MADISON, Wis.-The World Council of Credit Unions is piloting a project to match the savings accumulated by low-income residents of villages in rural Mexico, which will also allow citizens in developed countries to make donations to help underwrite the matching funds.
The Match Savings program is designed to fill a void WOCCU sees in many microfinance projects - an emphasis on lending, but not on the value of saving. To jump- start both education and savings in the rural communities, the matching grants are being offered as an incentive.
WOCCU is piloting the project with Caja Yanga, a credit union in Veracruz, Mexico. Caja Yanga has something of a unique operating model in that it sends employees into rural communities to introduce the credit union and the financial services it offers. In most cases those communities have no financial institutions. Caja Yanga representatives open accounts, accept deposits and, in some cases, make small loans. Some 120 villagers are enrolled in the six-month pilot, which will conclude in March when another six-month pilot will launch. Some of the participants, along with additional information, can be seen on the program's website at matchsavings.org. To participate, savers must be new to the credit union and must identify at the outset one of four goals for their savings: improve housing, finance education, expand a microbusiness, or pay medical bills. Participants then commit to depositing a set amount when the credit union staff member visits the community each month in order to receive a match on the principal amount they save. Those who faithfully save for six months may then withdraw the savings plus interest, along with the matching funds, up to 900 pesos. A WOCCU spokesperson told CU Journal that in some instances a missed deposit will be allowed, depending on the circumstances.
"WOCCU takes a savings-first approach to helping people out of poverty," said EVP/COO Brian Branch. "We see that a lot more poor people save to increase their assets and build their income and apply for loans later on."
The initial funds for the matches are coming from WOCCU's own foundation, but it is accepting donations from individuals and other organizations. In fact, said WOCCU, since the "soft launch" of Match Savings word has spread through social networking sites such as Facebook and LinkedIn where it has "begun to take on a life of its own."
Matchsavings.org includes the ability to make donations, and additionally features profiles of some of those who have provided funds under the "Givers" tab. Donations are tax deductible.
Villagers who participate may do so once. WOCCU said once a savings habit is developed, participants will then be able to qualify for loans from their credit union, although the goal is to teach participants to continue to save and not always borrow. "What we find is that small amounts of savings help people get started and bring them into formal financial institutions, the credit unions," said Branch.
WOCCU said plans are to expand the Match Savings program into one or two other countries during 2009.
