Rent-to-Own: It’s Expensive to be Poor

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More and more people are living paycheck to paycheck and finding it impossible to save for big-ticket items. Without access to credit and no money saved, they are forced to turn to rent-to-own stores for these purchases. These stores often charge customers two to three times more than traditional stores for the same items, leading to more purchase defaults and low-income consumers remaining locked in their current income quagmire. Consumer rights organizations continue to fight against this industry with only moderate success.

The Great Recession increased the gap between the upper 2% and the lower 98%. More and more of these families depend on minimum wage jobs as their only sources of income. During the recession, many lost their homes, destroying their credit and denying them access to traditional loan or credit opportunities. Since these families’ incomes are barely enough to pay for rent, food, and transportation, most live on the financial edge, with little left over for a rainy-day fund.

Rent-to-own stores have been in existence for over fifty years, but have exploded since the recession. According to an industry trade group, there are over 8,600 rent-to-own stores in the United States, serving over four million customers and generating over $7.6 billion in revenue every year. They target customers with little credit and no savings. The stores sell a large assortment of big-ticket items and durable goods, including jewelry, electronics, and home appliances.

The purchase is a hybrid between a rental agreement and a purchase on installment. Customers pay for the right to use the item as they pay it off. Payments are made once a month, every other week, or even weekly. Unlike installment or credit purchases, a credit check is not required. The customer can terminate the agreement at any time by returning the item—that is, however, less common than repossession of the item by the store for lack of payment. Once the item is repossessed, the customer does not get any credit for payments made. Customers can also exchange items before the agreement is complete. In this case, the customer does not receive any credit for funds paid toward the returned item unless they enter into another agreement for a new item.

According to a law review article on the industry, about seventy-five percent of purchases from these stores were terminated within the first four months of purchase. The industry uses this risk to justify the extremely high fees and interest charged. For example, a $450-600 computer can have a final cost of $1,943.28.

Current state laws depend on whether the agreements are characterized as installment contracts or lease agreements. Many states mandate full disclosure of the agreement’s terms and require the store to identify full purchase price before the consumer enters into the agreement. Others require prior purchase history to be carried over to new purchases, so long as purchases are returned to the store and the new purchase is made within a certain period of time. Additionally, many states’ attorneys general have filed lawsuits against these stores for harassing customers, relatives, and neighbors during debt collection efforts, scaring children by telling them their parents will be jailed for failure to pay, and breaking and entering into customers’ homes to repossess items.

Consumer advocates have made modest gains against this industry, but have failed to stem the growth of these stores. In some states, consumer advocates are filing and winning suits against specific stores and practices. In 2007, consumers in New Jersey won a $109M settlement after the N.J. Supreme Court ruled rent-to-own contracts were illegal and violated the state’s 30% criminal usury law. Allied with the Consumer League of New Jersey, along with N.J. Public Interest Research Group, N.J. Public Advocate, AARP, and others, individuals collaborated to advocate for citizens in the lower income bracket. Further, only two weeks ago, the second-largest rent-to-own furniture store, Aaron’s Inc., agreed to pay $28.4 million to California customers after their Supreme Court found the store violated the state’s consumer protection and privacy laws by overcharging consumers.

Overall, these intimidating business tactics and high prices are similar to activities in the payday loan industry. Although consumers’ rights organizations continue to advocate for more protective laws and file suits in states with more protective laws, in the end, as long as more traditional methods of purchasing these items are closed to this growing group of consumers, most have little choice but to continue using this risky and extraordinarily expensive option.

Article original cite: https://nonprofitquarterly.org/policysocial-context/25062-rent-to-own-it-s-expensive-to-be-poor.html

Princeton Joins New Jed & Clinton Health Matters Campus Program

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In the face of a lawsuit and growing demand for mental health services in college campuses across the country, Princeton University joined over 55 other colleges and universities in becoming members of the Jed & Clinton Health Matters Campus Program.

The dynamic growth in the need for services on college campuses was documented in the 2013 National Survey of College Counseling Centers. The survey reached out to 203 college centers serving 1.8 million students. In these schools, the average percentage of students accessing services was 11.37 percent in four-year institutions and 12.9 percent in two-year institutions. The average ratio of counselors to clients at these schools was 1 to 1,604 students. The survey also found that smaller schools (those with fewer than 15,000 students) had considerably lower ratios than larger schools.

