AFCU 01 Ann Report (inside pages)

Alternatives Federal Credit Union
2 O O O
T H E
A N N U A L
C R E D I T
R E P O R T
P A T H
A heartfelt thanks to our members
Thanks
AND THANKS TO OTHER HELPING HANDS ALONG THE PATH
Photos:
Ithaca and Tompkins County
Convention and Visitors Bureau
Finger Lakes Land Trust
Ted Bronsnick, Construction Consultant
Don Schlather, Landscaper
Richard Kinner, Maintenance
David Long, Appraiser
Cate Mazzarella, Support Staff
Virginia Townsend, Support Staff
Ralph Nash, Collections Attorney
James Salk, Corporate Attorney
Edward Crossmore, Collections Attorney
Steve Bisker, Attorney
Interns:
April Madres, Sarah Sullivan, Charles Ribaudo, Jeff
Lawhead, Michael David Emery, Daniel Chad Updyke, Andi
Forker, Michelle Menter, Tamara DiVasto, Chris
Chiambalero,
Tashi Yangzom, Ian Reeves, Kwado Asare, Zach Bruno,
Iuliana Calin, Gretchen Crowson, Scott Docie,
Lynn Engelskirchen, Matthew Flippen, Diana Flore,
Peggy Hamm, Donne Houston, Ting Lei, Pam Shields,
Barbara Sullivan, Crissy Wais
DfD Staff:
Other:
Kwado Asare, Intern/CEO (Park Fellow)
Zach Bruno, Mortgage Clerk
Iuliana Calin, Intern/CEO
Gretchen Crowson, Intern WISP/Accounting
Tamara DiVasto, VISTA/Marketing
Scott Docie, Intern/Bill (Park Fellow)
Michael David Emery, Intern
Lynn Engelskirchen, Consultant
Matthew Flippen, Intern/CEO (Park Fellow)
Diana Flores, Intern/YES - Operations
Andi Forker, Intern/Disaster Plan
Peggy Hamm, Intern/Mortgages (Park Fellow)
Blake Myers, MSR
Robin Booth, MSR
Donne Houston, VISTA/IDA
Jeff Lawhead, Intern/Venture Capital
Ting Lei, Intern WISP/Human Resources
April Valerie Madres Intern/Personnel (ILR)
Ian Reeves, Learning Web/DFD
Charles Ribaudo Intern/Bill
Gary Schueller, Intern/Accounting
Pam Shields, Intern WISP/Member Service Dept
Barbara Sullivan, Intern/Mortgages (Park Fellow)
Daniel Chad Updyke, Intern
Crissy Wais, Intern WISP/Loan Dept predatory lending
Tashi Yangzom, Y.E.S. Intern - Administration
Boynton
Colin Brumsted, Devon Bowers, Collin Shore, Aaron
Shore, Jacob Yale-Loehr, Collin Anderson, Chris
Montemagno,
Allon Brann
Home Schoolers
Joey Kilmer, Greg Warden, Lisa Smith, Anne KoplinkaLoehr, Nathaniel Cisne
Alternatives Community School
Michael Davis, Wytse Schukken, Derek Crawford,
Derek Murphy, Sam Pakin-Flerlagh, Chris Nuttle,
Sebby Friedebom, Mariah Dengal, Sei Harris
Venture
Rich Entlich, Richard Furnas, Richie Berg
CUSO
Kenn Marash, Myra Kovary, Marcie Wyant
alternatives.org
Alternatives FUND
Rick Wallace, Barbara Tefft, Jake Ryan
Venture Investment Committee
Rustin Howard, Brian Hunt, Angela Noble, John Nozell,
Ron Rigores, George Schneider
Alternatives is a Regional Community Development
Financial Institution (CDFI).
Our mission is to provide:
• Access to transactional services
• Savings and community investment opportunities
• Capital investments to individuals, small businesses and non-profits
• Education about capital
Our Goal:
To build wealth and create
economic opportunity for
underserved people and
communities.
PROFILE: Sasha
and Zelkida
Immigrant Family on the Credit Path
Sasha and Zelkida came to the United States and to Ithaca a little over a year
ago. Just a few days after coming, they opened their first account at Alternatives. As refugees, without any savings or cash, Alternatives was the only
financial institution with which they could establish an account for a minimal
fee and with just a few dollars to deposit.
Even when they weren’t using Alternatives’ services directly, when making financial plans and
family budget, or planning to buy something big, Sasha and Zelkida report they could still rely on
assistance from Miroslav, “...‘our man’ in the Credit Union who helps everybody from the ex-Yu
with all that banking stuff...we could rely on Miroslav’s assistance, advice and help, even after his
working hours. So, kind Alternatives people have been at our sides all the time and we could count
on them any time we needed them.”... see page 13 for more.
The Credit Path
T H E
P A T H
T O
O P P O R T U N I T Y
A decade ago we developed an analysis that suggested we could extend our mission by integrating the capital collecting and transaction processing
capacity of a Credit Union with the targeted impact and subsidy of a not-for-profit. In the year 2000, for the first time, Alternatives has been able to put all the
elements in place. We have extended this approach by building productive partnerships with other non-profits. This Credit Path analysis has been useful in
helping us to understand how products can be designed to assist our members in moving out of poverty. The five elements of this approach are:
TRANSACTOR
• Provide access to transaction services to give members a hand
up at the first stage of the credit path: check cashing and bill
paying.
SAVER
The transactor stage is for members with the least means who need
access to the financial system. Ironically, at banks these services
are often most expensive for those who need them. We price them
to be fair to all members; affordable and sustainable.
• check cashing
• money orders
• official checks
• change
• wire services
BORROWER
• entry debit/credit
card
• line of credit
• auto loans
• personal loans
• Offer savings and community investment opportunities both to
mobilize community investment and to encourage a savings
• savings accounts perspective. To begin a life-long savings habit - “Pay yourself
• free checking
• saver certificates
first.”
• home-buyer
certificates
• Initiate first time borrowing to establish credit, thereby
building a credit rating as a financial foundation and
building familiarity with regular payments.
Borrowing, used responsibly, can be a positive strategy
towards greater wealth. We try to help our members
develop good credit records. We offer several “starter”
loans, like the Entry card and Credit Builder loan. As
members handle these loans successfully, they can build
up to larger amounts.
Shortcut: IDA’s and Education
○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○
EDUCATION is a key component at every
stage along the Credit Path.
Credit unions historically encourage savings. Alternatives
gives members incentives by paying interest on accounts
with a $5 minimum balance and charging no monthly fees.
Individual Development Accounts (IDAs) significantly
expand the ability to succeed at this stage by providing both
the money match and education.
OWNER
• Develop capital investments in individuals, small business,
and non-profits, as asset ownership is what moves people
out of poverty.
With the experience of saving towards future goals and developing good credit records, members are in a position to become
owners - of homes, of businesses. We offer home loans and
small business loans, many to members who started at the
• mortgages
• construction loans
beginning of the credit path and didn’t dare hope that their
• small business loans
journey would bring them to the American dream.
