building economic security in americas cities
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Bilding Economic Secrit
in Americas CitiesNew Municipal Strategies or Asset Building
and Financial Empowerment
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Bilding Economic Secrit
in Americas CitiesNew Municipal Strategies or Asset Building and Financial Empowerment
January 2011
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CFED thanks the many people whose contributions, support, guidance, advice, knowledge and patience were
invaluable to this project.
This project was made possible through the generous support o Living Cities and the Surdna Foundation, and
we want to thank our program ocers Jasmine Thomas, Kim Burnette and Marian Urquilla or their support and
wisdom. We would also like to thank the Annie E. Casey Foundation or their additional support.
CFED would like to acknowledge the immense contributions o the policy and research committee o the Cities or
Financial Empowerment (CFE) Coalition to this report: Caitlyn Brazill, Jerry DeGrieck, Suzanne Donovan, David
Friedman, Mitchell Kent, Cathie Mahon and Leigh Phillips. We greatly appreciate the careul attention and time you
spent reviewing, editing and improving the content o this report.
CFED would also like to thank all o the members o the CFE Coalition or inspiring and providing much o theinormation contained in this report: Chicago Cara Castellana, Bill Thanoukos, Bina Patel; Los Angeles Sophia
Heller; Miami William Porro; Newark Anthony Santiago, Jacob Daniels, Stephen Pryor; New York Jonathan
Mintz, Cathie Mahon, Caitlyn Brazill, Mitchell Kent, Amelia Erwitt; Providence Garry Bliss, Bert Cooper; San
Antonio Dennis Campa, Richard Keith, Melody Woosley; San Francisco Jose Cisneros, Leigh Phillips, Marco
Chavarin, David Augustine; Savannah Daniel Dodd, Suzanne Donovan, Robyn Wainner, Rochelle Small-Toney;
and Seattle Jerry DeGrieck, Diana Stone.
Finally, we want to thank the team o CFED sta and consultants that researched, wrote, designed and otherwise
contributed to this publication: Ida Rademacher, Jennier Brooks, Kasey Wiedrich, Genevieve Melord, Michelle
Nguyen, Barbara Rosen, Chris Campbell, Kristin Lawton, Amy Radovich and Karen Murrell.
About CFEDCFED (Corporation or Enterprise Development) expands economic opportunity by helping Americans start and
grow businesses, go to college, own a home, and save or their childrens and own economic utures. We identiy
promising ideas, test and rene them in communities to nd out what works, crat policies and products to help
good ideas reach scale, and develop partnerships to promote lasting change. We bring together community practice,
public policy and private markets in new and eective ways to achieve greater economic impact.
Published January 2011
Copyright CFED, 2011
Acnoledgements
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Bilding Economic Secrit in Americas Cities:
Ne Mnicipal Strategies or Asset Bilding and Financial Empoerment
Foreward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Letter rom the Co-Chairs o Cities or Financial Empowerment (CFE) Coalition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Eecutive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
I. A Ne Role or Local Goernment in Poert Alleiation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 4
Financial Empowerment: An Emerging Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
How Did Cities Get Involved in this Wor? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2. The Fragile State o Hosehold Financial Secrit in Cities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 0
Income and Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Credit and Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2Baned Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Housing and Homeownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3. Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 6
Strategies to Improve Access to High Quality Financial Inormation, Education and Counseling . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 8
Strategies to Increase Access to Income-Boosting Supports and Ta Credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Strategies to Connect Residents to Sae, Aordable Financial Products and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 5
Strategies to Create Opportunities to Build Savings and Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 9
Strategies to Protect Consumers in the Financial Maretplace .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 5
4. Toard an Integrated Polic Inrastrctre: Remoing Barriers and Leeraging Opportnities . . . . . . . . . . . . . . 5 0
Aligning Policies to Improve Access to High Quality Financial Inormation, Education and Counseling . . . . . . . . . . . . . . . . . . . . . 5 0
Aligning Policies to Increase Access to Income-Boosting Supports and Ta Credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Aligning Policies to Connect Residents to Sae, Aordable Financial Products and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2
Aligning Policies to Create Opportunities to Build Savings and Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 4
Aligning Policies to Protect Consumers in the Financial Maretplace . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 5
5. From Innoation to Sstems Change: The Road Ahead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 8
Invest in Evaluation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Further Integrate Financial Empowerment Strategies across City Government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 9Plan or Political Transition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Endnotes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 0
Reerences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Appendi 1: Local, State and Federal Polic Alignment or Asset Bilding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 4
Appendi 2: Mnicipal Data Profles or CFE Cities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 9
Appendi 3: Data Sorces and Measres . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 0
Table o Contents
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THE IDEA FOR THIS REPORT AROSE rom a growing interest in identiying policies and strategies that enable
communities to work more holistically to advance the economic prosperity o their most vulnerable residents.
Never has this work been more needed. As the recent economic downturn has revealed, we have become a nation
that too requently lives beyond its means, increasingly only a paycheck away rom nancial distress. This work
and the growing eld o asset-building has given us a new way o thinking about poverty -- one based on the depth
o overall nancial stability not merely based on income. Such a broader view ultimately challenges us to promote
greater economic sustainability one that can sustain us or months versus weeks and over multiple generations.
Approaching anti-poverty work rom this view point asks that we re-think the social compact between government
and its constituents. It demands that we think beyond reactive policies ocused narrowly on crisis intervention
and preservation o the saety net, to policies that aim to proactively help individuals out o poverty -- in essence
oering them a hand up instead o a hand out.
Who better than the leaders in our cities to help in this eort? Unlike intervention at the state and ederal levels,
city leaders are more able to connect the dots between disparate disciplines that aect the lives and livelihoods
o their residents. From aordable housing, to transportation, to banking services, to consumer protection, cities are
uniquely positioned to align their array o services to advance the common goal o building the prosperity o all o
its residents.
Our hope in supporting this eort is to spread the ideas now bubbling out o a set o innovative places to inspire
more communities to develop and replicate policies and practices to build and maintain Americas middle class. We
look orward to continuing to advance this work together in the coming years.
Jasmine Thomas Marian Urquilla
Program Ocer Program Director
Strong Local Economies Living Cities
The Surdna Foundation
Foreard
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Letter rom Co-Chairs o Cities or Financial Empoerment
In March 2008, New York City Mayor Michael R. Bloomberg and San Francisco Mayor Gavin Newsom, ormed the Cities
or Financial Empowerment (CFE) Coalition to bring together those city governments implementing fnancial empowerment
initiatives. The Coalition, which now includes eleven local governments, came together to share lessons learned, harness specifc
opportunities, and address common challenges.
Since the birth o the eld o asset building two decades ago, diverse players have developed promising
research and programming across this country and the world. Even more recently, a ew local governments have
implemented approaches that go beyond traditional municipal eorts to increase incomes and deliver benets.
This thoughtul and detailed report rom CFED describes the emergence o the Cities or Financial Empowerment
(CFE) Coalition, heralding local governments as new and powerul players helping individuals and amilies create
sustainable pathways to nancial stability.
Mayors across the country are recognizing the unique and large-scale ways in which they can leverage municipalpower and politics to advance the diverse nancial empowerment agenda. Local governments directly touch
populations with low and middle incomes at which nancial empowerment agendas are aimed, and at the same
time regulate or otherwise interact directly with the businesses that can make such a dierence in peoples economic
lives. Armed with a public mandate to serve their entire cities, mayoral administrations also design programs or
scale, producing widespread impact, as well as rich data rom which researchers and other policy makers can learn.
