Northeast Community & Cooperative Center Help Low-income People This Tax Season
(March 14, 2011 – San Francisco, CA) With tax day fast approaching, preparers nationwide are working overtime to file their customers’ taxes. However, for millions of low-income Americans who can’t afford professional tax preparers, or for recent immigrants who may be filing taxes for the very first time, the process can be a daunting and stressful one. Fortunately for many, assistance is available thanks to thousands of volunteers across the nation helping low-income people file their taxes for free through Volunteer Income Tax Assistance (VITA) sites.
Credit unions are not new to VITA, but for community development credit unions (CDCUs) dedicated to serving some of the most underserved communities across America, tax season is often one of the busiest, with many CDCUs operating VITA sites throughout their communities. Their efforts have not gone unnoticed, and in the past week, two San Francisco Bay Area CDCUs, Northeast Community Federal Credit Union (San Francisco, CA) and Cooperative Center Federal Credit Union (Berkeley, CA) were the focus of recent media pieces lauding their work with VITA, with Northeast Community Federal Credit Union featured on ABC7 Television’s “Money on Your Side” segment, and Cooperative Center Federal Credit Union featured in an article in the San Francisco Chronicle’s SF Gate.
|Northeast Community FCU CEO Lily Lo assists a member with free tax preparation at the CDCU's VITA Site in their Tenderloin branch.
Originally organized to serve low-income residents in San Francisco’s Chinatown, Northeast Community FCU has expanded over the years to other low-income neighborhoods, and although the credit union has just over $10 million in assets it operates branches in the Tenderloin and in the South of Market’s (SOMA’s) 6th Street corridor, historically known as the city’s Skid Row.
“We have four VITA sites in San Francisco this year,” explained Northeast Community FCU CEO Lily Lo, “in our main branch in Chinatown, our Tenderloin branch, Golden Gate Church in the Richmond District, and our newest site in our SOMA branch, which opened last year,” she said. “VITA is an important service we provide our members, and with the high unemployment in California, we’ve seen big increases in people coming in for free tax preparation compared to last year. Already this year, we’ve opened 30 new accounts with previously unbanked people who came to us for VITA. It’s clear that the need is great right now, and we’re happy to help them,” she added.
Across the bay in Berkeley, another CDCU, Cooperative Center FCU, is also operating a VITA site, but in addition to preparing taxes for free, the credit union is piloting a new program that offers participants affordable refund anticipation loans (RALs) for just $19. In comparison, professional tax preparers offering RALs typically charge much higher fees, which when annualized work out to rates between 40% and 400%.
“As a nonprofit financial institution, our mission centers around serving our members and our community, not just padding our bottom line,” explained Cooperative Center FCU CEO Gary Bell. “By helping these individuals and families save their hard-earned cash, we build a trusting relationship with them and hopefully they’ll come back and become members of our credit union.
Northeast Community FCU has also been offering affordable RALs to its VITA filers, with 11 filers requesting them to date, nearly double the total number they made during last year’s entire tax season. Like Cooperative Center, Northeast Community’s RALs are much less expensive than for-profit tax preparers. Northeast's RALs carry a maximum interest rate of 18% and no fees.
A program of the Internal Revenue Service (IRS), VITA provides free tax preparation to households earning less than $49,000 per year, and assists low-income people save millions by helping them claim their tax benefits, such as the Earned Income Tax Credit (EITC), a credit of up to $5,666 for the 2010 tax year, and by helping them avoid the expensive fees and high-cost RALs offered by many for-profit tax preparers.
Many credit union VITA sites operate in partnership with United Way’s Earn It! Keep It! Save It! campaign, and according to United Way, these sites are not just a service for low-income people, they are a real benefit for the cities and communities at-large. Based on its research, tax refunds returned to low-income households are generally spent locally, multiplying their economic impact. Since 2003, Earn It! Keep It! Save It! VITA sites have generated an estimated $228.5 million in local sales, 1,057 jobs and $55 million in wages across the Bay Area.
“Ultimately, we don’t do this because it necessarily makes the most financial sense for our institution,” Bell explained. “We do this because ‘people helping people’ is what credit unions are all about. It’s in our mission and it’s the right thing to do,” he added.
The ABC 7 piece featuring Northeast Community FCU is available at: http://abclocal.go.com/kgo/story?section=news/7_on_your_side&id=8000327.
The SF Gate article about Cooperative Center FCU is available at: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/03/09/BU5N1HS5DE.DTL.
© 2011 National Federation of Community Development Credit Unions.