NCUF Innovation Grant Helps Latino Community Create "Culture of Savings"
|Latino Community Credit Union (LCCU) has earned a $60,000 Innovation Grant from the National Credit Union Foundation (NCUF) to create a “Culture of Savings” throughout a state with one of the fastest-growing Latino populations.|
This initiative could serve as a model for credit unions to overcome the key challenges in serving growing Latino populations.
In North Carolina, the Latino population has surged from 22,000 in 1990 to over 600,000 today.
|LCCU estimates that 80% of Latinos in North Carolina are unbanked – twice the national average for Latinos. Their per-capita income of $8,650 is less than half of other North Carolina households, and their average household net worth of $8,000 is less than one-tenth of white families.|
But these aren’t the only challenges to overcome in serving Latinos.
“Some of the barriers are cultural,” relates LCCU CEO Luis Pastor. “Many Latin American economies are significantly more cash-based than the United States. Political unrest or a history of currency fluctuations in some countries has created an understandable distrust of banking systems. Most Latin American nations have not created deposit insurance programs, fostering further reluctance to consider a bank or credit union as a location for your family’s life savings. The lack of traditional financial institution service has resulted in a lack of knowledge about basic financial management, such as how to save or how to establish good credit. This places Latinos at a disadvantage in planning for their financial future.”
Creating a Culture of Savings
|All of these factors are reasons why Pastor says “creating a Culture of Savings is critical for the Latino population. Our Culture of Savings initiative will educate LCCU members as well as create a vital program that can be a model for other organizations to follow.”|
Fortunately, Latino families tend to be younger than the rest of the U.S. population, so they may be more responsive to financial education. LCCU’s membership reflects this trend, with an average age of 34 compared to the national average credit union membership age of 47.
“We plan to develop and pilot three projects targeting three distinct age groups,” says LCCU Financial Education Director Erika Bell.
“Our hope is that by influencing multiple generations, this will instill and perpetuate a Culture of Savings. The projects will get everyone involved in and learning about the concept of savings, and will include monetary awards through long-term share certificates.”
|“The implementation of this Culture of Savings initiative beginning in 2009 is particularly crucial,” adds Pastor, “because we are planning to open three new branches and expand our financial education program. By implementing this initiative now, we will be able to attract, educate, and retain new members.”|
The initiative’s primary goals are to increase the number of savings accounts and the amount of savings for children, youth, and adults.
LCCU currently has seven branches throughout North Carolina. Chartered with just 500 members in the year 2000, LCCU has grown to serve over 50,000 members – 95% are Latino, 97% are low-income, and 70% were previously unbanked.
|“The credit union can create opportunities for young families in this target population,” Pastor concludes. “Providing financial education in conjunction with access to affordable financial services, helping to create credit histories, and building toward homeownership are necessary steps to improve their lives.”|
11th of 14 NCUF Innovation Grants
|This is the 11th of 14 Innovation Grants approved by NCUF in 2008. Innovation Grants are made possible thanks to supporters of NCUF and members of corporate credit unions who invest in the Community Investment Fund (CIF).|
|During the 2008 Innovation Grants application cycle, NCUF received 41 applications requesting over $2.2 million in funding. This was nearly four times the $600,000 budgeted for Innovation Grants through the CIF.|
“Grant requests were much higher this year because the needs are much greater,” relates NCUF Deputy Director Steve Bosack, the Foundation’s staff liaison to the NCUF Grants Committee. “More credit unions are seeking innovative ways to serve people with low wealth and modest means.”
“More credit unions than ever are investing in the Community Investment Fund,” points out NCUF Executive Director Steve Delfin. “Yet here’s the paradox: even though CIF balances reached an all-time high, the fund has returned a much lower percentage of grant dollars in 2008. This is due to federal interest rate cuts from January all the way through December. So especially during these challenging economic times, we thank all 650-plus CIF investors, the NCUF Board and Grants Committee for allowing us to maintain our $600,000 in Innovation Grant commitments and reward credit unions serving low-wealth households.”