Dollars and Sense: MEDA Reflects on Its Financial Coaching

M Teresa Garcia w:ClientCFED’s recent blog on how financial coaching leads to long-term stability prompted MEDA staff to reflect on the nonprofit’s own work in that area.

Financial coaching meets families where they are, focuses on financial goals set by the families and provides ongoing support through a one-on-one relationship with a coach. This approach–used broadly in the health, wellness and executive fields–is a positive and reinforcing way to help people reach their goals.

Five years ago, MEDA began weaving financial coaching into its services to help Latino families in San Francisco build assets. Most of MEDA’s programs start with foundational education on homeownership, small-business development, financial capability and sector-based workforce training. After that, families participate in one-on-one financial coaching towards their personal fiscal goals and general financial health, all over the course of a year. At MEDA, general financial health is measured by increased income, increased savings, reduced debt and/or improved credit.

Financial coaching is a stand-alone service at MEDA, and it is integrated into all other asset-building programs. There is a strong belief that financial health is a cornerstone to asset building and, ultimately, long-term financial stability. No matter where a family starts with MEDA, they will work on shoring up their financial health, along with reaching their personal financial goals of homeownership, small-business development or job attainment.

“We find that financial coaching provides families with the tools and support they need to succeed financially,” explains Director of Asset Building Programs Christi Baker.

So far this year, MEDA has helped families achieve 879 positive financial outcomes. In addition, 17 families purchased homes, 21 have started small business, 190 have found jobs and 3,397 had their taxes prepared for free. Boosting financial health and building assets are key for families’ long-term financial security. (See CFED’s blog for a link to additional research that shows the high impact of financial coaching.)

Kimberly Gantt worked with two financial coaches at MEDA on her financial health for two years. Over that time, her credit score improved by 100 points, from 529 to 629.  Kimberly is motivated to pay her bills on time and continuing to improve her credit score. While she worked on her financial health, Kimberly participated in MEDA’s free Homeownership program to purchase a residence in the future.  She is currently working on her GED and plans to participate in MEDA’s free Business Development program to implement an idea the budding entrepreneur has envisioned. Kimberly is grateful for the support that MEDA has given her.

Over the past five years, MEDA has learned some lessons about financial coaching:

  • It’s important to couple education with coaching. Education on basic financial concepts helps set families up for a successful coaching relationship. As mentioned above, MEDA’s programs begin with education that is followed by one-on-one financial coaching.
  • Structure helps. MEDA’s financial coaching program is 12-months long and includes quarterly check-ins with families on their goals and financial health.
  • Standardized outcomes’ measures help evaluate the program’s efficacy and the families’ progress. For financial coaching, MEDA tracks changes in income, savings, debt and credit through budgets, savings reports and credit reports.

How did MEDA make Financial Coaching a core service, embedded in all of its programs? 

Just five years ago, MEDA had only two core, direct-service programs: Homeownership Counseling/Foreclosure Intervention; and Business Development. MEDA recognized that while it was delivering financial-education services in these two programs, the curriculum, outcomes and process were not standardized. Furthermore, MEDA assessed that there were a large number of target clientele—low- to moderate-income Latino families–in need of services who did not necessarily have homeownership or business ownership as a goal . . . or who were many years away from these goals. MEDA knew these families could still benefit from coaching to help stabilize their finances.

In 2010, MEDA was awarded a transformational $400,000, three-year federal investment from the Department of Treasury, Community Development Financial Institutions Fund’s (CDFI Fund) Financial Education & Counseling Pilot Program. This program awarded HUD-certified housing counseling agencies, such as MEDA, the resources to create and implement a financial education and coaching curriculum that could be integrated not only into homeownership work, but also throughout MEDA’s scope of services. This investment has had a lasting impact on MEDA’s work today. The CDFI FEC investment was an opportunity for MEDA and speaks to the importance of CFED’s policy recommendations on prioritization of federal investment, which can ensure that financial coaching is made available to all low-income families.

Moving forward, MEDA has integrated financial capability into the service-delivery structure of all of its programs and funding streams. For example, it is a cornerstone of the services delivered through the Mission Promise Neighborhood (MPN) effort, funded by a five-year, $30-million investment by the Department of Education. MPN is seeking to build a cradle-to- college-to-career continuum of services in the Mission District that will improve education and financial outcomes for children and families. Within MPN, outcome measures have been adopted that are aligned with MEDA’s financial coaching across the organization: credit score 650 or higher; debt to income ratio 40% or lower; and the attainment of three to six months of liquid savings.

MEDA’s Workforce Development program has followed the same model, pairing financial coaching with employment preparation, and leveraging local funding streams that originate with HUD and the Department of Labor. While funding streams specifically available for financial education and coaching are limited, MEDA has had success in the “braided funding” approach, and the integration of this component into a variety of programmatic areas. This model is achieved through cross-training staff in financial coaching, prioritizing this service through the organizational strategy and leadership, and ensuring ongoing, consistent tracking of metrics and outcomes. This not only ensures that financial coaching goals with clients are met, but that federal dollars have even greater impact by also achieving financial capability goals.

Included in CFED’s blog was a link to its policy position paper on the need for financial coaching and ways to achieve this through policy actions. Based on MEDA’s experience, CFED’s recommendations to encourage the adoption of financial coaching practices by adapting federal outcome measures and integrate financial coaching into federal workforce and housing programs are definitely supported.