Local Financial Inclusion Programs Build a Strong Foundation for Financial Well-Being

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This is the sixth post in our blog series on financial inclusion. The series provides examples and action steps to help city leaders start or strengthen financial inclusion efforts. This post highlights local financial inclusion programming, with a focus on the four most common types of programs.

Couple working on finances(Getty/Fuse)

Proven, effective financial inclusion programs and services are essential to city leaders in helping residents become more financially secure. Local financial inclusion programs can vary widely in strategy, but they succeed when key components are in place, including strong champions, community commitment and partnerships and a clear vision for success.

In our recent scan of municipal financial inclusion programs, NLC found that those cities with the most successful and comprehensive financial inclusion programs tend to have a set of foundational or “pillar” programs in place. Sixty-three percent of the cities surveyed as part of our scan reported having at least one of four common financial inclusion Figure04_Pillars“pillar” programs in place:

  • Volunteer Income Tax Assistance (VITA) and federal Earned Income Tax Credit (EITC) outreach,
  • Multi-benefit outreach and access,
  • Financial education, counseling and/or coaching, and
  • Homeownership assistance.

By investing in these pillar programs, cities can customize tried and tested strategies, and by doing so can propel innovation and increase impact. Many cities have had some of these pillar programs in place for several years, which has positioned them to build out their financial inclusion strategy through ongoing services and partnerships.

Pillar programs tend to attract attention from community partners interested in expanding their financial assistance program offerings. This type of community buy-in increases the likelihood of additional funding for local financial inclusion programs from state and federal sources as well as private funders, such as banks.

Figure05_ProgramsVolunteer Income Tax Assistance (VITA)/ Earned Income Tax Credit (EITC) Outreach
VITA is a federally-funded program that provides free tax preparation for low- to moderate-income families. It also helps increase awareness of the Earned Income Tax Credit (EITC), a federal credit for low- and moderate-income workers. Fifty-two percent of survey respondents indicated their city has a VITA/EITC outreach program in place.

The Center on Budget and Policy Priorities reports that in 2013, the EITC lifted about 6.2 million people out of poverty, including 3.2 million children. VITA protects residents from predatory tax services while increasing the EITC’s financial impact.

Currently, 25 states and the District of Columbia have their own local EITCs to supplement the federal credit. For example, Chicago directly funds VITA and EITC outreach efforts, with city officials lending support by promoting these services to residents. In Hattiesburg, Mississippi, Mayor Johnny Dupree started the city-funded Education Initiative to provide free tax preparation services to residents and promote awareness of the federal EITC and the Child Tax Credit.

Multi-Benefit Outreach and Access
Cities are boosting the economic well-being of residents directly by connecting them to federal benefit programs such as SNAP (Supplemental Nutrition Assistance Program) and federal health insurance benefits like Medicaid through direct outreach, often joining with local nonprofits to refer residents to programs and help them complete benefit applications.

Over 48 percent of survey respondents indicated their city operates at least one multi-benefit outreach or access program. Pittsburgh has incorporated health benefits outreach into their 3-1-1 call system. When residents call, they hear a message about health coverage and enrollment assistance. Operators are trained to answer questions and refer residents to agencies that can help them get enrolled in Medicaid or the Children’s Health Insurance Program.

(Getty/Wavebreakmedia Ltd)

Financial Education, Coaching and Counseling
Financial education help residents learn to create a budget, manage debt, improve credit, build savings and plan for retirement. Financial counseling helps financially struggling individuals and families to manage immediate problems, typically providing a short-term intervention, and financial coaching offers one-on-one interactions with a trained financial counselor to identify issues such as wasteful personal spending patterns, for example. Coaches work with clients to design a plan for improvement and track their progress.

Forty-six percent of the cities surveyed indicated they have financial education, coaching and counseling programs in place, including Garden City, Michigan. The city offers the Financial Peace University curriculum, which teaches residents how to manage debt, build savings and plan for retirement. The city also offers a similar curriculum designed for teens that focuses on savings and understanding credit.

Homeownership Assistance
Cities provide homeownership assistance in many forms. Like financial education, coaching and counseling, homeownership assistance, 46 percent of cities surveyed said they offer homeownership assistance to residents. For example, Providence, R.I. provides home repair grants and support for first-time home buyers, including pre-purchase education. St. Petersburg, Florida offers home repair loans to residents who are at or under the city’s median household income. Grants are also available to physically, visually or hearing impaired home owners and renters for ramps, chair lifts and other features that make a home accessible for persons with disabilities.

These pillar programs can provide cities with a strong foundation from which to build a more advanced and comprehensive financial inclusion agenda. Through these programs, residents can improve their financial well-being by gaining access to assets such as tax credits, nutrition benefits, financial information and the ultimate American dream of owning a home.

However, the potential for local action to improve their residents’ financial state expands well beyond some of these “tried and true” local strategies. Many cities have implemented or are in the process of putting in place innovative programs to help residents build financial stability. These more advanced, innovative programs will be featured in our next and final blog in this series. Stay tuned!

Heidi Goldberg
About the Author:
Heidi Goldberg is the Director for Economic Opportunity and Financial Empowerment in NLC’s Institute for Youth, Education, and Families. Follow Heidi on Twitter at @GoldbergHeidi.