“From Promise to Practice: Scaling Innovations for Low-income Families”
For those of you who joined us at “From Promise to Practice: Scaling Innovations for Low-income Families” in Washington, DC on April 24, thank you for your contributions to an insightful conference. For those who were unable to attend, we hope you will find this recap informative, and we look forward to this important conversation continuing to unfold.
LISC President and CEO Michael Rubinger opened the event by welcoming the nearly 100 guests to a program intended to provide “lessons and a roadmap” for scaling up promising innovations. Over the past eight years, with philanthropic support and an award from the federal Social Innovation Fund, LISC has scaled up its network of Financial Opportunity Centers from a handful of Centers in Chicago to over 71 Centers in 23 cities today. In his keynote remarks, FDIC Chairman Martin J. Gruenberg called the integrated services approach adopted by LISC and event co-host United Way Worldwide “brilliant in its simplicity”—and extremely timely, given the number of Americans who remain unemployed, underemployed, or disconnected from the mainstream financial services market. The FDIC’s biannual National Survey of Unbanked and Underbanked Households found that eight percent of U.S. households are unbanked (defined as not having any account at an insured depository institution), while 20 percent of households are underbanked (defined as holding an account, but nonetheless relying on “alternative financial services” providers such as check-cashing services, pawn shops, and payday lenders).
With these challenges to financial stability as a backdrop, LISC’s Senior Vice President for National Programs, Kevin Jordan, gave an overview of LISC’s Financial Opportunity Center work, which in many cities is supported or co-managed by local United Ways. Based on the Annie E. Casey Foundation’s Center for Working Families model, the Financial Opportunity Centers provide an integrated set of services—employment services, financial coaching, and income supports—to low- and moderate-income neighborhood residents. The community-based institutions delivering this model focus on several key indicators: job placement, job retention, net income, credit score, and net worth. The presentation emphasized net income as the place where asset building starts: individuals cannot successfully and sustainably save for emergencies, build wealth, and plan for a career path until they have more money coming in each month than they have going out. In the same way that net income drives asset building, credit score drives financial health—and employment, as employers are increasingly using credit checks as part of their hiring process. While a rigorous evaluation is underway as part of the Social Innovation Fund, early data gathered by LISC indicate that the impact of the Financial Opportunity Centers’ integrated services approach is powerful. Across a sample of 3,700 clients from the longer-running FOC sites, the average increase in monthly net income was $376 (and in many cases, clients moved from negative to positive monthly net income). However, clients who only received employment services saw a $25 average increase in monthly net income, while clients who only received financial coaching saw a $276 average increase. Clients who received both employment and financial coaching—that is, who received bundled services and were working on their employment and financial goals concurrently—experienced an increase of $680 in monthly net income.
As a preview to the concepts discussed by the panel, Chris Walker, LISC’s Director of Research and Assessment, introduced the concept of scaling and highlighted some of the underpinnings of the Financial Opportunity Centers: the logic model, client flow, and the robust infrastructure necessary to operate and scale the model.
Jonathan Greenblatt, Director of the White House Office of Social Innovation and Civic Participation, reaffirmed the Obama administration’s commitment to supporting innovative evidence-based programming through vehicles like the Social Innovation Fund, the Workforce Innovation Fund, and Pay for Success (also known as social impact bonds). Defining social innovation as “finding new ways to solve old problems, and doing so not for personal gain, but in the public interest, typically beginning by starting with evidence and investing in what works, and by scaling through cross-sector partnership,” Greenblatt emphasized the importance of elevating and strengthening the social sector and finding new sources of incremental capital to support promising innovations.
Experts in scaling, public policy, philanthropy, and community development then took up this question of what “scaling through cross-section partnerships” actually means—and what it requires to achieve scale. Pam Flaherty, President and CEO of the Citi Foundation, moderated a panel featuring: Bob Giloth, Vice President of The Annie E. Casey Foundation; Michele Jolin, Managing Partner at America Achieves; and Kirsten Moy, Director of Scale Initiatives at the Aspen Institute. The discussion underscored several key themes:
· Infrastructure is critical to expansion, replication, and eventually, to scale. Effective scaling requires a robust management structure, data systems, tools and templates, and technical assistance. Each individual community organization may not have the resources to acquire and maintain that infrastructure independently—especially given their focus on day-to-day direct service provision—but intermediaries can serve as the centralized hub for data management, TA, and other elements of the scaling infrastructure. Intermediaries are also well-positioned to leverage the collective impact of the network to influence policy and systems change.
· The framework Kirsten Moy developed with Greg Ratliff outlined three levels of scaling and innovation: product, organizational, and industry. Scale at the industry level is the ultimate goal. Moy pointed to the private-sector example of CCA Global Partners, a coalition of 3,500 small, independent carpet retailers; by building a “networked group with industry support, infrastructure, [and] adequate resources,” CCA’s member retailers have successfully sustained and grown their businesses despite competing pressures from large chain stores. Reinforcing the importance of a network infrastructure, these types of collaborative and cooperative structures can be useful models for how to work at scale as an industry.
· Philanthropy can play an important role in seeding the early stages of innovation, with grants as well as with thought leadership, but reaching scale requires a more wide-ranging investment and buy-in from federal government systems and funding streams. In the face of budget constraints, it is more important than ever for the federal government to “invest in what works” by channeling its limited resources toward social innovations with proven results and evidence of effectiveness. To that end, the nonprofit sector must also devote energy to “telling the story” of what works—so that stakeholders know that, in Michele Jolin’s words, “progress is possible, impact is happening”—especially to policymakers and government agencies that may be operating in silos or whose decisions have been driven by historical funding priorities rather than evidence-based practices.
Gerri Walsh, President of the FINRA Investor Education Foundation and Senior Vice President at FINRA Investor Education, gave the audience a preview of FINRA’s 2012 National Financial Capability Study (initial findings are available online, with full datasets to be released later in 2013). While FINRA saw some encouraging improvements over the first survey’s benchmark data in 2009, the 2012 results illustrated that families still face significant financial challenges: nearly 60 percent of Americans are living paycheck to paycheck (a number that rose to 80 percent among respondents with incomes under $25,000; a majority do not have sufficient emergency savings to cover three months’ worth of expenses; and few respondents indicated that they had checked their credit scores.
Stacey Stewart, U.S. President of United Way Worldwide, brought the conference to a close by encapsulating the themes of the day: “Good start. Right direction. But more to do.” Innovations like the Financial Opportunity Centers, the Casey Foundation’s Centers for Working Families, and the United Way Sparkpoint centers in the San Francisco Bay Area are changing the trajectory of low-income families—and integrated service delivery holds great promise. While the United Way Worldwide’s three key issue areas are Education, Income and Health, Stewart pointed out that individuals don’t live in “education” today, “income” this afternoon, and “health” tonight; people lead “bundled” lives, so a bundled approach to services makes sense. The commitment to data and outcomes (which the community development field hadn’t always embraced) are another vital driver in scaling up these models and improving the financial stability of families. Finally, partnerships are critical to the work, and like LISC, the United Way Worldwide is dedicating to partnering with other intermediaries, policymakers, funders, the financial services sector, and nonprofit community-based practitioners—and continuing to expand on those partnerships as scaling efforts evolve.
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