THE ENTERPRIZE ZONE
Remember those banners on Austin-Hands Across the Boulevard? It was nice, even noble, rhetoric, but how many Oak Parkers ever really do business east of Austin?
Park Bank does. Headquartered in Oak Park, Park Bank (formerly First Bank of Oak Park) is participating with two faith-based organizations and the federal government in an experiment at the corner of Lake and Pulaski that seeks to combine good business sense, street smarts and a vision for community development. The experiment is called the Community Savings Center (CSC).
“There is literally no other place like this in the entire United States,” declared Andy Locke, who works for Thrivent Financial for Lutherans, one of the faith-based organizations which helped create the Center. What makes the Community Savings Center special begins with the concept of the Individual Development Account (IDA). 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 about the center’s opening on Jan. 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, 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 CSC 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 payday 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, testifies to that.
“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 achieving his goals is financing.
Myles said, “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 to 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 tells of one young woman who 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 being one more turn in the cycle of poverty, said Robinson, so shook her that she signed up for the CSC class.