The Cashless Debate, a Financially Inclusive Perspective

Nevertheless, the move toward a cashless economy is an alarming trend that threatens to penalize poor people. A two-tiered cashless system system that leaves millions of Americans in its wake is inherently inequitable. It’s also unprofitable.

What the 1619 Project Can Teach Us About Financial Security

Mae Watson Grote | Founder and CEO | The Financial Clinic

 

This past August — 400 years after slaves first arrived to North America in the English colony of Virginia — The New York Times Magazine published a 96-page special edition centered on the history and continuing legacy of American slavery. Today, the enduring impact of of slavery is perhaps nowhere clearer than in the financial security field, evidenced by the persistent racial gap in income and wealth.

At The Financial Clinic, our vision is to leverage the experience and knowledge we’ve gained from working with people individually into poverty-alleviating solutions that not only measurably improve individual lives but also address systemic barriers, like the persistent racial wealth gap. As Trymaine Lee writes in the magazine, “Today’s racial wealth gap is perhaps the most glaring legacy of American slavery and the violent economic dispossession that followed.” And the gap is widening — in the past 50 years it’s more than tripled

Interweaving social and economic history, the 1619 Project successfully demonstrates the central role that race has played in the development of American capitalism, and specifically, as Matthew Desmond writes, “a racist capitalism that ignores the fact that slavery didn’t just deny Black freedom but built white fortunes, originating the Black-white wealth gap that annually grows wider.” In his piece on the racial wealth gap, Trymaine Lee notes that even “though black people make up nearly 13 percent of the United States population, they hold less than 3 percent of the nation’s total wealth.”

From speculative banking practices that decimated the savings of Black Americans to exclusionary social programs, the 1619 Project excavates the origins of the widening racial wealth gap. The Civil War, Lee writes, was followed by a period of “economic terror and wealth-stripping,” in response to the North’s victory, during which freed slaves were denied the opportunity to build wealth through policy, law, and violence. During the New Deal, Black Americans were excluded from or discriminated against by many social programs. Created in 1934, the Federal Housing Administration, for instance, enacted a policy of redlining that furthered segregation and refused mortgages in Black neighborhoods. The long-term effects of these policies — including redlining, segregation, and discrimination — are still with us. During the recent subprime mortgage crisis, Black Americans were more likely to be “steered toward subprime loans.” 

Here at the Clinic, the racial wealth gap is a stark reminder of slavery’s legacy, a reality that is apparent in our own financial coaching data. According to our Change Machine data — collected through the Clinic’s online platform delivery model for financial coaching — Black customers have a median asset balance of $400, which is 55 percent lower than the median asset balance of white customers ($900). Moreover, fewer Black customers own wealth-building assets; they’re 8 percent less likely to have savings accounts, 4 percent less likely to have employer retirement accounts, and 5 percent less likely to have IRAs. Our own Change Machine data show that racial wealth inequality plays a critical role in perpetuating generational disparities.

The 1619 Project is as powerful a reminder as any of the structural barriers to wealth-building faced by the people we serve. We couldn’t be more proud of the accomplishments of our work — $90 million back in our customers’ pockets is laudable — but the 1619 Project makes it clear that only by appreciating the deep-seated nature of systemic racism can we begin to close the wealth gap and create transformative change.  We’re aiming to build on our early successes, from the material impact of our financial coaching services, validated by a rigorous study, to public policy victories like New York’s Refund529 law.  Because the barriers are systemic, the solutions we propose must transcend the individual. 

Drawing on the lessons we’ve learned and the values we’ve formed from successfully serving individuals, the Clinic advances field-wide practices and advocates for social policies that pursue racial equity:  

First, can we please put financial “literacy” to rest? Any conversation about poverty that distinguishes between “needs” and “wants” in a household budget fails to appreciate the legacy of slavery. At the Clinic, we’ve been on the forefront of differentiating financial coaching — with its emphasis on people’s lived experiences and actual circumstances  — from financial education. Just as the authors of “Credit Where It’s Due: Rethinking Financial Citizenship” point out, literacy tests have played a perverse role in excluding Black Americans from full political participation, so we should not let literacy tests do the same for financial participation.”

