The first line of the recently released report, “Financial Coaching Census 2015: Insights from the Financial Coaching Field,” reads:
Financial coaching has gained recognition as a strategy that can improve financial capability and security.
This first-of-its-kind report was put out by the Center for Financial Security and Asset Funders Network, with support from the Annie E. Casey Foundation. The goal is to annually release this report to track trends in the ever-growing financial coaching field.
MEDA understands that financial capability education and coaching is the thread that ties together all asset-building programs. The community-based organization’s client history has indicated – and United Way research has backed up – that clients do better in the long-term if, for example, financial coaching is tied to job training. This integration keeps families from remaining mired in being low income.
Take the case of a car breaking down, your not having the money to fix it and you then cannot get to work, therefore losing your job. Or you start a successful small business, but cannot handle your personal finances and do not build the asset you should be creating for your family.
MEDA last year served over 6,800 low- to moderate-income clients, of which two-thirds are immigrants needing to learn the financial system in their new country. All sought to build capital and create opportunities for their families’ long-term success. Whatever asset-building service brings someone to MEDA’s Plaza Adelante — from housing opportunities and job training to free tax preparation and small-business development — they will receive financial coaching as part of the required welcome orientation.
In addition, there were 1,090 clients who in 2015 received in-depth, one-on-one financial coaching, with a 199 average increase for those who raised their credit score. This is a major impact, as some clients come to MEDA with a zero credit score, being off the radar as immigrants. The anticipated outcome is always clear, tangible and sustainable assets being generated. (Read MEDA’s Annual Report 2015).
Digging into the financial coaching report
The “Financial Coaching Census 2015: Insights from the Financial Coaching Field,” survey was comprehensive, with 601 responses from 358 organizations offering financial coaching in every corner of the nation.
One item of note the report revealed was that telephone coaching was most widely used; conversely, MEDA strongly believes that starting with in-person financial coaching abets client engagement, only doing follow ups by phone once a strong coach-client relationship has been established. MEDA’s strategy mirrors the expectation of funders: the report indicates that 95 percent of funders choose in-person coaching over telephone coaching.
MEDA employs a DISC strategy, an acronym for reducing Debt, increasing Income and Savings, and bettering Credit. While the report indicates that working on debt, credit and savings are the three common pieces of a financial capability program, MEDA believes increasing income is vital, too.
Explains Director of Asset Building Programs Lucy Arellano, “Having a continuously increasing income enables more progress in each of the other three areas. It is imperative that clients increase their incomes, especially in the expensive Bay Area, where we do our work.”
The biggest challenge cited by those surveyed was client buy-in and engagement. Looking to decrease such potential issues, MEDA redesigned its strategy in November 2015. All new clients now have a uniform point of entry to services, beginning with a Welcome Orientation – offered once a week in English and Spanish. All clients receive the same financial education curriculum, and then meet one-on-one with a coach who will provide financial coaching in addition to the other services such as workforce, business, tax, and housing coaching. Coaches support clients to then create individualized service plans based on their personal goals.
States Arellano, “We want an integrated rather than a supplemental approach. Financial coaching is a valuable, embedded key to sustaining long-term success.”
Another means for client engagement is the development of MEDAPulse, an innovative mobile app that will help clients more actively participate in their financial coaching as they work toward their personal financial goals. A beta version is anticipated for fall 2016.
In terms of a staff-client ratio, the survey showed an average of five staff seeing 15 clients per month. MEDA’s numbers surpass this average. Capacity has been added by cross-training all program staff, so there are now over 10 MEDA employees providing financial coaching. Also, each staff member sees 18 clients on average each month.
Funders who took part in the survey mostly agreed that a lack of standardization of financial coaching is an issue. MEDA has remedied this by standardizing its service delivery-model, so that every client now has access to all available services, complemented by an individualized action plan that matches the client to the right services at the right time.
The conclusion of the report stated that more investment in research and evaluation is needed. MEDA is at the vanguard of implementing such a data strategy, with a four-person evaluation team customizing Salesforce’s referral tool for internal use, and external use with neighborhood partners. This holistic approach ensures that every family is showcasing a positive, long-term impact by its receipt of free financial coaching.
To expand its financial model, MEDA’s is now a backbone organization, bringing Mission Promise Neighborhood families into the fold. MEDA is the lead agency of this citywide community partnership that was created to support kids and families living, working and attending school in the Mission District. It brings together schools, colleges, community organizations and community leaders to help kids graduate and families achieve financial stability.
MEDA ‘s work as an affordable-housing developer to combat displacement issues for its clients is similarly becoming an extension of the financial coaching program. One means MEDA is using for the preservation of existing affordable housing is Rental Assistance Demonstration (RAD). This federal program, via HUD, enables nonprofits to manage and refurbish San Francisco Public Housing complexes that have deferred maintenance issues. The idea is to later bring financial coaching into these developments, so that residents’ lives can be bettered.
MEDA applauds the release of this report, plus the fact that it will be done yearly to track trends, both positive and negative.
Sums up Arellano, “Congratulations to the Center for Financial Security (CFS) and Asset Funders Network (AFN), and thanks to the support from the Annie E. Casey Foundation that made this survey possible. Such information will help MEDA, and other nonprofits, refine their financial capability program, creating community capital for clients.”