Nehemiah Gateway Community Development Corporation • Non Profit organization headquartered in Wilmington. • Organize and manage the EITC Campaign throughout Delaware. • Mission to transform lives and communities by increasing opportunities for successful employment, entrepreneurship, and asset development. • Programs focuson helping lower income workers to build wealth through savings, access to mainstream financial services, job training, and advocacy for policies that support these goals.
Delaware EITC Campaign Results Summary 2008 Background Program Age: 8th Year Operations Territory: Statewide Delaware, 22 locations Market Size: 780,000 total population in Delaware Returns Under $40,000: 206.413 Returns Over $40,000: 163.473 Total Tax Returns: 369.886 DE EITC Campaign: Tax Returns by Campaign: 14,377 (6% market share) Small Business Returns: 629 Federal Refunds: $17,405,529 State Refunds: $1,854,869 Savings Accounts Opened: 247 Certificate of Deposit Opened: 241 Savings Bonds: 105 Credit Report and Education: 2523 Split Refund: 352 Amount Saved on Tax Prep Fees: $2,875,400 Minorities Served: 68% Minorities in State: 30% AGI of Customers: $15,771 Campaign Champion: Governor Jack Markell Campaign Sponsor: Nehemiah Gateway CDC
Pre-Tax Season Preparation for Split Refunds and Financial Services • Conduct research to decide on product. Interview other programs around the country and EITC Campaign customers. • Prepare Request for Proposals for Delaware financial community during Summer ’06 • RFP outlined requirements • Offsite processing/approval of account opening (by phone); • Immediate creation of savings account number for form 8888 • Created Cash Coordinator position • Recruited from community and local colleges
Cash Coordinator Goals • Intake: Manage the Site INTAKE process. • Savings/ Split Refunds: Promote and facilitate savings and financial goal setting. • Credit: Educate customers about credit and the role that credit history plays in obtaining access to financial services. • Referrals: Educate and refer customers to state benefits, home ownership counseling and financial education programs that are available in Delaware.
Why is a Cash Coordinator important? • Help the Client to learn about the financial services at the tax site and to take advantage of them. • Educate NOT advise. • Provide clients with tools to use to increase their income, cash flow, and future economic position and become more financially stable. • Encourage Saving through the new Split Refund program, where a refund can be put into up to three financial accounts (checking, savings, etc.) • Encourage clients to learn more about handling their money, and having good credit. • Be a resource to provide information and referrals about state benefits, and community programs including financial education, and home ownership counseling.
Cash Coordinator Job: Promote Savings • Encourage EITC clients to use direct deposit and save part of their refund. With the Form 8888, taxpayers can split their refund into as many as 3 accounts. • When you have a large sum, an unexpected windfall of dollars into your life, that is the time to think about saving. • Saving can be accomplished by: • Use Existing Accounts: Using existing checking/ savings account for one part of the refund and using an existing second account for another portion of the refund • Open New Accounts: Assist the client in signing-up for a CD or savings bond product.
Cash Coordinator Job: Teach About Credit • Obtain a credit report for clients, interpret the contents, educate on how to improve their credit report, and refer them to a professional non-profit credit repair/ housing counseling organization. • Enter Housing Counselor Online (Fannie Mae website) through the desktop and pull a credit report containing information from TransUnion credit bureau: • The customer gets an education and a picture of their credit history, good and bad, with details regarding content and a score. • The score is used as a “grade” to qualify for financial services, jobs, and housing. A bad score can prevent a consumer from accessing the above through the mainstream, forcing them to alternative “fringe” or predatory services.
Financial Services for Un and Under Banked Taxpayers • CONVENIENT CASH CARD • NEW service sponsored by Nehemiah Gateway Community Development Corporation and Advent Financial Services, designed to make your financial transactions EASY! • How it Works • Get a Mastercard/ Debit Cash Card when you • get your taxes done. • Use it as a convenient way to manage • your money! • Direct Deposit • The IRS can directly deposit your refund on • to the Card. • Your employer can also directly deposit • your pay check. • Uncle Sam can directly deposit your social • security or other benefits. • It accepts all direct deposits!
Benefits of the Cash Card Fast! Direct deposit is faster than a check from IRS Get your refund within 7 to 12 days! Save Money! No check cashing fees No bounced checks, overdrawn accounts, or bank fees No minimum balance requirements first 3 months Free money transfers from bank account to card (international or local) Safe! No need to carry large amounts of cash, Purchase protection and fraud monitoring included Convenient! Get your refund on a card and not in a check Use a card instead of cash to buy things Accepts payroll deposits Use your card for store purchases Use your card to pay bills Use your card for ATM cash withdrawals You can deposit checks and cash at any “Green Dot” location (Rite Aid, Walgreens, CVS, Radio Shack)
Tax Site Marketing: Money Menu 25 Big Ruby Tuesday style menus at each tax site: List and describe all financial products and services available at tax site. Each customer receives a mini menu to take home.
Opening CDs at the Tax Site • Opening CDs at the Tax Site: CDs are opened either through a secured website and or an 800 customer service number. The account number is provided to the customer at the site and a package with signature cards is sent by the bank via snail mail. • Tax Preparer Training: We developed a savings manual for tax preparers and we sent an email to our tax preparer volunteers to stress the importance of their role in encouraging customers with big refunds to save. • Communications: We use a list serve with Financial Coordinators to exchange ideas and communicate throughout the season. • Talent Bank: We identify the strongest Cash Coordinators and ask them to increase their volunteer service by going to various sites on different days of the week to train other Cash Coordinators.
