With financial capability innovations and digital tools such as Hellowallet, the Doorway to Dream’s Fund Financial Entertainment Portal and Banco Azteca’s La Familia Luchon emerging in the Global North and South alike, it is an exciting time for organizations looking to develop better ways to expand the reach and deepen the impact of financial education. Fueling this innovation process, especially in the U.S. non-profit sector, is one particular gem of the past several months, the Center for Financial Services Innovation (CFSI)’s Financial Capability Innovation Fund Grant Awards.
CFSI is a US-based organization founded in 2004, which promotes financial access and financial capability amongst low-income, unbanked and under-banked consumers. The innovation grants are the product of a $1.5 million donation from Citi Foundation and several other US financial institutions. In a webinar last week, CFSI formally announced the results of their selection process for the most innovative proposals submitted in response to their September 2010 RFP.
They also released a comprehensive report on the learnings from the proposals that were submitted titled “Making the Shift from Financial Education to Financial Capability: Evidence from the Financial Capability Innovation Fund" that is definitely worth checking out. The report and the webinar provide an overview of the current scenario in financial capability particularly for nonprofits in the United States.
This sector has seen an explosion of activity as small organizations look to help low-income consumers cope with the impacts of the US and global financial crises. Four core trends emerged from the 246 proposals received by the fund: 1) cross-sector partnerships; 2) improved saving behavior; 3) intent to scale financial counseling and coaching programs and 4) a focus on behavior change driven by incentives. In the end, funding was awarded to five programs that were the most innovative amongst the bunch and which reflected the qualities that CFSI feels are most critical to success in financial capability, namely: 1) relevance (to the lived experience of the consumer); 2) timeliness (taking advantage of teachable moments in the person’s life); 3) actionability (teaching people things they can apply in the immediate term); and 4) being ongoing (the program has an eye to sustainability, long-term relationships and support over the long haul). The five organizations with the award winning models per CFSI included:
- Consumer Credit Counseling Service of Delaware Valley — looking at social commitments and text alerts helping consumers reduce debt
- Co-opportunity Inc. — leveraging technology via an online platform to expand their volunteer budget counseling program
- Filene Research Institute — looking at how incentives in the form of interest rate reductions for consistency in loan payments effect payment behavior
- Mission Asset Fund — franchising their Cestas Populares program which pairs peer-loans with peer-education for immigrants
- Grow Brooklyn and Piggymojo — mixing goal visualization, social dynamics and mobile tools to transform impulse buys into impulse savings
While none of the award-winning interventions had a youth focus per se, many of these creative, behavior change approaches could certainly be adapted to the youth that are YouthSave’s target. Considering the prized qualities of leveraging technology, linking products and financial education, and incorporating the principles of behavioral economics (automation, default setting, social commitments etc.) the interventions serve as a rich source of ideas for youth financial education propositions as well. Cracking the behavior change juggernaut, especially for people living on low, irregular and unpredictable incomes, is no small feat. Looks like the CFSI folks are making tremendous strides in this direction!
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Anya Maria Mayans