- Credit unions across the country participate in VITA tax return preparation effort.
- Millions of direct-deposited refunds are generated, refund anticipation loans avoided.
- Participants cite serving the mission as primary motivation.
As it’s grown, credit unions and their volunteers have become an integral part of VITA, the Volunteer Income Tax Assistance program that provides free help on returns to those who qualify–and that’s millions of American households.
Across the country, credit unions large and small–typically through community partnerships – are providing staffers and volunteers, space, supplies and other resources in an effort that participants say speaks directly to the core credit union mission.
Nationwide, including from credit unions, more than 81,000 volunteers staffed 12,753 sites last year and served nearly 3.1 million taxpayers, according to the IRS.
That represents an estimated $600 million or more in tax return preparation fees, had it not been free, and total refunds were approximately $3.5 billion, the agency said.
"This could not have been accomplished without the assistance of over 4,500 national and local partners and over 370 community coalitions that solicited volunteers and provided the training and resources necessary to make sure that services were available in their communities," said Michael Wade, senior tax analyst with National Partnerships Relationships at the IRS.
The effort centers on trained and certified volunteers who help taxpayers complete their forms and make sure they don’t miss such things as earned income and child tax credits that can put more money into hard-pressed pockets.
The preparation is free and reserved for those earning $49,000 or less a year, people to whom paying for tax preparation help can be stiff if not out of reach, according to the director of a VITA program at the National Credit Union Foundation, especially if they also take out a high-interest refund anticipation loan.
"The VITA program is of interest to us because of how much people spend on these loans, which generally aren’t in their best interest, especially when they can get similar products for far less money from credit unions," said Lois Kitsch, national program manager for NCUF’s REAL Solutions effort.
"This also is the time of year when people of low wealth actually can have disposable income and that makes it a very important time for credit unions to connect with them," Kitsch said. "It’s the time to encourage them to open a savings account and establish that relationship."
That’s what happens at the $114 million Dane County CU in Madison, Wis., where about 20 to 25 new accounts are established each year for direct deposit of refunds, and about four or five continue on as regular members, said Joe Molke, the credit union’s business development manager.
"We get a group of volunteers from our staff to help out once a week at the site, greeting people at the door and helping them fill out the basic information necessary to complete their tax forms. We also open accounts for those who don’t have one with financial institutions," Molke said.
Once involved, credit union managers can find the need is real and immediate. "We quickly realized that many of the people who come to our site really need help in understanding the tax forms, understanding budgeting and understanding the actual tax process," said Kimberly Smith, business development officer at the $330 million R.I.A. FCU in Rock Island, Ill.
She said her credit union has worked for four years at a local Martin Luther King Center, preparing more than 700 returns a year and last year opening 52 new accounts.
Meanwhile, some small credit unions generate significant numbers of new members through the VITA program. "The first year we got 50 new members, the second year 100. This year we hope to get 200," said Ray Santare, CEO of the $32 million Sherwin-Williams CU in South Holland, Ill., whose CU volunteers at a public library that did about 1,500 returns last year.
Santare said the retention rate for those members has been about 85%, helped along by such tactics as requiring filers they helped last year who joined and later closed their account to re-open the account to get the free service there again.
"We tell people about our products and services, but there’s no obligation," he added. "We are in a low-wealth area of the state with a lot of people with no banking relationships, so we’re really there to help."
Santare and other CU managers involved in VITA recommend turning to their state leagues and groups like the NCUF for grants and training tools and other help in setting up the programs. Some who have stepped up include the Michigan Credit Union League, which last year worked with 124 credit unions to help more than 6,300 residents get back $13.6 million in refunds.
That includes the $70 million FinancialEdge Community CU in Bay City, Mich., which works with the local United Way while providing seven workstations, computers and technical support to anyone in Bay County who wants to use the service.
"We’re helping to keep hundreds of thousands of dollars in our community by providing this free service," said Pam Swope, the 9,100-member institution’s marketing manager. "Credit unions are founded on the core principle of "people helping people." It just makes sense. It’s a way for us to give back to the members and community organizations we’re here to serve."
That sentiment resonates with Ellen Murtha of the $87 million Santa Cruz Community CU in California and its Santa Cruz Community Ventures affiliate, which helped about 1,700 people do returns last year.
"Our mission is economic justice," Murtha said. "Tax refunds are a special time for low-income working families to begin a savings account which can be a buffer for the hard times and a step toward having assets to make better decisions for themselves and their families.
"VITA is an opportunity to reach out to the unbanked and welcome them to equal access to services, products and knowledge that everyone needs."
Credit unions also are customizing their approach to offering the tax return service. For instance, the $1.5 billion Landmark CU in Wisconsin partnered with the AARP to offer the service last year at its Waukesha and West Allis sites and filed 1,800 returns, said Don Cohen, the credit union’s vice president of community development and lending.
Another Landmark site in Milwaukee accounted for 900 returns in the past four years, including in Spanish and Hmong. Health, energy, child care and asset-building information also are provided, Cohen said.
"We don’t offer refund anticipation loans," he added, "because the returns are filed electronically and the filer receives the money wired to their account, usually within 10 days."
The number of returns processed varies as widely as the size of the organization. For instance, volunteers with the $1.2 billion CFE FCU in Orlando, Fla., helped file more than 800 returns for tax refunds totaling more than $1.3 billion, said Suzanne Dusch, vice president of marketing at 116,000-member CFE.
Meanwhile, the $29 million, 3,800-member Carolina FCU in Cherryville, N.C., helped with 170 state and federal returns last year, said its president, Donna Beringer, who added, "They did not have to pay to file and are not tempted to use refund anticipation loan places."
And in the Big Apple, the New York City Financial Network Action Consortium, a group of low-income designated credit unions, have planned, supported and funded VITA since 2003, preparing more than 36,000 returns and generating $48 million in refunds.
"Our program also involves a number of ancillary services whose goals are to enhance the financial security of those served by the program and to strengthen the relationship between the credit unions and their members," said the consortium’s executive director, Peter Bray.
As for the return on credit union investment in the tax return effort, Cohen at Landmark CU said, "It’s hard to put a number of the actual business we directly receive from this, but I can say the community loves the work Landmark does and we’ve gotten business, non-profit and school accounts from it.
"We’ve also received great feedback not only from the filers but the community at large, including thank you letters from the IRS!"
That message resonates with John Felton, CEO of the $52 million Southern Chautauqua FCU in Lakewood, N.Y., which is expanding the hours it offers the VITA service in partnership with the United Way and other local agencies.
"We don’t do this program for public relations," said Felton, whose 9,600-member credit union assists in preparation of federal and state returns from Pennsylvania and New York for members and non-members alike.
"We do it because it’s the central to our mission. We feel we can make a difference in our community by helping to increase the standard of living for our members and potential members, by allowing them to keep money in their pockets," Felton said. "We do it because it’s the right thing to do."