Whether through access to mainstream banking, nancial education and counseling, asset building, or consumer
protection, the work o the CFE Coalition, detailed in this report, oers important and replicable ways or others
to advance the economic security o their cities populations. Though much progress has been made, the eld o
municipal nancial empowerment is still young and, in relation to traditional antipoverty unding approaches,
secondary. Going orward, and working together with our partners at CFED and elsewhere, the challenges o
achieving true scale across the country will lie not just in urther documenting the ways in which large-scale
nancial empowerment initiatives transorm lives on their own, but also in ensuring that such initiatives enhance
the eectiveness o traditional antipoverty approaches, within which they should be embedded.
We are grateul to the dedicated team at CFED or the careul and respectul way in which they researched and
prepared this report. We appreciate the promise o this, and other key partnerships, which have welcomed city
governments and the CFE Coalition into the old.
Jonathan Mintz Jos Cisneros
Commissioner Treasurer
New York City Department o Consumer Aairs City and County o San Francisco
Co-Chair, CFE Coalition Co-Chair, CFE Coalition
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Eectie Smmar
Helping individuals and amilies achieve economic security has never been more critical than it is today. While
strategies to help amilies improve their nancial situations have been prolierating in the nonprot sector or over
two decades, these issues have moved to the oreront during these trying economic times. And now as the eld
grows and matures, new players are emerging, devising new innovative approaches and mobilizing large-scale
delivery systems and resources to help amilies build wealth and assets. This report examines one such set o new
players: municipal governments.
Eorts by municipal governments to shore up residents economic security have traditionally ocused on increasing
residents income through job creation and job training strategies, and by providing subsidies or housing and
other basic goods. What they have not traditionally ocused on is parlaying that increased income into savings and
durable assets and then protecting that income, savings and assets rom predatory nancial practices. However,
evidence suggests that to undamentally change their economic prospects, amilies not only need income, they also
need knowledge o and access to aordable nancial products and services; incentives to encourage savings andinvestment; and consumer protections in the nancial marketplace.
A new vanguard o municipal leaders understands these needs and has committed tangible and measureable
resources to nding new solutions. They are creating partnerships and programs that expand access to mainstream
banking and wealth-building opportunities, as well as help amilies protect the assets they have and become more
nancially stable. These local leaders are pioneering new ways to leverage the resources and regulatory power o
municipalities to work across departmental silos and public/private sector divides to scale up economic inclusion
and asset-building opportunities or low- and moderate-income amilies. They group these eorts under the broad
umbrella o nancial empowerment.
Financial Empowerment StrategiesThis report documents an emerging set o nancial empowerment strategies that are
being piloted and adopted by city governments, oten in collaboration with partners
rom the private, nonprot and philanthropic sectors. These innovative local eorts
have the potential to add a new dimension to the existing eorts to expand economic
opportunity and inclusion or residents. More importantly, they have the potential to
help nancially vulnerable populations benet rom a new range o incentives and
protections and thereby gain a stronger oothold in the economic mainstream.
To understand existing municipal-level asset-building eorts and learn about
practitioner experiences, CFED worked closely with members o the Cities or
Financial Empowerment coalition, cataloging their eorts and documenting the
range o program and policy strategies they were implementing to nancially
educate, empower and protect their residents. We group the strategies under the
ollowing ve main goals:
Cities or Financial
Empoerment Coalition
The member cities are:
Chicago
County o Hawaii*
Los Angeles
Miami
Newar
New Yor City (co-chair)
Providence
San Antonio
San Francisco (co-chair)
Savannah
Seattle
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1. IMPROvE ACCESS TO HIGH quALITy FINANCIAL INFORMATION, EDuCATION AND COuNSELING
To build the nancial capability necessary to eectively manage money and choose sound nancial and credit
products, households need access to timely, useul nancial inormation and advice. Cities are working with
private sector and community partners to help households build their nancial knowledge and improve their
nancial behavior through quality nancial education and counseling. To help improve the quantity and quality
o the nancial education and counseling services available to residents, cities typically engage in three activities:
increasing their understanding o current providers o nancial education and counseling; increasing access to these
providers either by creating reerral networks or connecting education and counseling to existing programs; andworking to improve the quality o programs.
2. INCREASE ACCESS TO INCOME-BOOSTING SuPPORTS AND TAx CREDITS
Stabilizing and maximizing income is a critical step toward nancial security and economic opportunity. Without
sucient income, one does not have the wherewithal to meet basic needs, let alone save or the uture. For many
low-wage workers, however, employment can be unstable and earnings unpredictable. In addition, the wages or
jobs that are available to those without post-secondary education have stagnated over the past several decades. As a
result, many are orced to incur debt just to nance basic needs.
Cities have traditionally provided a range o services and benets to help people in times o need; however, recently
cities have begun to devise new ways to leverage existing services and benets to reach the largest number o
residents possible.
3. CONNECT RESIDENTS TO SAFE, AFFORDABLE FINANCIAL PRODuCTS AND SERvICES THAT
REDuCE COSTS AND FACILITATE SAvINGS
A households ability to save depends on several actors: minimizing costs or basic goods and services, access to
convenient, low-cost nancial products and structures (transaction, saving, credit and insurance products as well as
direct deposit, automatic enrollment, etc.), and nancial capability related to money management, nancial products
and credit.
The reality or many low-income households is that their incomes are insucient to reliably cover basic costs let
alone unexpected emergencies and so they must rely on credit to bridge the gaps. Use o high-cost credit products
creates a cycle o debt that increases monthly expenses and urther limits ability to save. There is no quick x to
break the debt cycle or put household balance sheets back in the black. However, there is increasing awareness
among government and community leaders about the gravity o the problem, as well as a commitment to improving
the aordability, accessibility and quality o nancial products and services.
4. CREATE OPPORTuNITIES TO LEvERAGE SAvINGS INTO APPRECIABLE ASSETS
Emergency savings are essential or amilies to weather crises in the short-term. In the longer term, however,
amilies really begin to get ahead when they have mastered good savings behavior and are able to leverage their
savings (together with aordable nancing and public subsidies) into appreciable assets such as an education
credential, home or business.
Local governments have begun to expand their eorts to help amilies particularly those o modest means to
build a range o liquid savings and tangible assets. While cities have continued their traditional eorts to spur
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homeownership and small business development, they have begun to do so in innovative ways. In addition, they
have also begun to support the attainment o post-secondary education credentials and have recognized that
vehicles are critical assets that acilitate ones ability to maximize income.
5. PROTECT CONSuMERS IN THE FINANCIAL MARkETPLACE
A nal element o household nancial security and empowerment is protection against loss o income or assets,
extraordinary costs, and harmul or predatory external orces. Financial setbacks due to loss o income can be
signicantly cushioned or even avoided i households have access to adequate, aordable and airly-priced health,unemployment, disability and lie insurance. Similarly, assets and wealth gains can be protected through access
to adequate, aordable and airly-priced property insurance, as well as consumer protections rom deceptive or
predatory nancial products and practices, and oreclosure prevention programs and counseling.
