Citi and MEDA Release Taxes White Paper, Are Interviewed by San Francisco Treasurer José Cisneros

Calculating Figures pencil and eraser ready for doing taxes

With tax season now underway, there is a clear need to seize the moment to provide asset building services to the low-income community. That is why Citi and MEDA have just released a white paper, “Key Elements of Service Integration of Asset Building Services at Tax Time,” to showcase the success of their model. (Read the white paper.)

The interview that follows complements this white paper, with San Francisco Treasurer José Cisneros leading an interview to further delve into the power of this financial model put into action by MEDA and funded by Citi … and fueled by thought partnership.

Jose CisnerosJosé Cisneros
San Francisco Treasurer at City and County of San Francisco

José Cisneros is the elected Treasurer for the City and County of San Francisco. As Treasurer, he serves as the City’s banker and Chief Investment Officer, managing all tax and revenue collection for San Francisco. Appointed in 2004, and first elected in 2005, Cisneros has used his  experience in the tech and banking industry to enhance and modernize taxpayer systems and successfully manage the City’s portfolio through a major recession. Treasurer Cisneros believes that his role of safeguarding the City’s money extends to all San Francisco residents, and continues to expand his role as a financial educator and advocate for low-income San Franciscans through award-winning programs like Bank On San Francisco, Kindergarten to College and Smart Money Coaching. Cisneros serves as Vice Chair on the President’s Advisory Council on Financial Capability for Young Americans and Chair of the Cities for Financial Empowerment Coalition.

Luis.GranadosLuis Granados
Executive Director, Mission Economic Development Agency 

Luis Granados has proudly served as the Executive Director for the Mission Economic Development Agency (MEDA) since 1999. During his tenure, Granados has worked to create asset-development opportunities for San Francisco Bay Area low- to moderate-income Latino families. He serves on the Board of Directors for the National Association of Latino Community Asset Builders (NALCAB), the California Reinvestment Coalition (CRC) and the Chase Community Advisory Board (CAB). Granados has a Masters of City and Regional Planning from the University of California at Berkeley and a Bachelors of Science from the University of California at Davis.

Bob AnnibaleBob Annibale
Global Director, Citi Community Development and Inclusive Finance

Bob Annibale leads Citi’s partnerships with global, national and local organizations to support inclusive finance and community development through economic empowerment, focusing on responsible and accessible finance; financial coaching and asset building; neighborhood preservation and revitalization; access to college education; and small business and microenterprise development. He also leads Citi’s commercial relationships with microfinance financial institutions, corporations, investors and municipalities, working across Citi’s businesses and geographies to expand access to financial services in underserved communities. In 2014, Annibale was honored as a White House Champion of Change for his work leading Citi’s programs promoting immigrant integration and citizenship in the U.S.

JC: Based on your experience, what strategies work for low- and moderate-income Latino communities when it comes to reducing debt, increasing income and savings, and improving credit?

LG: For 42 years, MEDA has helped to create long-term economic stability for low-income Latinos. Two-thirds of our clients are immigrants, and it’s important that we help our clients navigate the U.S. financial system through banking, establishing and building credit, doing taxes and more. Our model places financial education and coaching at its core — no matter who comes through our doors, we want to make sure they leave understanding how to improve credit, reduce debt, increase savings and increase income. Through our coaching model, we help clients establish an individual financial plan and work toward goals they have set. We’ve learned that tax time is a huge moment for thinking about finances: with refunds of often thousands of dollars to leverage, we coach clients through using this to establish savings, or open a secured credit card to establish a credit history for the first time. Then automatic monthly payments — like an electric or cellphone bill — are paid off via this card. In under a year, a good credit score can be achieved, putting clients on the road to economic growth. Our advice is to take advantage of these “financial moments” — whether a new job or a tax refund — and create your financial plan for short- and long-term goals.

