To say the least, 2020 was quite a year. From a global pandemic to the derecho storm to countless other issues, Iowans and small businesses are hurting. These disasters brought other financial challenges Iowans face into the spotlight — like access to affordable housing and child care, and a need for a “rainy day” fund. Iowa’s credit unions have worked hard to provide relief to those struggling, but it’s time to come together as a state to address these issues holistically.
When the pandemic hit in March, the Iowa credit union industry rallied together and created a $700,000-plus Emergency Relief Fund to help Iowans and small business. Of the 11,000 grant applications received, 8% were from the Waterloo/Cedar Falls area. The needs faced by these applicants tells an alarming story of challenges facing Iowans and small businesses, which has likely only grown since the original application period last spring.
Data from the Waterloo/Cedar Falls grant applications shows that, due to COVID-19:
- 58% of applicants lost employment.
- 51% of applicants were unable to afford their rent or mortgage.
- 46% of applicants were unable to afford their utility bill.
- 41% of applicants were facing food insecurity.
- 28% of individual applicants did not qualify for any other assistance programs.
- 42% of business applicants had closed their business.
- 24% of business applicants were not eligible for other government assistance programs.
While the grants helped provide some short-term relief, we need to work together on long-term solutions to these financial challenges facing Iowans. As we head into the 2021 legislative session, it is important to focus on priorities that can directly help struggling Iowans and small businesses, including access to affordable housing, improving child care access and affordability and helping Iowans save with programs like prize-linked savings.
Even before the pandemic, we knew Iowans were struggling to save. A Pew study from 2020 showed that only 23% of lower-income households had enough savings to cover three months of expenses. Combine that with the rising costs of child care, housing and a global pandemic, Iowans are constantly facing the burden of expenses.
Now is the time for our state to help Iowans become better savers to weather unforeseen disasters, and prize-linked savings programs can be a means to that end. PLS is a tested, successful concept in which savers earn chances to win cash prizes by saving at insured financial institutions. By injecting the prospect of winning into the savings experience, PLS not only rewards successful savers, but attracts unbanked customers into the financial mainstream. Credit unions in Iowa are interested in offering PLS to help their members and teach them to save for moments of crises. Programs like this are not currently allowed in Iowa.
Savings programs are only one component of helping to grow financial health in Iowa. We must also find policy solutions to solve housing and child care needs. Both of these issues are top priorities for the Iowa credit union industry, and we have been working with coalition partners on solutions.
A new year brings hope. We know Iowans will feel the effects of 2020 for a long time, but our industry is committed to working with the governor, legislators and partners around Iowa to move our great state forward. We hope you will join us.
Helen Pearce is president and CEO of Cedar Falls Community Credit Union.