Report
51
Number
Jan 01 1999

Credit Unions and Asset Accumulation by Lower-Income Households

Community development credit unions work hard and creatively to provide basic financial services to low-income communities. This report focuses on the efforts of larger, traditional credit unions to serve lower-income households. In presenting some of the details behind the special efforts, we want to show the diversity of strategies that credit unions are using, and indicate some of the key strengths and challenges associated with these approaches.

John P. Caskey
Swarthmore College
David B. Humphrey
Florida State University
Report Number 51

Executive Summary

Credit unions are pursuing a number of strategies to facilitate asset accumulation by lower income households. This monograph presents the details of special efforts credit unions are making, and explores the key strengths and challenges of these approaches. This material is based on site visits to approximately 20 credit unions as well as telephone interviews with many others. The results are intended to serve as a resource, based on documented credit union experience, of ways to assist lower income households to build their assets. As a rough approximation, we consider families with incomes of $35,000 and below to be low and moderate-income households. This report focuses on the activities of mainstream, or traditional credit unions.

What is the research about?

This report explores how the financial needs —especially the potential for long-term, regular savings — of low and moderate-income Americans can be realized. By studying credit unions that conduct special outreach programs to reach this group, the authors and their sponsoring organizations hope to provide useful information to other credit unions that may wish to replicate these efforts. A separate study specifically focused on outreach strategies used by community development credit unions is being conducted through a partnership of the Ford Foundation, the National Credit Union Foundation and the Woodstock Institute.

What are the credit union implications?

The report is extensive, clear, and practical. A summary cannot do it justice. One way to make full use of the information is for key credit union staff to review the entire paper, then assign each manager a particular portion to focus and report on. This effort will pay handsome dividends in practical, tested ideas from other credit unions. No credit union is likely to be able to undertake all of them, but every credit union will find one or more good ideas that can be implemented easily.

This overview gives a broad picture of the results, to put in context the particular sections that staff members can examine in detail. It also serves as a strategic overview for CEO’s.