A CD doesn’t play music… • Certificate of Deposit (CDs): A high interest account that is locked for a designated time period. Because the money stays in the bank without transactions, the bank offers a higher interest rate. This is not a transactional account. • Customer Motivators: CDs are labeled with purposes to inspire customers to save for specific goals, such as Vacation CD, Back to School CD, Christmas CD, etc. Our research suggests that Christmas Clubs are a very appealing type of savings program for our customers. • Getting your Money: When the savings period is up, the CD can be renewed, withdrawn, or just roll over and continue. As interest is earned it is added to the principal in the account so that new interest is earned on increasing higher amounts. • Bank Partners: The bank partners for the Delaware EITC Campaign during the 2009 tax season are WSFS and and Artisans Bank. The Campaign has also worked with GMAC Bank and PNC Bank in the past.
Other Savings Products for 2009 IDAs (Individual Development Accounts): AFI product, matching 1 ½ : 1 for home ownership, post-secondary education, & small business development. Customers can invest as much as $500 during tax season. Maximum savings: $1,500. Accounts are opened as savings and then transferred into IDAs when clients complete the formal intake process. Savings Bonds: EE Bonds, similar to CDs, matures at face value with interest averaging between 4 & 5% after one year. Starting investment of $50. Popular as a gift item.
Opening IDAs at the Tax Site On-Site Marketing: Customers will be educated about IDAs and offered the opportunity to open a pre-IDA by directly depositing a portion of their refund. Cash Coordinators will conduct preliminary screening to determine program eligibility. Pre-IDA Accounts: Deposits will go into a CD or savings account at the partner bank and will be held there pending final qualification and notification by the program administrator. Activating the IDA: Clients will be referred to an IDA program associate for intake, eligibility, and financial literacy training. On-site Account Opening: Account numbers are pre-assigned in batches of 25 and entered into a Spreadsheet. As accounts are opened, the Cash Coordinator will fill in the clients name, last four digits of the social, amount of deposit, date, and tax site. Spreadsheet will be held on a secured server which will be accessed only by Tax Site Managers and the bank with specific usernames and passwords. Referrals: Clients will be given all referral and program info in writing.
Script to talk to customers about the split refund Keep it Simple and Use Visualization to get your message across. Use the YES messages and avoid the NO messages. YES:Looks like you’re getting a great refund! Would you be interested in saving some of it so you’ll have money for something you need later on this year? Christmas shopping, vacation, back to school, or a savings account for your kids? Help customers visualize financial needs that they will have beyond the bills that are waiting to be paid now. This type of question motivates people to consider saving. NO:Would you like to open a CD? Most people don’t know what a CD is and may have misperceptions about it. This type of question might shut down the thought process. YES:By putting some of your refund into savings, its still your money. It can earn interest while it sits there and when you’re ready for it, you can take it out. Remind them that the money belongs to them and it doesn’t have to be spent all at once. NO: If you put it in a CD, you can get it out in six months. It feels like they are giving away some of their money and won’t be able to get at it. YES: You can put most of it in your regular bank account to use now, and some of it in another account to use later on. It’s all about having money when you need it. You won’t miss it if you don’t see it. Remind them that once it goes into their checking account, it will evaporate. By putting some in a CD, they protect their own money so they will have it for future financial needs. NO: You can open an account and save some of your refund. They might feel like you are trying to take away their refund and will resist this. They need to visualize the two accounts and be reminded that the money is theirs to use for their own expenses.
Buzz Words and Ideas Benefits of Direct Deposit: Would you like to have your refund directly deposited into your bank account? Did you know that if you do direct deposit, you will have your refund within 2 weeks or less? Benefits of more than one bank account Did you know that this year the IRS is offering taxpayers an opportunity to directly deposit their refund into as many as 3 accounts so that you can put some in your checking and some in a savings account or CD? Quick and Easy To make it easy to put a little bit of your refund into a separate savings account, we can open a CD right now for that purpose. It only takes a few minutes and we can call the bank and open it right now. What is a CD? How does it work? Do you know what a CD is? A CD is a higher interest savings account where your money earns interest until it matures in six months. It is designed to earn higher interest so its best to leave it in there and or you risk losing the interest. At the end of 5 months you get a notice telling you that it will mature in 30 days and you will have a window to either cash out, add more, or do nothing, in which case it will roll over and start another 6 month term. Bank Partners We have a partnership with two banks who are offering CDs and savings accounts for our customers who would like to save some of their refund. That is GMAC Bank, an internet bank, and WSFS Bank. The interest rate is higher on the GMAC Bank CD because it is an internet bank and doesn’t have the overhead that WSFS has. However, with WSFS, you can go into any branch and get other services also. Examples of Customers who took advantage of the offer We’ve had several customers who set one up for each of two children and then they put the rest in their own checking account to pay bills. One mother did it for her teenagers who are working. She decided to help them get started on a savings plan of their own by opening a CD for each of them so that they could add to it when it matures in six months. She took care of the important stuff…. She opened the accounts in her name and their name and she funded them with her refund. One young man who is single and in his twenties, opened a CD with half of his refund, so that he would have money for a vacation this summer.