The number of students accessing services at counseling centers is overshadowed by the number experiencing mental illness or substance abuse. According to a 2010 survey by the American College Health Association, in the twelve months preceding the survey, 45.6 percent of students reported feeling that “things were hopeless” and 30.7 reported feeling “so depressed that it was difficult to function.” Additionally, according to a 2007 study by the National Center on Addition and Substance Abuse, half of college students participated in binge drinking, abused prescription drugs, and/or abused illegal drugs.

The Jed Foundation describes the Clinton Health Matters Campus Program as a “groundbreaking self-assessment and feedback program that helps colleges create more comprehensive solutions to support their students.” Current members of the program include schools in the Big Ten, Midwest liberal arts colleges, community colleges, and religious institutions. After a school joins the program, it takes a confidential self-assessment survey assessing current mental and substance abuse services and opportunities for enhancement. The survey leads to participation in four years of technical assistance activities to expand and enhance these services. The program was created this past June and is a partnership between the Jed Foundation and the Clinton Foundation’s Clinton Health Matters Initiative.

Princeton University’s mental health program has been under intense scrutiny recently after two students reported being pressured to drop out of school due to their medical conditions. One filed a federal lawsuit this past March alleging his confidentiality was violated when his medical records were turned over to campus security following his suicide attempt.

Article original cite: https://nonprofitquarterly.org/policysocial-context/25000-princeton-joins-new-jed-clinton-health-matters-campus-program.html

The Powerful Philanthropic Intention behind “Women Moving Millions”

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For too many decades, programs serving women and girls stemmed from programs serving men. In response, women’s funds were created to raise, advocate, and focus funds on programs geared toward the unique needs of women and girls. Although these funds continue to grow, many leaders are advocating for more dynamic growth and others continue to question their need.

Women Moving Millions (WMM) issued a call to action in September to women of means across the country. The organization advocated for an increase in giving and a concentrated focus on organizations serving women and girls.

The call to action was accompanied by a new study entitled All In for Her, documenting the growing amount of wealth wholly or partially controlled by women. According to the study, women in the U.S. have the capacity to give an estimated $230 billion a year. Jacqueline Zehner, the chair of WMM, described the sum as “approximately equal to all charitable giving from individuals and roughly 3.3 times the overall charitable giving by foundations and corporations in the U.S. last year.” Much of this capacity stems from an intergenerational transfer of wealth. According to the Boston College Center on Wealth and Philanthropy, women will inherit 70 percent of $41 trillion, or $28.7 trillion, over the next 35 to 40 years.

This large transfer of wealth has the potential to increase philanthropic activities. According to a July 2009 Barclay’s Wealth study titled Tomorrow’s Philanthropist, women give, at 3.5 percent, an average of 1.7 percent more of their wealth to charity than men.

WMM advocates not only for an increase in giving, but giving that is transformative. Currently, only ten percent of donations are chosen using a “gender lens.” The organization defines giving with a gender lens as donors thoroughly “examin[ing] how culturally entrenched gender norms affect women and men differently, and then tak[ing] these distinctions into account when identifying both the problems and the solutions.” Women can change this deficiency by giving larger general operating gifts, combining money with volunteer engagement, and merging their efforts with other donors who share this passion. In addition to giving using a gender lens, thoughtful donors provide capital directly to women and girls in need.

The first women’s funds were created in the 1980s. Their donors have led the way by building and expanding foundations with missions of supporting organizations serving and creating programs designed for women and girls. Currently, there are over 160 women’s funds and they are growing at a faster rate than the greater philanthropic community. A report developed by the Foundation Center and Women’s Funding Network documented 24 percent growth in giving by women’s funds between 2004-2006 ($101 million in 2006, up from $72 million in 2004) while overall foundation giving increased by 14.8 percent. The leaders of WMM are advocating for transformational social change building on the dynamic growth of the last thirty years.

