Program targets the ‘under-banked’

CAPITAL PLAN: Capital Good Fund Founder and Executive Director Andy Posner and Libby Kimzey, senior vice president of coaching and systems,  working together. / PBN PHOTO/MICHAEL SALERNO
CAPITAL PLAN: Capital Good Fund Founder and Executive Director Andy Posner and Libby Kimzey, senior vice president of coaching and systems, working together. / PBN PHOTO/MICHAEL SALERNO

Seventeen people in Rhode Island opened a total of 27 checking and savings accounts to deposit tax refunds during the 2014 tax season through an award-winning pilot program run by the nonprofit Capital Good Fund in Providence.
The three financial institutions selected through requests for proposals to participate in this “Facilitated Account Opening” program were People’s Credit Union of Middletown, Navigant Credit Union of Smithfield and RBS Citizens Financial Group of Providence.
Each financial institution used a slightly different method to enable would-be customers who were filing their tax returns at a Volunteer Income Tax Assistance office to also initiate account openings while there, instead of going to the bank or credit union to do it. The partnership with VITA enables identity verification to be done both for the IRS and the financial institutions, said Libby Kimzey, senior vice president of coaching and systems for the Capital Good Fund.
While the numbers are not high, fund founder and Executive Director Andy Posner says they’re significant when aiming, as his organization does, to boost financial literacy not only for those low-income citizens who do not have access to bank accounts, but for those who do have accounts, but because of finances and other pressures may not be used to depositing and saving a tax refund.
These citizens are referred to as “unbanked” and “under-banked,” respectively. According to a 2011 national survey of unbanked and under-banked households conducted by the Federal Deposit Insurance Corp., Posner said, Rhode Island has the highest of rate of unbanked households in the country at 7 percent of the total population, while 17.8 percent of Rhode Islanders are under-banked.
“In Rhode Island, the problem is people being under-banked,” he said. “They typically have an account but don’t use it effectively. They might go to a check casher to get the money quickly [instead of saving it]. But having this [program] available gave us the opportunity to talk to people about their existing bank accounts” and encourage them to make deposits.
Shariff Njie, 40, of Providence, told Providence Business News he has deposited a $2,500 refund into new accounts at Navigant. Now working as a driver for Omega Solutions of Seekonk, Njie had been laid off for almost six months from a previous job. As a result, his account with a different financial institution had been closed. The VITA program also saved him the $300 expense of filing a tax return with a professional tax preparer, he said. He says he is grateful for the opportunity to regain a financial foothold.
“I also saved money [through] financial counseling,” Njie said. “It’s a great program.”
The pilot program also enabled a total of $55,000 in tax refunds to be deposited into new or existing savings accounts, said Kimzey. She and Posner modeled the program on a similar one in Rochester, N.Y. The model also makes use of incentives like sweepstakes and drawings to encourage people to make deposits, she said.
“We knew that a lot of people who came to us didn’t have a bank account for a reason,” she explained, “whether by choice or [because] they didn’t see that option available to them. They tried and had a bad history on check systems.”
The program also helped 64 people save a portion of their tax refund. A handful of people also saved by using treasury bonds or prepaid cards, said Kimzey. And 59 people entered SaveYourRefund drawings for prizes, according to the Boston-based Doorways to Dreams Fund, Kimzey said.
On June 4, the Capital Good Fund was one of five nonprofits to win a 2014 Best Practices Award, specifically, the Rhode Island Foundation’s innovation award.
“Their collaborative and creative solution to a significant challenge for many Rhode Islanders was remarkable,” said Jill Pfitzenmayer, vice president of the foundation’s Initiative for Nonprofit Excellence, in an email. “No other organization is doing this type of work here, and we value their ground-breaking approach.”
Overall, the Capital Good Fund’s mission is to empower people to move out of poverty through financial services, said Posner. He and Kimzey said that through this program and others that the Capital Good Fund runs, the organization is able to help people in crisis who may be out of work, about to get evicted, in abusive relationships or surviving an illness. “Just having $300 saved can make it easier, when your car breaks down, to get to work the next day,” said Kimzey. “It’s small savings amounts that can keep people from falling further and that makes for a much stronger Rhode Island.”
People’s opened one account, but remains interested in repeating the process and opening more accounts next tax season, said President and CEO Ellen Ford in a phone interview with PBN.
“It’s a good partnership for us,” said Ford. “We have the same mission as the Capital Good Fund to serve people. The shared mission – it was a perfect fit. It gives us the opportunity to provide services to clients we may not have otherwise had the opportunity to attract.”
Kathy O’Donnell, director of public affairs at Citizens, said the bank helped open 18 accounts.
“Financial education is one of our four focus areas, so the issue overall is very important to us as a bank to make sure we’re doing our part to educate people who may not have an account, particularly at tax time if they’re getting a refund and don’t know quite what to do with it,” she said.
The Capital Good Fund has also expanded the Facilitated Account Openings program into New London County in Connecticut, where Citizens does business.
“The Capital Good Fund has done a nice job with the program,” O’Donnell said. “Their numbers may not be large yet, but it’s … making an impact in both of those markets now.”
Kathy Orovitz, senior vice president of retail banking for Navigant, said the credit union opened up eight accounts.
“We’ve got an overall strategy to help the under-banked,” said Orovitz, particularly in markets in Central Falls, Pawtucket and Woonsocket. “What we came to realize is, we couldn’t bank everybody: They weren’t necessarily qualifying for accounts. Second, there was a trust issue with financial institutions given that they had a bad experience in the past with the customer.”
By partnering with the Capital Good Fund to reach out to these people, Orovitz said, “the value to Navigant is: it opens up the marketplace for us. Where we weren’t being able to grow our membership, this partnership allowed us to grow in the markets we serve because there’s a trust there.” •

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