C O N T E N T S
Cover / Thanks. / Credits ............................................................................ 1
Mission / The Credit Path ........................................................................... 2
President’s Report / Why the Credit Union isn’t enough .............................. 3
Manager’s Report / Staff Photos ................................................................ 4
Treasurer’s Report / Supervisory Committee Report ................................... 8
Financial Report ......................................................................................... 6
Board of Directors / Staff ........................................................................... 7
Human Resources / Member Service Representatives ............................... 8
2
Consumer Loans / Home Loans ................................................................. 9
Small Business Loans / Community Enterprise Opportunities (CEO) / Go
Fund ......................................................................................................... 10
Individual Development Account (IDA) / Dollars for Dreams (DfD) ............. 11
Community Partnership Lending (CPL) / Cooperative Enterprise Project /
Socially Responsible Investing (SRI) ........................................................ 12
Indivisible .................................................................................................. 13
Member Profile (continued) / Predatory Lending / Grants and Awards ....... 14
President’s Report
In pondering what to boast about Alternatives’ year 2000, I
realize there is no one remarkable event. Yet Alternatives
did, indeed, enjoy another extraordinary year. We continue
to provide excellent services, priced fairly and made
available to all; most notably, the otherwise underserved.
We have extended our education about capital. The CEO
class for micro-entrepreneurs now reaches into Cortland,
and the financial literacy class, Money Whys, Money Wise
developed for Individual Development Account (IDA)
participants, is being offered to the community at large. We
have successfully extended our Credit Path model by
building productive partnerships with non-profits in upstate
New York counties beyond Tompkins.
During this, the third year of our fifth five-year plan, we
focused on several areas:
• We developed mission targeted services through partnerships and new structures. Community Partnership
Lending is coming into its own. (See page 21)
• The Cooperative Enterprise Project drew the Cooperative Development Institute as a partner. (See page 17)
• We formed the Alternatives Venture Fund and Investment Committee, and received a tax exemption.
• In preparation for financial growth, we have grown our
capital, the net worth of our business, by 73%, 25% and
26% respectively in the past three years. The impact of
grants and secondary capital was significant.
• We have developed staff capacity through hiring, training, and a re-organization of our staff structure.
• We continued our work in developing adequate space for
program development and member service.
- JIM FRAVIL
In addition, we had some firsts:
• We did a complete, confidential Member Survey for ethnicity and income to
demonstrate to funders the effectiveness of our targeted impact.
• Members can place Liberty check orders on-line.
• We installed our first three ATMs, to extend access hours and locations while
reducing demands on lobby service.
• We introduced a new mortgage product-Home Opener-WOW, with no down
payment.
• We upgraded our phone system to Automatic Call Distribution, and
have thereby improved member service.
• We added an employee benefit, the domestic partner health insurance
premium assistance.
• Several Credit Union staff and Board members worked on launching the
Community Foundation of Tompkins County.
• To support our movement, Alternatives sponsored the third Upstate CDCU
(Community Development Credit Union) roundtable, and our Manager served
on CUNA’s (Credit Union National Association) Renaissance Commission.
• We introduced the issue of predatory lending locally to build awareness and
stop the spread of the dark side of credit. (See page 25)
Our national presence continued to grow as evidenced by: frequent calls and
requests for networking from other credit unions and agencies, more than three
dozen interviews by news publications, and our being featured in a national
documentary project, Indivisible: Stories of American Community. (See page 23)
The Board of Directors is an essential part of this always changing, ever
interesting experiment we call Alternatives. I am privileged to be the President
of this Board of interested, caring members. As I watch our staff, a group of
imaginative, hard-working, dedicated people, daily working for the things we
feel important, I often feel deficient in the commitment of my own efforts for
these causes. And where would we be without our diverse membership,
investing with us, borrowing from us, bearing with us when we’re crowded,
loving us in our innovation? Your complaints are our new products. Keep in
touch. Thanks for your support.
CONTACT: [email protected]
Why the Credit Union isn’t enough:
An analogy: Our mission was removing screws, so we built a very good screwdriver. And at first, it was easy enough. But more and more frequently we found an
impacted screw and hammered our good screwdriver across the screw to cut it. Other times, we pried the screw out with our screwdriver. We noted that these
extended uses damaged our screwdriver. We built a chisel and a pry bar, and soon had a toolbox rather than a tool. This served our mission better and the tools
are working better, doing what they do best.
1
Alternatives Federal Credit Union
is a not-for-profit, 501 (c)(17), established in 1979. It houses traditional
credit union services: deposits,
transactions and loans. It also provides the core management of the
Alternatives group. It is owned by
members and directed by an elected
board made up of members. Deposits
are federally insured by the NCUA.
2
Alternatives Venture Fund is a not-for-profit
501(c)(3) tax exempt corporation that receives donations for the group and provides training services. The
main services are:
• DfD, Youth Credit Union run by and for young people,
with branches in Boynton Middle School, Alternative
Community School and at Alternatives Credit Union.
• CEO small business development program, started
by the City of Ithaca and now run by Alternatives.
• IDAs, an incentivized savings program to encourage
low-income people to build assets in a home, business or their own education.
• GO Fund, a micro-enterprise venture capital product
to assist starting or expanding small businesses that
do not have access to traditional venture capital
markets.
While many think of all
the programs and
services as part of
“Alternatives Federal
Credit Union,” Alternatives is actually
four separate
corporations.
3
CONTACT: [email protected]
3
4
Alternatives Ithaca CUSO is a
for-profit Credit Union Service
Organization established in 1997
that provides Socially Responsible Investment to the public.
Alternatives Fund, a not-forprofit 501(c)(6) established in
1970, is a trade association of
community groups, cooperatives,
worker owned businesses and
individuals that provides a field of
membership for the Credit Union.
A Little Closer to Home
MANAGER’S REPORT - BILL MYERS
It’s a winter’s day in Ithaca. It has been a
season of long unbroken stretches of grey
skies. I try to remember that there is still a sun
behind these clouds. I try to imagine the color
grey as a combination of clear blue and sunset
red. Thinking back on last year, I have similar
problems imagining the year as an unmitigated
success. On the one hand, we did ourselves
proud serving our mission. On the other hand,
our building project has foundered and that’s
increasingly hard to ignore. I get questions
daily; it’s a visible hole in the ground. And by
comparison, other nearby construction
projects are proceeding apace.
I nurture the resolve that we will continue to build wealth and create economic opportunity for
underserved people and communities. We have cajoled, protested, and schemed to get
capital into underserved economic sectors. These capital gaps have not been addressed by
public and private capital sources. 13% of US households endure income poverty, 26% asset
poverty (50% of households own less than $1000 in assets) and 20% are unbanked. It’s a
joke worthy of a Batman villain that the only growing mainstream credit source for low wealth
communities is coming in the form of predatory lending. I try to imagine how growth can be
made equitable, how growth can avoid environmental degradation, and achieve sustainable
growth and inclusive prosperity. As I try to sort this out, we have yet another snow storm. Our
building site turns from a swimming hole into a skating pond. My wife suggests that this is an
opportunity to grow patience and let the issue develop. I listen to “Mood Indigo” by Louis
Armstrong, one of the slowest songs ever made. I walk to work over the Aurora Street bridge
on Six Mile creek. There are no spawning trout and smelt yet. But I do hear geese honking
their way home, confident that spring, though unseen, is imminent.
