Prospera Credit Union and Goodwill Industries of North Central Wisconsin are hoping to turn payday loans or "bad money" into "Good Money" with a new partnership aimed at helping consumers become financially independent.
The plan includes opening a limited branch facility at the new Goodwill Training Center in Darboy, near Appleton, this week and offering products and services similar to those offered by area payday lenders, including check cashing, bill payment, wire transfers and money orders.
"The CEO at Goodwill, Bob Pedersen, and myself have for several years been talking about how we can provide for individuals to get into traditional or mainstream financial institutions as opposed to going to some payday lenders," said Ken Eiden, CEO of community-chartered, $155-million Prospera Credit Union.
Eiden, who sits on Goodwill's board, said the idea grew as Goodwill made plans to open a new flagship superstore and training center. The $2.1-million, 34,000-square-foot-facility will be about one-third larger than stores in Grand Chute and Menasha.
"Many not-for-profit organizations will be located on this one campus," Eiden said. "It's a destination point with the same demographics as the people who use payday lenders."
He said officials estimate the new Goodwill store alone will get about 100,000 store visits per year. Among the first thing customers will see upon entering is the CU, located just inside the storefront. Signage both inside and outside will advertise the credit union and highlight the GoodMoney product, trademarked by Goodwill and sold exclusively by Prospera.
"I just can't tell you how excited I am for our marketplace," Eiden said. "I think the whole industry has been focused on this. We are working so darn hard to add value and meet the needs of the underserved."
GoodMoney is a short-term loan that will cost $9 per $100 borrowed, Eiden said, adding that it is much less than the $22 to $25 per $100 being charged by area payday lenders.
"While it's still pricey, $5 of that is for loan loss," he said.
He said the CU will offer the same high level, "non-judgmental" service that payday lenders offer.
"Credit unions are famous for service, and so are payday lenders," Eiden said. "People love their payday lenders. Why? Because they are there in their hour of need."
In addition to the immediate products and services, the new partners will work together to encourage patrons to take advantage of Goodwill's consumer credit counseling services through its Financial Information Service Center.
"We are working on some formula to reduce or eliminate some fees on their next transactions if they avail themselves to the free counseling services," Eiden said. "We want to help people break the debt cycle and offer hope of real financial independence."
Interestingly, Eiden said, two CEOs with similar backgrounds met long ago to forge similar plans.
"Edward Filene, the father of credit unions in this country, started in a bargain basement in Boston in 1902," Eiden said. "And Edgar Helms founded Goodwill (that same year) about a mile down the road from him. Now, here Bob (Pedersen) and I are working together 100 years later and a little farther west."
Eiden said he was thrilled to see that both the CU and Goodwill boards worked so hard to make this idea a reality.
"I am hopeful this model can spread," he said. "I hope that it's the genesis of an idea that gets legs and spreads all over the country, offering an alternative to the folks who really need it."
