1 No-Interest Credit Union Proposal Create a Texas Credit Union to provide interest-free loans to our community, InshAllah Bismillah

2 How typical Credit Unions work A CU uses your deposits to make loans A CU uses your deposits to make loans The CU charges interest for loans to pay for the CU’s expenses and to pay interest to depositors The CU charges interest for loans to pay for the CU’s expenses and to pay interest to depositors CUs are non-profits; CU members elect the board of directors CUs are non-profits; CU members elect the board of directors CU’s field of membership defines who can join CU’s field of membership defines who can join CUs generally rely on donations for startup capital CUs generally rely on donations for startup capital

3 How the No-Interest CU will work Will not charge interest nor pay interest Will not charge interest nor pay interest Use deposits to make no-interest loans Use deposits to make no-interest loans Rely on member fees to pay for its operating expenses ($3/month) Rely on member fees to pay for its operating expenses ($3/month) Rely on voluntary fees to help pay for expenses and build its capital ($7/month) Rely on voluntary fees to help pay for expenses and build its capital ($7/month) Rely on voluntary fees to help build capital and for lending ($25-$250/month) Rely on voluntary fees to help build capital and for lending ($25-$250/month)

4 Jafari Interest Free Loans Started in Ramadhan, 2007 to make interest- free person-to-person loans Started in Ramadhan, 2007 to make interest- free person-to-person loans Members contribute $50/month; funds are pooled and lent to a member who has an existing loan with the highest interest rate Members contribute $50/month; funds are pooled and lent to a member who has an existing loan with the highest interest rate As Borrower pays back, funds are refunded to the contributing members As Borrower pays back, funds are refunded to the contributing members Contributions are voluntary and can be stopped or changed at any time Contributions are voluntary and can be stopped or changed at any time

5 Jafari Interest Free Loans Has 150 members in 10 states; 120 from Houston Has 150 members in 10 states; 120 from Houston Made 36 loans for $346,000, saving $113,000 in interest Made 36 loans for $346,000, saving $113,000 in interest $165,00 has been paid back and refunded to members $165,00 has been paid back and refunded to members 12 loans paid off in full; 3 borrowers are behind; 21 borrowers are on schedule 12 loans paid off in full; 3 borrowers are behind; 21 borrowers are on schedule Members contributing $50 for last 5 years get $32 in monthly refund; net cash effect is $18/month. Members contributing $50 for last 5 years get $32 in monthly refund; net cash effect is $18/month. Members pay $1/month for JIFL expenses Members pay $1/month for JIFL expenses A recent JIFL loan for a $18, % student loan will save $4,800 in interest and be paid off 2 years sooner A recent JIFL loan for a $18, % student loan will save $4,800 in interest and be paid off 2 years sooner

6 Why create a Credit Union Some people are more comfortable with a regulated entity like a CU than an organization like JIFL Some people are more comfortable with a regulated entity like a CU than an organization like JIFL A CU can use deposits to make more loans A CU can use deposits to make more loans A CU can have liens on cars and homes to provide more protection to lenders A CU can have liens on cars and homes to provide more protection to lenders A CU provides better governance and continuity A CU provides better governance and continuity

7 No-Interest Credit Union Annual expenses $16-19,000/year at startup Annual expenses $16-19,000/year at startup Savings account only (no checking) Savings account only (no checking) $3/month fee per member $3/month fee per member Voluntary fee $7/month Voluntary fee $7/month Another voluntary fee $25-$250/month. This fee should go down the longer a member participates. Another voluntary fee $25-$250/month. This fee should go down the longer a member participates. Who can join: People in Houston, Dallas and Austin, and any of your family members living anywhere in the US Who can join: People in Houston, Dallas and Austin, and any of your family members living anywhere in the US

8 Current Application Status Filed application with state in Ramadhan, 2012 Filed application with state in Ramadhan, 2012 CU Dept wants us to do a survey to prove support within our community for the CU CU Dept wants us to do a survey to prove support within our community for the CU The more people who support the CU, whether $3/month, $10/month or $50/month, the stronger our application The more people who support the CU, whether $3/month, $10/month or $50/month, the stronger our application Visit and click Proposed CU for application, by-laws, business plan, 3 yr financial projection, survey Visit and click Proposed CU for application, by-laws, business plan, 3 yr financial projection, surveywww.jafari-ifl.org It can take up to three years to get approved It can take up to three years to get approved

9 How you can help Please fill out survey and return to us Please fill out survey and return to us Inform family and friends; ask them to fill out survey, whether on paper or via ; send to Inform family and friends; ask them to fill out survey, whether on paper or via ; send to Join JIFL; the more members JIFL has the stronger our application Join JIFL; the more members JIFL has the stronger our application Let us know if you want help in this effort Let us know if you want help in this effort

10 Q & A DISCLAIMER: There are a lot of details not covered in this presentation. Please visit the Texas state web-site for details, applicable laws, rules, regulations, etc. DISCLAIMER: There are a lot of details not covered in this presentation. Please visit the Texas state web-site for details, applicable laws, rules, regulations, etc. We are learning too as we go through the CU application process We are learning too as we go through the CU application process Please remember to fill out survey and turn it in Please remember to fill out survey and turn it in