Why  Performance  Management  is  LISC’s  Most  Valuable Fundraising Tool

Ricki Lowitz, Director of Strategic Opportunities, LISC Chicago Carrie Cox Bradean, Consultant to LISC Chicago

Audio Broadcast or Toll Free Number 877-668-4490 | Event ID 710 493 551

Moderator

Ricki Lowitz Director, Economic Opportunities, LISC

Chicago

Carrie Cox Bradean Consultant to LISC Chicago

Speakers

Ingvild Bjornvold Director of Strategic

Initiatives

Why Performance Management is LISC's Most Valuable Fundraising Tool

Local Initiatives Support Corporation (LISC) November 20, 2012

About LISC Nonprofit financial intermediary, launched 1980 30 cities, 61 rural areas

Mission help community organizations transform distressed neighborhoods into good places to work, do business, and raise children

Original focus on real estate measured by:

LEVERAGE: Raised and invested over $12 billion, which leveraged an additional $36 billion from public and private sources

REAL ESTATE: 288,600 affordable homes and apartments and 46 million sq ft of community facilities and retail space nationwide

Starting 2000, shift in focus to comprehensive community development

Supporting lead agencies to: (1) engage residents in planning, (2) develop projects that address priority issues, (3) implement those projects

Financial Opportunity Centers: LISC’s  response  to  resident  concerns  about  jobs, making ends meet, prevalence of predatory lenders

Broader goals new units of measurement

FOC Model: 3 Core Services

1) Employment Services One-on-one employment counseling Job readiness workshops / job placement Access  to  education  /  training…

2) Income Support Services Food stamps (LINK card) Housing and energy subsidies Earned  Income  Tax  Credit  (EITC)…

3) Financial Services Pull / review credit report Establish household budget & balance sheet Connect  to  mainstream  financial  products…

LISC Financial Opportunity Centers (FOCs) Based  on  Annie  E.  Casey  Foundation’s  Center  for  Working  Families  model

FOC Results (Chicago): 2009 n = 1528

2010 n = 2137

2011 n = 2600

2012 n = 3794

% increase from 2011 to 2012

Credit Score Increases 31 285 572 898 57%

Net Income Increases 182 619 829 1,288 55%

Net Worth Increases 17 44 298 705 136%

FOC Funding:

2004 - 2007 Foundational Funding: Annie E. Casey Foundation 2006 - 2011 Foundational Funding: John D. and Catherine T. MacArthur Foundation 2011 - 2014 Foundational Funding: Social Innovation Fund (SIF) - $4.2 Million / Year

Other critical funding (LISC National and LISC Chicago):

United Way Citi Foundation JP Morgan Chase Bank of America Wal-Mart Foundation The Crown Family Philanthropies State Farm The Walter S. Mander Foundation W.K. Kellogg Foundation US Department of Housing and Urban Development US Bank City of Chicago

FOC Expansion:

From 4 FOCs  in  1  city  in  2004  …  to  66 FOCs in 22 US cities in 2012

FOC Funding and Expansion

DOCUMENTED CREDIT SCORE INCREASES

Not  necessarily  better  off…

• Placed  in  a  job                    not  making  enough  to  cover  expenses… • Eligible  for  benefits                    did  not  apply  or  get  approved…. • Reached financial stability, security, etc. no standard meaning

Insufficient proxies  for  Financial  Stability…

• Income level • Homeownership • Access to financial products (banked, unbanked) • Service level / service type / bundling • Accumulated savings

What does it mean to be better off ?

FOC Key Indicators

Best Option: COMPOSITE financial indicators

Increases in Monthly Net Income (monthly income – monthly expense)

Increases in Net Worth (assets – liabilities)

Increases in FICO Credit Scores (reflects  all  “recorded”  payment  activity)

Benefits: COMPOSITE financial indicators

Can celebrate movement – large and small

Can celebrate milestones – income exceeds expense; credit score 650

Can test assumptions: Do  job  retention  rates  increase  if  Net  Income  is  “0”  or  positive?

Can drill down on granular data elements (medical debt, as % of all debt)

Because tool is standardized, can compare: • one site to another • one year to another

Need STANDARDIZED Data Collection Tool: FOC Combined Financial Assessment (CFA)

CFA Guiding Principles: • Avoid redundancies • Leverage 3rd party (penalty free) credit report information (use to populate budget, balance sheet) • Allow for personal or household budgets and balance sheets • Flag credit report inaccuracies (high rates of identity theft) • Complete Basic Profile one time only – at first counseling appointment • Repeat Budget at logical intervals (change in employment, change in benefits) • Repeat Balance Sheet at logical intervals (debt settled/resolved) • Pull Credit Report/Score every 6 months (get permission up front)

DRAFT 9/9/11

Basic Profile

• Household Comp. • Products/ Practices • Red Flags

Credit Report/Score

• Participant Present? • Credit Report • Credit Score • Revolving Accounts • Foreclosure/ Bankruptcy • Collections • Delinquencies

CREDIT SCORE

Budget

• Monthly Income • Monthly Expense • Monthly Net Income (auto calculated) • Monthly Savings Target

NET INCOME

Balance Sheet

• Assets • Liabilities • Net Worth (auto calculated)

NET WORTH

Vision

• Vision Statement • Coaching Agreement • Steps to Get to Vision • Target Completion Dates

