Innovative Ways Cities are Meeting Residents’ Financial Needs

This is the seventh and final post in our blog series on financial inclusion. This post highlights an array of programs and services to meet the diverse financial needs of city residents.

Financial inclusion(Getty Images/Chris Hondros)

“To fully participate in the economic fabric of a community, all families must have access to the financial tools and pathways necessary to reduce debt and prepare for the future. The City of Nashville is committed to making this happen through programs and services to help residents build assets and become financially stable.”
Megan Barry, mayor, Nashville, Tennessee

Mayor Barry knows that in order for her city to thrive, families must be financially stable. Yet, over half of Americans lack emergency savings to weather a financial crisis, and many families do not have access to the tools and information necessary to make informed financial choices.

MetLife TA projectMany mayors are following Mayor Barry’s lead and taking steps to develop financial inclusion strategies and programs that address the financial challenges that families face every day. While some cities have had “pillar” programs in place for many years (programs that offer financial education or connect families to homeownership opportunities, public benefits and tax credits), in the last five to ten years there has been an emergence of new, innovative programs at the local level that address more complex financial challenges.

Figure05_ProgramsIn NLC’s report on financial inclusion efforts, a quarter of the cities surveyed for the report indicated that they have innovative programs in place to help families save, reduce debt, access safe and affordable financial services, and financially prepare for the future.

One of the more popular municipal strategies emerging from city halls across the country in recent years has been Bank On. In this model, cities work with community organizations and financial institutions to connect un- and underbanked residents, who often rely on high-cost predatory financial services such as check cashers and payday lenders, to safe and affordable bank accounts.

San Francisco Treasurer José Cisneros and former Mayor Gavin Newsom first developed the Bank On model in 2006, and there are now over 100 Bank On programs in cities around the country.

Other local strategies focus on encouraging residents to save money. One way cities are doing this is through Individual Development Accounts (IDAs), which are designed to help low-income families save for homeownership, education or small business ownership. An individual’s or family’s savings are usually matched one to four times the amount of the deposit. For example, the city of Columbia, South Carolina offers residents an IDA with a city-funded 3:1 match.

Children’s savings accounts (CSAs) are another savings strategy that has caught the attention of many city leaders. San Francisco’s CSA, Kindergarten to College, offers all public kindergarten students a savings account for college with an automatic deposit of $50. St Louis, Missouri; Lansing, Michigan; and Caldwell, Idaho are offering similar accounts to young children, typically coupled with financial education for the whole family.

Debt reduction programs are also growing in popularity with city leaders. In partnership with NLC, five cities have implemented a new program in the last two years to connect residents in debt to public utilities to financial empowerment services in order to help these residents pay their debt while acquiring resources to improve their overall financial well-being.

Known as LIFT-UP (Local Interventions for Financial Empowerment through Utility Payments), this program is a win-win for cities that want to reduce their expenditures on utility debt collection and shut-offs while also helping struggling families. The city of Houston, for example, has integrated financial counseling into the city water utility’s customer service so that customers can receive the help they need on-site or over the phone.

This concept of financial inclusion service integration, which LIFT-UP employs, refers to the incorporation of financial inclusion programming into existing city programs and services, such as public housing and workforce development. For example, Seattle offers discounts on city services, such as utilities and car registration fees, to low-income residents that take advantage of financial coaching through the city’s Financial Empowerment Center (FEC).

FECs are one-stop centers where residents can receive financial coaching, help in managing debt and improving credit and access to financial services. Started in New York City by the CFE Fund, FECs have been replicated in cities around the country, including Nashville and San Antonio.

These examples offer a glimpse into the myriad ways that cities are making concerted efforts and thinking outside the box to make their communities more financially inclusive. As previous posts in this series have demonstrated, it takes bold leadership, a clear vision for success, strong partnerships and more to build a foundation from which innovative financial inclusion programs can grow and truly impact the lives of families in need.

About the Author:Heidi Goldberg 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.