Southern Good Faith Fund

Filling a Rural Need

Many rural communities across America suffer from high rates of poverty. However, low-wage rural workers often do not have the access to free tax preparation services that their urban counterparts enjoy. A great deal of Volunteer Income Tax Assistance (VITA) programs focus on urban centers, and simply do not operate in sparsely populated areas. This may be due to the daunting hurdles that must be overcome in order to operate a VITA site in a rural area. Finding enough volunteers and the space to host a site can be extremely difficult in areas with limited resources.

SGFF’s VITA program has filled a real need in rural Arkansas for clients like Joann Taylor.

For about 10 years, Southern Good Faith Fund (SGFF) has recognized the need for free tax assistance in rural Arkansas. Arkansas’ rural communities were highly impoverished long before the current economic crisis gripped America. In some Arkansas counties, only 50% of the adult population is in the labor market. But getting a VITA program off the ground has not been easy. It was not until SGFF forged a partnership with Southern Bancorp 5 years ago that they were able to launch their VITA program in rural Arkansas.

SGFF’s VITA Program

When SGFF began their VITA program 5 years ago, they ran one site and did about 200 returns. Their VITA program has expanded rapidly since then. In 2008, SGFF completed over 2000 returns (a 10-fold increase) at 10 sites, spread across Arkansas from Arkadelphia in the southwest to Ruleville in eastern Mississippi. All of those tax sites were located in towns with populations of about 50,000 or less, and most were in towns with less than 15,000 residents. This year, SGFF is adding 3 more tax sites. With 13 sites, they plan to do even more returns than last year.

In some of the larger communities they serve, SGFF is part of a VITA coalition. However, in the vast majority of the towns where they work, SGFF is the only VITA program serving the area. While SGFF may not prepare the number of returns that a large urban program does, they do reach a significant share of the market in rural counties. In some areas, SGFF estimates that they complete tax returns for 10% or more of the households!

The Importance of Partners

One of the keys to the success and sustainability of SGFF’s VITA program is their partner, Southern Bancorp, of which SGFF is a non-profit affiliate. Southern Bancorp is the largest rural Community Development Financial Institution in the United States and has branches in many small towns in the area. SGFF’s VITA sites are almost all run out of Southern Bancorp branches, and most of SGFF’s VITA volunteers are Southern Bancorp employees. This partnership has provided the space, the volunteers, and the stability that are necessary to making the rural VITA program work.

SGFF’s local IRS SPEC offices have also been a key to the VITA program’s success. The helpfulness and responsiveness of the SPEC officers in Arkansas and Mississippi has been instrumental in getting the VITA program off the ground, and in continuing to grow and expand it over the years.

With the help of partners like the IRS and Southern Bancorp, SGFF has been able to provide free tax services to thousands of clients like Margie Perry, pictured here.

Connecting VITA Clients to Other Services

While SGFF’s VITA program is relatively new, Southern Good Faith Fund has been serving the low-income community in Arkansas for over 20 years. SGFF was founded as a micro-lending agency, modeled after Bangladesh’s Grameen Bank. They no longer engage in micro-lending, but they do continue working hard to offer direct services and engage in advocacy to empower low-wage Arkansans. In addition to their VITA program, the direct services offered by SGFF include Individual Development Accounts (IDAs), homebuyer and credit counseling services, children’s saving accounts through the State of Arkansas’ Aspiring Scholars program, small business training and counseling, workforce training, and bank products to help build assets and credit scores.

With the help of partners like the IRS and Southern Bancorp, SGFF has been able to provide free tax services to thousands of clients like Margie Perry.

SGFF believes in the importance of a holistic approach to helping clients. If a client accesses one of their services, SGFF will do their best to involve them in other services that they offer. SGFF runs a number of successful programs, which are a perfect way to connect with potential VITA clients. For instance, SGFF’s IDA program has helped more than 500 people purchase assets in the last 10 years alone! Most of the IDA clients can also benefit from VITA, so there is a strong commitment to connecting those clients with a VITA site. In addition, many clients that have come to SGFF for their VITA services have also been connected to the IDA program and other direct services offered by SGFF.

New Products on the Horizon

Tax sites are also a great place to inform clients about successful bank products and opportunities for getting banked. SGFF has worked with their partners to develop responsible bank products that are useful and accessible to their clients. For some clients, it is not just about getting banked, but about getting ready to have a bank account. SGFF is working with Southern Bancorp to create a stored value card, which would serve as a “pre-checking account.” The money deposited on the card would be held by the bank in an account, but that account could not be overdrawn.

SGFF is also piloting a credit-builder CD product. This CD would secure a loan, which the client could pay off over time. This product adds diversity to a client’s credit file. While still in the pilot phase, the results have been extremely promising. All but one of the pilot’s 10 participants have increased their credit scores by 50 to 100 points! SGFF is planning to expand the pilot, and offer it to more of their VITA clients as well. While it might not be the right product for everybody, it can really make a difference for the right people.

One Client’s Success Story

The services offered by Southern Good Faith Fund have helped countless low-wage families over the years. Their VITA program alone has made a huge impact on thousands of families throughout Arkansas and western Mississippi. Blake Williams of Southern Good Faith Fund shared a story he wrote about Shamitria Williams. SGFF’s IDA and VITA programs have helped put Shamitria on the path towards financial stability.

“Shamitria Williams of Pine Bluff is just one of several individuals utilizing SGFF’s VITA program. No stranger to SGFF, Shamitria is a past IDA participant who, upon completing her savings goal, made her first home purchase in 2007. After hearing about SGFF’s VITA program through the client newsletter, Shamitria first visited SGFF’s Pine Bluff VITA site in 2008.

In 2009, Shamitria, like a lot of tax filers, was in a hurry to receive her tax refund and decided to bring her last paycheck stub to a paid preparer. While waiting to meet with the tax preparer, Shamitira overheard several tax filers complain about services they were receiving. “One lady at the paid preparer’s office was very upset about having been charged $500 for a same day refund and said that she had never been charged that high of an amount before.” “They were also very unprofessional” added Shamitria. “One of the tax filers had complained to me about a mistake that had been made on her return and was upset that the tax preparer had been talking on the phone to a boyfriend while she was preparing the taxes.”

After waiting for over an hour, Shamitria decided to hold off on filing her taxes until she had her W-2 forms so that she could have them prepared at SGFF. “I’m glad I waited and I highly recommend SGFF’s VITA program to anyone wanting their taxes prepared”, said Shamitria. “It’s worth it to wait on receiving all of your tax forms and then have them filed at SGFF because you get to keep all of your money and you avoid paying outrageous tax preparation fees.”

When asked what she plans to do with her refund this year, Shamitria responded, “My refund is going towards home repair. I’ve been looking around for grants that will cover home repair costs so my tax refund will really help out!”