Beneficial State Foundation Perspectives

Our thoughts on changing the banking system for good and building the new economy

Here’s one way banks can serve people experiencing housing insecurity

Zacharias Gardea was a 2018 Beneficial Banking Fellow based in Los Angeles, CA.

As a 2018 Summer Fellow for Beneficial State Foundation, I had the opportunity to research the homelessness and housing affordability crises in Los Angeles, with a particular focus on financial inclusion and banking products that aim to help provide capital for homeowners who are willing to construct accessory dwelling units (ADUs).

There may be no greater pressing issue in Los Angeles than homelessness. According to the 2018 Greater Los Angeles Homeless Count, approximately 52,765 persons are experiencing housing insecurity across the county. Although there was a 4% drop in total population from the 2017 count, more than 9,000 people across LA County said they experienced housing insecurity for the first time in 2018.

The demographic breakdown is as follows:

  • 65% have lived in LA County for 20+ years
  • 22% increase in ages 62 and older
  • 36% African American, 35% Hispanic or Latino and 25% white
  • 67% male

Even with a drop in overall population, visibility has grown as the number of vehicles, tents, and makeshift shelters have increased by 5% since the homeless count in 2017 and by 32% since 2016. Of the newly unhoused, about 46% blamed a loss of employment or other financial shortcomings as the primary reason for experiencing loss of housing for the first time.

With nearly half of people who are newly unhoused attributing their newfound housing status to financial hardship, it is crucial for Beneficial State Bank to make accessible, affordable products and services that leave someone better off the day after they use those services than the day before. The bank’s status as a certified B Corporation and Community Development Financial Institution (CDFI) with a stated mission to offer a full line of traditional banking services, and with a distinct focus on the traditionally underserved, uniquely positions the bank and foundation to steer underbanked people away from predatory lenders and into a safe and affordable financial institution.

In the City of Los Angeles where more than 300,000 households are unbanked and payday lenders, pawn shops, and check cashers outnumber banks and credit unions 2:1, mission-driven financial institutions that don’t focus solely on profit-making (and any bank for that matter) must offer banking products that cater to the needs of the unbanked. Beneficial State Bank offers PositiveChange checking and savings accounts designed to alleviate the dependence of financially vulnerable individuals on cash-checking and other predatory financial establishments. These accounts provide affordable alternatives for entry-level consumers looking to access the traditional banking system who may otherwise be discouraged by pre-prime (what others call sub-prime) credit or banking history, not enough savings to meet minimum deposit requirements, high fees, or lack of proper identification.

Beneficial State’s mission-aligned banking products and services aim to change the banking industry to be more responsive to the needs of local communities and marginalized, underserved groups.

This blog post reflects the author’s personal views and opinions, and does not represent the views and opinions of Beneficial State Bank and/or Beneficial State Foundation.