Program helps families become financially savvy

By Lynn Sygiel, editor, Charitable Advisors

Ten years ago, Terri Ottinger was laid off, raising two elementary-aged daughters alone and trying to save the family home from foreclosure. Ottinger and the girls’ father had split, and more than anything, she wanted to keep the house they had owned together to give her children a stable lifestyle.

Not knowing how she could ensure that, she saw a flier for the Family Success program and applied to take part. A decade ago, that program, located at the Hawthorne Center on Indianapolis’ Westside, changed her life. What the program taught about budgeting and credit has stuck with her.

It helped her stabilize her finances, and since then, she has purchased a different home on her own, gotten a job with Wayne Township schools, started a savings account and paid her bills on time while boosting her credit score to over 700.

Today, the Hawthorne Community Center is one of eight Centers for Working Families in Indianapolis. Started with an Annie E. Casey Foundation grant in 2004, and originally called Family Success, the center was housed at Washington Community High School.

Indianapolis was a logical pilot site for the Family Success program, an outgrowth of the Casey Foundation’s Making Connections project. That work was already happening locally through a collaboration with Community Solutions Inc., a local community development consulting firm. Lena Hackett, CSI’s president and founder, said the Baltimore-based foundation’s research showed a strong link to fragile families being successful if they could optimize all of their revenue streams and have access to quality financial coaching.

Today, there are 80 centers in more than 30 cities around the country managed by the Local Initiatives Support Corporation (LISC), one of the largest organizations supporting projects that revitalize communities. A recent indepen­dent study by the Economic Mobility Corporation found that Center for Working Families participants have greater success meeting their financial goals.

The key to their positive outcomes? The centers do more than simply offer employment assistance. Locally, to meet the needs in neighborhoods, more focus has been put on credit and budgeting. In addition, United Way is now a funding partner.

Tom Orr, senior program officer at LISC, has overseen the work in Indianapolis, and started with Hackett at CSI. He said the costs per center are $150,000 to $175,000 annually.

“We always say it’s not just another program, just a new way of organizing services for low-wealth or low-income families. It’s a bundle of services that consists of financial coaching, employment and career coaching and income supports broadly defined. Oftentimes it can mean the difference between stability and living on the street,” said Orr. He said it helps people get steady, living-wage employment, boosts their credit ratings and increases net income and net worth.

There are three main services bundled together: one-on-one financial counseling, employment assistance and help accessing public benefits that supplement work income. Clients are coached over the long term. LISC believes that no single strategy combats all the complex and deeply rooted factors of poverty, and holds true for individuals struggling to balance a household budget.

In January, United Way took the lead on financial sustainability for LISC’s model. LISC had had the benefit of significant federal funding for many years, but that is no longer available. Local funders also played key roles.

“We had local funders who really got it, the Clowes Fund, the Indianapolis Foundation and Pulliam Trust. Without their help, I don’t know that we could have done this,” Orr said.

To ensure ongoing support, Orr said he learned it was important to clearly communication to funders that this change doesn’t happen overnight.

“One lesson we learned is that this work takes a long time. The anecdotes that we share through the network are that this work takes two, three, four or five years for families really to make significant progress. And it’s not a straight line. Oftentimes, it’s just one step forward and one step back,” said Orr.

LISC provides opportunities for the eight centers’ staffs to network. All three coaching strands – employment, financial and supports – have roundtables to share information, peer exchange and in-service training. With the exception of the financial coaches who meet monthly, each group meets every other month. Site managers meet quarterly.

Over time, the process for a nonprofit to become a Center for Working Families has evolved and gotten more rigorous. It includes a pitch to stakeholders who help determine its inclusion. The newest organization to offer services is PACE, a nonprofit that “provides a variety of services to help offenders, ex-offenders and their families to lead productive and responsible lives in their community.”

According to Rhiannon Edwards, the executive director, the initial conversation was in 2009, when LISC was looking for an Eastside partner.

“At that time, we felt like, ‘We’re not really ready for that. We’re still trying to navigate what services our clients need to really be successful.’ So even though we’ve been doing this for a long time, we really looked at our data. We don’t just want to have an employment program, we wanted to figure out exactly what makes our population successful,” said Edwards. “We’ve realized as we’ve grown, we were delivering all the services that are being delivered in the Center for Working Families sites, other than the financial coaching.”

Once PACE decided there was potential, the first step was to apply for a planning grant to determine how the program could work with its existing services. Initially staff members worried that serving all of their clients might be impossible. Annually, PACE has 1,500 new clients.

“We were saying, ‘We’re a little nervous because our world is very different from the other organizations’ world.’ We want to make sure we’re not making a mistake trying to do this,” said Edwards. With the help of a consultant, the nonprofit created a logic model to serve as a road map for staff.