Goal Cit Strategies
Improe access to high
alit fnancial inormation,
edcation and conseling
n Financial education and counseling networs and reerral structures
n Neighborhood-based nancial one-stop centers
n Incorporating nancial education into social service and wororce programs
n Standardiing and credentialing o nancial education services and providers
Increase access to
income-boosting spports
and ta credits
n Leveraging technology to streamline public benets screening and uptae
nAccess points or benets screening in high-need communities
n Funding or ree/low-cost ta prep services
nVITA and EITC public awareness campaigns
n Enacting a locally-unded EITC
Connect residents to sae,
aordable fnancial prodcts
and serices
n Creating and promoting low-cost transaction and savings products through Ban On
campaigns or in partnership with nancial institutions
nAordable credit products, e.g., small dollar, reund anticipation or auto renance loans
n Encouraging employers to use direct deposit
Create opportnities
to bild saings and assets
n Short-term and emergency savings products
n Incented savings accounts, e.g., Individual Development Accounts (IDAs), college savings
accounts, or other accounts or uses such as buying a home or a vehiclen Epanding access to small business capital and training
nTa assistance or the sel-employed
n Shared-equity homeownership
Protect consmers in the
fnancial maretplace
n Limiting or managing the prolieration o alternative, high-cost nancial service providers
through licensing and oning powers
n Curbing predatory consumer lending through enorcement o local disclosure laws or
litigation
n Foreclosure prevention strategies, including oreclosure counseling, orgivable emergency
loans, encouraging lender worouts and assistance to tenants in oreclosed properties
Unique Added Value o Municipal GovernmentsMunicipalities can and do play unique roles in advancing and promoting household nancial stability and helping to
bring the best practices incubated through nonprots to greater scale. In this report, CFED identies a dozen value-
added roles that municipal governments can play that provide critical capacities to the eld. Local governments can
champion eorts, convene the diverse local stakeholders and use their infuence to persuade other actors to engage
in these issues. They can communicate to residents through public awareness and social marketing campaigns,
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connect residents to resources, and give their stamp o approval to products or
services, providing a powerul legitimizing eect or residents. Local governments
can also use their powers to integrate nancial empowerment work into existing
programs and services, tap existing sources o ederal, state and local unding to
sustain this work, and serve as testing grounds or pilots and evaluation, creating
an environment o experimentation or innovation. Furthermore, they can advocate
on behal o larger policy eorts while oten possessing the authority to regulate
and scrutinize problematic practices. This report seeks to signal the importance oengaging local government ocials into this work and to help those ocials exercise
their diverse and valuable roles.
From Innovation to Systems Change: The Road AheadThe ast pace o growth and adoption o these strategies is an indicator that the
work is lling important gaps in the set o services that cities provide to their
residents to help them ully and airly participate in the economic mainstream o
their communities. However, while the prolieration o nancial empowerment strategies is exciting, in order or
these strategies to be sustainable and continue to grow, we must strengthen the oundation or doing this work
going orward. Below are our key recommendations or how these eorts can be advanced.
1. INTEGRATE FINANCIAL EMPOwERMENT AND ASSET BuILDING INTO CITy SERvICES
The undamental approach o each o the cities documented in this report is to embed and centralize nancial
empowerment and asset-building strategies within city administration. They aim not to create separate or
independent programs, but to create connection points within and between multiple service areas. Each o them has
made signicant strides in integrating nancial empowerment work into the myriad o agencies that serve residents
working to ensure that no matter what door a person walks through, they can access the nancial supports,
products and services they need. Yet, there is a great deal more to be done.
In any given city, the agency that houses the nancial empowerment work imparts a distinctive stamp on the
kinds o issues, partners and strategies that become priorities. However, in the long run, to increase ecacy and
eciency, city leaders must look more broadly across public agencies and encourage all o those with a stake in the
game to see the relevance o nancial empowerment work to their own agendas. Municipal leaders should actively
encourage the incorporation o nancial empowerment services into other systems such as workorce development/
job training, housing, economic development, education, public utilities, human services and other core city
unctions.
2. ALIGN LOCAL, STATE AND FEDERAL POLICIES
Cities ability to deliver services that help individuals boost income, reduce debt, increase savings, and build
and protect assets is partially dictated by state and ederal policy permissions and prohibitions. In the best case
relationship, state and ederal governments will provide adequate resources to carry out policy mandates and, at the
same time, will eliminate barriers to innovation or local governments. Local governments, or their part, will take
advantage o incentives to improve policy and use the fexibility they have to devise innovative ways to address
local needs.
12 ke Roles or Local
Goernment
Champion
Convene
Persuade
Communicate
Connect
LegitimateIntegrate
Sustain
Pilot
Advocate
Regulate
Evaluate
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Across the strategies described in this report, there are examples o policy synergy among levels o government
where local, state and ederal structures, unding and rules align to maximize government investment.
Unortunately, however, there are also instances where policies at dierent levels o government are out o step or
even working at cross purposes. Better alignment o policies at local, state and ederal level is needed.
3. INvEST IN EvALuATION
Experimentation at the municipal level can spur innovation in cities nationwide and lead to adoption o innovative
strategies through state and ederal policy. However, to accelerate this process, more needs to be done todemonstrate the eectiveness and impact o the strategies described in this report.
Cities have certain advantages as pilot testers or innovative programs: they have access to large qualities o
personal data; they are trusted sources o independent inormation; and they have a vested interest in rigor because
they would likely incur costs o any new programming. In addition, they have better access to community-based
organizations and research institutions than a single nonprot implementing a pilot program would; and, although
smaller scale than a large ederal pilot, they can provide the basis or investment in a ederal pilot or policy change.
As state and ederal leaders and private oundations increase their investment in municipal pilot programs, it is
critical that they do so at a level that enables and even requires evaluation to occur so that we can know whether
the strategy is eective or simply inspired.
4. PLAN FOR POLITICAL TRANSITION
While political leadership and champions are eective ways to get nancial empowerment initiatives o the
ground, that same aliation has the potential to limit the longevity o the initiative during times o political
transition. Without careul planning and institutionalization o the work, political and nancial support may dry up
under new city leadership.
Embedding nancial empowerment work in the ongoing operations and unctions o a city agency may increasestaying power and potential or true systems change. Similarly, securing permanent city unding or privately-
unded pilots is essential to the sustainability o the work.
* The County o Hawaii joined the Coalition in September, 2010, ater the research or this publication was completed, and as
such, inormation on the Countys fnancial empowerment work is not included in this report.
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CITIES HAVE LONG BEEN THOUGHT OFas places o opportunity or low-income workers
to orge pathways to the middle class. But ar too many urban households have remainedstuck in a cycle o poverty. In addressing poverty, local government has traditionally ocused
on increasing employment opportunities through job creation and job training programs, in
addition to subsidizing consumption through income supports and subsidies or housing and
other basic goods.
A growing body o evidence suggests that traditional
income supports, housing subsidies and workorce
programs are necessary but not sucient to help
amilies stabilize their nancial lives and escape poverty.
A new vision backed by a growing body o research
holds that while income is vital to nancial security, a
household also needs to have knowledge o and access
to aordable nancial products and services to build
the savings and nancial cushion that enable upward
mobility. Policies that protect consumers in the nancial
marketplace and that acilitate and incent savings and
investment among low-income households can work in
conjunction with traditional anti-poverty policies and
programs to help amilies get ahead nancially.
Asset-building programs have been prolierating
in the nonprot sector or over a decade. In recent
years a growing number o city leaders have become
champions o asset-building strategies and nd them
to be a natural adjunct to the roles they already play.
Municipal leaders are connecting amilies to programs
that expand access to mainstream banking and wealth-building opportunities, as well as helping
amilies protect the assets they have and become more nancially stable. Across the country, local
leaders are pioneering new ways to innovate and leverage the resources and regulatory power
o municipalities to work across departmental silos and public/private sector divides to scale up
nancial empowerment and asset building opportunities or low- and moderate-income amilies.
This report catalogs emerging asset-building and nancial empowerment policies and program
strategies that are being piloted and adopted by some city governments, oten in collaboration
with partners rom the private, nonprot and philanthropic sectors. These innovative local
A Ne Role or Local Goernment in Poert Alleiation
Chapter 1
Local elected ofcials have a largely
untapped, but powerul role they can play
to fnancially empower and protect their
residents by promoting fnancial education,
asset building and easy and sae access
to mainstream banking. By strategically
leveraging the unique opportunities inherent
in municipal government, including its many
enorcement powers, city halls across the
country can broadly, switly and eectively
help move large numbers o people towardfnancial stability.
Jonathan Mint, Commissioner,
Department o Consumer Aairs, New Yor City
Co-Chair, CFE Coalition
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eorts have the potential to add a whole new dimension
to existing tools and strategies that boost economic
opportunity and inclusion in urban areas today.