In practice, the Clinic’s work fully appreciates that the barriers people face to wealth-building are not typically about rote knowledge, but structural. In the wake of the recession, more and more have come to appreciate that the crisis on Wall Street, the housing bubble, and the Great Recession were not just a chain of events that occurred because some Americans couldn’t identify a compound interest formula. In fact, structural crises only exacerbated existing inequalities. 

Second, we need to recognize and hold paramount that the people we serve are experts in their own lives. The Clinic actively promotes this idea by ensuring that our customers’ own financial goals are the driver on their path to greater financial security, not programmatic dictates on what  a budget should look like, or the organization’s targets for lowering debt or increasing credit score. Moreover, the Clinic’s social enterprise, Change Machine’s life blood is a community of practice in which the experts are served by a community of experts.

The fact that the communities we serve have been able to consistently and continually make-ends-meet, despite poverty wages and gig jobs, is because they’ve earned an MBA in tough choices, trade-offs and hard decisions. Their expertise is the well from which solutions must be drawn for them to be effective.  

Third, the pervasiveness of racism and discrimination makes it incumbent on our field to collaborate with other disciplines in addressing the roots of this issue. As Nikole Hannah-Jones — the investigative reporter who spearheaded the 1619 Project — told Ezra Klein in a recent interview, addressing poverty alone won’t bridge the racial wealth gap. The idea that class, income or assets-based policies alone can bridge the gap is a fallacy because it assumes that “the primary disadvantage that Black people face is income,” which, she says, “it is not.” Census data, she points out, show that poor white Americans have more wealth than middle-income Black Americans. 

Indeed, our own Change Machine data bear this out too. Regardless of income, Black customers disproportionately lack wealth and assets. This is a lesson that we as financial coaching practitioners must acknowledge, and as such, it is incumbent on us to partner with our colleagues working in education, healthcare, and housing. The customers we serve face a myriad of challenges. Some may have chronic health problems; others face legal and immigration challenges. Others confront daily discrimination. Knowing this — and knowing that racism spans many aspects of life — the solutions we seek must be both ambitious and holistic. 

The wealth gap evident in our own data and whose origins are described in the 1619 Project, is a grave indicator of the work to be done. The 1619 project is a reminder of the historical and economic legacy that leads to racial disparities in assets, income, and debt. As financial coaching practitioners, we recognize the barriers that continue to exist across racial lines, and see our work as part and parcel of a larger commitment to social justice — in the hopes of living up to our founding ideals. 

Data Dive: The Financial Capability Scale & Financial Well Being Scale

Sindhi Polubothu | Assistant Director of Data Analytics and Evaluation | The Financial Clinic

Data Dives:

In each Data Dive, we will analyze a different topic utilizing data collected from our financial coaching platform Change Machine. Change Machine combines our coaching blueprint, outcomes framework, content guides, customer engagement tools, specialized content for at-risk populations, and active community forum under one roof and make them accessible to programs working with individuals and families on their finances. The platform is utilized by hundreds of direct services practitioners across the United States serving over 55,000 customers as of 2019.

Financial Scales Overview:

This Data Dive will look into insights based on data we have collected from the Financial Capability Scale and the Financial Well Being Scale. At the Clinic, the financial coaches and practitioners on our financial coaching platform Change Machine utilize standard scales to measure the financial capability and well-being of their customers. The average customer that comes to see a financial coach in our dataset has the following characteristics:

  • Initial median income of $20,800
  • Initial median debt balance of $6,452
  • Initial median credit score of 601
  • Initial median liquid asset balance of $0
  • 89% identified as non-white
  • 67% identified as female
  • 57% had a highest education achieved of high school GED or less

The Financial Capability Scale was developed by the Center for Financial Security and measures one’s knowledge, skills, and ability to manage financial resources effectively. The Financial Capability Scale consists of 6 questions and an 8 point score scale. At The Financial Clinic, we collected the initial Financial Capability score of 29,015 customers that were seen by our practitioners as seen in the interactive histogram chart below. The average score for our customers is 3.6 which based on the Financial Capability score guide is between a low to moderate score. Interpreting Financial Capability levels based on the results of the scale can be done by using the following cutoffs (1) 0-3 points: Low financial capability, (2) 4-5 points: Moderate financial capability, (3) 6-8 points: High financial capability.

