New Report: Expanded Access to Financial Coaching Services Promises Greater Economic Security to Individuals and Families

NeighborWorks America and the Citi Foundation Urge Changes Including Adding Financial Coaching to a Broad Range of Related Services
Nearly 50% of Participants Improved Credit Scores, 97% of Participants Who Didn't Understand a Credit Report Gained That Knowledge, 2/3 of Participants Were Women

PR Newswire

WASHINGTON, June 24, 2013 /PRNewswire-USNewswire/ -- Today NeighborWorks America and the Citi Foundation released a report, "Scaling Financial Coaching: Critical Lessons and Effective Practices,"at the Capital View Conference Center in Washington, DC that spotlights how financial coaching can level the economic playing field by offering the information and support that helps consumers reduce debt, increase savings, and reach their financial goals. The high-level roundtable explored the implications related to advancing financial coaching as a means to ensure greater financial security for low- and moderate-income individuals and families. Participants included senior representatives from federal offices, researchers, funders, and practitioners.

Notably, the findings demonstrated that women and those who had a longer coaching relationship were more likely to increase their credit scores. At a time when more women are not only primary caregivers, but breadwinners, this research suggests financial coaching can inform and support them in a powerful, long-term way that benefits not only them, but their families.

NeighborWorks America, which creates opportunities for people to live in affordable homes, improve their lives and strengthen their communities, released the report jointly with the Citi Foundation. The report summarizes the findings of the Financial Capability Demonstration Project, a $5 million, 2.5 year initiative begun in mid-2010. The initiative significantly expanded the number of financial capability programs and practitioners that provide low- and moderate-income people with the critical financial education, coaching and planning services needed to allow families nationwide to build savings, pay down debt and better manage their finances throughout their lives.

Eileen Fitzgerald, chief executive officer at NeighborWorks America, said, "NeighborWorks America's work with the Citi Foundation on financial capability empowers individuals to achieve financial independence and save for long-term goals. Whether their goal is to save for homeownership, pay back student loans, or something equally as important, individuals excel with financial coaching and are able to bypass economic inequalities."

To achieve the goals of the Financial Capability Demonstration Project, NeighborWorks America and the Citi Foundation supported access to training courses for 1,500 practitioners to increase their knowledge in creating and delivering effective financial capability and financial coaching programs. In addition, over a two-year period, the partnership provided grant support and an integrated set of training, technical assistance, peer learning and evaluation services to a learning cohort of 30 nonprofit organizations that were initiating new or scaling existing financial coaching programs. Eleven of these organizations were NeighborWorks organizations, and the selected organizations were geographically diverse, representing 24 communities and 17 states across the country.

Brandee McHale, Chief Operating Officer of the Citi Foundation said, "We were interested in tracking the impact of financial coaching and gaining a deeper understanding of what works and why. Results from evaluation data collected by the project's 30-organization learning cohort offers promising evidence that many low- and moderate- income consumers who received financial coaching were able to save money, pay down debt and improve their credit scores."

A comparison of clients' financial status at the start of coaching with their status after coaching was underway revealed a substantial positive impact.

  • 97% of participants who didn't understand a credit report gained that knowledge.
  • 54% of clients with no savings at the start of the project had some savings after participation in coaching, resulting in median savings of $668.
  • 48% of clients who had savings at the start of the project increased that amount over time, with a median increase of $938.
  • 55% of clients who had unsecured debt when they began coaching decreased the amount of that debt, with a median decrease of $3,005.
  • 47% of clients raised their credit scores over the course of the project, with a mean increase of 59 points.
  • 2/3 of participants were women, and 51% of female clients increased their credit scores while 39% of males did so; and 58% of clients who had 10 or more months in coaching increased their credit scores, while 29% with less than five months were able to do so.

The report offered key recommendations such as including financial coaching in a broad range of related services to effectively reach and retain clients and to build financial security, such as human services, workforce development, foreclosure mitigation programs and individual development accounts. It also advised strengthening the impact of consumer information mandates by linking information on coaching resources to education materials related to credit reporting, student loan educational materials, and other financial issues.

To read the executive summary and full report, go to www.nw.org/fincap.  At the convening, NeighborWorks America and the Citi Foundation showed a new video highlighting financial coaching's impact on participants. To see the video, go to www.nw.org/fincap.

About NeighborWorks America
For 35 years, NeighborWorks America has created opportunities for people to improve their lives and strengthen their communities by providing access to homeownership and to safe and affordable rental housing. In the last five years, NeighborWorks organizations have generated more than $19.5 billion in reinvestment in these communities. NeighborWorks America is the nation's leading trainer of community development and affordable housing professionals.

About the Citi Foundation
The Citi Foundation is committed to the economic empowerment and financial inclusion of low- to moderate-income individuals and families in the communities where we work so that they can improve their standard of living. Globally, the Citi Foundation targets its strategic giving to priority focus areas: Microfinance, Enterprise Development, College Success, and Financial Capability and Asset Building. In the United States, the Citi Foundation also supports Neighborhood Revitalization programs. The Citi Foundation works with its partners in Microfinance, Enterprise Development, and Neighborhood Revitalization to support environmental programs and innovations. Additional information can be found at www.citifoundation.com.

SOURCE NeighborWorks

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