In 2007, Harvard Law School professor and current U.S. Senator Elizabeth Warren proposed that the United States federal government set up a new agency to protect the financial interests of average Americans, particularly low- and moderate-income individuals and families. After the financial crisis of 2007-08 and the subsequent Great Recession, Warren’s proposal was authorized as part of the Dodd–Frank Wall Street Reform and Consumer Protection Act.
This new agency was called the Consumer Financial Protection Bureau (CFPB), and its aim was to empower average Americans with greater financial information and protection. CFPB created a toolkit called, “Your Money, Your Goals,” in order better share their definition and philosophy of financial empowerment.
As CFPB describes it: “Financial empowerment goes beyond acquiring knowledge. Financial empowerment includes financial education and financial literacy, but it focuses both on building people’s ability to manage money and use financial services and on helping to access products that work for them.”
CFPB was very specific on the expected outcomes of financial empowerment: “When you are financially empowered, you are both informed and skilled. You know where to get help with your financial challenges and can access and choose financial products and services that meet your needs. This sense of empowerment can build confidence that people can effectively use their financial knowledge, skills, and resources to reach their goals.”
But the distance between a federal agency and average Americans, especially those who struggle financially, can be great. CFPB relies on local networks and associations to share resources with those who can most benefit, and for the past dozen years in the Puget Sound region, the Financial Empowerment Network (FEN) has featured prominently.
The Financial Empowerment Network
For the past decade, FEN has grown and changed to respond to local needs, according to Alice Coday, FEN’s executive director. “In 2005, the Seattle-King County region had many of the components of an asset building system, but programs and agencies largely operated in isolation of each other,” Coday said. “On the premise that people who access these services when they need them are more likely to achieve their financial goals, the City of Seattle formed an interdepartmental-community team, which in 2006 became the Seattle-King County Asset Building Collaborative.” To more clearly communicate its mission, that Collaborative later changed its name to the Financial Empowerment Network.
FEN’s initial Steering Committee included many organizations focused on the financial stability of low- and moderate-income residents: the Seattle Department of Human Services, the Seattle and King County Housing Authorities, El Centro de la Raza, the Seattle Jobs Initiative, Washington Appleseed, the Federal Reserve Bank of San Francisco, HomeSight, Hopelink, the Seattle-King County Workforce Development Council, United Way of King County, Neighborhood House, and the International District Housing Alliance (now Interim CDA).
FEN’s primary focus is a “train the trainer” model, according to Coday. “FEN’s initiatives are designed to assist nonprofits, financial institutions, and municipalities to move low and moderate income households along a financial continuum to greater financial empowerment,” she said. “FEN provides resources to ensure professionals in the field integrate access to mainstream banking, financial education and coaching, credit management, free tax preparation, workforce readiness, microenterprise development, and homeownership and foreclosure prevention resources into their service delivery process.” FEN adheres to CFPB’s philosophy of financial empowerment, and offers CFPB’s “Your Money, Your Goals” train-the-trainer workshops locally on a quarterly schedule.
Bank On Seattle-King County
Of FEN’s five major initiatives, the most well-known may be Bank On, a program to serve those who lack a bank account. “Bank On Seattle-King County was launched in 2008, the second in a national movement and a major public-private initiative of FEN to connect people without bank accounts to affordable mainstream financial services, including checking, savings, credit, and financial education opportunities,” Coday said. “Bank On’s 15 participating banks and credit unions, in conjunction with local nonprofits and municipal staff, provide individuals and households with alternatives to paying more than they need to for financial services, to help them on a pathway to financial empowerment.”
Coday reports that KeyBank was a key partner in promoting the Bank On initiative. “‘Get Banked!’ was a pilot project of FEN that took an innovative approach to addressing the needs of low and moderate-income unbanked and underbanked households,” Coday said. “The pilot project launched in late 2014 with KeyBank, and married the products and services of the bank with the services and tracking of a nonprofit agency who provided financial education and coaching. KeyBank’s loan and new account declinations referred for financial coaching played an important role in building the long-term household financial capability of their current and prospective customers.”
