Low Income Credit Union Opens Doors

press release from TULIP

It's the first credit union to open in the state of Washington in ten years, and it's the only credit union in the state with a specific mission to serve low-income people. After years of planning, the Thurston Union of Low Income People (TULIP) has finally thrown open its doors and turned the lights on.

Located in Olympia, TULIP credit union is now blooming after its seeds were planted in 1997. Kitty Koppelman is one of the early organizers who led the charge to create a financial cooperative for the so-called "unbanked" population.

"We want to provide an atmosphere for banking where people feel comfortable no matter what their income is or how they look," Koppelman said. "We're trying to create lending opportunities for those who don't have them currently. And we want to provide products and services that have particular value to low-income people."

TULIP will offer basic banking services to low-income residents in Thurston County. For the purposes of membership, low income is defined as earning 80 percent of the national median income, in this case, no more than $34,514 annually. Members of the Olympia Food Co-op, a TULIP partner, are also eligible to join.

In Thurston County, more than 35 percent of households have an annual income of less than $35,000. TULIP Credit Union is seeking to meet the financial needs of this group.

Check cashing services, pawnshops, payday lenders and wire transfer services have grown dramatically in the South Sound area over the past five years. Paying high prices for routine financial services effectively lowers the income of the people who use them.

People move from poverty to wealth not by simply managing their income, but by accumulating assets. Savings, investments and ownership are the factors that can lead low-income consumers to financial self-sufficiency. Without assets, low-income households are less likely to realize their dreams for themselves and their families. TULIP will provide the mechanism that helps low wage earners develop assets.

It took a lot of footwork and community partnerships to make it finally happen. The source of some of that support might be surprising: other credit unions.

Cooperation among competitors is unusual in the banking world, but common in the world of credit unions. Service is a part of the credit union philosophy, and TULIP has been helped along the way by other credit unions.

Koppelman said that the support from the more traditional credit union community has been overwhelmingly positive.

For example, Washington State Employees Credit Union (WSECU) is a major partner with TULIP. Not only did the second largest credit union in the state pledge $100,000 in deposits, but the two credit unions have a service partnership as well, with WSECU providing much of the operational and "back office" support for the start-up.

"Their support has made it possible to go from having a dream to reality," Koppelman said. "Credit unions are complicated businesses to start. To get the support from our neighborhood experts has made the difference."

Boeing Employees Credit Union and others have also been instrumental throughout the planning and implementation phases dedicating both financial and human resources to the effort.

Another major supporter of TULIP is the Olympia Food Co-op. The TULIP branch is located in the Co-op's east Olympia location.

For at least the first year, the branch will operate without cash. Members of TULIP will have access to basic banking services such as checking and savings accounts but will use an ATM for their transactions.

Why is it so rare for a financial institution to target low-income customers? Because of the higher risk that tends to be present when loaning to people with little or no credit history.

Koppelman has pointed out in the past that TULIP is not a charity institution, but a lending institution. Borrowers will need to show that they have steady income and the ability to repay loans.

Besides offering small loans and other banking services, TULIP will also provide financial education classes.

TULIP board member Robert Marino said that he became interested in the project because of a desire to really learn about how money works. He's taking the lead on the education component the credit union will offer. "I read a book that discussed the idea that rich families tend to talk about money to their kids, and so they grow up knowing about it and how to use it," Marino said. "That's not true of other classes and it wasn't true for myself. I heard about TULIP through the community grapevine and wanted to learn more."

TULIP will offer a new member orientation class that will cover the products and services the credit union will provide, as well as very basic banking concepts for people who may have never used financial services before.

"We'll teach them how to write a check, how to use an ATM," Marino said. "From there we hope to add more building blocks like offering classes on how to budget and how to save for emergencies. That's something that hits poor people harder and sooner than other folks."

There is already great interest in joining. Even before the doors opened some 200 people were on a list as saying they would be interested in opening an account.

Looking ahead five years into the future, Marino had some thoughts of what he'd like to see.

"A success for me would be that a lot of people came through the TULIP doors and not only opened an account, but learned about how to manage their money," Marino said. "If that happens, they are much more empowered to navigate the whole financial system so they can move out of poverty."

For more information about TULIP Credit Union, call its office at (360) 956-9235, or visit the website at www.tulipcu.coop.

WWW Washington Free Press