Financial education and counseling: Lansing, MI
- Setting and achieving financial goals: Financial education and counseling programs provide coaching, coursework, tools, and more for participants to improve their short- and long-term financial wellbeing. Goals typically include debt reduction, building savings, opening safe bank accounts, establishing and improving credit, budgeting, and more.
- Reaching a range of clients: While some programs are available to all residents, others are highly tailored to a specific subset, such as high school students and their families, victims of domestic violence, justice-involved individuals, residents in subsidized housing, and others. The target population often dictates delivery location, which may be within a government office, a community-based organization, a shelter, or other safe and public spaces.
- Professional financial coaching: Trained, professional financial coaches or counselors often deliver the model through one-on-one coaching sessions; to reach broader audiences, coaches or financial professionals may also teach financial education classes or budgeting workshops. Coaches work directly with clients to set specific financial goals and then develop strategies for clients to achieve them. In many cases, coaches also build in strong outcome tracking to help ensure clients have a mechanism for accountability.
- Recruitment and delivery alongside partners: Oftentimes, programs are delivered as part of a partnership, such as between a city-run financial empowerment center, a nonprofit multiservice agency, and a school district. Each partner can, in turn, help identify funding sources and potential client pools. Strategic partnerships allow programs to reach more residents and share overlapping costs (like marketing and office space). In some cases, these partnerships may help achieve a “supervitamin effect,” wherein complementary services delivered in tandem increase the impact of one another.
Financial education and counseling programs have demonstrated some positive results in two randomized control trials, in addition to strong anecdotal evidence. Further rigorous evaluation is necessary.
A comprehensive evaluation on the impacts of financial coaching programs conducted by the Urban Institute in 2015 (including a randomized control trial) found positive but limited results: participants had increased total savings; reduced debt; and in increased likelihood of maintaining a budget.
A 2016 randomized control trial on financial literacy programming for economically vulnerable women found a significant increase in self-reported financial knowledge and behaviors.
- A 2017 internal evaluation of financial empowerment centers found strong anecdotal evidence that clients increased their credit scores, reduced their debt, and increased their savings.
Results and accomplishments
The Lansing Financial Empowerment Center has served 5,092 residents since it opened in 2013, completing 15,277 sessions in total.
The Lansing Financial Empowerment Center has helped residents reduce their non-mortgage debt by nearly $12.8 million since 2013.
The Lansing Financial Empowerment Center has helped residents increase their savings by nearly $1.1 million since 2013.
The Lansing Financial Empowerment Center has helped residents open 790 safe, affordable bank accounts since 2013.
Awareness of BOLD Lansing grew from just 8% of Lansing-area high school and college students to 58% after a robust marketing campaign using local influencers and targeted student outreach programs.
- Reaching thousands of residents of all ages: Since the Financial Empowerment Center launched in 2013, counselors have met with 5,092 Lansing residents for a total of 15,277 sessions. Its fellow OFE program and BOLD Lansing partner, Lansing SAVE, has run financial literacy classes for 8,056 Lansing K-6 students with banking and school district partners.
- Reducing residents’ debt by $12.8 million: The Financial Empowerment Center has helped residents open 790 safe, affordable bank accounts since 2013. As a result, Lansing residents have increased their savings by more than $1 million and reduced their non-mortgage debt by $12.8 million.
- Securing public investment: By demonstrating its impact through measurable outcomes (such as debt reduction and savings increases) during its 3-year pilot, the FEC secured public funding from the City of Lansing General Fund. Additionally, the City of Lansing matches private donations to Cristo Rey Community Center to host the FEC for up to $50,000 per year, a figure reached both years since the matching began in July 2019.
- Sparking a city-wide focus on measurable outcomes: The Financial Empowerment Center uses strong data collection practices to make an annual, evidence-based case to the Mayor for public investment. As a result of the FEC’s success, other departments regularly solicit FEC’s counsel in incorporating measurable outcomes and data into their operations.
After the financial crisis in 2008, Lansing (MI) saw significant increases in unemployment, foreclosures, and property tax delinquency. Many low-income families were struggling to pay for essentials, and few families could afford postsecondary education for their children.