Job Placement

FOC Orientation

Job Readiness Training

Appt: Income Supports Counselor

Data Informed Client Flow:

Flow requires opportunities for one-on-one counseling

Bundling  doesn’t  occur  naturally  (patient vs. transactional)

FOCs can mandate all 3 services, if job is what client wants

FOCs have to sequence financial / income supports BEFORE meeting with job developer

Financial counselor has to complete CFA at 1st appt to establish baseline data profile

Financial  counseling  can’t  occur  on  the  first  day of service (too expensive); financial counselor has to do the CFA

With this flow, 70% of all residents will opt to continue working with financial counselor beyond 1st session

Appt: Financial Counselor

Appt: Job Developer

Appt: Financial Counselor

= What participant wants

FOC Flow Chart Key

= Group Activity

= Optional Next Step

= Employment Service = Financial Service = Income Support Service

= Ongoing Service

= Mandatory Next Step

Assessments  aren’t  everything: How do FOC counselors track their day-to-day work? LISC licensed a proprietary tracking methodology from nationally-acclaimed Project Match (PM)

PM established need for post-employment services in the 80s by tracking participants long term PM tracked each job as a unique  “story” with a beginning, middle, and end

PM counselors were required to manually update every story, every  month… until  the  “end”

A job that lasted 7 months might be coded as follows:

Starting 2004, LISC used PM methodology to build out financial  &  income  support  “stories”

Now that LISC sells its template through Social Solutions, we pay royalties to PM

STORY: Job at CVS 11/3/11 Open: New Placement

1/4/12 Interim: Still Working

3/7/12 Interim: Got an Increase in Wages

3/25/12 Interim: Still Working

5/27/12 Exit: Client Quit Job

Financial  Counseling  “Stories” Transacting Property Tax Appeal Home Loan

Checking Account Tax Exemption Debt Resolution

Stored Value Card (prepaid card) Transaction Dispute Auto-Title Loan

Saving New Credit / Debt Bankruptcy (Chapter 7)

Certificate of Deposit Car Purchase (Loan) Bankruptcy (Ch 11)

Educational Savings Account Credit Builder Loan (with match) Bankruptcy (Chapter 13)

Individual Development Account Credit Builder Loan (without match) Car Purchase (Loan)

Investment Portfolio Credit Card (includes store cards) Credit Card

Retirement Account Home Equity Loan/Line of Credit Debt Consolidation Loan

Saving Account Home Loan (purchase/refinancing) Debt Consolidation Program

Insurance Line of Credit Delinquent Bill (medical / non-medical)

Auto Insurance Other Formal Loan Informal Loan

Health Insurance Real estate investment (loan) Judgment (i.e. child support arrears)

Life Insurance Transportation Line of Credit

Administrative Issues / Errors / Disputes Car purchase (cash) Other Formal Loan

ChexSystems Error Car Purchase (Loan) Payday Loan

Credit Report Error Housing Real estate investment (loan)

Identification Acquisition Apartment Rental Rent-to-Own Plan

Identification Error Home Equity Loan Student Loan

Identity Theft Reverse Mortgage Tax Arrears

Exhaustive list of topics that might be addressed during financial counseling LISC consulted experts to develop Open, Interim, and Exit codes  for  each  “story” Asked, “What  could  possibly  happen  over  the  life  of  a  ___(checking  account,  loan,  etc)?”

Project  Match  “story  telling”  principles Keeps opinion and judgment out of tracking process; counselors just indicate status

Front line staff can check a box, instead of writing a lengthy case note; more time for service

Used to track only those issues that counselor and client agree to work on together

Requires counselors to track  all  “open” stories  until  the  issue  is  formally  “exited”

LISC applies an exacting lens to  the  question  of  when  a  financial  story  is  ready  to  “exit”

Sample: STORY: Home Loan (purchase/refinancing) Open Codes Interim Codes Exit Codes

Emphasized pros Emphasized cons Referred to provider(s) Applied Applied prior Approved prior

Emphasized pros Emphasized cons Referred to provider(s) Applied Approved Pending workout Loan in temporary modification (forbearance) Loan reinstated Loan in permanent modification Debt in consolidation Loan in default – at risk of foreclosure Loan in default – not at risk of foreclosure Loan in foreclosure Payments current Other

Decided not to pursue Application denied Account settled - paid in full Refinance Loan Deed in Lieu Pre-foreclosure sale (short sale) Home foreclosed (outstanding balance converted to income, resulting in tax liability) Other

PM Detailed Outcome Report

Are people coming back?

FOC  Customized  Reports… Three levels of inquiry (can see data in real time):

Does the staff understand the tracking system? Is the staff adhering to program protocols / guidelines?

• Self assessment tools for program managers - CRITICAL What’s  happening  to  clients  and  why?

Going  to  scale… All 66 FOCs use the same exact system (vet the same system) Can train efficiently; troubleshoot quickly (speak same language) More time for thoughtful analysis, innovation

LISC template available through Social Solutions 20% add-on to ETO SaaS pricing goes to LISC (royalty to PM)

Dashboard Workflow • Ability to see open stories • Ability to add new and update • Ability to see the full Detailed Outcome Report • Links to take action

Adding a Story • Ability to add multiple stories on the fly

– No longer updating service place

• Auto generated story number/identifier

Updating a Story • Basic successful contact details • Interim status • Ability to  set  an  “alert”  to  update  the  CFA