KeyBank considered the Bank On initiative to be an important priority, according to Michael Fait, KeyBank’s Corporate Responsibility Officer. “Without a bank account people are using alternate banking services like Payday Loans to cash checks, send money, and pay bills. These services are very costly,” Fait said. “Opening a bank account is also a gateway to other services and products like check cashing, savings accounts, checkless bank cards used to pay bills, and small dollar loans. Having a bank account also enables one to have employment income and tax refunds, for example, directly deposited into your checking account.”
The Bank On program has worked to lower the barriers to obtaining a bank account. “A $500 minimum balance may not seem unreasonable to many affluent customers, but it’s a daunting monthly sum to maintain for a hard-working house cleaner,” Coday said, sharing an anecdote of a recent client. “When Carmen’s hours were reduced, she could no longer even afford minimal fees on her bank account and cancelled it. For more than a year, she struggled without a checking account, asking employers to pay in cash. She had no opportunities for saving her money in a secure place, but saw no other options.”
But then, Coday reports, Carmen learned about Bank On and identified banks and credit unions who offered accounts with no minimum balance. “Most significantly,” Coday said, “when she went to the Bank On website, she learned that the bank would accept an ITIN, instead of a social security number.”
It’s the seemingly small things that can make a huge difference, according to Coday. “Carmen reported that she found a very welcoming branch of this major national bank that provided her with a debit card and a second free account that encouraged her to start saving,” Coday said. “She began saving 10 percent of each check, even if it’s just $10, to begin saving for emergencies. She reported that she had saved $200 in her second account, and declared, ‘It’s wonderful to have the freedom to be independent with my own account.’”
Coday’s example reflects KeyBank’s goals for the Bank On initiative. “Connecting the unbanked to safe products and free or low cost one on one support helps the unbanked understand more about their money, make good financial decisions, and have choices for savings and loans with no hidden fees or agendas,” Fait said. “Connecting the unbanked to these services diminishes poverty, provides housing stability for families, school success for children, and helps ensure consumers save enough to provide an adequate income in retirement while avoiding high levels of debt.”
Fait envisions a continuing role for KeyBank in FEN’s outreach work. “KeyBank is proud to be a part of the Financial Empowerment Network,” he said. “Financial institutions clearly have a role in providing support to organizations like FEN.”
FEN’s Four Other Initiatives
Two other FEN initiatives focus on key building blocks of financial stability: informed tax preparation and the Earned Income Tax Credit, and homeownership combined with foreclosure prevention.
Coday reports success stories from these initiatives, as well. “A veteran hoping to move and buy a home was referred to a nonprofit who provided financial education and coaching,” she said. “He was assisted in establishing a payment plan on his outstanding debt and several erroneously reported debts were removed from his credit report.”
FEN’s final two initiatives promote more widespread financial education among its community partners. FEN spearheads the Financial Education Partners Network (FEPN), and strives to integrate financial empowerment into other service systems through its teaching of CFPB’s “Your Money, Your Goals” toolkit, as well as through its “Your Money Helpline Resource Guide for Case Managers, Counselors, and Advocates.”
Coday emphasizes the community-focused nature of FEPN. “Quarterly meetings and workshops for professionals in the field offer continuing financial education that illustrates how together nonprofits, financial institutions, and municipalities can assist their staff in practically implementing financial empowerment strategies and resources in the context of their own organizations and programs,” she said. “It also provides an opportunity to promote FEN’s other four initiatives and a platform for outreach for United Way of King County’s EITC Free Tax Campaign.”
FEPN’s reach has been broad. “FEN has facilitated trainings for over 1,000 case managers and financial coaches, representing over 60 public, private, and non-profit agencies and other stakeholders,” Coday said.
FEN seeks to continuously improve its offerings. “FEN collects a pre- and post-survey, as well as inquiring how they use their knowledge with clients,” Coday said. “FEN also conducts an annual survey to measure the effectiveness and learn about organizational financial education needs.”
Northwest Access Fund
FEN also aims to advance financial empowerment through partnerships that support access to financial coaching, products and resources. One of these key partners is the Northwest Access Fund, which provides funding to Washingtonians and Oregonians with disabilities to purchase Assistive Technology (AT) to achieve greater independence.