Specically, they have the potential to help low-income
and nancially vulnerable populations benet rom new
incentives and protections and thereby gain a stronger
oothold in the economic mainstream.
In addition to cataloging the program and policy
strategies currently being undertaken by municipalities,
this report also explores the roles that municipalities
can play in advancing and promoting household
nancial stability and identies potential impediments
to such eorts. We include a number o observations
about engaging in this work and provide suggestionsor the types o issues that city leaders might consider
as they think about beginning this work in their own
communities.
To research and produce this report, the Corporation
or Enterprise Development (CFED) worked closely
with members o the Cities or Financial Empowerment
(CFE) Coalition. The authors met with them, cataloged
their eorts, and documented the range o program and
policy strategies they were implementing to nancially
educate, empower and protect their residents. The
research team also reviewed national policy research ocusing on municipal-level asset building
and studied local government legislative powers.
Financial Empowerment: An Emerging Approach
THE TERM FINANCIAL EMPOWERMENT has recently emerged and been embraced by a
growing number o cities as a way to broadly describe their asset-building work and their new
and expanding eorts to ensure that nancial education and protection is broadly available
to help amilies with low incomes stabilize their economic lives. The goal o this approach is
to boost income, reduce debt and increase savings. Financial empowerment strategies include
improving access to quality nancial inormation, increasing access to work supports and
tax credits, connecting residents to appropriate nancial products, creating opportunities to
leverage savings into appreciable assets and protecting consumers in the nancial marketplace.
Financial empowerment initiatives provide practical solutions that oster real change in the
lives o working amilies.
Cities or Financial Empoerment
The member cities o the Cities or Financial
Empowerment (CFE) Coalition are seeing toepand the vision o what municipal government
can and should do on behal o their residents
with low and moderate incomes. The member
cities o CFE are creating bold, in-house nancial
empowerment agendas. CFE cities strongly believe
that municipalities are uniquely poised to implement
innovative and eective programs, to create powerul
partnerships and to deliver orward-thining
services to the communities they serve every
day. Cities have the ultimate ability to bring any
number o ey players to the same table nancialinstitutions, community organiations, thin tans,
other government agencies and unders and their
unique birds eye perspective on the resources and
challenges in their own communities allows them
to develop and target the programs that wor most
eectively. These opportunities, combined with the
can-do mentality o local government, allow or
tremendous gains or residents in need o nancial
empowerment.
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How Did Cities Get Involved in this Wor?SOME CITIES BECAME INTERESTED IN FINANCIAL EMPOWERMENT WORk through their
involvement with Earned Income Tax Credit (EITC) campaigns and ree tax-assistance. Others
approached nancial empowerment through citywide eorts to help amilies living in poverty
or in supporting residents to return to the workorce. As the more traditional anti-poverty andworkorce strategies were assessed to determine long-term eectiveness, city leaders started to
recognize the importance o implementing nancial education and asset building approaches
along with existing income-ocused public assistance.
In Newark, the city started coordinating Volunteer Income Tax Assistance (VITA) sites even
locating one o the sites in City Hall because o the low take-up rate o the EITC. The city
recognized that the reason many people were not claiming their reund was due to a lack
o awareness about the program and so began integrating nancial education and public
awareness campaigns into this work, which oten meant working with and coordinating the
work o the citys asset-building programs.
Similarly, San Antonio was coordinating the EITC and VITA work and recognized that this
strategy was only the tip o the iceberg in helping amilies achieve nancial well-being.
With the large-scale expansion o the citys EITC work through partnerships with nancial
institutions and local nonprots, San Antonio ocials saw that they could use the citys
infuence to create new, innovative nancial products or low-income residents.
In San Francisco, while the city itsel was not coordinating the VITA work, they were trying
to build the take-up rate o the EITC with a local cash match, called the Working Families
Credit (WFC). The WFC was launched out o the Treasurers oce, which sent 10,000 checks
to low-income amilies who qualied. City ocials were concerned that thousands o these
checks would be taken to check cashing outlets and sent out a letter that advised people to take
their check to any o 10 banks that would cash it or ree. This work led to the creation o the
Bank on San Francisco campaign, which oers several low-cost savings options to unbanked
households and has been replicated by dozens o cities across the country.
Other cities, such as Los Angeles, Savannah and New York, launched nancial empowerment
strategies based on both their involvement with EITC and the work and recommendations
o blue-ribbon anti-poverty task orces commissioned or led by the mayor. New York Citylaunched a new oce in City Hall called the Center or Economic Opportunity, which created
the Oce o Financial Empowerment and strategically located it within the Department o
Consumer Aairs to leverage the citys licensing and enorcement powers. In Los Angeles,
the mayor was asked to chair the Poverty, Work and Opportunity Task Force or the U.S.
Conerence o Mayors. The city worked with the Brookings Institution to research best practices
and anti-poverty strategies grounded in research and with bipartisan support. Los Angeles
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Table 1. CFE City Financial Empowerment Entry Points and ChampionsCit Local
Goernment
Champion
Entr Point into Financial
Empoerment
where wor is
Hosed
Poplation
(Ran)
Chicago Mayor, Treasurer Financial education initiative Treasurer (elected) 2,740,224
(3)
Los Angeles Mayor, Economic
Development Policy
Mayor chaired U.S. Conerence
o Mayors National Tas Force on
Poverty
Oce o the Mayor 3,770,590
(2)
Miami Mayor, Special
Projects
Administrator or
the City o Miami
EITC outreach campaign
developed into a citywide anti-
poverty initiative, which became
ACCESS Miami
Oce o the
City Manager
Economic Initiatives
352,064
(42)
Newar Mayor, Deputy
Mayor
Newar Now (Mayors
nonprot); Bric City
Development Corporation
(Citys CDC)
Oce o the Mayor
and independent
organiation
Newar Now
265,375
(68)
New Yor Mayor, Deputy
Mayor or
Health and
Human Services,
Commissioner o
Consumer Aairs
Mayors Anti-Poverty Blue Ribbon
Tas Force; Ta-time eorts (i.e.,
VITA, local EITC)
Department o
Consumer Aairs,
Oce o Financial
Empowerment
8,246,310
(1)
Providence Mayor, Oce o
Human Services
AECF Maing Connections,
Poverty Commission
Pathways to
Opportunity
170,220
(137)
San Antonio Mayor, Director o
the Department
o Community
Initiatives
AECF Maing Connections; VITA
site administration
Department
o Community
Initiatives
1,267,984
(7)
San Francisco Mayor, Treasurer Local EITC Treasurer (elected) 757,604
(12)
Savannah Mayor Step Up Savannah, Poverty
Tas Force 2003; Supporting
Wor project unded by Ford
Foundation and the Families and
Wor Institute
Oce o the Mayor
and independent
organiation Step
Up Savannah
127,526
(181)
Seattle Mayor, City Council
Member, Public
Health Manager and
Policy Advisor
People Point; Seattle Asset
Building Collaborative grew out
o National League o Cities
technical assistance project
Human Services
Department
565,809
(23)
Source: Population: U.S. Census Bureau, 2005-2007 American Community Survey
Ran: U.S. Census Bureau, Population Division (2009)
Note: Ran by population is based on annual estimates o the resident population
or incorporated places over 100,000, based on estimates as o July 1, 2009.
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identied banking as an important unmet need and launched Bank on LA (modeled on San
Franciscos program) as a starting point to implement citywide asset-building strategies.
In Savannah, the city initiated a task orce in 2004 that researched and analyzed poverty
and identied the key barriers to sel-suciency. Poverty was identied as an economic
development issue, and the city held poverty simulations to engage the community, bringing
over 2,500 participants to the table rom 2005-2008. These meetings helped Step Up Savannah, a
collaboration o 85 organizations and city sta, to orm as an anti-poverty collaborative.
