Prospera Partners With Goodwill On GoodMoney
A year since introducing an alternative payday program to its community, Prospera Credit Union has saved 1,500 participants more than $75,000 in fees for the combined $550,000 that they've borrowed.
The program called GoodMoney is now gaining the attention of other industry leaders who say it may serve as a model for similar programs throughout the nation.
"This is about helping individuals become better money managers," said Ken Eiden, CEO of the $158-million Prospera CU. "GoodMoney is not only something we want to do, but rather something we have to do-not just as a single credit union but as an entire industry."
Created in conjunction with Goodwill Industries of North Central Wisconsin, it is aimed at helping consumers break free of financial dependence on others, including payday lenders, he said. It addition to low-interest short-term loans, members can receive other payday lending-type services such as check-cashing, bill payment and wire transfers. Interest rates amount to about $9.90 per $100 borrowed, Eiden said. The same loan at a nearby payday lender would cost $22 or more.
Eiden pointed out that the purpose of the program is not about providing loans so much as it is helping people become better educated about their money. After borrowing money for the third time, he said, members are given $50 certificates for financial counseling and an interest-free loan upon completion.
"If we gave the certificates out on the first loan, we think it might appear condescending," he said. "We want to build trust before we start engaging them in the notion."
"Surprisingly, more than half of the individuals that have come to us are not folks of modest means," Eiden said. "They are people with fairly good jobs, who just happen to be poor money managers."
He said the majority of the GoodMoney loans have gone to retail clerks, medical employees and educators.
"These folks would make extremely great members," he said. "We just need to get them on board and making the right choices."
While the certificates have not been redeemed as often as the CU would like, Eiden said, the marketing team is working on efforts to increase their usage.
Eiden said Prospera's staff has also been trained to recognize when a loan may not be the right option for a member.
"We try to help in a way that gives immediate cash relief, but there are some situations where a human services agency is the better choice," Eiden said. "For example, say someone on social security comes in and asks for a loan to pay for prescription drugs because his check is still a few weeks away from arriving. Well, we know there's a free clinic in the area that might be able to give him enough medication until that check arrives. He doesn't need a loan, he needs to know what agencies out there can help him."
GoodMoney was first introduced at a limited branch in the storefront of Goodwill Industries new flagship store and training center in early 2005 is now being expanded to all five of Prospera's branch locations.
"Although people are willing to drive some distance at first, it's not effective as a business model long-term to have only one branch," Eiden said. He said the CU is planning to launch a campaign that includes newspaper advertising to announce GoodMoney and its availability throughout the CU's four-county FOM.
Eiden said the $40-billion payday lending industry isn't going to disappear.
"Our members need them, want them and are going to continue to use them," he said. "It's important that we do something as a credit union movement to fill that gap and do it better or we are going to be left behind."
Eiden said he relayed a similar message during a recent credit union convention in Wisconsin and has been invited to share his ideas during CUNA Mutual's sold-out Discovery Conference in Las Vegas on June 22.
"We can't change the world, but if we can just help a few of these folks become a little smarter about what resources are available to this community, I think we are providing genuine help."