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No-Interest Credit Union No-Interest Credit Union ProposalProposal

Create a Texas Credit Union to Create a Texas Credit Union to provide interest-free loans to provide interest-free loans to

our community, InshAllahour community, InshAllah

BismillahBismillah

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How typical Credit Unions How typical Credit Unions workwork

A CU uses your deposits to make loans; your A CU uses your deposits to make loans; your deposits are insured by NCUA, a federal agency, up deposits are insured by NCUA, a federal agency, up to $250,000to $250,000

The CU charges interest on loans to pay for the CU’s The CU charges interest on loans to pay for the CU’s expenses, pay interest to depositors, and to build expenses, pay interest to depositors, and to build the CU’s Net Worth (capital).the CU’s Net Worth (capital).

CUs must maintain Net Worth of at least 7% of total CUs must maintain Net Worth of at least 7% of total assets, to absorb loan losses, unexpected expenses, assets, to absorb loan losses, unexpected expenses, etc.etc.

CUs are non-profits; members elect the CU’s boardCUs are non-profits; members elect the CU’s board The CU’s field of membership defines who can joinThe CU’s field of membership defines who can join CUs generally rely on donations for startup capitalCUs generally rely on donations for startup capital

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How the No-Interest CU will How the No-Interest CU will workwork

Will not charge interest nor pay interestWill not charge interest nor pay interest Will use deposits to make no-interest loansWill use deposits to make no-interest loans Will use member fees to pay for most of its Will use member fees to pay for most of its

operating expenses ($3/month)operating expenses ($3/month) Will use voluntary fees/donations to help Will use voluntary fees/donations to help

pay for expenses and build its capital pay for expenses and build its capital ($7/month)($7/month)

Rely on voluntary fees to help build capital Rely on voluntary fees to help build capital to enable more lending ($25-$250/month)to enable more lending ($25-$250/month)

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Jafari Interest Free LoansJafari Interest Free Loans

Started in Ramadhan, 2007 to make Started in Ramadhan, 2007 to make interest-free person-to-person loansinterest-free person-to-person loans

Members contribute $50/month; funds are Members contribute $50/month; funds are pooled and lent to a member who has an pooled and lent to a member who has an existing loan with the highest interest rateexisting loan with the highest interest rate

As Borrower pays back, funds are refunded As Borrower pays back, funds are refunded to the contributing membersto the contributing members

Contributions are voluntary and can be Contributions are voluntary and can be stopped or changed at any timestopped or changed at any time

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Jafari Interest Free LoansJafari Interest Free Loans

(Aug 2014) Has 177 members in 11 states; 140 from (Aug 2014) Has 177 members in 11 states; 140 from HoustonHouston

Made 54 loans for $550,000, saving $190,000 in Made 54 loans for $550,000, saving $190,000 in interestinterest

$300,00 has been paid back and refunded to $300,00 has been paid back and refunded to membersmembers

14 loans paid off in full; 4 borrowers are behind; 29 14 loans paid off in full; 4 borrowers are behind; 29 borrowers are on scheduleborrowers are on schedule

Members contributing $50 for last 7 years get $40 in Members contributing $50 for last 7 years get $40 in monthly refund; net cash effect is $10/month.monthly refund; net cash effect is $10/month.

Members pay $1/month for JIFL expensesMembers pay $1/month for JIFL expenses A recent JIFL loan for a $18,000 7.75% student loan A recent JIFL loan for a $18,000 7.75% student loan

will save $4,800 in interest and be paid off 2 years will save $4,800 in interest and be paid off 2 years sooner sooner

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Why create a Credit UnionWhy create a Credit Union

Some people are more comfortable with Some people are more comfortable with a regulated entity like a CU than an a regulated entity like a CU than an organization like JIFLorganization like JIFL

A CU can use deposits to make more A CU can use deposits to make more loansloans

A CU can have liens on cars and homes A CU can have liens on cars and homes to provide more protection to the lenderto provide more protection to the lender

A CU provides better governance and A CU provides better governance and continuitycontinuity

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No-Interest Credit UnionNo-Interest Credit Union

Annual expenses $16-19,000/year at startupAnnual expenses $16-19,000/year at startup Savings account only (no checking, debit card, etc.)Savings account only (no checking, debit card, etc.) $3/month fee per member$3/month fee per member Voluntary fee/donation $7/monthVoluntary fee/donation $7/month Another voluntary fee $25-$250/month. This fee Another voluntary fee $25-$250/month. This fee

should go down the longer a member participates. should go down the longer a member participates. Who can join: People in Houston, Dallas and Austin, Who can join: People in Houston, Dallas and Austin,

and any of their family members living and any of their family members living anywhereanywhere in in the USthe US

Once we reach 500 members InshAllah we will apply Once we reach 500 members InshAllah we will apply for a federal charter, allowing anyone in the US to for a federal charter, allowing anyone in the US to joinjoin

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Current Application StatusCurrent Application Status

Filed application with state in Ramadhan, 2012 and Filed application with state in Ramadhan, 2012 and received approval from Texas CU Dept May 2013received approval from Texas CU Dept May 2013

Filed for approval with NCUA July 2013 and working Filed for approval with NCUA July 2013 and working on their requests for more informationon their requests for more information

The more people who support the CU, whether The more people who support the CU, whether $3/month, $10/month or $50/month, the stronger $3/month, $10/month or $50/month, the stronger our applicationour application

Visit Visit www.jafari-ifl.orgwww.jafari-ifl.org and click and click Proposed CUProposed CU for for application, by-laws, business plan, 3 yr financial application, by-laws, business plan, 3 yr financial projection, survey, pledge formprojection, survey, pledge form

Approval process can take three or more yearsApproval process can take three or more years

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How you can helpHow you can help

Inform family and friends about the proposed Inform family and friends about the proposed credit union. Google Jafari No Interest Credit credit union. Google Jafari No Interest Credit UnionUnion

Ask your centers to consider issuing a Letter of Ask your centers to consider issuing a Letter of Support for the proposed Credit UnionSupport for the proposed Credit Union

Visit Visit www.jafari-ifl.orgwww.jafari-ifl.org and click and click Proposed CUProposed CU for for application, by-laws, business plan, 3 yr financial application, by-laws, business plan, 3 yr financial projection, survey, pledge formprojection, survey, pledge form

Please pledge funds to help the CU with start-up Please pledge funds to help the CU with start-up costs and capitalcosts and capital

Send email to Send email to notify@jafari-ifl.orgnotify@jafari-ifl.org for any CU or for any CU or pledge questionpledge question

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Q & AQ & A

DISCLAIMER: There are a lot of details not DISCLAIMER: There are a lot of details not covered in this presentation. Please visit the covered in this presentation. Please visit the Texas state web-site Texas state web-site http://cud.texas.govhttp://cud.texas.gov for for details, applicable laws, rules, regulations, details, applicable laws, rules, regulations, etc.etc.

We are learning too as we go through the We are learning too as we go through the CU application process. The business plan CU application process. The business plan will change according to any requirements will change according to any requirements of the Texas CU department and/or the of the Texas CU department and/or the NCUA.NCUA.