The Financial Well-Being Scale was developed by the Consumer Financial Protection Bureau and measures one’s ability to meet current and future financial obligations as well as if one feels financially secure and can make choices that allow them to enjoy life. The Financial Well-Being Scale used by the Clinic is an abbreviated version which consists of 5 questions and a 20 point score scale. We collected the initial Financial Well-Being score of 2,513 customers that were seen by our practitioners in our system Change Machine. The average score for our customers is 9.1 which is slightly below the mid-point of the abbreviated scale. Per the CFPB Financial Well-being user guide “A higher score indicates a higher level of measured financial well-being, but there is not a specific cut-off for a “good” or “bad” financial well-being score. Unlike credit scores, for example, which are often discussed as a series of ranges (such as 600-650, 650-700, and so on), the CFPB Financial Well-Being Scale scores have not been around long enough for research to have established meaningful ranges for different “levels” of scores.”

Characteristics that Impact Initial Score

Unsurprisingly, we found that people with higher initial incomes and credit scores are more likely to have higher initial scores on both scales. This finding was statistically significant.

An interesting characteristic that had a statistically significant impact on both initial financial scale scores was gender. We found that those who identify as female or transgender had lower initial Financial Capability scores than those who identify as male. We also found females have a lower Financial Well-Being score, and note we did not have any transgender customers who took the Financial Well-Being test. These findings can suggest that those that identify as female or transgender are less financially secure than men and also may mentally feel less financially secure than men. See below for interactive boxplots of initial score distributions by gender.

Impact of Financial Coaching on Financial Well-Being and Financial Capability Scores

To understand the impact of financial coaching on each financial scale score, we filtered the data for customers that had at least two survey records and compared the initial survey score to the final survey score. We found a positive increase in median score for both the Financial Well-Being and Financial Capability Scores post financial coaching as seen in the charts below.

Conclusion

Financial Scales can be helpful tools for financial services practitioners and financial programs to evaluate their customers and impact. Additionally, they can help us understand overall trends and patterns about people’s relationship with their finances. We encourage other programs to implement the Financial Capability Scale and Financial Well-Being Scale into their data collection processes and to compare trends to the ones we have found.

New CFPB Rules Will Fail to Protect Consumers from Predatory Lenders

Michael Dedmon | Policy Manager| The Financial Clinic

Yesterday, the Consumer Financial Protection Bureau (CFPB) announced its intention to rescind key provisions of the Bureau’s 2017 payday lending rules. These changes mean that payday lenders will once again be allowed to make loans without taking a borrower’s ability to repay them into account. Consider this for a moment: this rule change makes clear that payday lenders are free to offer products that are not only not in a borrower’s best interest, but are specifically meant to extract wealth.

The Bureau is also proposing to remove restrictions on “reborrowing,” when a payday loan customer takes out a new loan to pay off an earlier one, which it chose to cap at three successive loans in 2017.  The current regulations were written after an extensive community outreach and consultation process with civil society and with the payday lending industry, and while many of the most abusive practices were left untouched, core elements that trapped borrowers in a cycle of unmanageable debt were significantly weakened.

These proposed rule changes will be disastrous for consumers and they demonstrate that, under Kathy Kraninger’s leadership, the CFPB will continue to side with predatory and abusive lenders at the expense of vulnerable borrowers. “The CFPB’s priority right now should be curtailing the practices that perpetuate the cycles of debt that plague so many of the working poor in the U.S. today, but instead it has decided to look the other way,” says Mae Watson Grote, Founder, and CEO of The Financial Clinic. “The Financial Clinic and our partners see firsthand the way payday and title lending strips wealth from our communities, and especially communities of color. Our coaches are working with customers every day who are saddled with payday loan debt and as a result are struggling to pursue their goals and build their financial security. They have all of the tools and the drive to start that new business, finish their degree, or save for a family vacation – but these unregulated loans turn one financial emergency into a persistent crisis. This is a systemic problem and making sure that customers are well informed just isn’t good enough; it is the job of agencies like the CFPB to make sure borrowers are protected from these abusive loans”

Darren Liddell, the Clinic’s Director of Program Innovation and a long time financial coach, has seen the impact lax regulations on payday lenders can have on customer debt burdens. “The customers I worked with in Miami at Branches during the Urban Institute’s randomized controlled trial had, on average, more debt when they would come in for coaching than the customers we see in New York, and more access to payday loans – some with interest rates over 300% – is definitely a part of the reason why,” he says. “When folks run into a difficult financial situation or an unexpected crisis, sometimes a payday loan seems like the only option. Having simple regulations in place like making sure people can actually pay the loan back or capping the amount of times they can reborrow are really just common sense protections against the worse abuses. The rules CFPB are proposing to rescind now are just the most basic protections every borrower deserves”

The Financial Clinic condemns this proposal in the strongest terms, and will work with our customers, partner organizations, and our peers in the financial security field to fight against this misguided approach. We encourage everyone to get in touch with their representatives in Congress and ask them to publicly speak out against CFPB’s proposed rule changes, and to submit their written comments to the Bureau during the next 90 days.

