A National Model for Financial Counseling?

In January, New York City mayor Michael Bloomberg noted in his State of the City address that the City has an important role to help New Yorkers be self-sufficient. One of his proposals for accomplishing this is to take a privately funded pilot program that offers one-on-one counseling at Financial Empowerment Center locations across the City, and expand its critical financial services to help residents eliminate their debt and increase their savings.

Administered by the Department of Consumer Affairs Office of Financial Empowerment (OFE) in partnership with community-based organizations, the Financial Empowerment Centers provide underserved communities with free one-on-one financial counseling by trained professionals over the phone or in person on issues such as improving credit, debt collection, budgeting, and opening a bank account.

The pilot project was initiated in part as a result of the OFE led 2008 Neighborhood Financial Services Study. The study, which included focus groups and a survey of 640 randomly selected residents in two NYC neighborhoods, found “a demand for individualized counseling and a fundamental mismatch between the needs of low-income New York City neighborhoods and the financial products and services offered.”

In response, the City launched the first Financial Empowerment Center in the Bronx utilizing the resident survey feedback to inform and shape the program offerings. After yielding successful results in the Bronx, other Centers emerged across the City. According to Cathie Mahon from the New York City Department of Consumer Affairs, “Since inception, professionally-trained financial counselors have helped more than 8,500 New Yorkers reduce more than $3 million in debt and accumulate over $300,000 in savings.”

The Financial Empowerment Centers are not only improving the lives of New Yorkers, but also offer promising possibilities for a national model. The challenge for policy makers when bringing a pilot like this to scale is determining what key elements and features of the program are necessary to replicate success in diverse neighborhoods and communities across the country.

Every community has a different set of needs and resources available to them. This means the set-up of one pilot project might not be easily duplicated in other locations. Despite these differences, many communities face similar challenges so key program components and structure can be successfully transferred. Important questions to ask when bringing a program like this to scale include: (1) What menu of services should be offered and through what channels (e.g. in person or on the phone)? Are services easily accessible and affordable to the target client population? (2) Are the necessary community collaborators and city support present? What is the role of each stakeholder? This includes an extensive list of city administrators, community organizations, trained professionals to administer services, funders, and financial institutions. It is not only a matter of having these key players present, but that efforts are coordinated and collaborative. (3) Is there a market need in the community? (4) Will residents participate and find the services valuable? (5) What do the evaluations say about the pilot project and how might that inform the process? Are those receiving the services included in the evaluation process?

One critical and very basic element to consider that often gets lost in the shuffle of a process like this is the “voice” of those the policy or program is intended to benefit. This requires all stakeholders from the policy maker to the community organization to first listen to residents and then respond. Who better to ask than the residents themselves about what they need?

Including resident voice can take various forms and allows people to feel like a part of the process while providing valuable insight for programmatic and policy design. In New York for example, OFE included elements of community expertise in their preliminary process through resident participation in the Neighborhood Financial Services Study. The findings from the report guided the program design and led to successful outcomes because they were able to identify and then target the specific unmet needs voiced by the residents themselves. New York also accounted for potential language, affordability and accessibility issues. For easy access, the Centers are located directly in the neighborhoods where those the program is intended to serve live. Center patrons also have the option to receive services either in person or over the phone, in several languages, and at no cost.

From the get-go the pilot capitalized on a number of community partners. Integrating community organizations already established and working with residents in the neighborhoods makes sense. These organizations are likely to understand the struggles of the population served and provide an additional level of voice and expertise. They are also likely to be trusted by residents through their established presence in the community.

Regardless of where the Centers are implemented these important questions need to be considered. If policy makers first listen to residents and then respond, they are more likely to effectively address unmet needs and provide more viable and sustainable solutions. NYC’s Financial Empowerment Centers have provided a successful pilot that deserves attention for a national model.