I’m at turns frustrated, tired, discouraged.
I think about our excellent staff. And a membership that puts up with this experiment. And a
Board that doesn’t waver when we have to stand by our mission. I think about a federal credit
union examiner (the heroically named Lance McAllister), who a decade ago said that our
problem was that we, “Decide what we want to do, then find a way to do it.” This unlikely
criticism has stuck with me as an insightful compliment. Defining the limits of the possible is
not part of our approach. Follow the mission directly to the goal. Where is the fault there? We
imagine the world as we want it to be, then get everyone else to come there. I think of joyous
summer, when “the song sings itself above the muffled words.” -(WC Williams)
Midway in the journey of our life
I came to myself in a dark wood,
for the straight way was lost,
- Robert Frost
At other times, invigorated and testy.
Bring me my Bow of burning gold…
Bring me my chariot of Fire!
I will not cease from Mental Fight,
Nor shall my Sword sleep in my hand
I can imagine that our building will be completed and will allow us to resume this experiment
in community based capital formation, with the space it needs, and with gusto.
- William Blake
I think about a federal credit union examiner (the heroically named Lance McAllister), who
a decade ago said
…our problem was that we, “Decide what we
want to do, then find a way to do it.” This
unlikely criticism has stuck with me as an
insightful compliment.
CONTACT: [email protected]
Staff of 2000 not pictured in staff
photo page 12
Karl Graham
Jackie Brashear
Joe Cummins
Kristin Haner
John Halleron
Elizabeth Fattaruso
Larry Honigbaum
Jennifer Cunningham
Tracie Dissinger
4
The Impacts of Growth
TREASURER’S REPORT - PAUL MAZZARELLA
One of the most commonly debated issues for organizations of
all types concerns the impacts of growth. Does rapid growth
undermine an organization’s core values? Does an organization
need to grow in order to flourish, or can it be sustained in a
steady state? Can the impacts of growth be planned so that they
are manageable?
These questions and a lot more have been on the minds of the
staff and Board at Alternatives, because this is a Credit Union
that has ambitious plans for growth. In 2000, we saw many of the
ideas that were germinated years ago begin to show results and
we began to see how those ideas affected Alternatives’ financial
picture.
For example, the goal of providing better access to credit for
people who are poorly served by the conventional credit markets
was realized through the adoption of the Opportunity Lending
program. The result? A significant increase in consumer loans to
our members. Alternatives has also increased its business
lending, especially in small loans or loans to new businesses, an
area that is underserved by most lenders. The total amount of all
Alternatives loans grew from $19.7 million in 1999 to $22.0
million in 2000, an increase of 11.6%. Our members’ deposits
are being put to work to create jobs and finance personal needs.
The growth of Alternatives can be measured in a number of
meaningful ways. In 2000, our membership increased from 5,206
to 5,839, an increase of 12.16%*. This helped to increase the Credit Union’s total assets, which
rose from $30.7 million in 1999 to $34.5 million in 2000, an increase of 12.4%. Net capital,
which includes undivided earnings and gains on the sale of securities and reserve funds,
increased 25.6% in 2000, to $3.66 million.
As a federally-chartered Credit Union, the financial performance of Alternatives is continually
monitored by the National Credit Union Association (NCUA), which acts as both an insurer
and a regulator. The NCUA measures our performance against both established standards
and against the performance of our peer organizations. In 2000, Alternatives’ financial performance improved over the prior year, helping us to achieve the second highest rating available
on NCUA’s rating scale. One of the key indicators of financial strength is the net capital ratio,
which measures the capital retained by the members against the Credit Union’s total assets.
Our net capital ratio, which has been rising in recent years, improved to 10.61% in 2000, the
highest ever achieved by Alternatives.
One of the biggest indicators of change at Alternatives will be the construction of the new
offices that will be built on Fulton Street. The development of this building represents a huge
step forward in terms of providing the space that is needed to improve services and operate
new programs. It will also have some short term negative consequences for the Credit Union’s
financial picture, since a good deal of our available resources will be devoted toward paying for
this building. However, the construction of this building is also expected to play a major role in
helping Alternatives move its many plans for growth forward. Since we expect to continue to
increase membership, deposits, loan activity and other indicators of financial strength, the
development of this building will ultimately produce an even stronger Credit Union.
Financial statements on pages 9-10.
*These figures reflect a change in the way we calculate membership. Previously, our software counted a member with
two accounts as two members.
CONTACT: [email protected]
Supervisory Committee Report
The Supervisory Committee ensures that the Credit Union is always on the straight and narrow path...
The Supervisory Committee is appointed by the Board of Directors and is responsible for the annual audit, verifying member accounts and responding to member
complaints brought to its attention through regular new account and closed account surveys. The committee has been active in doing monthly checks of newly
opened and closed accounts, and performing other internal auditing functions.
For the third year, the Supervisory Committee contracted with Robert Simms, CPA, to perform the annual audit for the financial year ending December 31, 2000.
The audit was performed in accordance with all requirements of the Supervisory Committee Manual for Federal Credit Unions and generally accepted auditing
standards. In the auditor’s opinion, the Credit Union’s financial statements are a fair representation of Alternatives Credit Union’s position and the result of its
operation and cash flows. There was no indication of defalcation or malfeasance.
Supervisory Committee:
5
Anne Clavel, Nancy Istock,
Jan Evans Tiller, Emily Simon,
Abbe Lyons, Shaianne Warner
“I am honored to be a partner with an organization
dedicated to the ideals of compassion, justice,
sustainability and abundance for all. I appreciate
your integrity and steadfastness.”
Complete audited financial
statements are available on the
web at www.alternatives.org.
— Member
CONTACT: [email protected]
ALTERNATIVES FEDERAL CREDIT UNION
ALTERNATIVES FEDERAL CREDIT UNION
Income Statement
Statement of Financial Condition
2000
1999
Loan Income
Investment Income
Fees Income
Community Development Nonprofit Income
TOTAL INCOME
1,738,305
482,105
416,749
201,704
2,838,863
1,489,285
547,649
417,306
183,243
2,637,483
Total Salaries
Occupancy
Direct Nonprofit Expense
Other Expenses
TOTAL EXPENSE
1,077,190
108,017
44,384
1,012,526
2,242,117
982,278
115,757
52,824
607,801
1,758,660
46,092
917,974
964,066
15,393
857,281
872,674
NET INCOME AFTER EXPENSES
(367,320)
6,149
Misc. Non-op Income (Grants)
Misc. Non-op Expense
847,000
(308,999)
-
Net Income
170,681
6,149
Interest on Borrowed
Dividends
TOTAL DIVIDEND EXPENSE
“The work you do makes a
difference as we work to bring
more acts of goodness and
kindness into the far reaches of
the world (even into banking!).”
