Credit Union Invests in Washington Park

July 1, 2008 – Like any financial institution, the South Side Community Federal Credit Union has to watch its bottom line.

But unlike banks, pay day lenders, and currency exchanges motivated by making a profit, the nearly five-year-old institution, housed near the Red Line “El” Station at Garfield Boulevard, is devoted to building financial assets within the community.

Gregg Brown, South Side Community Federal Credit Union CEO (left), shares a moment with Lonnie Richardson, who helped found the institution and now serves as a board member.

“The credit union was established basically to equalize economic power and fight poverty,” said Gregg Brown, the credit union’s CEO. By improving financial literacy and providing access to credit and saving services, the credit union hopes to keep more money in the pockets of members.

In a philosophical and literal sense, the credit union belongs to the community. Opening a savings account means essentially purchasing shares and becoming part owner.”Having been a banker for over 24 years, I understand that to save a community we must save in the community,” Brown said.

His co-workers include an assistant manager, a seasonal teller, a mortgage officer and a loan counselor. With just over 2,000 members and $3.5 million in assets, the South Side Community Federal Credit Union is one of the fastest growing in the country, added Brown.

Beyond savings, checking and individual development accounts, the credit union has established a non-profit South Side Community Economic Development Center and provides free financial, education and home ownership counseling.

Opening an account costs as little as $25 and keeping a $5 share gives account holders voting power at annual meetings, the ability to serve as board members, and the opportunity to get involved in the institution’s growth. The credit union evolved from the desire of Washington Park and nearby residents for a financial institution sensitive to the needs of low-income families.

One in four Americans has a credit union account but residents of most low-income neighborhoods, said Brown, don’t have access to a community development credit union devoted to serving the underserved.

Getting one in Washington Park didn’t come easy. Yet after legal work, surveys, a feasibility study, a business plan, and two and a half years of organizing, the South Side Community Federal Credit Union was born.

On its first day of business 175 members joined, depositing $235,000 – more than some credit unions receive in several years, Brown noted. Membership is open to anyone who lives, works, worships, belongs to an organization or goes to school within the service area, or who has a family member that joined, Brown said.

Youth accounts can be opened for $5. Faith-based development accounts, holiday and vacation club accounts and credit builder loans, personal computer loans, auto loans and affordable mortgage loans are also available.

A LISC grant allowed the credit union to start a checking account program this year, which was a significant step, said Brown, because the financial services industry sees checking accounts as a consumer’s primary financial institution need.

Once customers establish checking accounts they typically avail themselves of other financial services, he said.Unlike banks, which may grudgingly loan money in their service areas to meet legal requirements, 100 percent of the money that comes into the credit union is used in the neighborhood, Brown said.

Few fees, higher interest rates on deposits and lower interest rates on loans are among the benefits that Brown hopes will attract even more residents to his business.

By Brown’s count, 45 percent of the Washington Park community is unbanked and wary of traditional lenders. Currency exchanges can charge $300-$400 a year to cash checks — money that could be saved, Brown added.

Many people are still learning about the value of the credit union and most growth has come through word of mouth and community presentations, said Brown, who is planning a marketing campaign and working with the Washington Park Neighborhood Association to get the word out.

Additional plans include initiating a membership drive, expanding home ownership counseling for residents with bad mortgages, and teaching the benefits and challenges of home ownership to renters. Brown would like to take the gospel of economic self sufficiency into the churches and convince them to allow the credit union to hold 10 percent of tithes to fight poverty in the neighborhood.

“We can’t say we love and value community, but all of our investments are somewhere else,” Brown said

(For more neighborhood stories, go to LISC Chicago’s, New Communities Program .)