ARLINGTON, Va. – Community Development Credit Unions have long sought to bring financial products, services and education to the poorest of their community's residents. But as economies change, neighborhoods change and fields of membership change, some CDCUs have found themselves helping lower income people who are living amidst middle and even upper income communities. Doing so has meant bringing a variety of different approaches, products and services to the fore. "We really straddle two pretty different worlds," said Shelia Schat, Director of Community Outreach and Marketing for the $55 million Santa Cruz Community Credit Union, a CDCU based in Santa Cruz County, "we have the North part of the county, where Santa Cruz is, which is very wealthy and then we have Southern part of the county which is not," Schat said. The statistics are telling. According to the U.S. Census, almost 12% of Santa Cruz County's 254,000 people, and the credit union's potential members, live below the poverty line as established by the Federal government. Almost 28% of the population does not speak English at home and almost 19% were not born in the U.S. But at the same time the Census found median household income in the County in 1999 to be almost $54,000, almost $7,000 over that for the rest of California, and per capita average income to be over $26,000, also almost $4,000 over the average in the rest of the state. But the most telling statistic is that the county's median home value has been placed at over $377,000, a price which makes owning a home out of reach of many of the credit union's members unless they get education and help, Schat pointed out. SCCCU tries to structure its programs aimed at low-income people in terms of financial education, saving and building good credit, while at the same time it markets its other products and services at people who could probably bank anywhere but who appreciate being able to put their money into an institution which has its heart in the community. For example, the credit union used a slogan for its car loans, "Put your Values in Motion" and another for its Visa program, "TransActions Speak Louder Than Words" to drive the dual messages of doing well at the same time you do good to its members. Fortunately, Schat said, the credit union's history in Santa Cruz helps with that message. "We have been here since 1977 so we have quite a presence in the community," said Schat, "and that helps us network among both the low-income people who use our products and services and the higher-income households who are open to investing with us." Not surprisingly given the price of housing in the county, the most popular goal for the credit union's Individual Development Accounts is housing. The credit union has an unusually high upper limit of $15,000 for the accounts, through which the credit union matches every dollar saved with two dollars, because the institution recognizes that the high cost of housing demands more savings and investment. The credit union also offers a credit builder Visa card and various financial education programs which focus all aspects of members' financial lives, Schat said. For Ed Jacob, CEO of the $9 million North Side Community Federal Credit Union, a CDCU based in Chicago, serving lower-income people in the midst of an increasingly gentrifying neighborhood has meant dealing with intangible things like neighborhood politics and tangible things like a new location. On October 1, NCUA Board Member Deborad Matz will cut the ribbon for the credit union's new headquarters location. The new location more than doubles North Side's previous office space, which it badly needed, Jacob explained, and will allow the credit union to offer 24-hour ATM services to its members, which he called "key." "Our previous ATM was accessible through our lobby but that wasn't 24 hours and that really needed to change," Jacob said. The new ATM that cardholders can access from outside means that the credit union will have one more product and service to offer its members who are not low income at the same time as it seeks to work with neighborhood residents who are. More than half of North Side's members, for example, have accounts of less than $100, Jacob reported, which are not going to be accounts that make the credit union a lot of money. He pointed out that those account holders are often those that will cost the credit union, since their transaction costs are often higher. "The fact is that you cannot serve a membership of only low-income people unless you are willing to fund your core operations with grants and other donations," Jacob said. While North Side has used grants and other sorts of longterm loans to fund some of its specific projects, Jacob said the credit union had decided early on that it would not fund its core operations that way. "I didn't want to fund salaries out of grant money because grants can go away," he said. So what North Side has had to do has been to market itself as well to more upper income neighborhood residents who can have bigger accounts and who can take out a $50,000 home renovation loan or an auto loan, Jacob said. And that has meant straddling the neighborhood's divides. "It's a very diverse neighborhood, a very mixed and active place," Jacob said, "but it's definitely divided along the issue of gentrification." Jacob reported that divide shows up at zoning meetings, community meetings, and other public forums. "Whenever someone wants to clear one empty lot and build $300,000 condos there, you can count on someone getting up to denounce that and oppose it," Jacob said. "Likewise, whenever someone wants to put a social service facility in the neighborhood, you will get other people who will stand up and denounce that and oppose that." Opponents of the neighborhood development fear rising property taxes and other costs will wind up driving them out of their homes. Opponents of the social service facilities fear that their placement in the community will drive property values down. So far, Jacob said, North Side has managed to keep itself from being seen as on either side. Lower income members have appreciated that they have been able to get the financial services and help they need on their way up the income scale, and upper income members have been able to get good rates and put their money in a neighborhood institution dedicated to making the neighborhood stronger. Shadows of that compromise extend to even the new location. Jacob reported that the new headquarters will both let his staff have greater privacy when talking with members about their financial needs, a lack many members had complained about in the past, and the new 24-hour ATM space, which the more upper income members have wanted. Bill Myers, CEO of the $45 million Alternatives Federal Credit Union, based in Ithaca, New York, reported that his 25-year old CU had long recognized the need to have members from a variety of income levels, even as it set out to specialize in helping members who are low income. Alternatives FCU is a CDCU with a reputation among the community development world for both its success and far reaching programs and Myers explained that, years ago, the credit union's board had mandated a policy which was designed to keep the credit union's focus balanced between low income and higher income. The policy is simple. Whenever the credit union leadership proposes a new service or product aimed at a higher income part of the membership, it has to also propose a new product, or an improvement to a product, aimed at serving the lower income part of the community. So if the credit union decides to go after a market for significantly higher home mortgages which have begun to pop up in the area, it also has to put into place a program or product designed to further help lower income members be able to buy a home, Myers reported. Unlike North Side's situation, Alternatives' mostly rural community tends not to have the same degree of income disparity that might be found in an urban setting, Myers said. But the credit union found that some of the same divisions could exist. The credit union has tried to ease those pressures by opening many of its financial education classes to members of all backgrounds, so that lower income members could learn from members with higher incomes. "We have a popular course in small business ownership," Myers said. "We opened that course to both members wanting to start a small business, as well as members who already own one and want to improve their management. We found that the two groups learned very well together," he said. [email protected]