Municipal Financial Empowerment: A Supervitamin for Public Programs

Municipal Financial Empowerment: A Supervitamin for Public Programs
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Tough economic times create a frustrating perfect storm: increasing need for social services, dwindling government resources, and public pressure for solutions. And the truth is, when it comes to providing services to those in need, less means less. Unless you innovate.

This week in New York, the City's Department of Consumer Affairs' Office of Financial Empowerment is releasing a report that outlines where we see early signs of an innovation that may help break apart that storm. In "Municipal Financial Empowerment: A Supervitamin for Public Programs," we highlight a thread that is common to many clients who participate in social services programs-financial instability. We posit that integrating professional, one-on-one financial counseling into traditional social service programs they already receive might not only achieve better and longer-lasting outcomes, but quicker ones that would lead to lower program costs.

Financial instability is more than just its own challenge. For many individuals and families, it is the cause of other, more serious presenting problems, such as homelessness. For some, financial instability is the reason solutions to many problems can be elusive, such as for domestic violence victims who can't afford to leave an abusive home. And for still others, it is the reason solutions can be short-lived and thus need to be repeated, such as for workforce development clients who fall back out of the workforce when new income is soaked up by a financial shock, spiraling debt or, worse, deception. Looking at clients and programs through the lens of financial instability sheds light on clients seeking services for other public programs, such as prisoner reentry, homeless prevention, mortgage modifications, business start-up, and more.

The "supervitamin" of financial counseling, as distinct from generalized "financial education" is our core work at the Financial Empowerment Centers (FEC), which we piloted throughout the City. Previously funded with philanthropic dollars, Mayor Bloomberg is now publicly funding this network.

Over the past three years, FEC counselors, who have passed rigorous and multi-faceted training courses, have provided one-on-one financial counseling to more than 13,000 New Yorkers, helping individual clients with average incomes of $16,500 pay down a total of more than $6.3 million in consumer debt and build more than $800,000 in savings. Many individuals came to the FECs in response to the services we advertise: help with debt and personal finances. But many more are increasingly finding their way to financial counseling as a part of other social service programs administered by sister City agencies.

Based on our experiences in our Office of Financial Empowerment and in other contexts, "Municipal Financial Empowerment: A Supervitamin for Public Programs" is a series of reports that builds the case for fully integrating the "supervitamins" of financial empowerment and asset building strategies into core social services.

This report details the innovation, outlines the many lessons we've learned so far from these efforts, and lays out the future for taking this approach to scale. Subsequent reports will explore our experiences with, and professionalization of, integrating access to safe banking products and services, savings and asset building, and targeted regulatory protection of consumer assets.

If financial empowerment continues to prove itself the supervitamin that improves outcomes and reduces costs, then funding streams, incentives, and mandates must follow from there. The "perfect storm" crisis in the social service world deserves no less than the innovative solutions the public expects of government.

Jonathan Mintz is the commissioner of the New York City Department of Consumer Affairs.

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