With the support of Workers’ Credit Union (pictured), I-C Federal Credit Union and Leominster Credit Union, the Montachusett Opportunity Council is offering a self-sufficiency program called Common Cents Plus.
Mayra Reyes already owns a home. She uses her Fitchburg residence five days a week to run a day care center for up to eight children. But she’s gearing up for a new venture, and to achieve her goal she needs a little help.
She’s receiving it from local credit unions and a program launched last December to pull low- and moderate-income families out of the clutches of debt, although actually being in debt is not a requirement for eligibility. Financial literacy classes focused on effective budgeting techniques for saving money are a key part of the program. Reyes is one of 10 people from northern Worcester County benefiting from Common Cents Plus, an initiative created by the Montachusett Opportunity Council to help families achieve self-sufficiency by investing in a major asset such as a home or a business.
“You need to work on something if you want it,” said Reyes, 38, who has been attending financial literacy classes since May. She hopes to put the money she’s saving into an individual development account (IDA) and eventually open a store, where she plans to sell affordable business suits to women.
Common Cents Plus is being offered through MOC with the support of Workers’ Credit Union, I-C Federal Credit Union and Leominster Credit Union, the largest credit unions in the north-central area of the state. The three institutions teamed up with MOC when it applied for a grant from the Washington, D.C.-based National Credit Union Foundation, which bills itself as the charitable arm of the U.S. credit union movement.
NCUF receives earnings from its Community Investment Fund, according to Martha Dodson, manager of institutional grants. Credit unions invest in CIF, which then raises funds and makes grants as part of its mission to promote consumer financial independence. The grant awarded to MOC last year for $20,000 is being used to provide financial education and encourage asset accumulation.
The grant officially was awarded to Workers’ Credit Union on behalf of MOC, though the program will be operated through the latter. Eligibility was restricted to credit unions or organizations working closely with them. Employees from the three credit unions will aid the training process by appearing as guest speakers and opening the IDA accounts for participants. WCU, as the lead organization, will also serve as the fiscal conduit for the grant.
D. Oscar O’Connor, vice president of real estate lending at Leominster Credit Union, referred to his institution as a co-sponsor of the grant. “When the opportunity came up for MOC to apply, they asked us to be involved,” he said. LCU wrote a letter to NCUF in June 2006 supporting the program.
Forty-seven credit unions applied for grants last year, according to Dodson. Eighteen were selected for funding.
“It was a shot in the dark,” said Herb White, business development officer at Workers’ Credit Union, which is located close to MOC in Fitchburg.
Although MOC and WCU did not receive the $100,000 funding for which they originally applied, they consider themselves fortunate to have received $20,000.
“We are very blessed,” said Bill Minkle, deputy director of planning, development and community services at MOC, which was established in 1966 under the Economic Opportunity act as the designated Community Action Agency for North Central Massachusetts.
“[The selection process] is highly competitive and this grant will go a long way.”
The NCUF grant, along with a separate grant MOC has secured from the U.S. Department of Health and Human Services, will be used to match funds deposited by those opening the IDA accounts. The funds deposited into each of the accounts will be matched at the federal level up to $2,000, which will have a corresponding match of $2,000 per account from the NCUF grant. If families save $1,333 within three years, they will qualify for $4,000 in matching funds. The $5,333 total can be used by participants to invest in an asset of their choice, whether it’s a home, secondary education or a business.
Anyone can apply for enrollment in the program but there are prerequisites. An applicant’s credit history does not have to perfect but must be in good standing, and readiness is a key component. Families must choose an asset they are striving to purchase and have income to save.
Reyes, who had started putting money for her account aside prior to the official start of the program, already has saved her $1,333, but she doesn’t plan to dip into it anytime soon.
“I don’t want to take it out and go shopping,” she said. “I want to keep saving and wait until I have all the resources I need for my business.”
Those necessary resources are not purely financial, noted Pamela Frye, director of training at MOC. The financial literacy curriculum includes lessons on goal-setting, barriers, understanding credit, record-keeping, spending plans and communicating about money. The classes are taught in the evening, which makes them convenient for working adults to attend.
‘Educational Mission’
Credit union frequently support or initiate community outreach and financial literacy programs, according to Robert Kimmett, senior vice president of marketing at the Massachusetts Credit Union League.
“This is very much in the credit union DNA,” he said. “They see that people need help understanding financial services, so the educational mission has always been part of a credit union’s modus operandi.”
Kimmett noted that there is a lot being done in Massachusetts to encourage financial literacy.
Similar NCUF grants have been awarded to other credit unions in the state, according to Dodson. HarborOne Credit Union received a grant to support a Brockton High School event to teach students about managing money. Lawrence CommunityWorks also used NCUF funding to support a program helping low-income families achieve first-time homeownership and receive financial education.
Taking groups of people who don’t understand the value of traditional services and teaching them how to manage their funds in a complex environment is what sets credit unions apart from banks, Kimmett said.
“Ours is a very holistic approach,” Minkle said. “An individual plan is developed to involve the whole family.”
Part of the $100,000 originally sought by MOC was intended to go toward including children from the local community in the financial education process. Although the organization did not receive enough funding to make that a reality, it is reaching out to younger generations through its education program for adults.
“In our classes, adults learn to make children aware of financial situations, even by something as simple as encouraging them to put money into a piggy bank,” Reyes said. “It’s all about learning to save early.”
The educational approach employed by MOC and the credit unions stresses the importance of making sound, long-term choices, according to Minkle. It has a positive impact on the whole family, as the increased responsibility reaps rewards that benefit everyone – like a permanent place to live.
“A family working together to get a home is awesome,” Reyes said.