To address these challenges, civic and government leaders in Lansing launched the Financial Empowerment Center (FEC) in 2013. The FEC provided clients with free, one-on-one financial counseling. Services offered included help creating personal budgets, saving money for the future, accessing affordable bank accounts, and developing strategies to pay down debt. After the FEC demonstrated success, the City’s Office of Financial Empowerment began launching a broader network of public and non-profit programs that aimed to support families’ financial empowerment. These programs included Lansing SAVE, which created children’s savings accounts for each public school student, among others.
Keys to the program’s success included co-locating FEC with an existing social service agency, which increased referrals, data sharing, and marketing; leveraging data to demonstrate impact and build trust; integrating college savings and college access programs to increase awareness among Lansing residents; texting with students, which boosted take up of services aimed at children; and small financial incentives, which increased participation in programming.
Challenges faced by the program included an understaffed Office of Financial Empowerment, the impact of COVID-19 on in-person recruitment and service delivery, issues engaging younger participants, and concerns about privacy.
What was the challenge?
- Widespread poverty in Lansing: In the wake of the 2008 Financial Crisis, many of Lansing’s 120,000 residents faced major financial challenges. Roughly 40 percent of Lansing residents were low-income, and unemployment doubled to more than 12 percent. Meanwhile, Lansing experienced a 20-percent increase in house foreclosures in 2011, with 10 percent of the population delinquent in property tax payments
- Higher education increasingly inaccessible: With many families struggling to cover basic costs, few families with low incomes reported having a savings plan for their children's postsecondary education. At the same time, higher education costs continued to rise, making post-secondary education increasingly unattainable for many Lansing residents. In Lansing today, just a quarter of residents 25 or older have a bachelor's degree.
- Underutilized economic mobility programs for families: To address these dual challenges, Lansing civic and government leaders launched several public and non-profit programs to support family savings and financial empowerment. These efforts were anchored by the City of Lansing’s Financial Empowerment Center, which was created in 2013. Despite a clear and growing need, many low-income families were unfamiliar with the FEC’s services. As the FEC matured and grew, meanwhile, it sought to reach more low-income families -- a population that could especially benefit from the program’s services.
What was the solution?
- Professional, one-on-one financial counseling: To respond to families’ depleted savings and rising debt, Lansing leaders identified an opportunity, through a Cities for Financial Empowerment Fund (CFE Fund) grant, to provide professional, one-on-one financial counseling for free. Lansing was awarded a three-year, $1.5-million grant from the CFE Fund, which enabled the city to launch the Financial Empowerment Center and its host agency, the Office of Financial Empowerment (OFE).
- A range of services, free to all: Lansing’s Financial Empowerment Center (FEC) works with clients to create personal budgets, save money for the future, access affordable bank accounts, and develop strategies to pay down debt. The FEC is available to any adult; there are no restrictions based on income or life circumstances. The FEC provides all services, including credit report analysis, free of charge.
- Reaching those most in need: As part of the CFE Fund replication model, the FEC co-locates with Cristo Rey Community Center, a basic needs provider that offers a health clinic and food pantry, among other services. This co-location allows the FEC to recruit hard-to-reach clients in-person and to receive referrals from Cristo Rey’s other services.
- Expanding financial empowerment services: After the FEC’s three-year pilot period, its host agency, the City of Lansing Office of Financial Empowerment, slowly began to expand its offerings alongside community partners. These include Lansing SAVE, which creates a children’s savings account for each Lansing public school student; Bank On, which helps Lansing residents open safe and affordable bank accounts; and Offender Success, a reentry program focused on reducing recidivism.
- Serving more students: To reach a greater number of families and support students in saving for higher education costs, the FEC recently launched an initiative, BOLD Lansing, in partnership with three other family-focused financial empowerment programs in the area. Participating in BOLD Lansing helps the FEC amplify its recruiting and marketing campaigns. It has also enabled the FEC to deliver its services to more high school and college students through referrals from BOLD Lansing partners, which have more frequent contact with families. The BOLD Lansing partners include another OFE program, Lansing SAVE, and two non-profit organizations, CapCAN (a college access counseling program) and the Lansing Promise (a higher education scholarship program).
What factors drove success?