BA: We know that when it comes to expanding financial inclusion for Latino communities, there are no one-size-fits-all solutions. “Latinos” are not a single homogenous group — context matters, culture matters. That’s why we do research that provides us and our partners with a granular, disaggregated view of the landscape of complex challenges that Latino and other communities of color face; it enables us to make sure that the programs we support — whether local or national in scope — are meeting their needs in a focused and targeted way.

For example, when we released the 2013 Immigrant Financial Services Study with the NYC Department of Consumer Affairs Office of Financial Empowerment (OFE), we learned that just 43 percent of Mexican immigrants in New York City had bank accounts (compared to 65 percent of Ecuadorians), and that their integration into the financial mainstream took far longer than other Latino groups because of real and perceived barriers to information, culture, language and trust.

As a result, we joined with OFE and the Mexican Consulate to launch the Ventanilla de Asesoria Financiera — a program which offers financial empowerment services, like one-on-one counseling, in a trusted environment. Since the program’s launch in 2014, the Ventanilla program has served more than 35,000 participants in the financial coaching group sessions, and more than 2,300 one-on-one financial counseling sessions. The services themselves were only part of what made the program successful — it was the integration of those services into a familiar, trusted and convenient setting that lowered the barriers to participation.

JC: What are the checks and balances to ensure that asset building is long term?

LG: MEDA offers one-on-one coaching to customize a family’s financial plan, which includes short- and long-term goals. We want our clients to be thinking long term from the beginning, for this motivates them makes the small, everyday choices — like not spending $3 on a cup of coffee — that make sense for a long-term savings goal. Our coaches follow up with clients every three months to check in on their progress, offer assistance and to help revamp the plans as needed. MEDA and the Mission Promise Neighborhood are working through a whole family, two-generation approach to asset building — we hope that parents and their children will become financially empowered and financial goal setting will be a regular part of life. Financial Capability is part of our young adult workforce programs, ensuring that young people who are earning income for the first time are already thinking about saving and long-term financial goals.

BA: We’re always learning more about what works best to create successful, enduring asset-building behaviors for the long term. One approach is through early access — such as with the Kindergarten to College (K2C) program, where we worked with Treasurer Cisneros and the City and County of San Francisco to provide the first-ever universal child’s savings account. For some of these kids, the matched savings account they receive may be the first bank account in their family; it introduces both the means and motivation for saving, and pairs that with a vision of planning for the future.

Another route is by integrating financial empowerment into a family’s existing routines – meeting them where they are. Last year, we worked with the Food Bank for New York City on a program called Food & Finances, which embeds financial empowerment services into their school-based anti-hunger program — targeting the link between financial insecurity and food insecurity. The program made financial empowerment accessible and convenient for a segment of the population — primarily Latina mothers — who were not being as widely served at the City’s Financial Empowerment Centers.

Most recently, we’ve just launched a project with NYC’s Office of Financial Empowerment, the Parsons Design for Social Innovation and Sustainability (DESIS) Lab, the NYC Center for Economic Opportunity and the Mayor’s Fund for NYC called Designing for Financial Empowerment that is using an approach known as “service design” to directly take this challenge on. We’re collaborating with every stakeholder of NYC’s financial empowerment centers — from the people who provide them to the people who use them — and employing a multidisciplinary design-based approach to making their services as effective and accessible as possible. We expect to learn a great deal about what works just from the discovery phase of this project alone.

JC: What is the need you see in the low-income community for Volunteer Income Tax Assistance (VITA) sites, such as MEDA’s four San Francisco locations that prepare taxes for free?

LG: VITA sites are … well, vital. It can cost hundreds of dollars to get your taxes prepared. For working families who are making less than $54,000 annually, that’s a big financial burden. The demand for our VITA sites in San Francisco has been enormous — we see about 4,000 clients in a few short months during tax season. Also, our staff specializes in understanding the unique needs of low-income immigrants. They are well versed in such items as the Earned Income Tax Credit (EITC), for which many of our tax clients are eligible, plus things like knowing the legality of claiming dependents who reside outside of the U.S. But more than just tax preparation, we see VITA sites as crucial entry points into the mainstream financial system and asset building programs like we have built at MEDA through our “Taxes Plus” model. We hope sites throughout the country can create similar models to make sure the tax time opportunity is maximized.

