- Associated Press - Saturday, December 12, 2020

WILMINGTON, Del. (AP) - More than three decades ago, a coalition of Wilmington activists took on big banks, winning agreements that the financial institutions would make more investments in poor communities.

Since then, the Delaware Community Reinvestment Action Council has expanded from advocating for fair lending to becoming a financial coach, legal clinic and, through its credit union, the financial institution itself for low-income residents traditionally rejected or overlooked by the banks.

Longtime Executive Director Rashmi Rangan envisions taking the credit union, Stepping Stones Community Federal Credit Union, a step further to provide low-income families a safety net.

Toward that end, the nonprofit has received a $10,000 grant through A Community Thrives, a philanthropic program of the USA Today Network, the parent company of Delaware Online/The News Journal. It is one of nearly 200 organizations nationwide that received grants this year based on their work in “community building” projects, according to the Gannett Foundation.

Rangan plans ultimately to put the money toward a credit union program that would offer low-income members a modest line of credit to cover bills and expenses in the short term.

For families who live paycheck to paycheck, Rangan said, “it’s not that they don’t have money - it’s that they don’t have the money at the time it is needed.”

One paycheck often isn’t enough to cover rent and utilities that are due before the next payday, pushing low-income people toward high-interest payday loans or incurring burdensome late fees and hits to their credit. The cycle of financial instability, Rangan said, keeps long-term savings, traditional banking access and homeownership ever out-of-reach.

“The way we have seen it with our clients, they pay every single bill but no bill is always paid on time,” Rangan said. “They work so hard to get a leg up and it seems they keep getting dragged down.”

DCRAC had hoped for a $100,000 grant to launch the program, but will instead raise the remaining funds to offer it next year.

In the meantime, the organization will still lend out the $10,000 in short-term loans to clients who need help paying rent and utilities. When the credit program is able to launch, she hopes to study, after a year of programming, the effects on families who got the peace of mind of “knowing they will never incur a late fee.”

“Our proposal was to find a solution to families’ cash flow problems,” she said. “Our hypothesis is that if they knew the bills would be paid on time, come what may, as long as they focused on their personal financial goal or growth, that in a year’s time they will have improved their savings, their credit scores and their confidence.”

Like many nonprofits serving low-income communities, DCRAC had to adapt in a hurry during the coronavirus pandemic to serve an ever-growing number of clients in financial straits.

The credit union has close to 1,000 members in Wilmington, and hundreds of Delaware residents take the nonprofit’s financial planning classes.

DCRAC’s employees talked to clients on the phone as they filled out tax returns to receive their stimulus checks, filed for unemployment and applied for Paycheck Protection Program loans. Stepping Stones began offering online services “overnight,” Rangan said.

All the while, the nonprofit was itself applying for a PPP loan to stay afloat as revenues shrunk.

DCRAC formed in 1987 in response to studies showing Black Delawareans were seven and a half times more likely to be denied a home loan than whites.

Using requirements of the 1977 Community Reinvestment Act, the group launched challenges during bank mergers and won concessions from Delaware banks that made it easier for modest-income applicants to get home loans. It also held banks to agreements that they would invest more in low-income areas.

Since those early years, the group has gone on to teach money management and offer free or low-cost legal services.

The credit union launched in 2012, offering at first only savings accounts to “unbanked” communities that often relied on payday lending and check-cashing services. Two years ago, Stepping Stones launched direct deposit, access to ATMs and loans.

It’s “practically full service,” Rangan said. In the future it will offer the line of credit – and home loans.

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