Workers in Crisis: Responding to a Government Shutdown

 

Source: The New York Times

By Laura Christensen-Garcia | Manager of Service Delivery | The Financial Clinic

 

The fact that the government is shut down is probably not news to you. It’s pretty hard not to notice something when even Cardi B posts about it on her Instagram. What might be news is the incredibly sweeping and profound effect that the shutdown is having on hundreds of thousands of people–not just the 800,000 furloughed government employees.

The ripple effects of the shutdown are being felt by people all across the country–from high school students that are unable to complete their FAFSA due to the inaccessibility of records on the IRS website, to victims of identity theft unable to file affidavits on www.identitytheft.gov. This affidavit is used to report fraudulent accounts to businesses, and is often required for them to close fraudulent accounts and remove them from a consumer’s credit reports. Because the website is currently out of commission, people don’t have access to a surefire method of identity theft resolution.

The financial coaches at The Financial Clinic are working around the clock to help our customers navigate the uncharted territory that this shutdown has entered. Many of our customers are low-income to very low-income and rely on public assistance to pay for necessities, such as housing or food. This month, SNAP recipients received their February benefits earlier than usual and were told this is the last payment of SNAP benefits until the government shutdown is resolved. If the shutdown is not resolved soon, the more than 38 million SNAP recipients will have to find other ways to get food – relying on food pantries, support from family or friends, or other means. For people without other options, the situation is dire.

We are, however, unsurprised to find that our resilient customers have already found creative strategies to get through the storm. Financial Coach and Manager of Service Delivery, Justin DeBrosse recently met with a customer who wanted to discuss how to best budget for the frontloading of their February SNAP benefits. The customer worked with Justin to track their Daily Expenses and formulate a plan for next month’s expenses using the Monthly Income & Expense Tracker.

If you are a federal worker, start to apply for unemployment now. CNN reported that unemployment claims by furloughed workers skyrocketed more than 400% in the last week of December. As a result, it may take up to eight weeks to receive your first unemployment check. Moreover, the verification process is tedious and time-consuming–you will need to access and submit pay stubs from your employer (which may be difficult if they’re closed) and will need to prove that you are actively job searching. All unemployment will need to be paid back if you receive back pay for the duration of the shutdown.

For those of you who find yourselves staring down a list of unheard voicemails from debt collectors, your landlord, or your student loan provider, consider prioritizing your bills. Use this tool to assess which bills absolutely must be paid. Because the shutdown is such a public issue, your request to modify a payment plan or pay rent in installments hopefully will not fall on deaf ears. For example, AT&T released a statement on January 9th explaining to consumers that, “as long as the shutdown is in effect, our customer service team will adjust late fees, provide extensions, and coordinate with you on revised payment schedules.” Many loan providers are also offering to re-calculate Income-Based Repayment plans to adjust to changes in income.

In addition to exploring flexible payment plans, many federal workers are also being offered emergency loan products by various financial institutions. USAA Bank, Alpine Bank, and the Transportation Federal Credit Union are offering furlough relief options to furloughed workers through low-interest loans, financial counseling, and the option to skip up to two monthly payments on existing loans. Democracy Federal Credit Union is also offering financial counseling and a short-term emergency loan with 0% interest. Although the majority of low-interest loan options are being offered by credit unions and community banks, some of the big financial institutions, like Chase Bank, are waiving monthly maintenance and overdraft fees. The easiest way to access these benefits is to call the bank or loan provider directly.

Although taking on more debt or changing a payment plan is not a long-term solution, they are quick moves that workers can take to respond to this emergency. In the future, we must collectively work to hold our representatives more accountable to the needs of their constituents, and guarantee that a paycheck is not used as a bargaining chip in a political game.

