My first experience with payday loans happened around the holidays when my sons were much younger. I was working full-time and had a “meaningful” career, but I was living paycheck to paycheck. At the time, I was earning less than $30,000 annually. I tried to keep my expenses to a minimum, stuck to a budget and lived a very simple lifestyle. However, money was still always tight, making a little over $13 an hour. That year, a couple of months before Christmas, my car broke down and needed an expensive repair, wiping out the little savings and “extra” I was able to build.
Recovering financially from the expensive repairs was rough. Knowing that Christmas (plus all three of their birthdays) was coming up, I tried to make a plan. At the time, I was working for an organization that provided Christmas presents to kids in lower-income households, but I didn’t qualify because I was an employee. I looked into other organizations to see if I could sign my sons up for a similar program, but I was told that I didn’t qualify because I wasn’t on public assistance and/or I “made too much”. What? Too much? I was blown away. Here I am barely surviving, and somehow I made too much.
I went to my bank for a personal loan but was denied because the amount I needed was too low, and I was still building my credit. Reluctantly, I turned to a local payday loan provider. It was quick. It was easy. But, it was extremely costly! With the exorbitant interest rates added, it took over a year to pay back such a small amount.
Statistics show that many women have experienced that same struggle. A study found:
Women make up approximately 60 percent of payday loan customers, with single mothers making up a high percentage of that group.
Payday loans are primarily used to pay for household and emergency expenses.
Payday loan interest rates average 574%
Single mothers who borrow from payday loan companies typically make less than $30,000 and typically go through a 2 year cycle of debt from the original payday loan.
You may be thinking, what in the world does that have to do with my nonprofit? If so, good question. This is the time of year that many nonprofits begin planning to provide holiday services like toy drives. Many of these services benefit parents that aren’t working and have very low incomes. With many companies discontinuing their lay-away services, single parents with slightly higher incomes are faced with making decisions that sometimes lead to the doorstep of predatory lenders.
I would challenge nonprofits to reconsider who “qualifies” for assistance and services. I challenge you to consider:
Increasing the income maximum for working single parents to qualify for holiday-specific services.
Providing assistance to the single parents within your organization that work to provide services to others that they themselves may need. This can be holiday bonuses, gift cards, etc.
Being mindful of staff involved Secret Santa. Some members of your staff may already be struggling to provide gifts to their family. Setting a $5 - $20 gift limit is one way to help.
Paying a truly livable wage.
The American Psychological Association found that 38% of people say their stress increases during the holidays. Though we can’t completely eliminate holiday stress, your organization could possibly prevent at least one person from entering the stressful world of payday loans by simply giving a little more wiggle room and care to a hard working single mother.
April Carter
April is the Director of Capacity Building a Momentum Nonprofit Partners.