— Member
10
2000
1999
ASSETS
Consumer Loans
Youth CU Loans
Partnership Loans
Mortgage Loans
Business Loans
TOTAL LOANS
Allowance for Loan Loss
7,208,154
219
22,456
12,203,895
2,609,368
22,044,092
(288,524)
6,380,552
1,823
13,695
11,333,400
2,020,506
19,749,976
(170,295)
Total Cash
Total Investments
Fixed Assets
Other Assets
518,595
10,034,289
1,271,864
890,417
580,567
8,107,929
1,361,432
1,040,163
TOTAL ASSETS
34,470,733 30,669,772
LIABILITIES AND MEMBER EQUITY
TOTAL LIABILITIES
561,608
Growth
11.62%
12.39%
319,511
Regular Savings
Youth CU Savings
Retirement Savings
Checking
Certificates
TOTAL DEPOSITS
8,417,430
330,468
2,979,754
7,683,073
10,839,451
30,250,176
8,085,111
279,204
3,097,422
6,092,698
9,882,867
27,437,302
Secondary Capital
1,400,000
850,000
495,096
676,973
-26.87%
1,763,853
1,385,986
27.26%
TOTAL
LIABILITIES AND EQUITY 34,470,733
30,669,772
12.39%
LOAN RESERVES
RETAINED EARNINGS
10.25%
Board of Directors
Alternatives’ volunteer Board of Directors, elected by the members from among the membership, ensures that our mission is met through prudent,
thoughtful and creative action.
recycle funds in the community
be a socially responsible depository
serve underserved people
Robin Botie Warden
Kenny Christianson
Diana Drucker
Jim Fravil
Nia-Malika Fussell
Karen Jamarusty
Amy Kuo
Paul Mazzarella
Tom Terrizzi
Leslie Strebel
Lane Chambliss
Leslyn McBean
Alternatives recognizes that the key to moving members
successfully along the Credit Path is Education.
Staff preparing for
the new building
Sitting: Abigail MacBain,
Fidela Sindihebura,
Michelle Menter, Sarah Sullivan,
Soren Bailey, Miroslav Knezevic,
Carol Chernikoff, Chuck Dong
Kneeling: Sharon Kinnan,
Ronda Porras,
Bill Myers, Jeff Lawhead,
Melissa Pollack, Pat VanDusen,
Meridith Smith-Converse
Standing: Betty Henderson,
Patrick Woods, Mary Ziegler,
Ron Campbell, Deirdre Silverman,
Gerry Ruggiero, Kathleen Cooke,
Chris Chiambalero, Diana Leigh,
Leni Hochman
“Just thanking you once again for the news from Ithaca in a part of the Midwest where a livable wage is rarely if
ever discussed, and a fair economy is a foreign concept It
was great to read of your efforts. Sometime I feel completely alone here but you remind me I’m not!”
— Member
12
Human Resources
FELLOW TRAVELERS
PROFILE: Irene Kapiris
Irene came to Alternatives member
service in August 2000. She had been a
small business owner in Key West,
growing edible flowers and gourmet
greens for local restaurants there. She
closed her business after it was blown
away by a hurricane for the second
consecutive year.
Irene chose to work at Alternatives
because “The Credit Union is about what
you believe is worthwhile in life.” As a
member service representative and longtime entrepreneur herself, Irene enjoys
seeing the high percentage of small
business owners who use Alternatives’
financial services and has a special
appreciation of the value of Alternatives’
role in educating its members, for both
business and personal money management, as they travel the credit path.
Alternatives is member owned, and staff all become members. Our staff has a common bond
with members; they travel the credit path together. When we seek to serve our membership by
educating and empowering them financially, it’s the commitment of our member-staff that
‘moves the mission’.
Alternatives has been an innovator this year in serving the needs of those who serve the Credit
Union by initiating a domestic partner health insurance reimbursement that is one of the first of
its kind in the region. We’re proud to offer livable wage and a competitive, complete benefit
package. In addition to education benefits and subsidized professional seminar attendance, biweekly staff training is a regular feature utilizing in-house resources to keep all staff fully informed of Credit Union services. Networking opportunities are actively encouraged; Alternatives
gives staff incentives to share their expertise with the community by serving on community
boards as compensated work time.
Worker’s Council, the body of staff that gives voice to staff needs, proposed changes, instituting
a new joint council of management and staff which were implemented to improve communications. To further encourage communication opportunities, staff are provided monthly subsidies
for lunches with other staff, which is a popular, lively and well used program.
Alternatives’ livable wage study, instituted to honor the concept that workers at full-time jobs
should be able to support themselves without additional outside help, has served the local
community as a hallmark of employment fairness standard. The study is much anticipated and
widely quoted as a tool for securing fair wages.
We continue to be active partners in Youth Employment Service; we also had 22 interns from
area colleges and five VISTA interns.
Alternatives is an equal opportunity employer which seeks diversity in its staffing while cultivating growth and advancement for each worker: personally,
financially and professionally. As an employer, we’re committed
to serving our membership with highly motivated, well-trained
staff dedicated to our basic mission.
CONTACT:
Sharon Kinnan, HR Manager
[email protected]
Member Service
Our Tellers… and what they could tell! - but don’t.
“THE FACE OF OUR CREDIT UNION” WELCOMING HANDS ALONG THE PATH.
The mood and friendly feeling of the Alternatives lobby is an experience in
itself. Alternatives is well known for the diversity of its membership, and our
Member Service Representatives (MSRs) and members share an appreciation
of that diversity and individuality in a wide range of unique and entertaining
relationships! MSRs are the hands-on, roll-up-your-sleeves-and-get-the-jobinto-the-system part of the Credit Union journey. Alternatives’ MSRs function
efficiently and accurately to translate member needs into action. In addition to
the obvious demands of handling over 20,000 transactions a month with
precision, MSRs perform many of the functions that larger financial institutions
assign to “specialists,” such as receptionist duty, account opening, address
changes, stop payments, and closing accounts. They’re also knowledgeable
about product lines including loans, Certificates, and VISA cards, and are able
to refer members to needed specialists within the Credit Union for these needs.
PROFILE: Amy Capalongo
Amy is proud to have brought herself and two children
off public assistance, which she describes as “nobody’s
dream”, through her Alternatives job. Amy applied twice
for her job, started part-time, moved to full-time, then to
assistant vault manager and is currently Member
Service Specialist. Amy says “I don’t know if I could have made it without this
job.” She took the Credit Union’s economic literacy training course, Money
Wise Money Whys and is practicing personal money management. She has a
car now and no longer has to walk her children to daycare or ask for a ride to
take them to the doctor.
When the doors lock shut and the shades come down, our MSRs are not
enjoying “banker’s” hours. They function as their own “proofing department,”
checking transactions and participating in training sessions. For members who
aren’t able to take the time to enjoy the special ambiance of the Alternatives’
lobby, MSRs helped design our “Get Out of Line” campaign explaining access to
our electronic and after hour services on the phone with Fortune Teller and online with Alternatives CU@Home.