To learn more about how furloughed government workers, their family members, and other every day Americans are being affected by the government shutdown and are coming together to support each other, check out #ShutdownStories on Twitter.

When the Government Shuts Down, the Vulnerable Suffer the Most

Michael Dedmon | Policy Manager| The Financial Clinic

While a partial shutdown of the federal government dominates the daily news cycle, the real impact on people’s lives can be hard to see because many essential services continue to function – more or less – as normal. For example, the U.S. Postal Service is still running, Social Security payments continue to be made, many Veterans’ services are still available, and federal employees deemed essential like federal transportation safety workers and military personnel continue to report to work each day. But, beneath the surface, this staged political crisis is already generating more significant consequences than many realize, and the risk of a deeper national crisis rises every day the impasse continues.

Up to 450,000 of these government employees won’t be receiving a paycheck this Friday despite working throughout the shutdown, and there are thousands more who have been furloughed while the negotiations over reopening the government continue. Although the majority of the furloughed and all essential employees will receive back pay for the time lost to the shutdown, many staff working for government contractors, like cleaning and food service employees, will not. This loss of income presents a huge risk to these less financially secure employees who already receive significantly fewer protections and are paid much less.

Nearly 80% of Americans report that they live paycheck to paycheck, and over 40% of families lack emergency savings, claiming that coming up with $400 would pose a significant financial burden. Like many workers across the country, federal employees have seen their incomes stagnate in the past decade, allowing them even less flexibility to deal with unplanned instability. This sudden shock to their income will force many of them into tough financial choices like whether they should pay their rent and utility bills or buy groceries. Like so many other households dealing with income volatility, many families will be forced to rely on risky and expensive credit products to make ends meet.  As the shutdown drags on, it’s critical that we not lose sight of the very real impact this disruption has on the financial lives of federal employees and their families, and consider the long-term effects some will feel after the political disputes are resolved.

In addition to these affected employees, a number of vulnerable households across the country that rely on government services will soon start to feel the consequences of the shutdown. The Washington Post reports that the Department of Housing and Urban Development (HUD) is scrambling to prevent the eviction of over 1,000 people receiving support from a federal program that ended on January 1st, and in just weeks, millions of SNAP beneficiaries could face reductions to their benefits. Also, with tax season just around the corner, the IRS is both unable to process tax refunds and will have to delay critical support it provides to nonprofits, like The Financial Clinic, that participate in the Voluntary Income Tax Assistance (VITA) program. The Post has reported that over 90% of Internal Revenue Service (IRS) staff has been sent home without pay just weeks before tax season begins in earnest.

This is especially poorly timed this year as changes to tax law passed by Congress in late 2017 spell a number of important changes that may impact low- to moderate-income (LMI) households this season, including the elimination of the personal exemption, the introduction of new tax brackets, and alterations to the Child Tax Credit. “With the new tax law changes starting this year, VITA customers will be looking to their tax preparer to learn what the changes mean for them. ‘Why is my refund changing?’ Many will not think to ask the question of how will this impact their future refunds.” says Darren Liddell, Director of Program Innovation at The Financial Clinic. “Also, refunds won’t be issued while the government is shut down even though the government will still accept the returns.”

Credits claimed at tax time like the Earned Income Tax Credit (EITC) can make up 12% of some households’ yearly income and present a huge opportunity to get ahead financially, save some money for future goals like education and retirement, or pay down debt. Financially insecure families expect a properly functioning federal government to process their returns and issue their refund just like the IRS expects them to file on time. “We see the biggest rush for VITA services right at the beginning of tax season, so in late January, as many customers want to file as soon as they can,” according to Darren. Families looking to get on top of debt accumulated during the holiday season, make some headway on yearly savings goals, or make education/childcare payments for the semester will be relying on receiving their refund.

The financial pain inflicted on government employees, a looming shutdown of some housing and nutrition programs, and the disruption of the tax season are real consequences that will have a lasting impact on the lives of some of our most vulnerable friends and neighbors. The human impact should be considered with the knowledge that all of it is, in fact, needless, as the shutdown is the result of a manufactured, partisan crisis over a poorly conceived and racially charged plan for border security. We call on all representatives in Congress to fulfill one of the most basic tasks entrusted to them: provide the resources to deliver the critical services Americans everywhere rely on and reopen the government without delay.

What a (not so) Long, Strange Trip it’s Been!

