An Economic Path to Safety: Credit Union Model of Support

What if I reminded you that 99% of domestic violence survivors experience economic abuse as part of domestic violence? And, that this type of abuse is one of the main reasons victims stay or return to an abusive relationship. And, that the effects of economic abuse can stay with survivors long after an abusive relationship may have ended.

Credit unions are in a unique position to understand these complicated financial situations and provide domestic violence survivors with tailored financial products and opportunities to rebuild credit and regain economic independence.

Understand the Complex Dynamics

There are unique and complex challenges in delivering financial services to domestic violence survivors. Even when the effects of physical violence have subsided, financial impacts leave lasting burdens. Abusers may have taken out loans in a survivor’s name, causing a tarnished credit score. Access to online banking and financial information may have only been set up in the abuser’s name, leaving a survivor with no financial security.

According to the National Domestic Violence Hotline, economic or financial abuse occurs when an abusive partner extends their power and control into the survivor’s financial situation.

• Being refused access to financial services
• Having savings or property destroyed, given away, or sold without consent
• Being saddled with loans or credit cards taken out in their name without permission
• Being refused access to job opportunities

Additionally, the economic impact of financial abuse is multipronged. Individuals experiencing economic abuse lose a total of 8 million days of paid work each year – the equivalent of 32,000 full-time jobs. The lack of paid sick days or other job protections prevents survivors from taking time off work to recover from injury, seek safety, or pursue a court case. Further, survivors lose nearly $53,000 in lost wages over their lifetime, and the estimated overall workplace productivity costs are $1.3 trillion.^[1]

It should then come as no surprise to learn that the parallel effects of COVID-19 and domestic violence were almost immediate. In New Mexico, during the initial lockdown in 2020, one Albuquerque domestic violence agency reported a 40% increase in service calls; a year later, in December of 2021, the Albuquerque Police Department noted a 40% increase of domestic violence and sexual assault calls throughout the holiday season.

With these numbers on the rise, a cross-sector group of credit unions and a health foundation teamed up to develop a New Mexico-based model within which survivors of domestic violence can access the financial tools necessary to become financially secure and independent. Survivors of domestic violence can only secure long-term safety for themselves and their children if they can afford to leave, rebuild and heal.

First Step in Solving a Complex Issue

Credit Union Survivor Alliance for Financial Empowerment (CU SAFE) program and service began operating at the end of August 2020 as a partnership with the CUSol CUSO. The program is designed to pair survivors who are referred from a domestic violence center with a financial institution to provide survivors with access to necessary capital. Through CU SAFE, U.S. Eagle Federal Credit Union was successfully paired up with Domestic Violence Resource Center in Albuquerque.

U.S. Eagle President/CEO Marsha Majors says, “the first step to solving an issue as complicated as domestic violence is to offer tangible support. This offering is focused on getting funds into the hands of people who need it most knowing full well that a small, affordable loan might save someone’s life.”

Having now offered 3 of these loans to date through the CU SAFE program, U.S. Eagle is continually thinking about ways to create a more tailored loan program that supports the long-term success of its recipients. Through their referral partner, Domestic Violence Resource Center, the process is easy, and the loans have a fast turnaround through their staff. The lack of a stable job or a credit score is not a barrier to obtaining this type of loan. Certified financial counselors are made available to support the long-term financial success of loan recipients.

The support that stands out the most is that U.S. Eagle ensures they offer loans with a low interest rate. This is especially important in the State of New Mexico where there is no cap on interest rates except for one: a cap of 175% on consumer loans of $5,000. To ensure domestic violence survivors do not have to rely on predatory lenders, U.S. Eagle offers access to their financial resources at no interest rate for the first twelve months and allows a 9.9% interest rate after they have been able to transition to their new lives.

The Collective Grows

At the height of the global pandemic, Filene’s prior research on a Domestic Violence Recovery Loan program was the second most downloaded Filene research report. In 2021, Credit Union Support for Domestic Violence Survivors During COVID-19 and Beyond was one of the most read blogs by credit union leaders all year. The desire for more information on how to support domestic violence survivors continues and so too must our work to find safe and affordable products to meet their unique needs.

In 2021, the Con Alma Health Foundation, based in Santa Fe, joined the partnership as a funder. “The research is clear. Financial health and stability contribute to the overall health and well-being of individuals and families. We proudly support this effort to strengthen financial services and opportunities available for domestic violence survivors in New Mexico,” said Executive Director of Con Alma Health Foundation Denise Herrera. “We are also inspired by Filene Research Institute’s commitment to create viable solutions so domestic violence survivors not only have their financial needs met – but they also thrive and plan for a healthy financial future.”

Filene is working with the New Mexico collaborative to expand the program, and create new, affordable financial products that can be scaled for credit unions across the U.S. Filene is engaging domestic violence survivors, service agencies and credit unions to help identify, develop, and offer financial services that are most needed by domestic violence survivors when meeting their most critical financial service needs.

Throughout 2022, this collaboration will build upon and strengthen the important work and innovation already taking place in New Mexico and from research Filene has pulled together around domestic violence financial services. The overarching goals will be to:

• Create a scalable financial model that can be easily developed and adopted by credit unions, services providers, and healthcare partners in communities across the country.
• Leverage credit unions’ ability to support populations that have historically been overlooked or marginalized by traditional financial institutions.
• Help survivors of domestic violence gain the financial tools they need to build lives of independence and economic security.

Why it Matters – Credit Union Perspective

“At the end of the day, we all share in the victory of providing life-changing services that directly benefit all members in our communities, especially those members facing significant barriers like domestic violence survivors,” Marsha adds. “Collaboration and the cooperative spirit are inherent within our industry. We are stronger together and collectively, we can make a very real and powerful difference.”

Filene’s research is directed in part by a council of credit union leaders and innovators. Under their guidance, topics like this one, and others that address the needs of credit unions’ most vulnerable members rise to the top of their list of important issues for the industry. By serving the unique needs of these members, credit unions can better serve the needs of all members and elevate their value proposition in a crowded financial services space. Research like this is focused on through Filene’s Centers of Excellence for Consumer Financial Lives in Transition and
Community Social Impact.

If you or your credit union wishes to participate in this research opportunity, please reach out to [email protected].

[1] Content provided by the National Network to End Domestic Violence and the Pennsylvania Coalition Against Domestic Violence.

If you, or someone you know, is impacted by domestic violence, you can get support and find local resources through the National Domestic Violence Hotline.