PROFILE: Anita Peebles
Anita is a “townie” and has had an account at the Credit
Union since her high school years. Before coming to
work at Alternatives, as a single parent, she struggled
to make ends meet at minimum wage jobs. Anita had
so little working capital that she would open an account when her tax return
came in and close it out a few months later when the money was gone. It was
hard to sacrifice to pay bills when she felt she could never get ahead. Anita
cried when she came to work at Alternatives where there is an implemented
livable wage policy. She has opened a line of credit and is proud that she’s
able to pay her rent on time, and fix her car when necessary. As a Member
Service Representative, she’s been amazed to see how many families come
to Alternatives, get homes and put down roots. Her hope for the future is to
buy a small home of her own after establishing a credit rating.
I enjoyed banking with you very
much. I wish we had a bank like
yours here. I loved your awareness of the needs of the community and I like to be helped by
people from different cultures.
— Member
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CONTACT: [email protected]
Consumer Loans
For many people, a consumer loan is the second step along the Credit Path from Saver to
Borrower. Credit histories begin with small personal loans, lines of credit, credit cards or car
loans. Borrowers may move from used car loans, to new car loans, to mortgage loans as they
build successful credit records.
Consumer lending is also important from a community development perspective because it
provides a fair alternative to less affordable rent-to-own or predatory lending practices. And
numerous studies have shown that having a reliable car is a major factor in getting and keeping
a job, especially for those who are new to the work force.
For many years, Alternatives has developed products that help people who are entering the
credit system, or who are repairing damaged credit. Our Credit Builder loans, share secured
loans, and Entry debit cards are such tools. In 1999, we began our Opportunity Lending
Carol Chernikoff, Director of Lending
Program, which provides entry into the Credit Path for those with
weaker credit histories by basing loan prices (interest rate) on
the risk involved in making the loan. We continue to have the
best rates in town for borrowers with great credit ratings, and far
better rates than predatory lenders for borrowers with blemished
credit ratings.
Lines of credit showed major growth in 2000, increasing by more
than 30% from 1999. New car loans also showed strong growth,
with a 35% increase in 2000.
CONSUMER LOANS 2000
PROFILE: Betty McGrew
Betty was preparing to buy a new car. She called our loan staff and Ronda was
able to show her how to comparison shop on the Internet. Using the information
she gained from Ronda, Betty negotiated for the same car at nearly $2,000 less
than she had expected to pay originally. She was one happy member! It made
Ronda’s day, too. We can’t always promise fabulous savings like this, but we do
pledge to give the most personalized service and share our knowledge and
experience with members who need it. Sometimes it’s a gas!
Loan Type
#
$
884
1,094,850
New Auto
35
621,469
Used Auto
160
1,545,404
Signature Loan
175
638,516
7
18,871
34
179,009
1,295
$4,098,119
Line of Credit Loans
Community Partnership Loans
Other Secured Loans
Totals
CONTACT: [email protected]
Home Loans
BUILDING PERSONAL WEALTH, A CREDIT PATH GOAL ACHIEVED
Buying, renovating, or using equity to reach personal goals...
The year 2000 saw 67 new mortgages representing dreams reached for community members
who have traveled the Credit Path to a meaningful goal - a home of one’s own. Additionally 208
community members received in-depth information and counseling. Many of them took their
first step towards home ownership: making a plan. We reached out into the community by
working with Ithaca Neighborhood Housing Services, Better Housing for Tompkins County, and
provided information at GreenStar Cooperative Market and Credit Union seminars.
Alternative offers real alternatives with the Flexible Mortgage for members who don’t meet
conventional guidelines because of employment, debt ratio, credit history problems or with
homes that don’t meet secondary market standards.
Alternatives’ array of home loans makes it possible to match the best loan to the member’s
needs. In addition to the standard fixed and variable rate loans offered at competitive rates, we
have loans that we hold at the Credit Union, designed for the special needs of our members:
the 10 Year Swing, the Flexible Mortgage, a Construction loan product and the Home Equity
Credit Line.
10 Year Swing is designed for people who have the means to make their monthly payment, as
evidenced by their income and ability to pay rent, but who have been unable to save enough for
PROFILE: Pam Mackesey
Pam Mackesey has been a homeowner before and knew what she was
getting into when she and her husband decided to buy a “fixer upper” in
downtown Ithaca. “Conventional” lenders weren’t very interested in
Pam’s choice of property and her plans to build “sweat equity.” Alternatives had competitive rates and a staff that took the time to hear out
Pam’s plans. She started with our Flexible Mortgage, closed in early
April, worked her tailfeathers off, and came back to qualify for a home
equity loan in late May. “It’s not our first home renovation, but it’s our
most thorough renovation, and a year later, we still have lots to do.
Alternatives listened and worked with us to accomplish our dream.”
9
CONTACT: [email protected]
a down payment. It features a low down payment (3%), and
unlike most mortgages, where the down payment must be
proven to be personal funds, this down payment can be a gift,
grant or loan. This allows many low-income and first-time buyers
to complement their mortgage with local home ownership
programs.
Alternatives offers real alternatives for members with credit
history problems, or with homes that don’t meet secondary
market standards with the Flexible Mortgage.
Members use our Home Equity Credit Line for all kinds of things,
like home improvement, vacations, even car loans.
Construction Loans are designed to allow members to build their
own houses or hire a contractor to build for them.
Alternatives, with its understanding and experienced staff have
held many hands through this sometimes unnerving process and
assisted grateful members in achieving their dreams.
Alternatives is an Equal Housing Lender
HOME LOANS 2000
Loan Type
#
$
Secondary Mortgages
19
1,245,205
Flexible Mortgage
13
779,950
10 Year Swing Mortgage
19
1,300,750
Home Equity
22
660,750
Totals
73
$3,986,655
Small Business Loans
There is a great symbiosis between the Community Enterprise Opportunities (CEO) program
and our small business lending. People use the services of CEO, in the classroom or one-toone consultations, and are better prepared to handle a small business loan. With these two
programs, Alternatives is helping develop the local economy. After all, small businesses have
created most of the new jobs in New York state over the last 20 years.
BUSINESS LOANS 2000
Serving small business has been one of the major focuses of our mission since 1979. In 2000:
• for the second year, we approved more that $1 million in new business loans
• our new partnership with the SBA MicroLoan program enabled us to lend $74,000, to 8
members, all loans under $25,000.
Loan Type
#
$
10
180,000
Unsecured Loans
5
20,200
Equipment Loans
16
334,883
Grace VISA
3
17,000
Small Business Administration Micro
8
73,880
Small Business Administration
10
557,950
Totals
52
$1,183,913
Line of Credit
• we assisted over 50 members to start or grow their business
PROFILE: Joseph Wetmore
CONTACT:
Joseph is a long-standing Alternatives member who used the equity in his home for an
Alternatives’ loan to get started with his bookstore Autumn Leaves, featuring only used
titles, on the Ithaca Commons. Autumn Leaves partnered with Alternatives to install
Tompkins County’s only no-fee ATM, joining our ATM sites at Ithaca Bakery,
Greenstar, and Collegetown Bagels.