By Mae Watson Grote | Founder & CEO | The Financial Clinic

In Ideas that Work, Clara Miller, the President Emerita of Heron Foundation wrote “The urgency and size of the problems we face require that we work differently.  Everything at our disposal is now a mission-critical resource.” The series, on the whole, is a comprehensive and inspiring body of work, yet I’ve found myself at different points in the year coming back to this particular essay and passage when evaluating the small role The Financial Clinic plays in the pursuit of a more equitable economy.

In October, The Financial Clinic was honored to learn that the randomized control trial study commissioned by the CFPB in 2015 to evaluate its financial coaching model, “An Evaluation of the Impacts and Implementation Approaches of Financial Coaching Programs” had been re-evaluated by the Journal of Economic Behavior and Organization.  The findings were a welcome, additional validation of our long-held belief that financial coaching has a positive and significant impact on the financial security of low- and moderate-income Americans. The acceptance of the results by a distinguished peer-reviewed journal – with its particularly strong reinforcement of the study’s key findings – was on its face a proud moment for the organization; and yet, as I reflected further, I realized that the moment was more significant than just affirming our approach to service delivery.  This moment was about affirming the impact a growing field was having in a system of economic inequality towards the pursuit of lasting financial security for working poor Americans.

At the time, the idea of having our coaching model – something we believed passionately in yet simultaneously grappled with the reality that it was still unproven – independently evaluated in a year-long study was a daunting idea.  What if it wasn’t as effective as we thought? What if its impact couldn’t be scaled effectively? These were among the most frequent conversations we had while anxiously awaiting the study’s findings to be made public.

Indeed, this moment was about appreciating how far we’ve come as an organization and as a field. We didn’t know it at the time, but the RCT’s release would set in motion a journey that I’m so deeply proud to be a part of.  In 2015, when the study was released, the Clinic was regarded as a local nonprofit, growing in size and impact, but still very much rooted in its local community.  Today, we have national partnerships and have done work in more than 40 states. At the time, our quantifiable outcomes framework – assets, banking, credit, debt, taxes, and goals – had delivered a cash value of roughly 10 million dollars back into the pockets of our customers.  Today, that number is more than 80 million!

And lastly, perhaps on parallel tracks, not long after the RCT release we publicly launched our financial coaching social enterprise, Change Machine, a technology product rooted in our approach to coaching and our steadfast belief in its ability to deliver meaningful change.  Today Change Machine has helped thousands of practitioners build financial security for more than 60,000 customers.

While life events are rarely monocausal – the Clinic’s moment today certainly isn’t – it is fair to say that tapping into our own mission-critical resource in financial coaching was the best decision we could have made as an organization.  I’m so proud to be surrounded by a team that embraces the unknown and seizes the moment for self-improvement; we’ll continue to keep our eyes open for the next seminal moment and stay humble yet curious. Here’s to the next chapter, what a rewarding trip it’s been!

Change Machine and the MIT Inclusive Innovation Challenge: Building a More Equitable Economy Together

By Mae Watson Grote| Founder & CEO| The Financial Clinic

 

 

Change Machine, The Financial Clinic’s social enterprise for financial coaching and wealth-building strategies, was built on the idea that we can amplify our impact and advance the field by building a high performing community of practice. Financial insecurity is pervasive across social and human service sectors, and often stymies organizations from fully completing its mission. We believed that if a platform existed that allowed practitioners to integrate financial coaching alongside case management, to share best practices across the field and use commonly adopted outcomes,  and to concurrently embed direct services with the training and curriculum necessary to sustain the work at the organizational level, an innovative approach to poverty alleviation was possible. We launched publicly nearly three years ago with the vision of scaling financial security strategies for the nonprofit sector.

We are pleased to announce that Change Machine has been selected as a finalist for the MIT Initiative on the Digital Economy’s Inclusive Innovation Challenge, joining a group of esteemed innovators and change-agents committed to leveraging technology as a force for good towards an economy guided by principles of equity and opportunity for all.  The Challenge aims to award over one million dollars in prizes to “Inclusive Innovators,” entrepreneurs around the world using technology to reinvent the future of work and create shared prosperity.  We are deeply honored that the selection committee sees in Change Machine the potential to create such lasting impact.

