We’re calling on companies across the country to deposit $1M of their banked dollars today into credit unions serving low-income communities. Thanks to our partnership with Inclusiv, this is one smart, seamless, socially conscious money move.
What if I told you there is a very simple way your company could help fix a problem that has plagued underserved communities for years? Better yet, what if I told you it won’t cost a dime and is actually a very smart business move?
For decades, Black, Indigenous, people of color (BIPOC) and other underrepresented communities have been locked out of various systems — healthcare, education, the job market — and denied access to the same opportunities as white Americans.
One of the many industries that has consistently presented barriers for these communities is the industry I’ve been a part of for my entire professional life: financial services.
It’s easy to track the unfair start in capital creation for BIPOC and other underrepresented communities: Only fifty years ago it was lawful to deny mortgages to Black families — and those belonging to other communities of color — who lived in “redlined” areas. More recently, I’ve seen banks driven by profit motives offload customers who “cost more to serve than they are worth” with tactics such as charging monthly overdraft fees.
According to a 2019 study from the FDIC,13.8 percent of Black households and 12.2 percent of Latinx households are unbanked — meaning that no one in the household has a checking or savings account at a bank or credit union — compared to just 2.5 percent of unbanked white households. Lacking other alternatives, unbanked households are often forced to turn to predatory financial services such as payday loans and high-cost check-cashers, which can come with more fees and interest.
Whether this is the result of discriminatory policies such as redlining or driven by financial interest, BIPOC and other underrepresented communities often lack safe and fair options when starting a business, buying a home or paying for an emergency expense — all of which are critical to creating long-term, sustainable wealth for themselves, their families and their community.
While this is certainly a complicated and deep-seated problem, we can all play a role in helping underrepresented communities access equitable financial services and, ultimately, create more equal economic opportunities. Companies, in particular, can make an impact with one very simple smart money move: Transfer a small portion of money from one bank account with great rates to another bank account with great rates … one that also serves an important social purpose.
At NerdWallet, we’ve chosen to move $2 million that was previously sitting in one bank into a CD — a low-risk savings tool — at Self-Help Federal Credit Union (FCU), which serves low-income working families in California, Washington, Illinois and Wisconsin; and we’ve partnered with Inclusiv — the nonprofit network of community development credit unions (CDCUs) — to encourage other companies to do the same. By investing in credit unions such as Self-Help — which are best suited to invest in areas where communities are most underserved — we can build a stronger, more robust and vibrant economy; and bring financial equality to more low-income residents of urban, rural and reservation-based communities. Today, credit unions in the Inclusiv network serve 12.5 million residents of low-income urban, rural and reservation-based communities, and hold almost $160 billion in community-controlled assets.
Credit unions serving low-income communities provide personal, mortgage and commercial loans for people with limited access to mainstream, non-predatory financial services. As part of the fabric of their communities, they are able to offer financial education, counseling, fair lending, and the ability to fairly assess risk of members who may have limited or no credit. They also bring a deep understanding of their members’ greatest needs, as well as the unique barriers to economic opportunity they face.
Perhaps most importantly, they frequently serve both the individual and the larger community simultaneously. For example, in 2019, Self-Help FCU helped finance the opening of Community Foods Market, the first full-service grocery store in West Oakland in over 50 years. Prior to its opening, West Oakland was a food desert, with residents spending around 70 percent of their grocery dollars annually — an estimated $42 million — outside the neighborhood.
As a Nerd, moving our money was an easy decision: Self-Help FCU offers competitive rates, asset preservation, and quick ratio maintenance. But best of all, our dollars are making an impact, directly funding loans for businesses such as Community Foods.
It will take a lot of work on many levels to truly create equal economic opportunities, but we believe investments in credit unions serving low-income communities and others like them is an important — and simple — step forward in providing underserved communities with access to equitable financial services.
True impact requires collective power. That’s why we’re calling on companies across the country to join us in this effort and deposit $1 million of their banked dollars today into credit unions serving low-income communities. Thanks to our partnership with Inclusiv, this is one smart, socially-conscious, seamless money move.