Credit unions, financial literacy and the fight against poverty

Movie still from Columbia Pictures' Oliver! (1968)

In Dickens’ Oliver Twist a hungry boy stands with his empty bowl. “Please sir, I want some more.” The scene has lived for nearly two centuries because it captures poverty in its simplest form. Hunger.

That same hunger is with us today. It is not in a Victorian workhouse but in our own schools, where children arrive without breakfast because their families cannot afford it. In Canada almost 900,000 kids rely on school breakfast programs. In the United States one in eight children lives in a food insecure household. Nothing says poor quite like a child trying to learn on an empty stomach.

This reality matters to credit unions. Poverty is not only a social issue. It is an economic force that touches the communities credit unions serve and the markets they depend on.

The scale of poverty

In Canada 10.2 percent of people lived in poverty in 2023. That is about 4 million people. Deep income poverty, defined as disposable income below 75 percent of the poverty line, stood at 5.3 percent. Child poverty rose from 9.9 percent in 2022 to 10.7 percent in 2023.

In the United States the official poverty rate was 11.1 percent in 2023. That equals about 36.8 million people. The Supplemental Poverty Measure, which includes government supports, rose to 12.9 percent. Child poverty under this measure reached 13.7 percent. Black Americans faced an 18.5 percent poverty rate. Hispanic Americans faced a 20.9 percent rate. Poverty for people with disabilities reached 22 percent.

Why financial literacy matters

Poverty and financial illiteracy reinforce each other. People in poverty avoid banks. They turn to high cost credit. They face cycles of debt.

A global study found that a one point rise in financial literacy reduces the risk of poverty by 6 to 7 percent. In low income countries the effect is 32 percent. The largest gains are among women, rural residents and people with less education.

Matched savings programs also show measurable results. The Assets for Independence (AFI) program helped low income participants increase savings and asset ownership in the short and medium term. Families saved more. Renters became homeowners at higher rates. Non business owners started businesses at higher rates. Participants reported less material hardship.

What is a matched savings program?

A matched savings program helps low income families save by pairing their deposits with matching funds. For every dollar a participant saves, the program adds a dollar or more. These savings are restricted to wealth building uses such as buying a home, starting a business, paying for education or making essential repairs.

The most common model is the Individual Development Account. Participants open an account at a financial institution, attend financial literacy training and receive matching contributions when they reach their savings goal. These programs combine two forces: education and incentive. They teach people how to manage money and reward them for doing it. This creates lasting habits that build financial resilience.

Where credit unions fit

Credit unions were founded to serve people of small means. That mandate still matters. Unlike commercial banks, credit unions are built around communities and member ownership.

Many credit unions hold Low Income Designation (LID) in the United States or operate as Community Development Financial Institutions (CDFIs). These designations give them access to supplemental capital and grants to expand services in underserved markets.

In Canada, credit unions have taken similar steps. Assiniboine Credit Union in Winnipeg opened branches in low income neighborhoods such as North End and West Broadway to reach members who would otherwise rely on check cashers or payday lenders. ACU has also invested in community housing, Indigenous partnerships and local food security programs.

Predatory alternatives

Banking deserts leave gaps. When banks close branches in poor areas, other players move in. Payday lenders, check cashers and corner stores with ATMs become the default financial system.

The pattern is clear. In U.S. zip codes with about 25,000 people, every high poverty area had at least one payday lender. In low poverty areas only 21 percent did. High poverty neighborhoods are also more likely to see clusters of payday shops, making them unavoidable.

In Canada the same dynamic plays out. Recent research shows payday loan borrowers are not buying luxuries. They are disproportionately renters, low income workers, single parents, Indigenous peoples and people with disabilities. Many use loans for food, housing and bills. About 30 percent report being unable to repay on time, leaving them in cycles of debt.

Even local bodegas and convenience stores become part of the problem. In many neighborhoods they are the only place with an ATM. Withdrawal fees add another layer of cost to families already living on the edge.

Hunger and breakfast clubs

Hunger is poverty’s clearest signal. A child cannot learn well on an empty stomach.

In Canada, Breakfast Club of Canada now serves more than 880,000 children through 4,900 school programs. Demand has risen by 30 percent in just a few years. In the United States, one in eight children lives in a food insecure household.

Research is clear. School breakfast improves concentration, attendance, test scores and long-term health. It reduces behavioral problems and increases graduation rates. The return on investment is high. Fewer missed school days and better outcomes translate into stronger communities and more financially stable families over time.

For credit unions, this is not charity at the margins. Supporting breakfast clubs and similar programs is a direct investment in the next generation of members. Hungry children struggle in school, fall behind and remain trapped in poverty. Children who are fed, supported and financially literate grow into adults who can save, borrow and invest.

Credit unions can partner with schools, food agencies and local non profits to support these programs. They can provide funding, volunteers and financial education alongside nutrition. Doing so ties their brand to both immediate relief and long term empowerment.

The upside for credit unions

Helping fight poverty is not just good ethics. It is good business.

Membership growth—Reaching underserved households brings in new members. People excluded from banks often become the most loyal credit union members once they are included.

Product use—Financially literate members use more services. They open savings accounts, take out fair loans, buy insurance and build credit histories. Every new service deepens the member relationship.

Assets under administration—More deposits and more loans flow directly to stronger balance sheets. Growth in household savings means growth in assets under administration.

Reputation and brand value—Public opinion favors systemic solutions. More than 70 percent of Canadians say poverty is caused by structural barriers, not personal failure. Credit unions that take visible action strengthen their reputation as trusted institutions. That translates into goodwill, advocacy and long-term growth.

Serving vulnerable groups

Poverty is not uniform. It strikes some groups far harder than others.

• Indigenous and ethnic minorities face poverty rates two to three times higher than national averages. They are also more likely to live in banking deserts.

• Seniors on fixed incomes face inflation and rising medical costs. Many are vulnerable to fraud and digital exclusion.

• People with disabilities face poverty at twice the rate of the general population. They often lack access to fair credit or inclusive products.

• Children and youth are the face of long term poverty. Early financial literacy and youth accounts break intergenerational cycles and create the credit union members of tomorrow.

Credit unions can tailor literacy programs and product design to these groups. Each intervention is both a mission response and a growth strategy.

Moral and strategic case

Credit unions were built to lift people of small means out of poverty. Providing financial literacy, fair products and access fulfills that mission. The strategic case is just as strong. Inclusion creates members. Members use more products. Assets grow. Ties to community deepen. Every dollar moved from a payday lender to a credit union strengthens both the household and the institution.

A call to action

Oliver Twist asked for more. Today children in classrooms still go hungry. That is a call to action. Credit unions can answer. They have the mission. They have the reach. They have the tools.

Financial literacy is one of the most effective tools. Support breakfast programs. Provide education. Offer fair services.

These steps lift families out of poverty. They reduce reliance on predatory lenders. They grow membership and assets.

At Currency Marketing we see this every day through It’s a Money Thing, our financial literacy program built for credit unions. It gives institutions a proven way to teach, engage and empower their members.

What is good for communities is good for credit unions. Fighting poverty is sound business.