“The majority of our clients have low to moderate incomes and have credit profiles, such as medical debt, which can make a loan from a traditional financial institution difficult to fund their AT needs,” said Emerson Sekins, the Northwest Access Fund’s Deputy Director. “The majority of our clients access some sort of disability benefit, either Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI). These fixed income streams can often also make it difficult to fund our clients’ AT needs.”
NWAF has been most engaged in FEN’s Financial Inclusion and Disability Awareness initiative. “This workgroup aims to bolster the capacity of social service agencies, financial institutions to better serve the disability community, and aims to bolster the disability community’s understanding of financial resources that can benefit from and common financial barriers that the disability community experiences,” Sekins said. “We are currently in the process of developing a speakers bureau to connect financial institutions, community organizations, and disability organizations are connected to the training and resources that the need to better serve people with a variety of disabilities.”
But NWAF and its clients have also benefited from all five of the Network’s initiatives. “Many of our low-income clients with disabilities are unbanked or underbanked,” Sekins said. “NWAF uses the Bank On matrix to refer our clients needing access to information on where and how they can open a safe and affordable bank account.”
NWAF also emphasizes the importance of tax information related to FEN’s Earned Income Tax Credit initiative. “The EITC and the free tax preparation services are a great resource to ensure that our low-income clients can maximize their refunds,” Sekins said.
With these building blocks in place, NWAF then helps clients look toward successful homeownership, through FEN’s Homeownership and Foreclosure Intervention initiative. “NWAF refers our clients to the Network’s homeownership resources, as needed, to help increase and preserve homeownership for our low and moderate-income individuals and families,” Sekins said.
He cites concrete accomplishments as a result of NWAF’s partnership with FEN. “We recently helped a client remove all of their medical debts from their credit report and have these billed through their insurance,” he said, “thereby increasing their credit report and decreasing their debt.”
Other examples of NWAF’s successes are more long-range. “We recently directed a grandmother, who is the primary caregiver for her daughter with a developmental disability, to the Network’s homeownership resources so that she can move further towards the path of homeownership,” Sekins said. “She is also exploring taking out a credit-building loan with NWAF to improve her credit score, a necessity to get the best rate on a future mortgage.”
Coday has appreciated NWAF’s continued leadership in the Financial Inclusion and Disability Awareness work group. “FEN’s diverse, multi-disciplinary, countywide partnerhips includes multiple area professionals in the fields of local and state government, banking, social services, housing, community development, law, technology, health, workforce development, marketing, public policy, and advocacy,” Coday said. “We continue to expand direct access to this larger group of experts to ensure a structure that permits us to maintain flexibility by making mid-course adjustments, as needs change and opportunities arise.”
But working with such a broad base of partners and clients is not without challenges. “Ongoing government support in the development of agencies to build financial empowerment services is an ongoing challenge,” Coday said. “With each new incoming elected official, we look for support in integrating financial empowerment into agency and municipal delivery systems.”
FEN’s work relies of necessity upon persuasion. “Another challenge is the model of voluntary collaboration,” Coday said. “With limited exceptions, we do not provide financial resources to participating organizations to undertake the projects that we work on together. Since we rely completely upon their goodwill and cooperation, we cannot move forward on any strategies that do not have significant support and willing peoplepower behind them from the start.”
To address these challenges, FEN invites community support in a variety of forms. “Outreach is mostly by word of mouth,” Coday said. “FEN publishes a monthly newsletter with training opportunities and community announcements for professionals in the field.”
Coday said that FEN is also working to connect with the community through new technology and local corporations. “FEN is looking forward to releasing mobile app in early 2018 that will provide information on community resources for King County low- and moderate-income residents in multiple languages,” she said. “FEN was also selected to participate in the 2017 Seattle GiveCamp on Microsoft campus this past weekend. GiveCamp is a weekend-long event where technology professionals donate their time to provide solutions for non-profit organizations.”
FEN’s fiscal sponsor is The Seattle Foundation, a non-profit, 501(c)(3) organization. According to Coday, all contributions are tax-deductible and will be used to develop, assist, and strengthen FEN’s mission. Contributions to FEN should be made to The Seattle Foundation, at 1601 5th Ave, Suite 1900, Seattle, WA, 98101, noting “BOSK” on the check memo line. More information about financial empowerment can be found at FEN’s website at www.everyoneiswelcome.org.