a population of about 90,000. Almost 40 percent are Hispanic, so information and programs will be provided in both English and Spanish. Fifty-eight percent of the families with children earn less than $40,000 a year.
When DVCCU President/CEO Terry Denmark was approached by the Michigan Credit Union League about participating, "We decided it would be a natural fit," Denmark says.
"The league has been involved in the Just File It program to help lower-income folks file their income taxes electronically and apply for earned income credit. The league has also been very involved in a Community Redevelopment Initiative, and knew we had just opened a branch in southwest Detroit."
The credit union will have staff on site at the center four days a week, acting as receptionists and answering questions regarding credit union services.
As part of getting the program underway, DVCCU and Communicating Arts Credit Union were invited to educate the actual tax preparers about their credit unions. Denmark took with him a handful of bilingual brochures.
"The product that amazed them was our checking account with overdraft protection," he recalls. "I'm not a believer in courtesy pay, although I know other credit unions are. So we have simply taken something that has been around for years, a line of credit, and dubbed it our 5 cents a day overdraft protection.
"Our computer is geared to $50 increments. If you overdraft by $1 or by $50, it's going to cost you two and a half cents a day. If you overdraw by $50.01 to $100, it's going to cost you five cents a day and so on. Everyone who has a checking account and has no credit snags gets a minimum of $250 protection. If you have some credit problems we might start you off at $100."
Another brochure that won the interest of the tax preparers was one advising against payday lenders. Why go to a payday lender and pay $20, $25 or $30 dollars for a payday loan for a few hundred dollars when you can go the credit union and if you need $300 for two weeks that will cost you 15 cents a day times fourteen. That works out to $2.10.
Donna Risch, vp/finance at Communicating Arts CU, explains the credit union will have a representative at the tax center two days a week. Participants will receive coupon books, including one to open a credit union share account.
Risch notes the first year the tax center helped 75 people. Last year that figure doubled. This year the Accounting Aid Society estimates it will serve 700 people.
The biggest challenge?
"Fortunately I have one gal who is bilingual and able to communicate in both English and Spanish," Risch answers. "But we don't have a lot of Spanish-speaking employees at this time. This is new territory for us, and we want to educate people about credit union services and why credit unions are great places to belong." --firstname.lastname@example.org