North Shore United Way Is Strengthening Families Through Financial Advancement Work
North Shore United Way, United Way of Metropolitan Chicago, City Aldermen and the City of Evanston partnered to host the Financial Advancement Summit on May 16. The event brought together financial institutions, non-profits, government representatives and private citizens to focus on solutions for Evanston residents who are â€œunderbanked,â€ and discuss next steps for economic empowerment work in the community.
Nine million households in this country are “unbanked,” according to Dr. Robert Meyer of Loyola University. About 21 million households are “underbanked” (a figure that has risen steadily over the past 30 years), and the population that uses alternative banking services (fringe banks) is typically minority. North Shore Untied Way is proud to be a part of conversations and driving services supporting local families. Financial stability is one of the three building blocks of good life and strong families, and a pillar of LIVE UNITED 2020, United Way’s 10-year vision to transform 45 communities of greatest need throughout Chicagoland.
The following is an excerpt from a recent Evanston Roundtable article about the Financial Advancement Summit and these important financial issues. Read more about the work happening in Evanston or contact North Shore United Way at 847-674-2668.
Payday Loans and Other Non-Traditional Financial Services
By Mary Helt Gavin, Evanston Roundtable
On May 16, the City of Evanston and United Way of Metropolitan Chicago and the North Shore United Way co-sponsored a financial workshop on the topic of how to facilitate access to traditional banks for those who now use payday loans, currency exchanges and pawn shops for quick money.
“We hope to create policies to put payday loans out of business,” [Peter Braithwaite, alderman of the Second Ward] told the some 60 representatives of financial institutions and social service agencies who serve low-income families and individuals (in the Parasol Room of the Morton Civic Center).
Ald. Grover said there are several dimensions to the problem. “There is the family dimension, and what [the presence of payday loans] says about a neighborhood. And we’re trying to starve out what feels like businesses with predatory practices.”
In the financial world such facilities, as well as pawn shops, check-cashing facilities and “rent-to-own” businesses, are called “alternate financial services” (AFSs) or “fringe banks,” said Dr. Robert Meyer of Loyola University.
Those who exclusively use fringe rather than traditional banks are termed “unbanked”; those who use an AFS at least twice a year in combination with traditional banks are considered “underbanked,” said Dr. Mayer.
“Fringe banks are very good at what they do, and they serve a need,” he said. Nine million households in this country â€“ 8 percent â€“ are unbanked, Dr. Mayer said. That number has held steady or declined over the past several years, while the number of underbanked households â€“ now about 21 million or 18 percent â€“ has increased steadily over the past 30 years. He said nationwide, the population that uses fringe banks is typically minority â€“ 42 percent of Hispanics, 54 percent of African Americans and 18 percent of Caucasians. About half of the fringe banking population has an income below the poverty level, “so about half of the underbanked have higher [than poverty-level] incomes.”
The solution to the problem of the unbanked and underbanked will not be easy or straightforward, he said.
Post submitted on behalf of Mary Teeter, Development Manager at North Shore United Way.