New findings reiterate the need for expanded access to financial coaching services that result in greater overall economic stability for low- to moderate-income families and the country at large. And the key to that process is educating the coaches and assisting more women.
Nearly 50% of the participants in a study conducted by NeighborWorks America and the Citi Foundation reported improved credit scores. Up to 97% of those who did not understand a credit report gained needed knowledge.
The report summarizes the findings of the Financial Capability Demonstration Project, a $5 million, 2.5-year initiative launched in mid-2010 to expand the number of “financial capability programs and practitioners” available to low- and moderate-income people.
Services included critical financial education, coaching and planning services needed to build savings, pay down debt and better manage personal finance issues during their lifetime.
Through the 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.”
Starting in 2010 the partnership provided grant support for an integrated set of training, technical assistance, peer learning and evaluation services to 30 nonprofit organizations that offer financial coaching programs, of which 11 beneficiaries were NeighborWorks member organizations. Nonprofits selected operate in 24 communities and 17 states across the country.
The initiative was an effort to empower individuals to achieve financial independence and save for long-term goals, said Eileen Fitzgerald, chief executive officer at NeighborWorks America. The joint study indicates “individuals excel with financial coaching and are able to bypass economic inequalities,” she said, despite differences in their personal goals.
Findings from the “Scaling Financial Coaching: Critical Lessons and Effective Practices” report based on data gathered by the joint initiative also reiterate that women are the most interested in gaining financial health knowledge. Two-thirds of those who sought financial coaching assistance were women.
In addition to those who had a longer coaching relationship, women “were more likely” to increase their credit scores. “At a time when more women are not only primary caregivers, but breadwinners,” the report notes, findings suggest financial coaching can empower them and their families long-term.
A before-and-after comparison of the financial status of those who received financial coaching shows 54% of clients with no savings at the start of the project had roughly $668 in savings after the education sessions were completed, while 48% of those who had savings increased that amount over time to about $938.
According to Brandee McHale, COO of the Citi Foundation, “Tracking the impact of financial coaching and gaining a deeper understanding of what works and why” is
Evaluation data collected by the nonprofits participating in the project, she said, “offer promising evidence that many low- and moderate-income consumers” benefited from financial coaching.
Among others, the report recommends “including financial coaching in a broad range of related services,” such as human services, workforce development, foreclosure mitigation programs and individual development accounts, as well as linking information on coaching resources to education materials related to credit reporting, student loans and other financial issues.
