A defining moment in the Clinic’s early history was our effort to quantify and qualify what we meant by our mission: To build the “financial security” of our working poor customers. It was one thing to define mission clearly in the business plan leading to the organization’s founding, but quite another when actually working with people, partners, and investors. What once seemed precise became murky when viewed through the lens of our customers’ lives, problems, and dreams for their future.
We asked ourselves a basic question: How will we know we are accomplishing our mission? How will we know our customers are “there”? It’s one thing to know what activities we want our customers to engage in, but quite another to feel comfortable in knowing that we’re having a positive influence and are actually facilitating their economic mobility. Plus, there is the personal side: Starting a nonprofit business is no joke. The entire team’s hard work, long hours, and devotion to our customers come from dedication to the mission. We needed to know—at any moment—where we were in relationship to that mission.
Quantifying and qualifying our mission started with a review of the first 100 or so customers. A small team of volunteers and a financial coach (actually, the only employee) and I set out to map all the work we were doing. We catalogued all the tax returns filed, bank accounts opened, and savings started. We categorized all of the presenting issues and problems and asked ourselves, “When these are resolved, are they creating financial security and, if so, how and when?” “What does a successful trajectory between poverty and prosperity look like?”
The resulting map was taxonomy of financial security:
- Goals: Having specific and measurable financial goals are the cornerstone to all financial education and the driver to the entire financial counseling process.
Targeted Outcome: Articulated goal and verifiable activities toward that goal with the Clinic’s Financial Action Plans..
- Assets: The presence of a safety net to vastly improve working poor families’ ability to make ends meet and weather financial stressors.
Targeted Outcome: Consistent savings.
- Banking: Avoiding predatory and fringe financial services (from rent-to-own outlets to cash advance options) and being “banked” increases the resources families have to spend on necessities.
Targeted Outcome: Increased use of mainstream banking services and lowered use of fringe services.
- Debt: Limiting unhealthy debt not only alleviates budget constraints but also promotes economic security because it frees up resources for “good” debt like student loans or mortgages.
Targeted Outcome: Improved debt to income ratio.
- Credit: The increasing importance of credit reports to transactions outside of applying for major loans like applying for a job, opening a bank account, or obtaining housing makes it critical for working poor families to know the contents of their credit reports and understand their score.
Targeted Outcome: Improved credit score.
- Taxes: For good or bad, the U.S. Tax Code has become the nation’s primary conduit for alleviating poverty: the Earned Income Tax Credit dollars exceed that of all other work and income supports combined. Tax refunds are a critical resource to helping the working poor achieve economic mobility.
Targeted Outcome: Portion of refund used for savings and financial goals.
These five outcomes were supported by dozens of milestones, that we eventually differentiated by activities or key performance indicators, and hundreds of inputs such as meeting time or financial education materials. Over time, we dropped the ratio from the debt outcome to only focus on debt alleviated, recognizing that our financial coaches had less influence on customers’ employment and career options.
We also changed the banking outcome substantially: the increasing prevalence of products and services like overdraft protection had mainstream services looking more predatory; meanwhile, “fringe” services were accessible and transparent. Thus, we decided to “do the math” and focus on the cost of banking products and services. Critically, we are continuously tinkering with the overarching definition of high-performance: Three out of five outcomes? One asset-related outcome coupled with one deficit-related outcome?
And we are still tinkering. We recently learned so much about our relationships with our customers and their financial security through a recent random controlled trial. The Clinic was one of two organizations nationally to conduct the study on its financial education and coaching program at the behest of Urban Institute and the Consumer Financial Protection Bureau. This research will provide evidence of the effectiveness of Financial Coaching as a strategy to help empower consumers and determine what aspects of coaching work for whom and under what conditions.
I credit that early focus on understanding how, when, and why our mission actually impacts the lives of our customers. That internal compass, and the Clinic’s ability to adapt to changing circumstances, continues to drive our success.