In addition to the locally initiated strategies, many eorts also had early support and assistance
rom national oundations and intermediaries. The Annie E. Casey Foundation provided major
support and capacity building or San Antonio and Providence through its Making Connections
Initiative. The Ford Foundation supported early work in Savannah through the Supporting
Work Project, administered through the Families and Work Institute. The U.S. Conerence o
Mayors National Taskorce on Poverty introduced the mayor o Los Angeles to the issues. The
National League o Cities has played an important role in getting cities to address the issueso savings and nancial security in three ways: through its asset-building technical assistance
project that began in 2005, through its Poverty Working Group, and through orming a learning
and technical assistance group or cities who wanted to develop strategies to expand banking
access through Bank On initiatives.
How the city got involved in nancial empowerment and who champions the work can oten
determine where the work is housed within city government and, with it, the unique powers
and capacities that that particular agency can leverage. For example, in San Antonio and
Miami, the nancial empowerment work is led by a City Director who coordinates a multitude
o community and human service strategies. As a result, some o the strongest initial areas o
work tended to ocus on integrating nancial education, tax help and asset building strategies
into existing programs. In San Francisco, the champion is the City Treasurer, and the nancial
empowerment work grew out o his oces eorts to administer the Working Families Credit
(a local version o the EITC) and develop a campaign to expand access to nancial institutions.
In New York, where Mayor Bloomberg is a strong champion or nancial empowerment,
the specialized Oce o Financial Empowerment is housed in the Department o Consumer
Aairs, and central strategies in its nancial empowerment work relate to consumer protection
and regulation in the nancial marketplace.
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12 ke Roles or Local Goernment
Champion. City ocials can leverage the public spotlight and bully pulpit in order to promote and add legitimacy
to municipal nancial empowerment eorts. Mayors and council members attract media attention and can
acilitate the dissemination o program inormation to the public through press conerences and local media.
Conene. Cities have a unique ability to bring together and coordinate the wor o diverse actors and organiationsin the community toward a common cause. By taing advantage o eisting woring relationships, or by engaging
businesses or nonprots that have a vested interest in residents nancial security, city ocials and sta can
acilitate cooperation.
Persade. City ocials can use their infuence as policymaers, customers and employers, along with other
incentives such as positive publicity and/or access to new customers to persuade local actors to engage in
certain activities.
Commnicate.Cities can spearhead public awareness and social mareting campaigns that inorm residents about
opportunities and rights related to nancial products and services, inormation and consumer protection.
Connect. Cities can connect residents directly to resources through mareting and reerral services and can
leverage general inormation services lie 311 and citywide directories.
Legitimate.City involvement in nancial empowerment eorts has a powerul legitimiing eect or residents.
City oversight and/or involvement increases the credibility o programs targeted to lower-income citiens and
thereore increases uptae o programs and services. For many people, a clear message that the citys stamp o
approval has been given to a nancial product or a service provider reduces personal ris and osters trust and
willingness to utilie new products or services.
Integrate. Cities can integrate nancial empowerment wor across agencies by embedding nancial education,
services and products into eisting programming.
Sstain. State and ederal grants directed to local governments, as well as available municipal general und revenues,
provide opportunities or municipalities to und nancial empowerment programs. Several ederal grants are
distributed through the U.S. Department o Housing and Urban Development namely through the Community
Development Bloc Grants, the HOME Investment Partnership Program and the American Dream Downpayment
Initiative. These grants provide a natural vehicle or municipal governments to promote asset-building wor.
Pilot. Cities are prime testing-grounds or innovation in public programs and policies. By engaging in asset-building
wor, municipalities create an environment o eperimentation which leads to greater innovation in the eld.
Ealate.City representatives are both accountable to their citiens and now that data is necessary or epansion
o programs beyond initial pilot phases. Although relatively ew cities are now actively engaged in rigorous
evaluation o pilot programs, there is considerable interest and desire to evaluate their innovative wor. Liewise
there is uniorm acnowledgement that amassing evidence about the inds o strategies that are eective is
critical to move any initiative to scale.
Reglate.While cities legislative powers are more limited than those o states, municipalities can enact local
legislation, called ordinances, or such local issues as oning, taation, budget decisions, capital improvements and
department organiation. In addition, cities can eercise their eisting powers o enorcement to curb abusive
lending practices and improve local consumer protections.
Adocate.Municipal-level lobbying o state and ederal lawmaers is another avenue or improving economic
opportunities or city residents. Given the abundance o state- and ederal-level policies impacting local asset
building and economic security, city ocial lobbying o legislators can have low-cost and high-impact potential.
Cities doing innovative nancial empowerment wor have an important role to play in advocating or new and
eective policies at the state and ederal level.
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THE ECONOMIC RECESSION THAT GRIPPED THE NATION has been both cause and eect or
escalating unemployment and oreclosures. The resulting loss o nancial security or manyormerly middle class amilies and the urther deterioration o the economic stability o lower-
income amilies have been acute. According to the Federal Reserve, between 2007 and 2009,
U.S. households lost $14 trillion in wealth, a sum representing nearly a quarter o all personal
wealth and the largest loss o wealth in generations (Fed Board o Governors 2009). However,
even beore the start o the current nancial and economic crisis, household nancial insecurity
was widespread in America. Personal savings rates were at historic lows, and income poverty
and unemployment numbers in urban centers were alarmingly high. Americans in general
were overextending themselves, in many cases with nancial products that stripped, rather
than helped build, wealth and nancial security. Combined with a lack o access to aordable
nancial products and services and the general high cost o being poor (Fellowes 2006),
American amilies are really struggling.
At the outset o this project, CFED worked with the 10 cities in the CFE Coalition to map a
range o indicators o household nancial ragility. Several o the key indicators income
and assets, banking status, credit and debt patterns, housing aordability and educational
disparities are discussed below. Other data is available or review in Appendix 2.
Income and Assets
INCOME AND ASSETS ARE EACH CRUCIAL COMPONENTS or a households establishmento economic well-being and security. While interrelated, it is important to distinguish between
the two as they represent two dierent sources o nancial security. Income is a fow o unds
generated through wage earnings, investment returns, business prots and public benets that
can be used to cover household monthly expenses. Income can also be set aside as savings to
help und uture expenses or asset acquisition. Assets such as a retirement und, an education
credential, a home, a business or even a car are essential or helping households guard against
nancial setbacks and get ahead over time. Without income, one does not have the cash fow
necessary to sustain a amily or build a personal saety net. But without assets, a household
that is just making ends meet with their current income is more susceptible to being driven
into poverty during dicult times (De Janvry 2008). Assets provide the route to both nancial
security and opportunity.
Income poverty is a persistent problem in urban centers, and households o color and single-
parent households tend to experience the highest rates o income poverty. Asset poverty is
another way o looking at nancial security levels across households and is dened as not
having enough net assets (net worth) to survive at the ederal poverty level or three months
The Fragile State o Hosehold Financial Secrit in Cities
Chapter 2
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High levels o debt and diculties paying it back have serious consequences or a borrowers
credit score, which can have a dire impact on a amilys ability to get ahead. Credit reports and
scores not only determine access to credit but can also be barriers to basic goods and services.
Credit reports are used by employers and landlords to evaluate applicants; utility companies
can also use credit scores to price deposits or their services (Fellowes 2006). Unortunately,
the reality or many amilies is that their low credit scores reduce access to aordable credit.
An average o almost 60% o residents in CFE counties have subprime credit scores,1 and the
range varies rom 41% o residents in San Francisco to 69% o residents in San Antonio (Bexar
County), Texas (see Chart 2).
Chart 2: Percentage o Consumers with Subprime Credit Scores in CFE Cities
Source: TransUnion (Q1 2009). Subprime Credit Score is dened asa TransRis score 700 on a scale o 150-934.
