The New Financial Empowerment Champions: Municipal Governments
By Jonathan Mintz, President and Chief Executive Officer of the Cities for Financial Empowerment Fund
The connection between people with low incomes, and the need to help them manage their money, build assets, and become financially stable is no surprise. Community organizations have been at the front lines of addressing these social service needs, often through connecting families to income supports and benefits like Supplemental Nutrition Assistance Program (SNAP) and the Earned Income Tax Credit (EITC). In the last few decades, community organizations have been increasingly looking towards financial empowerment and asset building strategies to help families and communities.
In fact, community organizations have long labored to secure the resources and staff capacity to offer these services regularly and at scale, and have struggled to advance these efforts beyond websites, literacy classes, and sporadically-funded individual services. And, truth be told, while there has been much discussion over many years about financial literacy and education, the field classically has struggled to measure real impact.
But over the past 10 years, as part of the aftermath of the 2008 recession, municipal leaders have begun to see the importance of financial stability of low-income households, understanding that as individual and family financial stability falters, so go neighborhoods and cities. And just as city leaders experienced increasing demand for municipal social services, they began to invest in financial empowerment. Entering the arena, local government faced enormous, but constructive, pressures. Politically, they had to offer measurable solutions. Constitutionally, they needed to do so at scale, not just for a few dozen or a couple hundred here and there. And responsively, quality and impact mattered when it came to stewarding public dollars.
These local government pressures coincide with powerful and unique strengths. Cities are able to connect financial empowerment services to an array of public and nonprofit social services, reaching residents where they were already receiving help and weaving in efforts to address their financial instability directly. And cities are literally powerful, able to regulate and enforce unfair and deceptive consumer financial matters such as in debt collection, employment agencies, process servers, pawn shops, auto dealers, and more.
In these 10 years, the municipal financial empowerment field has exploded, as leaders add asset building, access to banking, consumer financial protection, and financial counseling strategies to city programs and policies. For example, cities are offering children’s savings accounts through the public school system, as in San Francisco’s K2C initiative, helping tens of thousands of families build assets and save for college. As another example, the CFE Fund’s Financial Empowerment Center initiative, which provides one-on-one, professional financial counseling as a free municipal service, has helped almost 80,000 clients across 6 cities build $12 million in savings and pay down $95 million in debt; the CFE Fund is currently working to scale this initiative to as many as 50 local governments, helping even more residents become financially stable. As yet another example, the over 75 local Bank On coalitions across the country are working to connect residents to safe, affordable banking accounts, and connecting account access to city and nonprofit payment streams such as workforce programs. Often, cities use private funds from philanthropic or corporate partners to seed this work, and then as programs demonstrate impact — and demand — they are sustained with public dollars.
What’s particularly exciting is not just the impact of these financial empowerment outcomes, but how these services have started solving even larger social service challenges. Municipal financial empowerment programs and services are increasingly being woven into larger anti-poverty service streams, and have been boosting their successes, as well — an outcome we have dubbed the “Supervitamin Effect.” Through integrating these various financial empowerment strategies into social service touchpoints — workforce development, homeless prevention, prisoner reentry, domestic violence services, and more — cities have realized a whole other level of impressive, quantifiable impact. In partner city Lansing, Michigan, for example, integrating financial counseling into prisoner reentry programs led to clients leaving transitional housing almost a month more quickly.
This field has grown from city leaders’ general awareness about financial education and literacy to an increasingly standard local government set of tools to produce meaningful, measurable, and large-scale improvements to families’ and individuals’ economic stability. This work has spread to over 50 cities, beyond individual programs even to the creation of entire municipal Offices of Financial Empowerment. And they are proving to be strong partners for community organization and financial institution partners looking to expand and entrench their services to strengthen their communities. City governments are truly leading the way on stabilizing people’s financial lives and families’ trajectories of success, in the process making our communities and cities stronger and more stable.
Jonathan Mintz is the Founding President and Chief Executive Officer of the CFE Fund. He also founded and co-chaired the Cities for Financial Empowerment Coalition, which brings together pioneering municipal governments from across the country to advance innovative financial empowerment initiatives on the municipal, state, and national level.
This essay is part of a series titled, Accelerate This! Government as Social Innovator, which features leaders at the intersection of philanthropy and government offering ideas about how non-public dollars can be used to drive innovation and systemic change on complex social issues. The Accelerate This! Government as Social Innovator national symposium will take on May 1, 2018 in Los Angeles and feature systems-changing innovations from cities that can be adapted for your community. The event is part of the City Accelerator, an initiative led by Living Cities and supported by the Citi Foundation. For more information, click here.
