Expanding the family loan program nationally

The success of the loan funds Michael Raschick describes in these pages encouraged Family Service America (FSA), in partnership with The McKnight Foundation, to replicate the model nationally. The family loan program is currently being piloted at FSA member agencies in Milwaukee, Wisconsin; Akron, Ohio; Kansas City, Kansas; and Indianapolis, Indiana. Agencies in other communities plan to implement the program in 1997.

As Raschick notes, low-income citizens often lack the financial cushion to overcome short-term obstacles to independence. Most programs provide either cash, in-kind grants, or incentives for long-term savings (e.g., individual development accounts). By contrast, the family loan program offers a -booster shot' to help families at critical moments. By providing the assistance in the form of a loan, borrowers are respected as partners and customers who, when they repay their loan, make it possible for others in their community to borrow from the loan pool.

The future of the program depends on forming strong organizational partnerships with community institutions. The working poor, family service agencies, government, and the lending community have much to gain by working with one another. The LSS loan fund in Duluth represents an important model. Other family-loan-program models and alliances are emerging nationally. The potential of entering new markets, as well as banks' obligations under the Community Reinvestment Act, has motivated lenders to examine family loan programs as a way to meet the credit needs of the communities they serve. Family service agencies can provide banks with the skills necessary to engage low-income residents with the institution. Likewise, banks can become a new partner for family service agencies that are searching for a new strategic niche in a turbulent environment.

Finally, local governments see the family loan program as an effective way to help the working poor. Community Development Block Grant funds, as well as county social service funds, are being used to support the program in some national demonstration sites. Family service agencies, the philanthropic community, lenders, and the public sector, working in partnership, can find in the family loan program a method to strengthen families and meet their organizational goals.

More information regarding the family loan program is available from FSA's Severson Information Center or Innovative Family Service Initiatives Department at 414-359-1040.

Daniel 0. Magnuson Director, Innovative Family Service Initiatives Family Service America Milwaukee, Wisconsin

Copyright Family Service America Jan/Feb 1997
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