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Financial empowerment centers

What is it?

Financial empowerment centers are city-managed programs that offer free, professional, one-on-one financial counseling to help residents address their financial needs and plan for their financial futures. The need for such services is real — in 2016, the Federal Reserve reported that nearly half of Americans would not be able to come up with $400 in savings for an emergency expense. Cities seeking to help residents build wealth and financial security may establish financial empowerment centers to offer training and services for money management, budgeting, reducing debt, establishing and improving credit, connecting to safe and affordable banking services, and building savings. 

Through financial empowerment centers, residents can access resources and support to build savings to weather financial emergencies, invest in their futures, avoid predatory financial products that can entrap them in cycles of debt, and increase their financial acumen. Implementing a financial empowerment center requires upfront investments determined by its structure, the services it delivers, and the costs of specific programs and incentives (e.g., matched savings accounts). But because these centers can be integrated into other public services — including housing and foreclosure prevention services, workforce development, prisoner reentry, benefits access, and domestic violence prevention — they can actually save cities money. Research shows that financial insecurity can strain city budgets, while people with stable finances need fewer ongoing support services.

For more resources on financial empowerment centers, see the Cities for Financial Empowerment Fund.

 

Who implements it?

  • Elected and appointed city officials can establish an office or department of financial empowerment charged with improving household financial security for workers and families in the city.
     
  • Business leaders can work with city governments and community-based organizations to offer financial empowerment programs to their employees and may also help fund financial empowerment centers.
     
  • Community-based organizations and other advocates can encourage local elected officials to build financial empowerment centers, and offer their community locations as spaces for financial counseling sessions.

Key considerations

Mayors and city leaders have the opportunity to be creative, and to fine tune services to alleviate the most pressing financial issues affecting their communities. Cities seeking to implement financial empowerment centers must consider a range of related logistical questions.

  • Prioritizing service offerings: Financial empowerment centers can offer a wide array of services to city residents, so it is critical to identify the greatest financial challenges facing the community in order to prioritize services — in some cases, access to basic banking may supersede the need for homeownership counseling.
     
  • Language access: Financial empowerment centers should strive to offer services accessible to limited English-proficient individuals in their communities by providing written translation and oral interpretation in other appropriate languages.
     
  • Collaborating with community-based organizations: Financial empowerment centers thrive when they have strong relationships with community-based organizations, which serve as a point of entry to addressing many economic challenges facing workers and families.
     
  • Partnering with city agencies: Various city government agencies can be critical partners for shaping policies and practices and connecting clients to available services.
     
  • Private-sector engagement: Private-sector partners can provide three critical resources, among others, to support city efforts for financial empowerment: employees to participate in financial coaching, financial expertise and possible volunteers (especially in the case of banks), and philanthropic support for financial empowerment programs.
     
  • Data collection: City leaders should establish clearly defined data collection procedures at each step of client engagement to assess the effectiveness and inform the direction of financial empowerment centers while safeguarding the privacy of clients.
     
  • Sustainability: Cities implementing financial empowerment centers must have long-term plans to sustain them, including budgetary allocations, professional training for counselors and other staff, formal relationships with private-sector and nonprofit partners, and program development plans.

Where is it working?

The most robust financial empowerment centers offer a full range of services, including financial counseling, bank access programs and savings incentive programs.

  • New York City was the first in the nation to develop the municipal financial empowerment center model. Mayor Bloomberg established the Office of Financial Empowerment under the Department of Consumer affairs in 2006, just before the great recession. After an initial pilot to test the financial empowerment center model, 22 centers now operate in all five New York City boroughs. An impact study showed that between 2010 and 2013 the financial empowerment centers served 25,000 clients, increased savings by $2.4 million, and helped families reduce household debt by $14.7 million.
     
  • The Nashville Financial Empowerment Center was established in 2013 through apartnership between the city and the United Way of Metropolitan Nashville. The Center’s five locations are charged with helping Davidson County residents reduce debt and build assets through free, one-on-one financial counseling incorporated into existing services offered in the city. Since its opening, the centers have served more than 4,000 clients and held more than 9,000 individual counseling sessions. Since their inception, the centers have helped clients reduce their debt by more than $5 million and increase their savings by more than $800,000.