[email protected]
CEO
COMMUNITY ENTERPRISE OPPORTUNITIES
The Community Enterprise Opportunities program gave new millennium entrepreneurs a boost! A record 162 people used CEO to receive training and technical
assistance in business. These participants were offered CEO classes, business plan assistance, marketing ideas, peer support groups, networking opportunities,
question and answer sessions with an accountant, lawyer, professional promoter, and access to other CEO participants who are in business.
This year brought a new director, new technical assistance specialist and new VISTA to the program. These staff changes meant new ideas and additional
projects including a CEO survey, the rehabilitation of The Micro Enterprise Support Alliance (MESA), seminars including bookkeeping and stress management, as
well as the exciting expansion of classes to Cortland.
As part of the CEO program expansion into Cortland County this year, eleven participants completed the CEO course. “I was pleased to see such dedication and
interest in the Cortland class considering that the program was new to the county. We are hoping that the CEO program is as popular there as it is in Tompkins
County,” said Patrick Woods, the program’s Director.
The CEO program is funded by the Small Business Administration, Empire State Development Corporation, the Aspen Institute and the Ithaca Urban Renewal Agency.
PROFILE: Sara Culotta, Owner, Business is Blooming, weekly flower service
Sara started her flower business in March of 2000, but wanted more direction, and went through the eleven week
CEO class. The CEO classes helped Sara to “…take my dream seriously and actually manifest my business. The
class is well-rounded and provides a complete picture of what is involved in a successful business.” CEO classes
helped Sara with marketing, product pricing, networking, and learning to speak about her business in search of
feedback. For Sara the class was also motivational. “It got me to push through tough places. I now think about
what is the next right thing to do and trust that this is all going to come together.”
Sara adds, “Running a business from home is more complicated than I thought it would be. I do, however, get to
stay home with my two year old.” When I asked Sara if she had any words of wisdom to current and future CEO
participants, her reply was, “Do what you love… your passion for it will carry you through!”
CONTACT: [email protected]
GO Fund
GROWTH OPPORTUNITIES FUND
How does a business finance an opportunity to expand? If the business has equity and collateral, a small business loan
works fine. If the business owners have capital, they can invest in the business. If it is a high-tech business, venture
capital can be the solution. But for upstate, low-tech, fully leveraged small businesses, these options aren’t available.
The year 2000 saw background work completed for the launch of an innovative business growth fund. Alternatives has
responded to specialized small business needs by creating a hybrid debt/equity product, which suits the needs of small
businesses- a middle ground between a loan and venture capital company. The Growth Opportunities Fund (GO Fund)
encourages the development and expansion of small businesses that do not have access to equity or equity-like instruments. The goal of the GO Fund is to provide equity-like financing that does not require immediate repayment, to support
the development of small businesses that can demonstrate growth potential.
The goal of the GO Fund is to
provide equity-like financing that
does not require immediate repayment to support the development of
small businesses that demonstrate
growth potential.
Each investment is reviewed by an investment committee of expert volunteers. Technical assistance will be available from
the GO Fund and the Credit Union’s Business Services department.
The results of these innovative efforts lie in the future.“Right now, we’re trying to draw the balance between social returns
and capital returns. We are finding out what the needs of potential businesses are, a key piece in developing this as an
effective tool,” reports Jeff Lawhead, Fund Manager.
Note: The GO Fund is a product of the Alternatives Venture Fund, a 501(c)(3) affiliate organization of Alternatives Federal Credit Union.
10
CONTACT: [email protected]
Jeff Lawhead, GO Fund Manager
IDA
INDIVIDUAL DEVELOPMENT ACCOUNTS
An Individual Development Account (IDA) is a targeted matched savings
account for low income people, to be used specifically for attaining the
following asset goals: home purchase, post-secondary education/job
training, or small business development. The goal of the IDA program is to
help low income people reach financial self sufficiency through money
management course work and matched funds.
Alternatives is one of thirteen sites across the country participating in the
American Dream Demonstration (ADD) to prove the efficacy of IDAs. Since
1998, people have been saving in Individual Development Accounts at
Alternatives to purchase a home or make repairs, go back to school, or
start a small business.
We currently have 78 participants in the IDA program. Twenty-two people
have reached their asset goals. Eight IDA participants have purchased
homes; five people, two of whom are youth, are currently attending college;
five people have started or expanded their small business and four participants have made essential home repairs.
Major funding for the ADD IDA program has come from the Corporation for Enterprise Development, the Park Foundation, HSBC Bank, Tompkins County, and
Empire State Development Corporation. A wide range of local foundations,
churches, civic groups and individuals have also supported this program.
As Alternatives’ ADD IDA program winds down, a few new IDA programs are just
getting started. For women and minority graduates of the Community Enterprise
Opportunities classes, Alternatives is offering IDAs with a 1:1 match rate on $750 in
savings over the course of one year. These IDAs are for the purchase of business
equipment only.
Through a partnership with Challenge Industries and funding from the Joseph P.
Kennedy Foundation and the New York State Office of Mental Health, IDAs are
available to consumers of Challenge’s supported self-employment program. Savings
of up to $50 per month will be matched 2:1 for business start-up or expansion.
PROFILE: Gabe Flores
Gabe Flores was one of the first IDA youth participants, joining the program right after high school graduation. As a peace activist, Gabe did not want to register for selective service. However without registering,
he would not have access to a number of student grants and loans. The IDA helped Gabe get money for
his education while not having to go against his values.
So far Gabe has used $2,705.01 to pay for tuition at Tompkins Cortland Community College. He completed
the economic literacy training course, Money Whys, Money Wise and has noticed how it has helped him
change the way he thinks about and spends his money. “I have been trying to save for a car but my
education is more important right now, so I’ll have to put it off for a while.” Gabe also enjoyed looking at the
effects of our consumer culture and the impact on our environment, our values and families.
CONTACT: [email protected]
PROFILE: Anne Koplinka-Loehr
DFD
Ever since her debut at age 6, of naming Dollars For
Dreams, Anne has had a love for finance… (and
banking, and saving, and volunteering). She started
working at DfD during her freshman year at Ithaca
High School. She is graduating a year early so she can
spend a year abroad in Belgium. She is very involved
in youth theater (especially with Orange Tree Theatre
Company) and the arts (singing, violin, acting, photography, writing, etc). She loves reading exponential
amounts of literature in AP English, as well as writing
essays (really, she likes to write!). She hopes to grow
up and conquer the world. Or maybe she'll settle for
her own classroom.
DOLLARS FOR DREAMS
For DfD, 2000 marks ten years as an innovative model youth financial program.
2000 also saw a majority of its veteran youth staff graduate and a new coordinator come on board in the fourth quarter. While adjusting to these major staffing
challenges, our accomplishments for the year are as follows:
• We maintained the DfD branches at Alternatives Credit Union, Alternative
Community School, and Boynton Middle School, ending the year with 737
accounts and a total of $304,000
• DfD participant Lisa Smith won the Youth Volunteer of the Year award from the
New York State Credit Union League
• Anne Koplinka-Loehr represented DfD at the National Federation of Community
Development Credit Unions Annual Conference in Denver, Colorado
• We sponsored a children’s story and foreign coin activity at the Kid’s Bookfest,
Boynton Middle School
• DfD participated in Credit Unions Care for Kids by collecting toys and donating
them to the Red Cross Shelter
Anne reports - “I believe that I have a much closer association with the
program because I named it, and I feel I belong there. I have a forum for
ideas, as well as a group of young people who are competent tellers to work
with. I have gained business experience from volunteering at Alternatives,
and I hope I have extended my public relations skills as well as my interpersonal connections.”