* New Yor Citys data is a weighted average o the 5 counties that compose the City.
Baned StatusECONOMIC INCLUSION BEGINS WITH A BANkING RELATIONSHIP. Savings accounts are one
o the most basic asset-accumulation tools, and transaction (i.e., checking) accounts can act
as a gateway into the nancial mainstream. A 2009 survey conducted by the Federal Deposit
Insurance Corporation (FDIC) (see Table 2) ound that 7.7% o all American households and
11.3% o households in cities are unbanked, meaning that no one in the household has a checking
or savings account. In addition, 18% o households are considered underbanked, meaning that
although they have a bank account, they still rely on alternative nancial services or certain
kinds o transactions. The lack o a basic bank account is particularly prevalent among minority
and low-income households. Nationally, 22% and 19% o Black and Hispanic households,
respectively, are unbanked compared to only 3.3% o white households. In addition, over 1 in 4
households earning less than $15,000 annually do not have a bank account (FDIC 2009).
LosA
ngeles
Coun
ty,CA
SanFranc
isco
Coun
ty,CA
Miam
i-Dade
Coun
ty,FL
Chath
am
Coun
ty,GA C
ook
Coun
ty,IL Ess
ex
Count
y,NJ
NewY
orkCity*
Provid
ence
Coun
ty,RI Be
xar
Coun
ty,TX Kin
g
Coun
ty,WA
0
10%
20%
30%
40%
50%
60%
70%
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Table 2. Unbaned and Underbaned Households in CFE Metropolitan Areasunbaned
Hoseholds
underbaned
Hoseholds
Total un- and
underbaned
Nmber Percent Nmber Percent Nmber Percent
Chicago MSA 248,000 7.4% 463,000 13.8% 711,000 21.2%
Los Angeles MSA 406,000 9.2% 637,000 14.4% 1,043,000 23.6%Miami MSA 186,000 8.4% 286,000 13.0% 472,000 21.4%
New Yor-Northern
NJ MSA
691,000 9.6% 1,069,000 14.8% 1,760,000 24.4%
Providence MSA 30,000 5.6% 71,000 13.5% 101,000 19.1%
San Antonio MSA 82,000 10.6% 199,000 25.9% 281,000 36.5%
San Francisco MSA 74,000 4.7% 161,000 10.2% 235,000 14.9%
Seattle MSA 49,000 3.5% 244,000 17.2% 293,000 20.7%
USA 9,850,000 7.7% 21,276,000 17.9% 31,126,000 25.6%
Source: FDIC, 2009 National Survey o Unbaned and Underbaned Households.
Data was unavailable or Savannahs MSA.
There are many reasons or a household to be unbanked, but the primary reason cited by
households was that they did not eel that they had enough money to need an account
(FDIC 2009). However, the perception o a bank account not being o value to them may be
exacerbated by the practices and products oered by nancial institutions. Traditional banking
products are oten not customized to the needs o lower-income households (Tuano and
Schneider 2005). Research nds that nancial institution practices o establishing minimum
balance ees, directing the majority o marketing dollars to more afuent customers, and using
ChexSystems to screen out potential customers with prior bank account problems are ways
that banks discourage enrollment o lower-income customers (Tuano and Schneider 2005).Minimum balance requirements and higher ees can drive certain households to non-traditional
service providers, such as check cashing establishments or payday lenders. Yet these non-
traditional services are extremely costly; check cashers charge an estimated $40 per payroll
check to cash a check rom an unbanked household with ull-time workers (Fellowes and
Mabanta 2008). Over a career, an average ull-time worker who does not have an account will
spend more than $40,000 on nancial services (Fellowes and Mabanta 2008).
Housing and HomeownershipHOUSING COSTS ARE OFTEN THE LARGEST MONTHLY ExPENSE FOR FAMILIES. Aordable
and predictable housing costs (i.e., mortgage or rent and utility costs) enable a amily to plan
or the expenses o other goods such as ood, clothing and healthcare while also being able to
save money or emergencies and or the uture. Unortunately, aordable housing is scarce
in many cities, and an average o 50% o both renters and homeowners in the CFE cities are
housing cost-burdened, meaning that they spend more than 30% o household income on
housing, as shown in Chart 3.
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Chart 3: Percentage o Cost-Burdened Renters and Homeowners in CFE Cities
Source: U.S Census Bureau, 2005-2007 American Community Survey. Cost burdened
is dened as spending 30% or more o household income on housing costs.
Despite the recent oreclosure crisis and erosions in home equity, homeownership continues
to be the primary means by which amilies build and transer wealth. Home equity is by ar
the largest component o net worth, especially or low- and moderate-income households
and minority populations (CFED 2008). However, households in urban centers tend to
become homeowners at much lower rates than the rest o the nation as a whole, in part
due to the housing stock and the high cost o housing in dense, urban areas. Across the ten
cities, the homeownership rate ranged rom a low o 25% in Newark to a high o 61% in San
Antonio, compared to 67% nationally. Even or those households that are able to achieve
homeownership, it may be unsustainable. In 2007, an average o 18% o mortgages in the CFE
counties were high-cost or subprime mortgages (on par with the national rate o 17.5%), which
bring with them a signicantly higher risk o delinquency and oreclosure. In act, in March
2009, the oreclosure rate in the cities was an average o 5%, 66% higher than the national rate
o 3% at that time.
Renters Homeowners
LosA
ngele
s
SanF
rancisc
oMi
ami
Savannah
Chica
go
Newa
rk
NewYo
rkCity
Provide
nce
SanA
nton
io
Seattle
0
10%
20%
30%
40%
50%
60%
70%
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BEFORE DESCRIBING THE RANGE o municipal asset-building and nancial empowerment
strategies that are ocus o this report, it is helpul to consider rom a householdsperspective what it really takes to build nancial security over time. CFED has created the
Household Financial Security Framework to describe this cycle o asset building and nancial
empowerment, which, in the abstract, is relatively straightorward. Individuals must rst learn
the knowledge and skills that enable them to earn an income. They then use that income to take
care o basic living expenses and debt payments, and then i income has exceeded expenses
they can save some or uture purposes. When they have accumulated enough liquid savings,
they can leverage those savings and invest in assets that will appreciate over time and generate
increasing levels o income, equity and net worth. Throughout the cycle, access to insurance
and consumer protections help households protect the gains they make.
In reality, there is nothing particularly straightorward
about getting a household balance sheet to balance, much
less tip toward asset accumulation. As the data in the last
chapter make clear, nancial security is the exception
rather than the rule or the majority o Americans. Part
o the explanation lies with the individual; they may
lack the knowledge and skills that would enable them to
get a good job and advance, or may not understand the
long-term implications o using costly credit or ailing tosave or retirement. But another part o the explanation
has very little to do with individual knowledge and skills
and instead has to do with the systems, structures and
protections that exist or dont in the marketplace. It
is oten the institutional arrangements provided through government policies, employers,
nancial products and institutions, and education that determine who accumulates assets and
who does not (Sherraden 1991).
Strategies
The strategies that are documented in the
remainder o this chapter are designed to be
responsive to both individual agency and the
conditions o the fnancial marketplace as
they work to increase the fnancial stability o
low-income households by boosting income,
decreasing debt, and increasing access tosaving and asset-building opportunities.