“People come to us in so many different times in their life, they’re not all ready to go down the Center for Working Families track. We deliver the same service that we delivered before we got this designation, we just have a process that decides when we enter them into the Center for Working Families database,” said Edwards.

Key to the program’s success, Orr said, is hiring skilled financial coaches. These are people who have the ability to work one-on-one with families on their finances and help with budgeting, credit repair and debt management.

“Credit is just a big deal. We’ve learned a lot about it over the years. It affects everything. People with bad credit pay more for everything. It affects their employment, it affects their housing prospects. There are just lots of ramifications to having bad credit. Moving credit scores is still a slow business. It might take a couple years or more,” said Orr.

Four years ago, LISC’s Chicago office developed a model called the twin-account program as a credit-building tool. A client applies for a $300 loan at a credit union that is a locked account. Monthly the client makes a $25 payment until the loan is paid off. The payments are reported to the three credit bureaus.

“At the end of the term, if they’ve paid all their payments on time, we’ll match. They then have $600 that they can use to invest in crediting building or pay down their debt. We have been fairly flexible in how they use it, we don’t want them to blow it, but we encourage them to use it so they can invest in a secure credit card or pay down debt or put it in a savings account. The coach works with them to make that decision,” said Orr. “If a person understands or can see that they’re making that kind of progress even if it’s modest, just moving from the 500s to the low 600s, they think, ‘Well, what else can I do to bump it further.’”

In the past five years in Indianapolis, 13,335 individuals have received one core service, and 10,285 have received bundled services. Of this number, 1,849 increased their credit scores. According to Orr, an estimated 53 percent of the people return for services, and key to this return is providing some type of on-going programming.

“If they’ve established a relationship with a coach, that’s what we want. We don’t want a case that is ‘closed.’ If the person is engaged in healthy budgeting, they may have passed the point of crisis, but working with a financial coach in that same way that people work with a financial adviser on their long-term financial goals. Especially, if they are beginning to put money away in a 401(k) or 527 college savings account, they’re growing assets and managing them. That’s what we hope to see,” Orr said.

Edwards said one of the hurdles they are learning how to overcome is how to get client buy-in. At PACE, a client doesn’t start with financial coaching. Most would never go to a financial coach because they have multiple priorities – finding a place to live, getting a job and re-entering society.

“So the first time the financial coach meets them is usually in the job readiness area, where he’s like, ‘Look, you wonder why I’m here talking to you? Here’s why I’m here talking to you. You are here to get a job, but you have bills, you already have financial commitments. You’re going to come in here and say, “Give me any job.” But in reality, you need to figure out what you need to make so you can pay child support, so you can pay probation. I’m here to help you figure out.’”

PACE started the program in January, and currently its financial coach has a caseload of 50. Most clients arrive without bank accounts, and that is part of the service that is provided. Workshops include sessions with banking partners to help clients open accounts.

“Before Center for Working Families we were trying all these different things to make sure that our clients didn’t go back to jail. Which is still what we’re doing, but now they can say, ‘Hey, you’re still working. Why don’t you come in and let’s do your budget again and see where you’re at, and see if you’re ready for something else.’ It’s just different mechanisms for us. So it gives us some different tools to pull out of the toolbox to figure out.”

While initially Edwards was skeptical, PACE’s criminal justice partners have been open to financial planning. She thought they would wonder why the nonprofit was doing financial coaching when they should have been getting clients jobs or off drugs. Once a client completes a budget, determining what can be paid to the courts, a copy of the budget is sent to probation and parole.

“And that’s good because Probation and Parole is getting their money and the system can keep moving, but then they can really see that the client cannot pay $100 a week, they can only pay $40,” said Edwards.

“They’re not like other people where you can say, ‘Do you want to buy a house?’ For a lot of them, it’s like, ‘Yeah, right. I’m nowhere near that.’ You cannot come at them with some of those big ideas. You’ve got to come a little bit smaller. So it’s being able to say, ‘Well, we can do a budget and see what we can do with your home detention fee,’ then they buy in. Then we can come back and say, ‘OK, let’s look at your credit report.’”

Edwards said that while the population her staff works with has other issues, ultimately all CWF clients have similarities.

“All our populations are coming from the same place, and that’s poverty. It takes a lot of work to get someone out of poverty. Now the road they travel is very different. But I think it’s all the same thing. They’re traveling that road and you just have to help navigate those barriers along the way.

Remember, Ottinger? When enrolled in Family Success, she took a tax course. Every year since then, she and her daughter volunteer at the Hawthorne Community Center. They, along with other volunteers, complete Hawthorne area-residents tax forms for free. She says that it’s her community service and desire to pay it forward.

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