We cannot fully articulate the excitement and humility we feel to have been chosen as a finalist for this competition, regardless of the final outcome.  We built this comprehensive software platform determined not merely to advance our field, but to accelerate the impact of our field when streamlined into a user-friendly product motivated by a singular purpose: help those on the platform and the people being served by those on the platform reach their financial goals. For thought leaders and independent evaluators from MIT  to recognize Change Machine’s potential to innovate at scale.

We also know, and appreciate what it means to have the “MIT seal of approval.”  As finalists, we join past winners and engineers of social progress like LaunchCode, a 2017 grand prize winner that provides free accelerated software development training that places graduates in paid internships aimed at transitioning them into full-time software development positions. Or SkillSmart, a 2017 winner that leverages technology to assist job seekers in sharpening their skills and identifying action plans for the areas most in need of improvement, and most in demand from employers.  To sit alongside these and countless other steadfast leaders to collectively advance our ability to tap into human potential is a distinction that, regardless of the final outcome, we as an organization will forever be grateful.

We’ll be traveling to Detroit to the next round of the Challenge and are bringing with us the motivation to make the case that building financial security is just the beginning.  Together, we will create a future guided by equity and inclusion, and accelerated by technology and community of practice. This spirit of community will be applied to the Challenge:  regardless of who wins, we look forward to amplifying their impact, drawing from their expertise, and looking to a future of collaboration towards ameliorating barriers to opportunity.

See you in Detroit!

Practicing What We Preach: A Practitioner’s Approach to Sensible Economic Policy

By Mae Watson Grote | Founder and CEO | The Financial Clinic

Economic policy for low-income Americans is often written by economists.  But alternatively, what might a practitioner-based approach look like? How would the success factors change?

At The Financial Clinic, we advocate for a nation where every American is financially secure, and for economic policy that centralizes the needs of America’s working poor.  Currently, around seven percent of Americans remain unbanked, and possibly up to twenty percent of banked Americans report needing to rely on non-traditional financial services. The Federal Reserve’s own SHED data reports that thirty-five percent of Americans would be unable to pay all of their monthly bills in full if they were faced with a $400 emergency. The impact created by this financial insecurity extends far beyond individual households.

It is clear that improving financial inclusion and financial security is not just beneficial to low- and moderate-income families: it strengthens the American economy.

The Financial Clinic understands the risk financial exclusion and insecurity present to the health of our nation, because its practitioners work everyday directly serving working poor families and building their financial security through an outcomes-oriented, strength-based model empirically proven to deliver measurable results.  The Clinic’s leadership within the financial security field gives us a unique perspective on the daily struggles of working Americans and the impact that economic policy has when it fails to fully take into account their perspective.

A central goal of my career has been to build the financial security of working poor Americans by arming them with the financial knowledge and capability they need to achieve their goals.  After well over a decade of work in this field, one of the primary lessons that I have taken away is that knowledge on its own is insufficient to achieve lasting financial security. Hard working people across this country face far greater barriers than a lack of financial literacy. Americans today face a dynamic, challenging economic and financial landscape that, while showing positive signs of strength, continues to leave far too many without the skills or the income they need to reach their potential.

To address these critical challenges, The Financial Clinic has focused on bringing the people that we serve – and critically,  the organizations that serve them – to the forefront of our work. By democratizing solutions to systemic poverty, it is possible to unlock the enormous potential of human service and community development practitioners, and leverage their unique knowledge and skills to inform a blueprint for how anti-poverty efforts can be strengthened nationwide.

The U.S. Department of Labor reports that there are 1.8 million workers on the front-lines of anti-poverty work.  My vision is that every one of them have a financial security tool, product, or practice in their arsenal that informs their unique mission and meets their customers where they are.  Our vision – together as practitioners, nonprofit leaders, and economists –  is a social service sector where job developers have all the tools they needed to spot their client’s credit problems, domestic violence advocates are trained in practices to screen for financial abuse, and community college counselors help their students readily and effectively pair financial goals with career goals.

With the aim of harnessing the power of technology for social good, we created our financial coaching platform Change Machine. The platform is integral to our vision of scaling up our rigorously evaluated financial coaching model – the first in the field – and empowering social service practitioners across the country to build the financial security of their communities. We pair the tools and resources of the coaching platform with a set of wrap around capacity building supports focused on integrating financial security into the existing set of services any organization offers. Through the direct provision of financial coaching, and the support we provide to over 460 social service organizations across the country, we have been able to put nearly $80 million dollars back in the pockets of over 48,000 customers.

