REAL Solutions® Reaches 30 States A Year Ahead of Schedule
NCUF’s Signature Program Becomes a Critical Strategy,
Saves Credit Union Members Millions of Dollars
|A full year ahead of schedule, REAL Solutions® – the signature program of the National Credit Union Foundation (NCUF) – is reaching credit unions in 30 states and saving members tens of millions of dollars.|
State credit union leagues surveyed “strongly agree” that “REAL Solutions® is a valuable program for leagues.” Nearly all report that "REAL Solutions® helps credit unions serve members with low wealth.” This target group includes people with low income or modest means, as well as people with moderate and middle incomes who are struggling to save and build assets.
“As millions of consumers faced an uncertain economy in 2008, REAL Solutions® became an even more critical strategy,” emphasized NCUF Executive Director Steve Delfin. “The program has evolved beyond products and services. REAL Solutions® is now a documented business strategy for credit unions to grow their memberships by serving the underserved.”
|In fact, research conducted by Cornell University and released in a 2008 report by the Filene Research Institute found:|
“The REAL Solutions initiative illustrates the type of strategy credit unions could adopt to successfully engage the underserved financial market.”
Cornell’s Center for Sustainable Global Enterprise emphasized:
“This is important because underserved households – while at the bottom of the economic pyramid now – represent future savers, future car-buyers, future homeowners, and future generations of credit union members.”
Click the cover on the right to see the full report:
Back to the Future: Integrating Sustainability into Credit Union Strategy
|Also in 2008, the Credit Union National Association’s Membership Growth Task Force released recommendations to “assist credit unions in reaching out to new markets.” The CUNA Membership Growth Task Force recommended “encouraging credit unions to develop more community partnerships, encouraging more participation in REAL Solutions®, and continuing advocacy efforts aimed at legal and regulatory changes to make service to new markets easier.”|
Both reports touched on much of what REAL Solutions® participants have learned about why and how credit unions provide affordable products and services to underserved markets.
“The most successful products and services are not only affordable for consumers, but also sustainable for credit unions,” explained REAL Solutions® National Program Director Lois Kitsch. “Sustainable products and services become a permanent part of credit unions’ business plans – as opposed to ‘loss leaders’ that must be limited in volume or subsidized by other parts of the credit unions’ operations.”
Among the most popular REAL Solutions® products and services chosen by credit unions and their state associations:
Payday Loan Alternatives
In 2008 alone, over 200 REAL Solutions® credit unions disbursed more than $70 million in affordable payday loan alternatives to 25,000+ members.
REAL Solutions® credit unions aim to provide these short-term loans as lower-cost options for borrowers who typically pay over 300% APR at predatory payday lenders.
Borrowers who received payday loan alternatives from REAL Solutions® credit unions saved an estimated $8 million in excess interest and fees.
Many members were able to pay off their credit union loans without rolling them over. This saved members countless more dollars in debt they would have rolled up at payday lenders.
Voluntary Income Tax Assistance
|Nearly 100 REAL Solutions® credit unions provided volunteer income tax assistance (VITA) in 2008.|
VITA sites specialize in helping workers who earn under $42,000 apply for Earned Income Tax Credits.
By offering free tax preparation, free electronic filing, and free deposits of refunds, REAL Solutions® credit unions saved low-income tax filers an estimated $20 million.
In addition, REAL Solutions® credit unions steered many tax filers away from costly refund anticipation loans (RALs) promoted by for-profit tax preparers. This saved tax filers from RAL rates as high as 2,000% APR.
Another 100 REAL Solutions® credit unions plan to provide volunteer income tax assistance in 2009.
Non-Prime Auto Loans
|Nearly all REAL Solutions® credit unions (92%) are offering non-prime auto loans. Non-prime auto loans are designed to help borrowers with low-to-moderate incomes, low credit scores, and thin credit files afford cars they need to drive to work.|
To highlight model non-prime used auto loans and encourage even more credit unions to provide them, NCUF in 2008 released its first-ever research report. Steer Clear: How Credit Unions Help Car Buyers Avoid Predatory Loans demonstrated how credit unions could gain a sustainable share of the non-prime market where 8 million used cars are sold each year.
This 60-page report is available free of charge here on the NCUF website. (Click the cover on the left). You can also download the report and many other free resources on the new REAL Solutions® Impact Center (www.realsolutions.coop).
|In the photo on the right, NCUF Executive Director Steve Delfin presented REAL Solutions’ Steer Clear report to the Credit Union Advisory Board of Enterprise Car Sales, a Corporate Supporter of NCUF.|
The Steer Clear report was funded in part by the Annie E. Casey Foundation, with support from the Aspen Institute.