• We initiated a financial literacy curriculum for youth
I had three students approach me with how interesting they found your presentation on issues of
disenfranchised people in our community. What a
whole new world of potential work and career
opportunities you uncovered for them.
— Member
11
CONTACT: [email protected]
Community Partnership Lending
CPL
PULLING TOGETHER ALONG THE PATH
Community Partnership Lending (CPL) is a program designed to help community-based, not-for-profit organizations work with their
clients to get them on the Credit Path. Staff of participating agencies determine client needs for loans. Alternatives administers loan funds
which are lent to clients of a participating agency. The agency raises half of the funds and the loan fund account provides the rest.
Participating agencies in 2000 include: ACCORD, Ithaca Urban Renewal Agency (IURA), Ithaca Housing Authority, Minorities and
Women Business Enterprises (MWBE) Development Center, Inc. Negotiations are underway with several more community agencies
to continue this very practical program.
Alternatives and the agency partner in education, mentoring, and monitoring to help ensure success. These loans include small
business loans to low-income city residents, loans to debt program participants for debt consolidation, cars, and loans for emergency
assistance to clients in need. The loans are as varied as the individuals served by our partners. CPL exemplifies Alternatives’ mission
to serve underserved populations.
CONTACT: [email protected]
Cooperative
Enterprise Project
WIDER PATHS
Zoe Holloman, Intern
The Cooperative Enterprise Project, begun in February
of 2000, is focused on the creation of a strategic plan to
provide technical assistance and resources to cooperative businesses in Central and Western New York State.
The vision is for a Technical Assistance Center to be
located at Alternatives Federal Credit Union, managed
and staffed by Cooperative Life and the Cooperative
Development Institute of Greenfield, Massachusetts in
partnership with Alternatives.
In 2000, an advisory board was established and a study conducted to evaluate the need
for technical assistance, including the need for an active program in education and
marketing. The goal of these programs would be to stimulate interest in cooperative
business formation within identified communities.
While still in the planning stages, this project reflects Alternatives’ concern with the
mission of serving underserved communities by building cooperative enterprise at the
grassroots level.
CONTACT: [email protected]
Socially Responsible Investing
ANOTHER STEP ALONG THE CREDIT PATH
Members who put their money in Alternatives often do so because our
mission matches their values. They want their money to be poured back
into the community. But the ability to invest with us is limited to savings
accounts and share certificates. Members who want to diversify their
savings plan and have the chance for higher returns often look to us for
advice.
In 1999, we created a partnership to fill that need. Brian Laverty, an
investment counselor specializing in socially responsible investing (SRI),
has over 16 years of experience in consulting in insurance and investments. His primary activity is in investment portfolio management.
development credit union is truly about making a positive difference in those areas
that are under served by the traditional large conglomerate banking institutions.
That is why I cherish my relationship with Alternatives.”
Brian is available at Alternatives two days a week for Alternatives members.
Investments are offered through Progressive Asset Management Network, member NASD/SIPC. Products
offered are not federally insured, are not guaranteed by or obligations of Alternatives Federal Credit Union or
Progressive Asset Management Network. Investments may involve risk, including loss of principal.
“It is hard to believe that I’m starting the third year working with the staff
and members of Alternatives,” reflects Brian. “Being part of a community
Brian Laverty, Investment Counselor
12
CONTACT: [email protected]
Indivisible
Leni Hochman, C.O.O.
THE PATH TAKES A DETOUR TO TELL THE REST OF THE NATION OUR STORY
An email from Soren Bailey, who worked at Alternatives before moving to Chicago:
“When we first moved here, we decided to go to a contemporary art museum in
downtown Chicago. When we got there we saw there was a special show... We
were surprised to see that one of the towns featured was Ithaca! When we
actually got to the set on Ithaca, what do you know, but it was all about Alternatives! There were pictures of staff and members on the wall as well as photos of
businesses like Sticky Rice who got loans at the Credit Union! I couldn’t believe
it! What a coincidence! It was nice to see all the familiar faces and hear Leni’s
voice on the audio museum guide.”
The good work of Alternatives is being showcased nationwide as part of “Indivisible; Stories of
American Community.” Alternatives is one of 12 organizations selected to depict grassroots
democracy in America. Indivisible tells the stories of our members and staff in narration and
photographs.
Indivisible is a project of the Center for Documentary Studies at Duke University in partnership
with the Center for Creative Photography, University of Arizona, and funded by The Pew Charitable Trusts.
Indivisible debuted in October as a museum exhibition in Chicago, and as a major trade book,
Local Heroes Changing America. The Terra Museum was the first of eight museums around the
country displaying nearly two hundred original photographs and an audio guide with excerpts
from recorded interviews. Though the museum tour is not scheduled to hit Ithaca, the postcard
version opened in Center Ithaca in December. Designed to
take the words and images of Indivisible to a broader audience, the postcard installations (brought to Ithaca and set up
with a lot of help from Ithaca Downtown Partnership and
Center Ithaca) featured racks of free postcards and interactive computer stations that allowed visitors to record their own
stories of community.
“Indivisible portrays the struggle to build our democracy at the
ground level - connecting our everyday lives with our civic
lives - and documents how, with hard work, it can be done,”
said Rebecca W. Rimel, president and CEO of The Pew
Charitable Trusts.
The project also includes an educators’ guide, the booklet
Documenting Community Action, a guide to producing a
documentary and local archives. Check out the web site,
www.indivisible.org where you can hear the stories of
Alternatives and the other local initiatives to better their
communities. From the website, you can purchase the book
(feel free to look at it at the Credit Union), send e-postcards,
and find out if the museum or postcard exhibit is crossing
your path.
In the spring of 1999 Alternatives was asked to be part of a documentary project
funded by The Pew Charitable Trust. The project, called Indivisible, will tell the
stories of 12 community initiatives, highlighting diverse, sustainable grassroots
projects that promote strong communities across America.
