CHICAGO – The Center for Financial Services Innovation yesterday said it has awarded a $300,000 grant to the Filene Research Institute and the Boston-based Doorway to Dreams Fund to help expand a pilot Prize-Linked Savings program.
“We know that it works, to some extent, what we want to find out is whether this is bringing in new customers,” said Jeff Zinsmeyer, executive director of Doorway to Dreams, of the innovative savings program that uses prizes to induce people to convert their lottery spending into savings.
Prize-Linked Savings is being piloted at several credit unions as an effort to transfer a portion of low- and moderate-income families’ lottery and gaming spending to a savings product that offers a chance to win prizes, while building assets at the same time. Centra CU, for example, for the past year has been giving out $1,000 a month in cash and prizes, such as home video and stereo equipment, said Zinsmeyer, whose non-profit has helped develop the program with the Columbus, Ind., credit union.
Several other credit unions have piloted the concept of prize-linked savings. Tower FCU recently launched a year-long Super Savers Sweepstakes that will award $80,000 in cash prizes.
Tower members will be entered automatically in a $20,000 grand prize drawing at the end of the year if they make qualifying deposits every month to either a Club savings account or direct deposits to a checking account. Members who make monthly direct deposits of at least $100 into their checking account will be entered into quarterly drawings for a chance to win up to $3,000 in cash prizes. Members who make monthly deposits of $25 or more to a Club savings account will be entered for monthly drawings to win up to $1,000. Members also will receive a $125 cash bonus when they open a new checking account and set up a qualifying direct deposit.
Under the new project, Filene and Doors to Dreams will work with the Michigan CU League to develop a pilot with six credit unions from June 2008 through December 2009. The $300,000 grant will be used to leverage the program by attracting new savings, some of which will be used to fund the pilot. “We’ll be setting up a sweepstakes structure which will be able to generate larger prizes,” Zinsmeyer told The Credit Union Journal yesterday.
“There are indications that this is attracting new customers,” said Zinsmeyer. “We need to be able to study it longer to be able to tell for sure.”
The Center for Financial Services Innovation is an affiliate of community development bank ShoreBank Corp. The Prize-Linked Savings program was one of four projects chosen from 133 for funding this year.
