Financial Empowerment Centers

September 23, 2010

Presenter:Cathie Mahon, Deputy Commissioner for Financial Empowerment

Office of Financial Empowerment (OFE)Office of Financial Empowerment (OFE)

To educate, empower, and protect New Yorkers with low incomes.

• Launched by Mayor Bloomberg in December 2006 as the first program under the Center for Economic Opportunity.

• First local government initiative in the nation focused exclusively on anti-poverty and financial empowerment efforts for those with low incomes.

EducateEducate● Increase access and strengthen quality of financial education services● Coordinate education and large-scale public awareness campaigns

EmpowerEmpower● Research “supply and demand” of safe and affordable financial products and services● Partner with financial institutions to develop and implement innovative asset-building products

ProtectProtect● Protect workers with low incomes from unfair and predatory practices through targeted advocacy and enforcement

OFE’s Strategic PrioritiesOFE’s Strategic Priorities

• 825,000 NYC adults with no bank account- Nearly half (48%) of unbanked households in New York

City are in one of 10 neighborhoods; 79% are in one of 20 neighborhoods

• $4,000 or more in credit card debt held by 59% of households in low income NYC communities

- In the top 10 unbanked neighborhoods, over 70% of credit card holders are using more than 30% of their available credit, which has a negative impact on their credit score.

• 48% of NYC households have $0 in discretionary income

Citywide Financial Services StudyCitywide Financial Services Study

Financial Empowerment Center ModelFinancial Empowerment Center Model

Selection of non-profit organizations with expertise in financial education and ties to the community

Co-location with multi-service, multi-purpose organizations and sites providing comprehensive approach to those in need

Multiple “mobile” locations throughout City

Receives rollover calls from 311 operators as well as referrals from community partners

Tracking 40 client milestones across 5 financial counseling service areas

Delivery ModelDelivery Model

• The City’s infrastructure provides DCA and OFE with numerous “touch-points” for reaching individuals.

• Linkages to strategic moments like getting employment, receiving emergency assistance and receiving services around homeownership or foreclosure prevention counseling.

• Current partnerships with:

NeighborWorks America, the Center for New York City Neighborhoods, Department of Homeless Services, Human Resources Administration, Small Business Services, Department for Youth and Community Development, the New York City Housing Authority, the Department of Corrections and the Department of Probations.

Financial Empowerment Center LocationsFinancial Empowerment Center Locations

Over 18 Locations in 5 Boroughs

Client ProfileClient ProfileGender

Female 61%

Male 39%

Race

African-American/Black 47%

Latino/a 36%

Other 16%

Family Composition

Married/Common Law 26%

Divorced/Separated/Widowed 13%

Single 61%

Living Arrangements

Rent 63%

Own 10%

Staying with Family/Friends 15%

Shelter/Homeless 4%

Demographics

• Average age of clients is 41• The majority of clients are

women• Nearly half of clients are

African-American/Black• A majority of clients rent

(63%) although the percentage that is staying with family or friends has been steadily increasing.

Income Distribution of FEC Clients

23%

7%

71%

<$20,000

$20,000-$39,999

$40,000 or more

Income and EmploymentIncome and Employment

Employment Status of FEC Clients

5%

35%

17%

6%

37%

Full-time

Unemployed

Part-time

Disabled

Retired

Average Income: $16,153

Median Income: $13,008

Successes to DateSuccesses to Date

• 7,098 Clients Served

• 12,009 Counseling Sessions

• 4,705 Credit reports reviewed

• 3,123 Budgets created

• $2,261,760 In debt reduced

• $220,380 In savings

*As of August 31, 2010

Citywide, 94% of all clients have achieved at least one financial milestone.

Outcomes: Reduce DebtOutcomes: Reduce Debt

• 57% of clients are in the debt service plan

Average Debt: $38,314

Average Non-Mortgage Debt: $25,695

Median Debt: $10,000

• Over 200 clients have significantly reduced their debt• Average debt reduction: $8,125• Average # of sessions: 4.6

Over $2,200,000 in debt reduced!

Average Debt Reduced by Time in Program

$6,721$2,897

$18,053

$2,308$0

$4,000

$8,000

$12,000

$16,000

$20,000

< 1 month N=54

1 - 2 months N=71

3 - 4 months N=35

5+ months N=75

Outcomes: Establish/Improve CreditOutcomes: Establish/Improve Credit

• 63% of clients are working on establishing or improving their credit

Average credit score at intake: 593

• 82% have reviewed their credit report and/or credit score

Positive Change in Credit Score No Change in Credit Score

• Avg # of Sessions: 4.55 • Avg # of Sessions: 1.75

• Score Increase: Avg: 41 Median: 31 • Avg Score Increase: N/A

• Avg Debt: $18,425 • Avg Debt: $28,066

Outcomes: Increase SavingsOutcomes: Increase Savings

• Only 21% of clients report having any savings at time of intake

• Median savings: $1,132

• 18% have included a savings plan in their budget

205 clients are saving money regularly

Total value of increased savings: $220,000

Average Dollars Saved by Time in Program

$1,805

$866

$879

$533

$0

$400

$800

$1,200

$1,600

$2,000

< 1 month N=58

1 - 2 monthsN=72

3-4 months N=35

5+ months N=46

Outcomes: BankingOutcomes: Banking

• 28% of clients are unbanked at intake

• Overall, 20% of clients have a banking service plan

• 181 clients have opened either a checking or savings account

Opened a Bank

Account3%

Have a Bank Account

72%

Unbanked28%

• 75% of clients completed an initial budget

• Over 200 clients report living by their budget

Outcomes: Budgeting*Outcomes: Budgeting*

* As of 6/1/10, this outcome has been refined to “increased income to expenses ratio”

Clients working on budgeting

12%

6%

6%

75%

Completed estimatedbudget

Completed realisticbudget

Revised budget

Living by budget

Current Evaluation EffortsCurrent Evaluation Efforts

• Data Sharing with City Agencies

• Credit Score Project

• Anticipated Quasi-experimental Study

42 Broadway, New York, NY 10004www.nyc.gov/consumers