Banking through local nonprofits seeks to make it more ‘FAIR’

Equity in financial access — being able to build credit and save money — can be more difficult to come by than some may realize. Bad credit or predatory financial institutions can make it difficult to break into the financial mainstream.

To close the gap in financial access, Prepare + Prosper, a Twin Cities nonprofit focusing on financial wellness, worked with community leaders to create a series of banking products that give people the chance to build credit and savings. The end result is a program called FAIR — financial access in reach.

The project was piloted through Sunrise Banks in 2018 and is now available through four nonprofit partners: Lutheran Social Services Minnesota-Eastside Financial Center, Build Wealth MN, Community Action Partnership of Ramsey and Washington Counties, and EMERGE Community Development. 

FAIR provides checking and savings accounts with no overdraft fees or unpredictable charges, as well as no account minimums. All three are often limiting factors for those in unpredictable financial situations. The program also offers a series of low-entry credit building services and financial counseling. 

It also provides what’s called “branchless banking,” meaning it doesn’t rely on banks to host its services. Instead, it is provided through nonprofits that already provide financial coaching and services. Users can access their accounts online and deposit checks with an app.

 

Building financial confidence

Anne Leland Clark, financial capability and learning director at Prepare + Prosper, said the need for such a program comes from a number of things — historical disinvestment, financial deserts in high poverty areas and a lack of trust in bankers. She said the program is “serving as a bridge back into banking.”

The Federal Deposit Insurance Corporation’s National Survey of Unbanked and Underbanked Households found that 33.5 million households in the U.S. are excluded from the financial mainstream. Of those households, 44 percent are households of color, compared to 19 percent that are white.

Further, Prosperity Now Scorecard data says there are nearly 195,000 households in the Twin Cities that are financially underserved, and that about 55 percent of those households are of color, compared to about 15 percent for white households.

Eva Song Margolis, economic empowerment and employment services director at East Side Financial Services, said the organization, which is a part of Lutheran Social Services Financial Counseling, is focused on serving low- to moderate-income families and helping them toward asset building. She said FAIR serves as another tool to ensure the money people make gets back into their households. 

“This is a product I believe in,” said Margolis. “I would recommend it to my grandma.”

Margolis said oftentimes when people can’t get access to traditional banking, they’re forced to use sources that are predatory, such as check cashing places that charge high fees, or payday loan providers. She also pointed out that people carrying their entire paycheck in cash makes them a target for robbery.

All in all, she said the most important thing is “ensuring the money they are making is getting back into their households.”

Clark said FAIR’s development group worked with leaders from newer immigrant communities like Hmong, Somali and Latinx on ways to reach populations that may benefit from easy-to-access banking. 

She added that FAIR is in its first iteration and that those behind it are looking for more community partners to help connect to communities who need the services. 

For more information about FAIR, go to www.fairfinancial.org or reach out to any of the aforementioned nonprofits. 

For organizations looking to partner with FAIR, contact Clark at anne@prepareandprosper.org.

 

–Marjorie Otto can be reached at 651-748-7816 or at eastside@lillienews.com.

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