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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Economic development from the ground up

Bert Caldwell The Spokesman-Review

Sometimes, economic development starts with one person. Someone like Crystal.

Crystal, who withheld her last name because of a lingering domestic conflict, walked into Spokane Neighborhood Action Programs in August 2004 knowing only that her finances were out of control. She had picked up her financial habits in a family that paid bills on a whim. She had no savings, but bad debts so old even collection agencies had taken them off the books.

Her approach to money management went something like this, Crystal says: “I had money. I spent it. It was gone. Oh, well.”

Last month, Crystal bought a home.

A savings program that started with just $20 per month divided between two accounts had mushroomed into $6,000 thanks to matching funds from Numerica Credit Union, the State of Washington and the federal government.

Crystal’s financial turnaround began in a program called Neighborhood Assets, and accelerated with an Individual Development Account. SNAP manages both, with the support of Numerica, the Washington State Employees Credit Union and six banks — AmericanWest, Farmers & Merchants, Wells Fargo, U S Bank, Sterling Savings, and Washington Trust.

Neighborhood Assets helps the “unbanked,” those like Crystal who have a credit history so bad they cannot open a bank account. Some do not understand the concept of savings, budgeting or other fundamentals.

The Washington and National credit union leagues support Neighborhood Assets with modest financial incentives.

“We see all sorts of people,” says Jeanette Radmer, a branch operations officer for WSECU. Clients include the homeless, those living on fixed incomes, even former inmates.

She will open a WSECU savings account for clients willing to attend one class on managing personal finances, and one counseling session. After three months, if the client is working, budgeting, and working off debt, they receive an ATM card. Another three months and the credit union will open a checking account, even extend a loan. Also, if the client has saved at least $5 per month for six months, the credit union foundations will provide a match of up to $50.

Radmer says she throws in small gift certificates from local merchants as extra encouragement.

Many clients, Radmer says, have relied on high-cost payday lenders for cash, cash sometimes ripped off by a roommate, boyfriend or girlfriend.

She says relatively few clients drop out of the program. They lose their jobs, or their motivation. But most succeed where they might have failed before simply because they have found somebody willing to help them with their problem without looking down on them.

“Some people, it really eats at them,” Radmer says. “I’ve seen a lot of tears.”

“You’re so embarrassed you don’t even want to talk about it,” says Crystal, who kept seeking advice at SNAP while she waited to enter the Individual Development Account program.

Implemented four years ago in Washington, IDA last year received $1 million in additional funding. Idaho also has an IDA program.

SNAP has received $150,000 of the state money, as well as a $100,000 partial match from a U.S. Department of Health and Human Services program, “Assets for Independence.”

Kerri Rodkey, SNAP’s economic development manager, says the federal funds come with strict guidelines for their use: Savings must be used to buy a home, start a business or pay for education. The recipient must be employed.

State money can match individual savings dollar-for-dollar. The federal match is $2 per $1 saved. The maximum match is $4,000, which ballooned Crystal’s $2,000 into $6,000.

The $50,000 in state money unmatched by federal dollars can be used by disabled workers to buy a car for travel to a job or school. The money can also be used to buy computers, or other equipment that will make it possible for the recipient to work.

All IDA participants must take 15 hours of education covering topics like budgeting, insurance and credit. With up to $4,000 in federal and state matching funds available for each enrollee, there is a waiting list. Applicants must not have any judgments or liens against them.

The SNAP IDA program has enrolled 252 since its inception. Of those, 124 finished with the purchase of a home or other asset, including higher education, that IDA officials consider the foundation for a secure financial future. Fifty-six savers remain enrolled, with the potential to add significantly to that number thanks to the new funding.

Rodkey says there is a waiting list, but wants more applicants to make the program as competitive as possible.

“It’s not a handout,” she stresses. “We’ve got other people waiting for this opportunity.”

For some, to buy a home. Others start a business. And some use the money to continue their education.

Is this economic development?

The conclusion is Crystal clear.