Almost four years ago, I wrote about a new non-profit check cashing and payday lender that opened in the Fruitvale area of Oakland, California in the San Francisco Bay Area. This alternative to private sector financial parasites, for-profit check cashers and payday lenders, has not only survived, but is growing stronger by the day.
This success story is thanks to Dan Leibsohn, founder and former Executive Director of the Low Income Investment Fund (formerly the Low Income Housing Fund). Leibsohn's present non-profit, Community Development Finance (CDF), who five years ago, created the first competitive non-profit community-based check cashing and payday lending business in the country, located in Oakland, to challenge the bottom-feeding money men.
As early as 1776, Adam Smith recognized that businessmen may be more interested in their own materialistic self-interest, while ignoring, overriding or harming the public interest. He knew that "men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it."
Thanks to Leibsohn and his staff in Oakland, fewer consumers are being deceived by fast-talking check cashers and money lenders.
CDF's check cashing program, for example, not only offers much lower prices, financial coaching and small business assistance, but refers customers to local banks and credit unions, so that they can establish long-term community banking relationships. CDF has grown extensively, with 50 percent year-over-year increases in check cashing volume, generally saving customers utilizing the organization's products and services an estimated $150,000 to $200,000 annually.
Some of the many breakthroughs of the CDF check cashing and lending program include:
• Payday loans at much lower costs with a .82 percent loss rate on over 3,000 loans totaling approximately $800,000
• Development of a Credit Repair loans program at approximately 12 percent APR
• Development of a new financial coaching program
CDF has also become involved in policy development based upon five years of operating history as a non-profit financial services company, including:
• Providing a major analysis of the U.S. Postal Service's proposal to operationally implement a national financial services program for underserved communities
• Analysis of payday loan alternatives and development of new program options
• Development of a concept for creating a new delivery system for financial services for those that are unbanked and low income
Additionally, Leibsohn and CDF have begun to explore expansion of new stores, partnerships with other non-profit community-based organizations, including private companies -- especially high tech startups, extensively employing new technologies and using consulting services to expand reduced cost financial services access for underserved communities.
CDF's non-profit experiment is very close to breaking even, every year increasing check-cashing volume and payday lending totals while finding additional outside income sources. The CDF board continues to see this model as viable, scalable and something that can be duplicated in numerous neighborhoods across the country. Successfully getting through the worst financial recession since the Great Depression, has provided CDF with a greater understanding of the financial needs of our community and a deeper resolve to prove that lower income people continue to need access to credit, and that the non-profit alternative may also be the best way to fumigate the pests.
CDF can be reached at (510) 479-1037, is near the Fruitvale BART station in Oakland, or can be accessed online at http://www.communitycheckcashing.org/.
John Harrington is a CDF board member and contributor and a Registered Investment Advisor in Northern California.