The General Affairs Committee heard testimony Feb. 7 on a bill that would allow credit unions to conduct a savings promotion raffle.<\/p>\n
Under LB524, introduced by Lincoln Sen. Amanda McGill, savings promotion raffles would be added to the definition of a gift enterprise. Currently, credit unions are authorized to conduct a gift enterprise \u2013 a business promotion contest or game of chance \u2013 under Nebraska law.<\/p>\n
According to McGill, a savings promotion raffle is a contest where depositing a specific amount of money into a savings account or program earns an individual a chance at winning a designated prize. Each entry must have an equal chance of winning.<\/p>\n
McGill said a pilot program in Michigan helped individuals save over $8.5 million dollars. Individuals earned a chance at winning a prize each time they made a deposit to a savings account, she explained, with the prize money supplied by credit unions either through a small reduction in the interest paid on accounts or from the credit union\u2019s respective marketing funds.<\/p>\n
\u201cPeople in America just aren\u2019t saving anymore,\u201d McGill said. \u201cThis is a way to incentivize savings by making it fun.\u201d<\/p>\n
Joanna Smith-Ramani of Doorway to Dreams, a Boston based national nonprofit group, testified in support of the bill, saying that prize-based savings accounts are a safe and powerful way to encourage low-income Americans to save.<\/p>\n
She said 56 percent of those who participated in the Michigan pilot program had never previously had a savings account, and 44 percent were low- or moderate-income individuals.<\/p>\n
\u201c[This bill] could help more families across the state start saving for their futures,\u201d Smith-Ramani said.<\/p>\n
Julie Kalkowski of the Financial Hope Collaborative also testified in support. Fifty percent of families live paycheck-to-paycheck, she said, and a lack of emergency savings causes low-income individuals to pay more in interest and fees for basic financial transactions.<\/p>\n
\u201cWhen people have even a little bit of savings it goes a long way,\u201d Kalkowski said. \u201cI can\u2019t see a downside to this.\u201d<\/p>\n
Robert Hallstrom of the Nebraska Bankers Association testified in a neutral capacity, saying steps could be taken to make the bill less \u201cbare bones\u201d in regard to the operation of a savings raffle.<\/p>\n
For example, some states restrict participation in such raffles only to new customers, he said. Such restrictions would help create a level playing field, Hallstrom said, because federal law prohibits banks from participating in raffle promotions.<\/p>\n
The committee took no immediate action on the bill.<\/p>\n","protected":false},"excerpt":{"rendered":"
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