Steven Valloney, Alternatives Federal Credit Union member and
owner of the Sunrise Yoga Center, with Charlotte Rosen. Ithaca,
New York, 1999. Photo © Bill Burke
Alternatives Federal Credit Union member
Jonathan Kline is the owner of Black Ash
Baskets, a local business. Ithaca, New York,
1999. Photo © Bill Burke
Kind Help, continued from page 2
“During the first year we have been living in Ithaca, we have accomplished a lot of things: our incomes have stabilized because I (Sasha) have got a permanent job in
my field at Cornell, my wife Zelkida has become an “A” student at TC3, our daughter Mirna has already passed through the Pre-K program and she is now preparing
to start her study in Kindergarten. These days we are just about to move from public housing to a very nice rental apartment, we have already bought and collected
almost all the furniture that we need, we have a computer, a nice used car, etc. And Alternatives has been with us all the time, supporting and helping us every time
we needed help with our finances. Your organization has approved every one of our loan-applications so far, even at the very beginning, when we didn’t have very
stable source of income and still were in ESL program, but urgently needed to buy a computer because of my profession ( I am an information specialist) and
Zelkida’s study needs at TC3. Alternatives issued us our first VISA card, at first a debit one and after just a few months the Choice Card, extending our credit limit
only six months after getting it. And every time kind people from the Alternatives have served us promptly,
with the highest level of professionalism. Also, we specially want to mention your excellent CU@Home Online service, which we especially appreciate because it offers us the possibility to check on our account
from home, any time we turn on computer. “
“Thank you very much for everything you have done helping us to make Ithaca and the United States our
new home. Best wishes!”
13
Predatory Lending
HAZARD SIGNS ON THE PATH
Education is a key component of the Credit Path and Alternatives’
mission. Its importance is especially relevant when you consider the
unscrupulous practices of predatory lending. Predatory lending threatens
to undo some of the gains of the Credit Path. Because predatory
practices are carefully designed to lure unsuspecting consumers, the
best protection is education.
While the phrase predatory lending may be new to you, its practice is
old. It may not be as apparent in Ithaca, where there are no Check
Cashing stores or Pay Day lenders, but Ithacans have not avoided its
clutches. Predatory lending can take the form of unconscionable fees
for quick tax refunds or rent-to-own stores which, if translated into
annual interest rates, can soar over 100%.
Predatory lending should not be confused with subprime lending. Much
of Alternatives lending is subprime lending. Subprime lenders work
with individuals who, because of credit history with late payments, high
debt-to-income ratios, or other reasons, do not qualify for loans from
conventional lenders. Fair subprime lenders charge more, but do not
engage in abusive, usurious lending practices; they make loans that
are appropriately priced for higher risk borrowers. Predatory lenders
charge fees and interest beyond the risk they are taking.
It’s infuriating to hear about the exploitation some of our members have
suffered before coming to us:
• A couple goes to the local branch of a national tax service to file their
tax return and get their Earned Income Tax Credit. It’s a very simple
return, but they are charged $60.00. The preparer convinces them to
apply for quick return to get the return faster ($20). And they could
take out a tax return anticipation loan, very short-term with up-front
processing fees. These fees affect the annual rate, bringing it to a
startling 401%! When the refund is paid, they get a check from the preparer’s account. The fee for the couple to cash the check at a bank (without an account) is $10!
• A rent to own center offers a lease for a refrigerator purchase. For the $800 appliance, the purchaser pays $1800 including interest, fees and markup by the time the
refrigerator is paid for.
• An immigrant borrower buys a car from a used car dealer. Purchase price is 20%
over book value plus fees plus high interest rate. Loan payment is 100% of borrower’s
net income. Borrower goes back to dealer in two months. Dealer refinances deal with
longer term, added fees and uses borrower’s brother’s car as additional collateral.
The worst cases are predatory mortgage lenders. These stories can be heartbreaking.
Lenders focus on the elderly and minorities. They prey on low income and unsophisticated borrowers. Borrowers are lured into high rate loans with excessive fees and
misleading terms. Many borrowers lose their home and savings because the loan is
often based on the amount of equity the borrower has in his/her home, not in the
borrower’s ability to repay the loan.
Why is this happening? “They’re greedy, they’re greedy,” says Nina Simon, a staff
attorney with the American Association of Retired Persons Foundation, which works on
behalf of elderly people who have been scammed. “They’re very profitable and they
don’t care. I just don’t think anybody cares,” she adds. “They’ve kept pushing the
envelope because they’re making money.”
Recent actions of the Federal Trade Commission are encouraging to the many groups
working to fight predatory lending. In the meantime, Alternatives is joining others
locally, statewide and nationally to educate people about what to look out for, and to
check out alternatives, like community development credit unions.
CONTACT: [email protected]
Grants and Awards
OUTSIDE GRANTS AND DEPOSITS BRING COMMUNITY DIVIDENDS
The community development activities described throughout this Annual Report- IDAs, youth credit union, microenterprise development, affordable mortgages,
financial education, small business lending- would not be possible, or would be limited in scope, without support from public and private funders. The individuals,
foundations, corporations and government agencies that provide grants and program-related investments (low-interest deposits and loans) make it possible for us
to expand our efforts to promote community economic development.
Investments in Alternatives have a multiplier effect in our community. They help create new businesses that revitalize our local area with new jobs and innovative
products and services. By promoting homeownership, they increase stability in our neighborhoods. Through the support of financial education and helping people
move towards self-sufficiency, they help reduce the wealth gap.
On behalf of our members and our community, we truly appreciate the financial support of the following:
We received grants and secondary capital deposits from:
CDFI (Community Development Financial Institutions) Fund of the U.S.
Treasury Department, Corporation for Enterprise Development, Empire
State Development Corporation, Small Business Administration, Ithaca
Business and Professional Women, National Community Investment Fund
(NCIF), National Federation of Community Development Credit Unions
(NFCDCU), National Community Capital Association (NCCA), First Baptist
Church, Ithaca Urban Renewal Agency, Tompkins County, Haro Foundation,
Park Foundation, Aspen Institute, HSBC Bank, Social Service League,
Service League, Helen Thomas Howland Foundation.
Non-member depositors make large deposits, sometimes at below-market
rates, to support our lending and other initiatives: ACCORD, Ben & Jerry’s
Foundation, Calvert Fund, Calvert Social Investment Fund, Cayuga Medical
Center, City First Bank of D.C., Community Capital Bank, Douglass National
Bank, Dryades Savings Bank, Empire State Development, Emunah Yuka
Edinburgh, Fannie Mae, Fleet Bank of New Jersey, Fleet National Bank
Massachusetts, Foundation of SUNY Binghamton/Joel Robinson Fund,
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CONTACT: [email protected]
Funding Exchange Endowment, Genesee Valley Improvement Corp., F.B. Heron
Foundation, HSBC Bank, Institute for Community Economics, MWBE Development Corp., Neighborhood National Bank, New Alternatives Fund, NFCDCU, O.P.
& W.E. Edwards Foundation, Parnassus Fund, Partners for the Common Good
2000, St. Lawrence Seaway Development Corp., Shorebank Cleveland, Sisters of
the Holy Cross, South Shore Bank, Stowell Trust, Tompkins County SPCA,
Tompkins County United Way.
And the following credit unions: Alpa, Bethpage, Cascade, East Idaho, Greater
Minnesota, Heritage Community, John Deere Community, Kaiser Permanente,
Kemba Charlestown, LUSO, Miramar, Mississippi Telco, Morristown, Near
Eastside, New Century, Pasadena, Peoples, Quitman County, Riverside County
Schools, Rochester Ukrainian, San Francisco Police, Self-Help, Star USA,
Syracuse Cooperative, Union Heritage, Union Settlement, Vicksburg, United Auto
Workers CIO, United Brotherhood.
Deirdre Silverman, Director of Development