I am so proud of what The Financial Clinic has accomplished, but our work remains unfinished. We are redoubling our efforts to leverage the household financial data we collect through Change Machine, the lived experience of our customers, and the unique capabilities of our organizational partners to develop best practices, innovative financial products, and economic policies that will build a more financially secure America.

Partner Series: Supporting Adults With Autism/IDD as a Financial Coach

A Guest Blog By Taryn Oesch, CPTM | Board Secretary |  The Power of the Dream

A 2014 report by the U.S. Senate Committee on Health, Education, Labor and Pensions found that twice as many adults with disabilities live in poverty than adults without disabilities, that fewer than 30 percent of working-age Americans with disabilities work, and that American households that include an adult with a disability earn 38.4 percent less than households that don’t.

For individuals with autism or intellectual/developmental disabilities (IDD), the numbers are, perhaps, even more alarming. The unemployment rate among people with intellectual disabilities is more than twice as high as the rate for the general population, and only 26 percent of adults with intellectual disabilities who do work have full-time jobs. About 85 percent of college-educated adults with autism are unemployed, and more are underemployed.

Clearly, financial support is critical for individuals with autism/IDD. With the high prevalence of autism/IDD (about 1.5 million people in the U.S. have autism, and about 6.5 million have an intellectual disability) and the high rate of financial struggles among those people, you’re likely to work with at least one person with autism/IDD, or a person with a close family member with autism/IDD. How can you help?

What Are Autism/IDD?

First of all, what are autism/IDD?

Autism spectrum disorder, often called autism or ASD, encompasses a range of symptoms and levels of severity. They include difficulties with social communication and interactions; repetitive patterns of behavior, interests or activities; and difficulties developing and maintaining social relationships. It includes Asperger’s syndrome, which is no longer an official diagnosis but which many individuals still use to identify themselves as people with autism who typically have less or no impairment in cognitive or language development.

An intellectual disability is what it sounds like – an impairment in intellectual functioning and what’s known as adaptive behaviors (social and practical skills). A developmental disability is a cognitive and/or physical impairment diagnosed before the age of 22 that limits the person in three or more of these areas: self-care, receptive and expressive language, learning, mobility, self-direction, capacity for independent living, or economic self-sufficiency. Common intellectual and developmental disabilities include Down syndrome, Fragile X syndrome, ASD and cerebral palsy.

Coaching Adults With Autism/IDD

Many of the goals of financial coaching for individuals with autism/IDD and their families are similar to the financial coaching goals for individuals without disabilities. They include:

  • Identifying financial goals and developing a plan to achieve them
  • Asset-building, including creating an easy-to-use spending planner, enrolling in eligible benefits, creating a savings plan, and understanding ABLE accounts (if applicable)
  • Opening and managing a bank account
  • Understanding and managing credit, including checking credit scores, building and repairing credit, and avoiding or remedying identity theft
  • Managing debt, including understanding and paying bills, learning about bankruptcy (if applicable), and managing student loan payments (if applicable)
  • Paying taxes, including knowing where to obtain free tax preparation, understanding available tax credits, and understanding and saving tax refunds
  • Finding additional help, including referrals to legal help and benefits resources

Working with individuals with autism/IDD requires the same basics that any coaching relationship does, like building trust, being client-centered and focusing on strengths. However, there are some guidelines you should follow to provide the best service to these clients:

  • Provide clear, easy-to-understand communication. This means using straightforward language and providing visual aids instead of too much written communication.
  • Understand government benefits for people with disabilities, and be able to make recommendations to your clients based on their goals, employment status and other factors.
  • Help individuals understand and build on their skills and strengths.
  • Know about employment opportunities for individuals with autism/IDD, including job coaching and micro-enterprise.
  • Understand the needs of families, and help them with their financial goals. What does the family need to do to be able to support the individual with autism/IDD? Does your state offer ABLE Accounts, for example?

Know where to find more resources and advice. For example, The Power of the Dream, a partner of The Financial Clinic, is always available to answer questions.

About The Power of the Dream

The Power of the Dream is part of our WorkBOOST National ecosystem. Based out of Raleigh, NC, its mission is to create jobs and advocate for adults with Autism or other Intellectual Development Disorders in the North Carolina Triangle