Savings Raffle Campaigns Show Progress Nationally
The credit union campaign to win new lawmaker support for savings promotion raffles picked up steam last week with advances in at least three states–Nebraska, North Carolina and Washington–all coming despite a bank-led rebuke in Iowa.
And two of the champions of the raffles, the Michigan Credit Union League with its "Save to Win" prize drawings and a Boston-area nonprofit, the Doorways to Dreams Fund, voiced optimism that the lobbying efforts on the enabling bills in targeted states can succeed during the remainder of 2011.
By week’s end, the Nebraska Credit Union League remained hopeful that its raffles bill now on final reading in the unicameral legislature will pass and be signed by Gov. Dave Heineman.
But in Iowa, the Senate defeat of a raffles measure follows a bitter two-month fight marked by an ad blitz and counterattack over the tax exemption and CU "gambling" charges brought by the Iowa Bankers Association.
The banking lobby accused CUs of being reckless with consumer funds and that "offering a $100,000 raffle prize to one lucky winner is not an appropriate use of the credit unions' tax exemption."
Firing back, the Iowa League, in ads appearing in newspapers accused bankers of "greed" by blocking competition and blasted banking’s role in the financial crisis.
Despite differing lawmaker attitudes and dynamics between neighboring Iowa and Nebraska, Brandon Luetkenhaus, governmental and public affairs director of the Nebraska League, said he is optimistic that state’s bill will have a more favorable result in the final outcome.
"Getting more Nebraskans to save for their financial future is what this bill is all about, and that resonates with Nebraska lawmakers," explained Scott Sullivan, president/CEO of the league.
Meanwhile, in Washington state, Gov. Christine Gregoire appears ready to sign an enabling bill backed by the Northwest Credit Union Association that has now cleared both chambers of the state legislature.
The "Prize-Linked Savings Accounts" bill, as it is known, was due for final House-Senate concurrence last week and will become effective July 24 following the governor’s signature. CUs in the state, however, are not expected to launch the savings programs until next January because they need the time to set up account mechanics, said a spokesman for NWCA.
Washington banks have been on the sidelines in the raffles debate as has been the case in North Carolina.
In Michigan, the state league said that "Save to Win," which got fully under way last year, has proved a success for the 40 participating CUs, drawing 56% of new participants who were not regular savers in the past.
"Every credit union member in this program keeps the money they save in a special certificate of deposit, and the only chance involved with this program is the opportunity to win more with monthly prize drawings and the $100,000 grand prize," noted David Adams, president/CEO of the Michigan League, stressing that members' deposits are never at risk.
Adams said he could not speak directly or offer advice to other leagues that might face banker-led objections to empowerment bills, but Doorway to Dreams, the Massachusetts nonprofit that developed the savings raffle idea, maintained the program continues to win legislative support as more see its value as a savings tool.
"From our perspective, there are states, like Iowa, where there are long-standing political forces at work or disputes in play that simply cause the legislation to get defeated," explained Joanna Smith- Ramani, director of strategy for Doorway to Dreams, which was founded in 2000 and funded by some of the nation’s largest foundations.
Smith-Ramani noted that in Michigan, low-income consumers are now opening up savings accounts for the first time, and under "Save to Win," savers get one entry in a prize pool for each $25 CD, with a maximum of $250 in prize entries. The CDs APY ranged from 1% to 1.5%.
For the most part, outside of Iowa and Maryland, which also saw initial opposition, bankers, said Smith-Ramani, have remained neutral or stayed on the sidelines.
She noted, however, that the legislative campaign in various states is complicated by federal law that prohibits non-CUs from operating a prize-linked raffle.