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Catalysts for Change: Four Systems-level Initiatives

Momentum is committed to making a meaningful difference in our community. We all want to live in a community where everyone has a sustainable livelihood and a meaningful chance to contribute. We want to inspire the development of local economies with opportunities for all people.
Your support helps us to accomplish this, through community economic development programs for individual participants, and your partnership helps us to influence systems change through collaboration and policy initiatives.
In 2015, Momentum was instrumental in three successful systems-level initiatives. We are both pleased to have been a catalyst for these initiatives, and stand proudly with all the organizations and individuals who worked so hard to make them succeed.

And we were disappointed that one of our initiatives failed. The ACES grant was discontinued in spite of our best efforts.
We agree with D.L. Moody, who said, “Our greatest fear should not be of failure, but of succeeding at something that does not really matter.” We have been working toward a community that offers opportunity and prosperity for all for the past 25 years, and we are excited about the work we are planning in the years to come.

1. Taking Action on High-cost Lending

It was our program participants who first taught us about high-cost lenders—those lending companies that often charge exploitative interest rates, frequently do not allow instalment payments, and have only short-term loans available. We learned how easy it is get trapped in a relentless cycle of debt, and how very difficult it is to get out. And so our Public Policy team took up the issue of payday lending as a policy initiative.
In 2015, Momentum championed regulatory change at both municipal and provincial levels based on our solid research about the real cost of payday loans. We and our partners worked successfully with Calgary City Council to bring in a new land use bylaw that prevents payday lenders from setting up business within 400 metres of each other. This was a very significant win.
All over Calgary, especially in the low income neighbourhoods, payday lenders set up shop very close to one another. This concentration normalizes payday lending, neighbourhood residents don’t like it, and it affects nearby businesses. The new bylaw means this clustering will not be as prevalent.
Momentum was also a key player in the Government of Alberta’s payday loan review process. We worked closely with Service Alberta on the Ministry’s public consultation, providing input on the survey sent out to Albertans, and hosting focus groups of loan recipients. We anticipate the new legislation proposed recently will put an end to predatory lending practices.

2. Testing an Alternative: The Cash Crunch Loan

Momentum wants to see safe, affordable and accessible credit available to people living on low incomes.
Everyone needs credit occasionally. Those of us unable to access loans through regular financial institutions often turn to payday lenders as the only alternative. Typically, payday loans aren’t used to purchase trivial luxuries. They’re not about saving for retirement. On the contrary, people turn to them because they need to make the month.
Ending high-cost lending isn’t enough—we need alternatives. Momentum was therefore very pleased to work with First Calgary Financial and a local philanthropist to pilot the Cash Crunch Loan.
To help you understand why Cash Crunch loans make such a difference, imagine that you need to take out a $1,000 loan.

  • With a payday loan that renewed over 12 months, your interest rate would be 600 percent. At the end of the 12 months, you would have paid $5,980 in interest on your original $1,000 loan.
  • With a Cash Crunch loan that has a 12-month term, your interest rate would be 12 percent. At the end of the 12-month term, you would have paid $66.19 on your original $1,000 loan.

To be eligible for this safe and affordable Cash Crunch loan, applicants needed to be Momentum participants, and be referred to First Calgary by a Momentum staff member. If applicants came with a bruised credit score, that wasn’t a problem, but they had to be willing to repay the loan.
Momentum worked with First Calgary’s staff to break down any false assumptions about why people take out payday loans. We discussed the role of the banking industry in helping people achieve financial wellness. And we talked about the feeling of intimidation that people on low income often have when approaching a bank.
The first phase of the pilot was completed in September, months ahead of schedule because it was so popular. Fifty-six loans were made, totaling $70,000. On that, borrowers saved over $275,000 in interest payments!
Perhaps the greatest outcome was that, for the first time in their lives, the recipients had a positive experience at a financial institution.
We are particularly impressed that First Calgary Financial, which has been on the cutting edge of banking services and products for decades, was willing to take the risk of going considerably beyond general lending guidelines. And we are grateful to the anonymous donor, whose generosity made this pilot possible by providing a loan-loss reserve.
The risks paid off. All three partners have agreed to move on to a second phase, launching in early 2016.

3. Lifting Children out of Poverty: The Alberta Child Benefit

Poverty is often intergenerational, and moving children out of poverty can help break the cycle. In three other provinces, providing a direct income supplement to low income families with children has been a successful strategy—in Ontario, for example, 47,000 children and their families were lifted out of poverty.
Momentum and Vibrant Communities Calgary have been promoting such a strategy in Alberta for the last two years. It was a key recommendation of the Poverty Costs 2.5 report in which we were very involved.
We are delighted by the Government of Alberta’s decision to institute the Alberta Child Benefit. The Benefit will help more than 100,000 Alberta families with children earning less than $41,200 a year. The maximum annual benefit is $1,100 for families with one child, and up to $2,750 for families with four or more children. The Benefit isn’t taxable and will not impact access to other benefits such as AISH, Income Support or the Child Care Subsidy.

4. Education Savings Harder for Some Alberta Families: ACES Grant Discontinued

Unfortunately we didn’t win them all . . . The Government of Alberta decided to discontinue the Alberta Centennial Education Savings grant. The grant placed $500 into any RESP opened by a parent on behalf of their child.

Momentum had worked hard to convince the government of the value of the ACES grant, knowing that children with an education savings account in their name are up to six times more likely to finish high school and move on to post-secondary education. Because higher levels of education lead to higher levels of income throughout life, tools like the ACES grant are important to ending the intergenerational cycle of poverty. We were therefore disappointed by the decision.
But we don’t give up . . . Before the grant ended, Momentum’s StartSmart program, which explains the value of opening RESPs, trained 110 community champions across Alberta. Our Public Policy program will continue to work toward promoting education savings and, when the time is right, an income-tested RESP grant for lower-income families. And Momentum was successful in its recommendation that RESPs be considered a fully exempt asset when qualifying for social housing, which was confirmed by the Minister of Housing early in 2016.

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