Article original cite: https://nonprofitquarterly.org/philanthropy/25008-the-powerful-philanthropic-intention-behind-women-moving-millions.html

Clean Energy Fd’n Draws Social Investors to Nonprofit’s Solar Project

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Recently, Chicago’s Institute of Cultural Affairs (ICA) partnered with investors leading to the operation of the second-largest number of solar panels in Chicago. Thanks to funding from the Illinois Clean Energy Community Foundation and social investors, the organization purchased and installed 485 solar panels for its 93 year-old landmark building. The panels will reduce the building’s dependence on external energy sources for electricity by 23 percent.

By empowering individuals to invest in the project, ICA is following its mission of encouraging people to be agents of social change. The project will save the organization $16,000 in energy costs per year and is part of a nonprofit trend in developing creative new revenue sources and funding opportunities. Working with a small number of investors, the ICA funded the 40 percent match required for the $600,000 project. In return, each investor will receive a four percent annual return on their investment for the next ten years. After the ten-year period, the organization will be relieved of its debt. The funding model is similar to planned giving opportunities.

The ICA is a member of ICA International and is the only nonprofit of its kind in the U.S. Its mission is “to build a just and equitable society in harmony with Planet Earth through empowering cultural dimensions of the social process.” ICA’s programs include leadership development and service learning. The ICA’s eight-story building is home to diverse nonprofit organizations, including an interim housing program for homeless women and a dental clinic. The building is the largest nonprofit social service center in the Midwest, serving over 1,000 clients every week. Additionally, thirty-four people live in the building as part of an intentional or shared residence.

The project was part of a Retrofit Chicago Commercial Building Initiative. Of the 48 participants, the ICA is the only building outside of the Loop or downtown area and the first nonprofit to participate. This project is the organization’s first step toward environmental sustainability; the next is the development of a BioShaft system as a waste water solution.

Article original cite: https://nonprofitquarterly.org/policysocial-context/24932-clean-energy-fd-n-draws-social-investors-to-nonprofit-s-solar-project.html

Louvre Using Crowdfunding to Purchase 18th-Century Table

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Around the world, nonprofits continue to experience a drop in government funding. European nonprofits are not immune to this trend. In France, museums are struggling to raise essential funds after two years of consecutive cuts in government support. In its place, two the country’s most famous museums, the Louvre and Musée d’Orsay, are turning to crowdfunding to expand their collections.

Earlier this week, the Louvre started a new crowdfunding campaign to partially fund the purchase of the Table de Teschen. The eighteenth-century jeweled “Table of Peace” was a gift to a French diplomat at the end of the Bavarian War. The total price of the piece is 12.5 million Euros, and the museum is looking to individual donors to fund the last million Euros, or $1.67 million.

This effort follows the Louvre’s previous successful campaigns. In all, the museum has raised over 4 billion Euros since 2010 from 20,000 donors. Their activities are part of a movement toward online crowdfunding efforts. The TABB Group, a financial markets research and advisory firm, projects that the crowdfunding market will reach $17 billion by the end of 2015.

Current nonprofit crowdfunding has roots in the telethons of the late 1950s. Both are methods of raising funds by pooling a large number of small donations from unconnected donors pledged in a short period of time. Similar efforts continue on public radio and television stations across the country. These campaigns often highlight special incentives to entice donors to participate. The Louvre offers donors of over 200 Euros the opportunity to visit the exhibit on a day when the museum is closed to the public, but what they really offer is a psychic partial ownership of the museum’s beauty.

The Louvre limits its crowdfunding expenses by hosting its efforts directly on its website. Many smaller nonprofits find it necessary to host their project on one of the many crowdfunding websites. These websites allow nonprofits the opportunity to reach more new donors. The sheer number of crowdfunding sites is emblematic of the growth in crowdfunding. Successful projects include theater productions, renewable energy, and academic research.

As the Louvre continues its crowdfunding efforts, it is also exploring more conventional methods of raising revenue. It announced it will soon welcome visitors seven days a week in the hopes of bridging its funding gap.

Article original cite: https://nonprofitquarterly.org/policysocial-context/24958-louvre-using-crowdfunding-to-purchase-18th-century-table.html