The Rundown

• Credit unions across the country participate in VITA taxreturn preparation effort.
• Millions of direct-deposited refunds are generated, refundanticipation loans avoided.
• Participants cite serving the mission as primarymotivation.

As it's grown, credit unions and their volunteers have become anintegral part of VITA, the Volunteer Income Tax Assistance programthat provides free help on returns to those who qualify–and that'smillions of American households.

Across the country, credit unions large and small–typicallythrough community partnerships – are providing staffers andvolunteers, space, supplies and other resources in an effort thatparticipants say speaks directly to the core credit unionmission.

Nationwide, including from credit unions, more than 81,000volunteers staffed 12,753 sites last year and served nearly 3.1million taxpayers, according to the IRS.

That represents an estimated $600 million or more in tax returnpreparation fees, had it not been free, and total refunds wereapproximately $3.5 billion, the agency said.

“This could not have been accomplished without the assistance ofover 4,500 national and local partners and over 370 communitycoalitions that solicited volunteers and provided the training andresources necessary to make sure that services were available intheir communities,” said Michael Wade, senior tax analyst withNational Partnerships Relationships at the IRS.

The effort centers on trained and certified volunteers who helptaxpayers complete their forms and make sure they don't miss suchthings as earned income and child tax credits that can put moremoney into hard-pressed pockets.

The preparation is free and reserved for those earning $49,000or less a year, people to whom paying for tax preparation help canbe stiff if not out of reach, according to the director of a VITAprogram at the National Credit Union Foundation, especially if theyalso take out a high-interest refund anticipation loan.

“The VITA program is of interest to us because of how muchpeople spend on these loans, which generally aren't in their bestinterest, especially when they can get similar products for farless money from credit unions,” said Lois Kitsch, national programmanager for NCUF's REAL Solutions effort.

“This also is the time of year when people of low wealthactually can have disposable income and that makes it a veryimportant time for credit unions to connect with them,” Kitschsaid. “It's the time to encourage them to open a savings accountand establish that relationship.”

That's what happens at the $114 million Dane County CU inMadison, Wis., where about 20 to 25 new accounts are establishedeach year for direct deposit of refunds, and about four or fivecontinue on as regular members, said Joe Molke, the credit union'sbusiness development manager.

“We get a group of volunteers from our staff to help out once aweek at the site, greeting people at the door and helping them fillout the basic information necessary to complete their tax forms. Wealso open accounts for those who don't have one with financialinstitutions,” Molke said.

Once involved, credit union managers can find the need is realand immediate. “We quickly realized that many of the people whocome 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 $330million R.I.A. FCU in Rock Island, Ill.

She said her credit union has worked for four years at a localMartin Luther King Center, preparing more than 700 returns a yearand last year opening 52 new accounts.

Meanwhile, some small credit unions generate significant numbersof new members through the VITA program. “The first year we got 50new members, the second year 100. This year we hope to get 200,”said Ray Santare, CEO of the $32 million Sherwin-Williams CU inSouth Holland, Ill., whose CU volunteers at a public library thatdid about 1,500 returns last year.

Santare said the retention rate for those members has been about85%, helped along by such tactics as requiring filers they helpedlast year who joined and later closed their account to re-open theaccount to get the free service there again.

“We tell people about our products and services, but there's noobligation,” he added. “We are in a low-wealth area of the statewith a lot of people with no banking relationships, so we're reallythere to help.”

Santare and other CU managers involved in VITA recommend turningto their state leagues and groups like the NCUF for grants andtraining tools and other help in setting up the programs. Some whohave stepped up include the Michigan Credit Union League, whichlast year worked with 124 credit unions to help more than 6,300residents get back $13.6 million in refunds.

That includes the $70 million FinancialEdge Community CU in BayCity, Mich., which works with the local United Way while providingseven workstations, computers and technical support to anyone inBay County who wants to use the service.

“We're helping to keep hundreds of thousands of dollars in ourcommunity by providing this free service,” said Pam Swope, the9,100-member institution's marketing manager. “Credit unions arefounded on the core principle of “people helping people.” It justmakes sense. It's a way for us to give back to the members andcommunity organizations we're here to serve.”

That sentiment resonates with Ellen Murtha of the $87 millionSanta Cruz Community CU in California and its Santa Cruz CommunityVentures affiliate, which helped about 1,700 people do returns lastyear.

“Our mission is economic justice,” Murtha said. “Tax refunds area special time for low-income working families to begin a savingsaccount which can be a buffer for the hard times and a step towardhaving assets to make better decisions for themselves and theirfamilies.

“VITA is an opportunity to reach out to the unbanked and welcomethem to equal access to services, products and knowledge thateveryone needs.”

Credit unions also are customizing their approach to offeringthe tax return service. For instance, the $1.5 billion Landmark CUin Wisconsin partnered with the AARP to offer the service last yearat its Waukesha and West Allis sites and filed 1,800 returns, saidDon Cohen, the credit union's vice president of communitydevelopment and lending.

Another Landmark site in Milwaukee accounted for 900 returns inthe past four years, including in Spanish and Hmong. Health,energy, child care and asset-building information also areprovided, Cohen said.

“We don't offer refund anticipation loans,” he added, “becausethe returns are filed electronically and the filer receives themoney wired to their account, usually within 10 days.”

The number of returns processed varies as widely as the size ofthe organization. For instance, volunteers with the $1.2 billionCFE FCU in Orlando, Fla., helped file more than 800 returns for taxrefunds totaling more than $1.3 billion, said Suzanne Dusch, vicepresident of marketing at 116,000-member CFE.

Meanwhile, the $29 million, 3,800-member Carolina FCU inCherryville, N.C., helped with 170 state and federal returns lastyear, said its president, Donna Beringer, who added, “They did nothave to pay to file and are not tempted to use refund anticipationloan places.”

And in the Big Apple, the New York City Financial Network ActionConsortium, a group of low-income designated credit unions, haveplanned, supported and funded VITA since 2003, preparing more than36,000 returns and generating $48 million in refunds.

“Our program also involves a number of ancillary services whosegoals are to enhance the financial security of those served by theprogram and to strengthen the relationship between the creditunions and their members,” said the consortium's executivedirector, Peter Bray.

As for the return on credit union investment in the tax returneffort, Cohen at Landmark CU said, “It's hard to put a number ofthe actual business we directly receive from this, but I can saythe community loves the work Landmark does and we've gottenbusiness, non-profit and school accounts from it.

“We've also received great feedback not only from the filers butthe community at large, including thank you letters from theIRS!”

That message resonates with John Felton, CEO of the $52 millionSouthern Chautauqua FCU in Lakewood, N.Y., which is expanding thehours it offers the VITA service in partnership with the United Wayand other local agencies.

“We don't do this program for public relations,” said Felton,whose 9,600-member credit union assists in preparation of federaland state returns from Pennsylvania and New York for members andnon-members alike.

“We do it because it's the central to our mission. We feel wecan make a difference in our community by helping to increase thestandard of living for our members and potential members, byallowing them to keep money in their pockets,” Felton said. “We doit because it's the right thing to do.”