BA: We couldn’t agree more about the importance of linking VITA to financial empowerment — and MEDA’s recent research confirms the strong relationship between the two — and we’re also learning that the need for greater capacity goes hand-in-hand with a need for greater awareness. In New York City, only 3 percent of those eligible for the EITC took advantage of the VITA sites — roughly 77 percent paid an average of $250 to file their taxes, and missed out on the pipeline of other financial empowerment services that many VITA partners offer.

That’s why we joined with the NYC Department of Consumer Affairs (DCA) to expand and enhance the City’s annual tax credit campaign. We funded capacity-building for three different VITA site providers, and provided in-kind support for the City’s expanded advertising campaign. The campaign resulted in a 50 percent increase in the number of VITA filers, putting more than $250 million in fee savings and tax credits in the pockets of roughly 150,000 financially vulnerable New Yorkers.

This is the second year we are working with NYC on their tax credit campaign — this year, they are introducing improvements generated by our first Designing for Financial Empowerment project, which was focused on VITA: the first is a new brand identity for all the VITA sites in the city — “NYC Free Tax Prep” — which unites all the VITA partners under a common look and feel that conveys trust and professionalism; the second is an employer-based VITA solution that allows employees to file their taxes at work instead of taking a day off, in addition to taking some of the strain off the VITA sites themselves.

JC: What is the value of free financial coaching for low-income residents of San Francisco?

LG: Financial education and coaching isn’t a formal part of our nation’s educational or workforce system — and it’s even less accessible for new immigrants. The cost of a financial planner is prohibitive, especially for the low-income community; but it is actually more important for low-income families to gain financial knowledge, so that they have the opportunity to climb the economic ladder, too. Offering these services for free is the only way most of the low-income community can access this much-needed financial information. Having a coach by your side to keep you on track, motivate and provide accountability is a proven method of achieving success.

BA: Access to free financial coaching is critical for enabling individuals and families to build assets and strengthen their financial resiliency. The FDIC’s Economic Inclusion advisory committee, of which I’m a member, found that 7.7 percent of households in the U.S. were unbanked, and 20 percent were underbanked. The CFPB tells us that more than one in 10 consumers are “credit invisible,” with another 19 million considered “unscorable” — a problem which disproportionately affects Black and Latino communities. And according to data from Family Assets Count, a project we launched with the Corporation for Enterprise Development (CFED), almost half of all U.S. households do not have enough savings to sustain three months at the poverty level in the event of a shock to income, like the loss of a job or a medical expense.

The need is clear for more than just financial education — we need to expand access to high-quality counseling expertise, connect that expertise with safe, affordable financial products and services, and work to make sure that both are integrated into trusted and convenient settings.

JC: What is the role of banks, such as Citi, when it comes to funding nonprofits’ financial services for the low-income community?

LG: MEDA could not offer its free asset building services to the low-income community without funding from such partners as Citi. It’s as simple as that. We are grateful for the financial support, but we also look to Citi as a thought partner as we innovate, expand and evaluate our model for bringing integrated financial capability and asset-building services to the community. Citi has paved the way through its investments, research and coalition building to help make financial education and coaching a national priority.

BA: Citi Community Development’s focus is on building more financially inclusive cities. We do this by forming partnerships with municipal governments, nonprofits and community organizations to develop programs that improve access, affordability and resiliency for vulnerable households and communities.

The kinds of partnerships we look for are ones in which our role is more than just that of the passive funder — we want to be an active thought partner. Funding can be how we enable partners to unlock innovation or explore new approaches, but it’s just the beginning. Our most successful relationships are when we work directly with municipalities to co-design, scale or replicate programs that meet the needs of their residents, as with the City of San Francisco for Kindergarten to College; and when we can tap into the subject-matter expertise of nonprofits like MEDA, who have so much knowledge of the local community and can act as a trusted intermediary.





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