Chapter 3
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Wage Income
+ Business Income+ Public & Employee Benets
+ Tax Credits
+ Investment Income
= Income
Ability to Maximize Income
Depends On:
Ability to Save Depends On: Ability to Build Assets
Depends On:
H o u s eh o l d F i n a n c i a l S e c u r i t y F r a m ewo rk
nAccess to reliable basic goods andservices (housing, transportation,
medical care, child care, food)nAvailable qualityjob and business
opportunities
nAccess to public benets and taxcredits(e.g., EITC, Child Care)
nAsset ownership (higher educa-tion, home, business, nancial
investments)nKnowledge and skills related to
work, taxes and benets
nPrice and appreciation of assets(higher education, home, business,
nancial investments)nAffordable nancingnAccess to public incentives (e.g.,
downpayment assistance, govt loan
guarantees, tax incentives, PellGrants, IDA/CSA match)
nKnowledge and skills related toasset purchase and management
nAccess to affordable basic goods andservices (housing, transportation,
medical care, child care, food)nDebt reductionnConvenient, low-cost nancial
products (transaction and savings
vehicles, credit and insurance
products)nConvenient, affordable nancial
structures (e.g., direct deposit,
automatic enrollment, online banking,
bank location)nKnowledge and skills related to
money management, nancial products,
and credit building and repair
INVEST
Savings+ Borrowing
+ Public Incentives
= Assets
Income- Current Consumption- Debt Payments
=Savings
SAVEEARN(Maximize Income) (Build Assets)
nInsurance (public or private): Protects against loss of income or assets as well as against extraordinary costs (e.g., unemployment,disability, life, health/medical, property)
nConsumer Protections: Protect consumers from discriminatory, deceptive and/or predatory practices (e.g., redlining, predatorymortgage lending, payday lending, banking practices)
nAsset preservation: Depends on government policies (e.g., community investments, blight ordinances, foreclosure prevention) andmarket conditions
Gains must be protected against loss of income or assets, extraordinary costs, and harmful or predatory external forces
nK-12 & Postsecondary Education: Basic literacy and math skills, plus commitment to lifelong learning are critical for employmentand advancement
nFinancial Education & Counseling: Timely, relevant, accurate information on basic budgeting, taxes, nancial products and services,and use of credit
nAsset-specic Education: Preparation for homeownership, business ownership, postsecondary education, and nancial investments
LEARN
PROTECT
Assets can increase income and earning capacity
Knowledge and skills that enable navigation of and success in markets (labor, nancial) have a direct bearing on nancial security
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The city leaders we spoke with are keenly aware o the roles that both individual agency and
the conditions o the nancial marketplace play in determining the economic realities o a
household. The strategies that are documented in the remainder o this chapter are designed to
be responsive to both as they work to increase the nancial stability o low-income households
by boosting income, decreasing debt, and increasing access to saving and asset-building
opportunities. We group the strategies under ve main goals:
n Improve access to high quality nancial inormation, education and counseling
n Increase access to income-boosting supports and tax credits
n Connect residents to sae, aordable nancial products and services that reduce costs and
acilitate savings
n Create opportunities to leverage savings into appreciable assets
n Protect consumers in the nancial marketplace
Strategies to Improve Access to High Quality Financial Inormation,Education and CounselingTO BUILD FINANCIAL CAPABILITY to manage money and choose sound nancial and credit
products, households need access to timely, useul nancial inormation and advice. Cities are
working with private sector and community partners to help households build their nancial
knowledge and improve their nancial behavior through quality nancial education and
counseling.
To help improve the quantity and quality o the nancial education and counseling services
available to residents, cities typically engage in three activities: increasing their understanding
o current providers o nancial education and counseling, increasing access to these providers
either by creating reerral networks or connecting education and counseling to existing
programs and working to improve the quality o programs.
INCREASING ACCESS TO FINANCIAL EDuCATION AND COuNSELING
A number o cities led the way in identiying and documenting all o the disparate nancial
education providers working in community-based organizations, social service programs and
other programs throughout their city and then developing systems to increase access to those
services. The systems to increase access include both nancial education networks and reerral
structures. In some cases, the reerral structures are specically or nancial education, in othercases they leverage existing citywide inrastructure, such as 2-1-1 and 3-1-1 lines.
n New Yorks Oce o Financial Empowerment (OFE) manages the Financial Education
Network, which includes a searchable online database connecting residents with nancial
education classes, workshops, hotlines and 3-1-1 reerrals, and one-on-one counseling
services throughout the city.
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n The City o Seattle, the Seattle-King County
Asset Building Collaborative (SKCABC)
and Bank on Seattle-King County led
the creation o a Financial Education
Providers Network, which includes a
searchable Financial Education Locator on
the Bank on Seattle-King County website.
Similar inormation can be accessed
through Seattles Your Money Helpline,
an online resource tool, and through the
2-1-1 Community Inormation Line call-
in number which reers target groups to
resources and agencies that can answer their
nancial questions and be o assistance.
n
San Franciscos nonprot serviceproviders, philanthropic unders and
local public-sector representatives are
working together to streamline access to
nancial education services and products,
to increase quality o service and to
encourage collaboration among providers.
Creating Phsical Access Points
in High-Need Commnities
Some cities use actual brick-and-mortar
centers located in high-need communities to
consolidate and deliver nancial education
services more eectively.
n The City o Newark operates a number o
comprehensive Financial Empowerment
Centers, which use SingleStop USAs
One-Stop-Shop model to provide
comprehensive services to Newark
residents, including ree tax assistance,
nancial education and FAFSA orm
assistance. Residents can meet with
counselors who screen them or eligibility
or health care and public assistance
programs aligned with their goals.
Pblic-Priate Partnerships or Asset Bilding and
Financial Empoerment
As cities assess how to become involved in asset-building
wor, they oten loo or ways to collaborate with partners
rom nonprots, business and philanthropic sectors. Below aredescriptions o the ey roles that various sectors are playing and
can play.
Nonproft and community-based partners Many cities
already partner with nonprot organiations, civic organiations
and aith-based institutions on other anti-poverty eorts, or at
least have a general sense o the relevant groups with whom
they should be partnering. In a survey administered by the
National League o Cities, city mayors and managers reported
that nonprot organiations, oundations or civic organiations
and churches were the most important partners in local povertyeorts. When ased about current collaborators in local poverty-
reduction eorts, city ocials responded that they were currently
collaborating with nonprot organiations 84% o the time, with
civic organiations 61% o the time, and with churches 55% o the
time (Furdell, Perry, and Undem 2008).
Private sector partners As cities have begun ocusing on
asset building or low-income residents, they have ound ways
to partner eectively with private employers and nancial
institutions. For eample, these private sector partners can oten
more easily reach many city residents who do not typically havedirect contact with government agencies. Cities have also sought
assistance rom nancial institutions and rom private companies
to disseminate inormation, provide monetary or in-ind
donations, or improve services to low-income residents.
Philanthropy Philanthropic partners can help cities test pilot
programs and eperiment with new approaches, steps that are
dicult to tae with tapayer dollars. Privately unded innovation
and demonstration allows cities to uncover new strategies and
to pinpoint which approaches wor best beore implementing
them on a large scale. In an era o tightening public budgets, manyunders have become more strategic and sought to leverage the
impact o limited dollars. Philanthropic partners identiy ways
in which a particular grant or activity can stimulate or catalye
other resources.
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n New York Citys Financial Empowerment Centers oer ree one-on-one nancial
counseling in collaboration with community-based organizations. Clients can receive
assistance with money management, budgeting, credit counseling, negotiating with
creditors, connecting to aordable banking services, debt management, government benet
screenings and reerrals to other services and organizations.
n In Savannah, Providence and San Antonio, city ocials are supporting neighborhood-
based Centers or Working Families and Family Success Centers where city residents can
receive nancial education, coaching, counseling, and other services that help them access
nancial services, income supports and employment training to achieve greater economic
sel-suciency.
n With Operation Hope and private partners, the City o Miami provides ongoing counseling
and nancial education using the citys park system as a ocal point within the community.
Incorporating Financial Edcation and Social Serice and wororce Programs
In addition to creating new nancial empowerment centers, many cities are incorporatingnancial education, counseling and savings opportunities into government social services. The
City o Seattle and the SKCABC, or example, are working closely with the United Way o King
County to incorporate nancial education, access to nancial services, and products and benet
access into ree tax preparation services. A similar eort is taking place in Providence through
the Family Stability Partnership.