“This was the first of what we hope will be many collaborative efforts integrating REAL Solutions® into projects that help further the mission of other asset-building organizations as well as credit unions,” reflected Delfin. “REAL Solutions® is opening doors for NCUF to apply for grants from larger foundations that share our desire to help consumers with low wealth.”
|In another collaborative effort, the American Association of Credit Union Leagues (AACUL) leveraged the REAL Solutions® brand when designing the REAL Deal, a new outreach initiative advanced by AACUL in partnership with CUNA and NCUF.|
REAL Solutions® became an integral component of the first REAL Deal outreach framework model:
“REAL Programs—products and services promoting a ‘good deal’ for members geared toward achieving individual financial success...”
|Looking ahead to 2009, REAL Solutions® will focus on growing deeper rather than broader.|
“While we still plan to bring REAL Solutions® to more states,” Kitsch explained, “we plan to delve deeper with the 30 current states. Participating leagues have asked us to introduce new products and services, pilot projects, and toolkits to help more credit unions implement REAL Solutions®.”
Each time a state adopts REAL Solutions®, an NCUF Field Coach and a credit union development professional from the state association train credit unions to provide products and services that have a proven track record of serving people with low wealth.
REAL Solutions® aims to help low-wealth consumers become credit union members, grow savings and accumulate assets that will generate wealth for their families.
“When rolling out REAL Solutions® in new states, we will follow the same format that has worked so well in other states,” Kitsch affirmed. “By combining our resources with the league, credit unions and their members will benefit from our shared experiences across the country.”
|Online, the new REAL Solutions® Impact Center is now available for credit unions in every state. Model product and service descriptions, low-wealth market trends, partnership opportunities, interactive forums and blogs are designed to appeal not only to REAL Solutions® credit unions, but to all credit unions.|
|In 2009, through a grant from the Aspen Institute’s “Living Cities Mashup,” the REAL Solutions® Impact Center will add a portal for community organizations.|
This will help credit unions address one of the CUNA Membership Growth Task Force’s top recommendations: “develop more community partnerships.”
Funding REAL Solutions®
|NCUF and state credit union associations will continue to fund REAL Solutions® through the Community Investment Fund (CIF), which won the Association of Fundraising Professionals’ Award for Fundraising Excellence.|
Offered through the Corporate Credit Union Network, CIF investments are structured to earn dividends for each corporate credit union member while making charitable donations to NCUF and state credit union organizations.
About REAL Solutions®
|REAL Solutions® was piloted by the Filene Research Institute in 2003 to provide "Relevant, Effective, Asset-building, Loyalty-producing" financial services to working families with low wealth. The pilot introduced innovations to credit unions in three states and succeeded in securing a safety net for consumers who were at risk.|
Results from the pilot years are documented in the 2006 Filene report, REAL Solutions®: Solving the Financial Service Needs of America's Working Families.
In 2007, NCUF launched REAL Solutions® nationwide. In the first two years as NCUF's signature program, REAL Solutions® has been adopted in 30 states. As a result, credit unions are providing dozens of new products and services that have proven successful in serving consumers with “low wealth” and driving credit unions’ growth strategies.
REAL Solutions® has the potential to touch millions of lives. An estimated 20% of all American households – 40 million American families representing 100 million people – lack access to basic financial services. REAL Solutions® aims to help low-wealth consumers become loyal, long-term credit union members who will grow savings and accumulate assets that generate wealth for their families.
The greatest potential for membership growth, according to the Credit Union National Association’s Membership Growth Task Force, is attracting diverse membership groups. Providing profitable yet affordable services to more members is a sound business decision that also fulfills credit unions’ social mission.
For credit unions to best meet the needs of emerging markets, credit unions must offer the right products – at the right prices – and the right terms and conditions. Using product models created and tested by credit unions, REAL Solutions® disseminates these business models to credit unions through special REAL Solutions® meetings, an online impact center, and state and national conferences.
REAL Solutions® reaches people of all ages and ethnic groups. For predatory loan victims struggling to climb out of debt… aspiring entrepreneurs reaching to revitalize low-income communities… life-long renters striving to realize the American dream… recent immigrants learning to build new lives… and everyone across America working to live from paycheck to paycheck… real people with real needs are finding REAL Solutions® at credit unions.
About the National Credit Union Foundation
|The National Credit Union Foundation (NCUF) is the primary national charitable and fundraising organization for America’s credit unions.|