“I wouldn’t want to hang out in this area at 11 p.m.,” said “Catherine Hegarty as she drove her family van under the El tracks on Lake Street towards 310 N. Pulaski. So what is a pastor’s daughter and a member of St. John Lutheran Church doing in a neighborhood like this? She’s headed toward the Community Savings Center which her employer, Thrivent Financial for Lutherans, helped create.
“There is literally no other place like this in the entire United States,” declared Andy Locke, one of Hegarty’s colleagues at Thrivent. What makes the Community Savings Center special begins with the concept of the individual development account. An IDA, or “$mart $aver” account as the Center calls it, is an account in which the savings institution matches every dollar deposited with two more dollars over the course of three years. Participants in the program must attend an eight session series of classes on financial management and agree to use the money to start a business, buy their first home, pay for post-secondary education, make car and home repairs, buy a car or reduce their debt.
“For the approximately 20 percent of Americans with no bank account and few assets, life can be a daily gamble,” said a Thrivent announcement of the opening of the Center on January 9.
“The loss of a job, an appliance breakdown or an unanticipated medical bill can plunge a family deeper into poverty.”
Part of the reason people in poor neighborhoods do not have bank accounts is that they have grown up in a culture which has not taught them how to use the products banks offer. “Banks want to do business in low income communities,” said Patrice Robinson, the Financial Education Coordinator at the Center, “but they offer products and services that you have to know how to use. No one in this community has knowledge like that, so you have to educate them.”
Hence, the eight week teaching component built into the $mart $aver program.
“I think the biggest thing people have taken out of the class is the credit card issue,” Locke said. “Eighteen percent interest on your credit card debt when you’re making $25,000 a year can bury you. But then the light comes on in class: ‘If I’m ever going to get anywhere, I have to get that debt down.'”
The classes, which are facilitated by Robinson, teach the difference between good debt and bad debt. “Taking out a mortgage is the fastest way out of debt,” Locke contended. “The classes point out that taking out a mortgage is a way to build equity” and therefore wealth.
There is also a strong spiritual component to the $mart $aver program. The first three sessions, according to Robinson, deal with stewardship, “keeping up with the Joneses,” and values.
In addition to the $mart $aver program, the Community Savings Center provides other products and services to meet the specific needs of this particular market. The center offers “flex loans” at reasonable rates to compete with the pay day loan industry. Patrons pay lower fees for cashing checks than those charged by currency exchanges. And they can receive advice from trained financial counselors, something definitely not available on the street. “You have to understand this kind of community,” explained Robinson, “and meet them where they’re at. If you offer them standard products, it’s not going to happen.”
Ann Myles, a recent graduate of $mart $avers, gave a testimonial. “Yes, the class did help me. I entered the class to save money so I could take my business up higher. I needed money so I could advertise, get a computer and do other things.”
Myles is starting a business to put last wills and testaments on DVD. Calvin Hoarde, who has completed half the program, has different goals. He is working on his bachelor’s degree at DeVry and then wants to buy a house. All that is standing between him and his goals is financing.
Myles has been giving a witness about the program to her friends. “I’ve been telling people they should join this class. If they want to continue their education, buy a home or start a business, this is something good to go into.”
Hoarde is doing the same. “What we are learning is to break the cycle. I did not have a financial education in my household growing up. We as a whole haven’t practiced very good financial responsibility. We will teach what I’ve learned to my nephew. I advocate $mart $aver to just about everybody I run across.”
Myles adds some advice for future participants. “All you have to do is be there as far as the classes are concerned,” she said, “but you have to put your money into $mart $avers in order to get something back … and be for real and do what you gotta do. You gotta work it.”
Patrice Robinson told the story of what motivated one young woman to take the classes. What happened was that the woman entered the public aid office to sign up for benefits. When she gave her name and address, her counselor asked her if she wanted to inherit her mother’s public aid number. The thought of her being one more turn in the cycle of poverty, said Robinson, so shook her that signed up for the classes.
So, where did the funding and the willingness to take risks come from to make such an experiment happen? Four players were involved.
First, Bethel New Life is a faith-based service agency on the West Side of Chicago which was started by Bethel Lutheran Church in 1979 and now pays the salaries of 348 employees, has a $13.5 million budget and serves more than 12,000 families. Bethel New Life used some federal grant money to begin a small pilot program with IDAs for twenty-five of its employees in 1999.
Second, Thrivent Financial for Lutherans is a non-profit “fraternal” benefit society which has 3 million members, all of whom are Lutheran. Because it is fraternal, all profits go back to the communities in which the members live and worship in the form of grants to churches and institutions whose purposes are consistent with that of the Lutheran Church. For example, St. Peter’s Lutheran Church is qualifying for a $300 grant from Thrivent to restock the Forest Park Food Pantry, while St. Paul’s has received a $1,000 grant to subsidize its work with West Suburban PADS.
On a larger scale, Thrivent members are working in collaboration with Habitat for Humanity towards the goal of building ten homes in the Chicago Area and 312 homes throughout this country. Hegarty said, “The money provided by Thrivent to support member activities and the value of the volunteers’ hours in 2005 was $8,842,705 in the Chicagoland Region and $429.3 million nation-wide.”
In 2005 Thrivent came to Bethel and proposed building on their pilot project to do something far more substantial for the whole community. Realizing that no for profit bank could provide IDAs, Thrivent gave the as yet unborn Community Savings Center the promise of a $1 million grant plus a team of motivated volunteers.
Neil Steinberg, a Jewish columnist for the Sun-Times wrote, “Thrivent helps people of all denominations, having spread more than $1 billion worth of good around over the past decade. Kinda cool, really.”
Third, the U.S. Department of Health and Human Services matched Thrivent’s grant with a $1 million grant of their own. According to a Thrivent news release, this total of $2 million in funding for the Savings Center”if fully utilized”could result in the purchase of 200 new homes, post-secondary education for 120 people and investments in 60 small businesses.
Finally, the Center had vision and funding but still needed the business know how to run a bank. First Bank of Oak Park Corporation (now called Park National Bank), which already had a track record in working with Bethel New Life in particular and the community in general, provided the last player the team needed.
Their location at the corner of North and Austin is symbolic of the collaboration of suburban capital and expertise with Westside street smarts and commitment to community. First Bank provides the assets of a $13 billion multi-bank holding company and the know how to run a bank. Hegarty was clearly impressed with First Bank. “In the short run the bank isn’t going to make a lot of money doing this. They have to be committed to the community. In the long run, hopefully, they will.”
Kacy Bassett left the Chase Corporation and a significantly larger salary to become the director of the Savings Center. He reported that since opening, the Center has drawn customers mainly from the Austin, Garfield, Humboldt Park and North Lawndale neighborhoods but also from as far away as South 110th Street. To promote the Center he is doing a lot of networking with nearby organizations like Circle Urban Ministries.
Patrice Robinson put out the call for volunteers. What the Center needs right now are coaches for the IDA holders, business people who are willing to be shadowed, and small business coaches. She can be contacted at 773-826-8121 or email@example.com.
Robinson feels called by God to be educating participants in the $mart $avers program. She senses that something new and creative is happening at the Center. She quotes Amy Shir, one of the Washington University researchers who created the concept of the IDA, as saying that this is the new financial frontier. It is an experiment in how well the government, business and religious sectors of society can work together to make a difference in our society.