Self-Help

Background

Banks and credit unions provide a wide range of financial services for the average person. However, their offerings are designed with a financially stable, mainstream individual or family in mind.

In recent years there has been an emerging industry of alternative financial service providers including check-cashers, pawn shops, and payday lenders. These businesses target "un-banked" and "under-banked" individuals and families living paycheck-to-paycheck by providing check-cashing, bill-pay and remittance services.

According to the nonprofit Center for Community Self-Help, an un-banked person making $500 a week can spend anywhere from $400 to $600 a year ($7.50 to cash a check; $5 to pay bills) on basic financial services. Un-banked individuals have no secure vehicle to save for an emergency or a family vacation or celebration and no access to build or repair credit. But why are people traditionally un-banked? The reasons vary from budgeting with cash or a negative experience with a bank's lack of transparency.

Under-banked individuals have made the transition halfway to the mainstream, but bank accounts are designed with a middle-income or mainstream customer in mind, therefore they have requirements that are out of reach for many low-income customers. For instance, most banks require a minimum balance or don't offer an adequate product suite (like remittances to be sent home to family in another country or money orders) for the client. An under-banked individual might cash a check at a cash checking outlet, pay his bills, send money to family and then cross the street to deposit the rest.

Mission

Self-Help's mission is to create and protect ownership and economic opportunity for people of color, women, rural residents and low-wealth families and communities and provide financing, technical support and advocacy for those left out of the economic mainstream. Since its founding in 1980, Self-Help has reached out to female, rural and minority borrowers across North America.

Full Circle Fund Role

There are many different demographic segments within the $106MM underserved market, and Self-Help is targeting the Latino immigrant population. Self Help seeks to develop a network of micro-branches that serve the immigrant Latino un-banked and under-banked with a one-stop-shop credit union model that meets that target market where they are most comfortable and offers a path towards financial stability and mobility. Projects will help Self-Help build brand affinity and trust, and overcome client skepticism and cynicism. They hope to eventually become the premier trusted source of all financial services for Latino immigrants to build a better life, and need Full Circle Fund's help to accomplish this.

In addition to assisting with the development of this micro-branch model, Full Circle Fund's project team will work with Self Help to change the behavior of member clients by providing a suite of products and services that will serve as a gateway to financial stability and capital access.

Additional Resources

Watch a clip of Self-Help Micro Branch featured on CBS, "Micro Branch in San Jose Offers Bank Alternative," April 15, 2010

Grantee Perspective

Haydee Moreno speaks at Full Circle Fund's 2010 Member Retreat, Monterey, California

NAME: Self-Help
LOCATION: San Jose
WEB: www.self-help.org
GRANT TERM: 2009-2010
TEAM LEADS: Anna Binder and Annette Brinton