The cities o Savannah, Seattle and New York provide examples o dierent approaches to
pairing nancial empowerment with workorce development.
n Step Up Savannah is a community-based organization that pairs workorce development
with asset building to move people toward sel-suciency. Step Up Savannah and the City
o Savannah integrate nancial education classes, access to appropriate nancial products,
ree tax preparation and other services with existing workorce development and GED
classes oered throughout the community.
n In Seattle, SkillUp Washington/College or Working Adults is a collaborative eort
involving community and technical colleges and employers that creates training
opportunities or low-skill, low-wage workers to help them move into living-wage
jobs. The Seattle Human Services Department (HSD), which is the home base or Citys
nancial empowerment work, along with the SKCABC is working with the initiative to
connect participants to a ull range o nancial empowerment services including nancial
education, credit counseling, access to benets, access to nancial services and asset
building. HSD and SKCABC are training SkillUp sta and leadership to help their students
utilize nancial empowerment resources including PeoplePoint the Citys one-stop
online benets access platorm. In addition to SkillUp Washington, SKCABC and HSD are
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working with Homelessness Prevention and Rapid Rehousing providers, the Workorce
Development Council, among others, to embed nancial empowerment services into their
service delivery systems.
n New York Citys Workorce1 Career Centers operated by the Department o Small Business
Services provide employment services as well as access to nancial empowerment
counselors with inormation on public benets, nancial education and nancial products.
IMPROvING THE quALITy OF FINANCIAL EDuCATION AND COuNSELING
Many city eorts to increase access to nancial education and counseling are tied to eorts to
also improve the quality o these services. Cities have taken approaches ranging rom sharing
o industry best practices to standardization and credentialing o services and providers.
n Seattles Financial Education Providers Network adopted quality standards and sponsors
ongoing train-the-trainer opportunities. Its Your Money Helpline includes an electronic
manual used to train proessionals and volunteers on multiple nancial empowerment topics.n San Franciscos nancial education collaboration includes sharing o industry best practices
through quarterly learning circles and the development o nancial education standards so
grantmakers (including City agencies) and consumers have a benchmark or quality.
n In New York City, OFE runs the Education Evaluation Improvement Initiative, which
supports the collection o dozens o uniorm metrics across providers. OFE will use the data
to help determine which services have the greatest impact on segments o the low-income
population.
n OFE also developed a nancial counseling certication program or nancial educators,
counselors, trainers, coaches and others, allowing them to receive a standardized, rigorous
and City-endorsed certicate in nancial education and counseling. OFE submitted the
curriculum to the Academic Review Panel at the City University o New York and is
awaiting approval or the program to be eligible or course credit.
n New York Citys Department o Consumer Aairs is also working with its CFE Coalition
partners, unders and the U.S. Department o Treasury to explore expanding New Yorks
approach to certication nationally.
Strategies to Increase Access to Income-Boosting Supportsand Ta Credits
STABILIzING AND MAxIMIzING INCOME IS A CRITICAL STEP toward nancial security andeconomic opportunity. Without sucient income, amilies do not have the wherewithal to meet
basic needs, let alone save or the uture. For many low-wage workers, however, employment
can be unstable and earnings unpredictable. In addition, the wages or jobs that are available
to those without post-secondary education have stagnated over the past several decades. As a
result, many are orced to incur debt just to nance basic needs.
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One strategy to boost income is to increase earning potential through skill building and
education. Many cities oer skill-building services through their workorce development
systems and community colleges. Depending on the city, these services may or may not be
included under the nancial empowerment umbrella.
Cities also try to maximize individual income by increasing the take-up o public benets
(in-kind and cash) and tax credits. Cities have traditionally provided or administered a range
o services and benets to help people in times o need; however, recently cities have begun
to devise new ways to leverage existing services and benets to reach the largest number o
residents possible.
Champions o asset building and nancial empowerment
are utilizing technology, creating new and leveraging
existing physical access points, and launching public
awareness campaigns to connect residents to the ullrange o benets, work supports and tax credits or which
they are eligible. In addition, some cities are oering
new benets, such as a local EITC, to help low-income
residents maximize their income.
IMPROvING ACCESS TO AND uPTAkE OF
PuBLIC BENEFITS AND wORk SuPPORTS
One o the most promising strategies or boosting income
is to use technology to eciently connect low-income
residents to public benets. Cities are using a range o technology platorms to link residents
to city- and state-administered benets. The Benet Bank (TBB), EarnBenets, PeoplePoint
and La RED are examples o online platorms that have been developed to help streamline
eligibility determination and acilitate access to a wide range o public benets, tax credits and
nancial services.
n The City o Miami is using TBB at each o the citys Neighborhood Enhancement Team
locations and with community- and aith-based organizations across the city. The system
allows a trained counselor to prepare a city residents tax return and simultaneously
complete application orms or state and ederal benets, including Medicaid, KidCare
(CHIP), ood stamps (SNAP), cash assistance (TANF) and energy assistance (LIHEAP), as
well as voter registration.
n EarnBenets was initially launched in New York City in 2003 and has expanded to
Memphis, Atlanta, Baltimore and Louisville. The platorm was developed by the nonprot
Seedco and is implemented through partnerships with government agencies, employers,
aith- and community-based organizations, and oundations. It connects low-wage workers
Champions o asset building and
fnancial empowerment are utilizing
technology, creating new and leveraging
existing physical access points, and launching
public awareness campaigns
to connect residents to the ull range
o benefts, work supports and tax credits or
which they are eligible.
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to a range o public benets, including tax credits, ood stamps, health insurance, as well as
to nancial services.
n The City o Seattle developed PeoplePoint to help low-income residents apply or a
range o ederal, state and local public benets. The City is now working with the state
government to launch a joint online portal that will streamline the application process or
city and state benets and create access points at community organizations, libraries and
community centers.
n Bank on San Franciscos Financial Education Network is using the online screening and
reerral system La RED to connect people to public benets, appropriate nancial services
and community-based services. La RED was developed by the Mission Asset Fund
originally to serve diverse populations in San Franciscos Mission District and is now
serving multiple Bay Area counties.
In addition to using technology to increase benets coordination and uptake, some cities are
also using the community-based oces and centers mentioned in the previous section not onlyto deliver nancial education and counseling but also to connect residents to resources and
benets. In San Antonio, there is a concentrated eort to integrate nancial empowerment and
asset building opportunities into various departments and to ensure they are part and parcel
o existing programs, not overlaid on them. This integration helps assure sustainability or the
program across administrations and in all economic environments.
MAxIMIzING uPTAkE OF TAx-RELATED BENEFITS
The ederal EITC is one o the largest and most eective programs to boost incomes or low-
and moderate-income amilies. Each year the credit lits more than 5.1 million Americans out o
poverty (Sherman 2009) and can also reduce asset poverty (Holt 2006).
Unortunately, many who are eligible do not take advantage o the credit. National estimates o
EITC-eligible taxpayers who ail to claim their EITC range rom 13% to 25% (Holt 2006). In any
given city, unclaimed tax credits result in the loss o signicant sums o money that could be
reunded to residents and either saved or spent in the local economy.
Cities have employed two main strategies to help residents claim the EITC and other tax credits:
unding ree tax preparation services and public awareness campaigns. In addition, a small
number o cities have also created local credits that piggy-back on ederal and/or state EITCs.
Free and Lo-Cost Ta Preparation Serices
Free tax preparation is one o the most well-established strategies cities use to help residents
claim the EITC and boost their incomes. Some cities directly support ree tax preparation by
unding equipment and paid sta positions at VITA sites, which are primarily run by nonprot
organizations and volunteers. San Antonio and Miami, or example, have a line item in their
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city budgets to und a Campaign Coordinator or