- FECs “Supervitamin Effect”: By delivering evidence-based financial empowerment strategies, the FEC functions as a “supervitamin” to the city’s traditional public programs, such as homelessness prevention and workforce development. With families more financially stable as a result of FEC’s work, Lansing’s other social services tend to have a stronger impact. This creates a virtuous cycle: clients experience more positive outcomes from other services as a result of their FEC counseling, which in turn leads them to return for more counseling, yielding yet more positive outcomes from other services.
- Co-locating with Cristo Rey Community Center: The FEC delivers its services at Cristo Rey Community Center, a multiservice social agency which also includes a health clinic and food pantry. By co-locating these services, the FEC and Cristo Rey increase one another’s reach through on-site referrals, data sharing, and marketing.
- Leveraging data to build trust: Since its launch, the FEC has carefully tracked outcome data, such as debt reduction and increased savings, to measure its effectiveness and refine its approach. By the time the office’s initial 3-year funding runway expired, the FEC leaders had built a strong, evidence-based case to secure sustainable funding streams from the city and private donors.
- Integrating college savings and access programs: Individually, each of Lansing’s free financial empowerment and college access services (the FEC, Lansing SAVE, CapCAN, and Lansing Promise) had limited reach. By participating in BOLD Lansing, the FEC could reach more families and students through shared marketing and referrals, and raise awareness of its services for future clients.
- Texting with students: The FEC counselors text directly with students, rather than relying on email and social media. By directly engaging with students using their preferred medium, the FEC has boosted overall program awareness and the number of students taking up program services.
- Offering small incentives: The FEC provides small financial incentives for students to participate in programming and to put personal finance strategies into practice. For instance, during the pilot period, the FEC offered Promise Scholars (who are 18 and older) a maximum of $125 in Amazon gift cards for reaching different goals, like $50 for opening a bank account. The FEC has also offered $25 for referrals that resulted in another student attending a counseling session.
What were the major obstacles?
- An understaffed office: Lansing’s Office of Financial Empowerment was originally launched to house a single program, the Financial Empowerment Center. It did so from 2013-2016. As the FEC’s impact grew, the City of Lansing identified it as the best place to house three other programs (Lansing SAVE, Bank On, and Offender Success). The OFE’s significantly expanded portfolio did not come with a commensurate expansion of staff capacity. With only 3 full-time employees, the OFE faces constraints in growing each program at a consistent rate.
- COVID hampers in-person recruitment and service delivery: The COVID-19 pandemic forced the FEC to deliver financial counseling virtually, which proved especially challenging for the students it was seeking to reach as part of BOLD Lansing. With BOLD Lansing originally planning for significant in-school advertising and word-of-mouth referrals, the pandemic limited the impact of the program’s marketing campaign.
- Engaging younger participants: Initially, some students missed appointments with the Financial Empowerment Center and did not reschedule them. This occurred at a higher rate than with older clients. As a result, counselors prioritized texting and calling students with reminders and updates.
- Addressing privacy concerns: Some students expressed concerns about sharing sensitive information such as social security numbers with program staff. As a result, the FEC was forced to narrow its offerings to these students (for instance, it could not run a credit check for some students).
In the wake of the Great Recession, Lansing families face unprecedented barriers to economic mobility: unemployment doubles to 12.3 percent, 40 percent of residents live in poverty, and home foreclosures rise by 20 percent -- all while the Michigan state legislature makes significant cuts to social services, the EITC, and energy assistance programs. Local government and civic leaders zero in on financial empowerment programming focused on higher education as a potential strategy to mitigate the crisis.
Jonathan Mintz, who previously served as Commissioner of New York City’s Department of Consumer Affairs under Mayor Bloomberg, launches the CFE Fund with support from Bloomberg Philanthropies. The CFE Fund provides funding and technical assistance to select mayors and their teams to develop, launch, replicate, and test evidence-based financial empowerment strategies.
After responding to the CFE Fund’s RFP to replicate its Financial Empowerment Center model, Lansing is one of five cities to receive the grant funded by Bloomberg Philanthropies. The grant allows Lansing to create the Office of Financial Empowerment, which houses the Financial Empowerment Center. Amber Paxton, who helped write the grant proposal, serves as the office’s director, which was a cabinet-level position.
With three years of strong results, the FEC leaders make a data-driven case to the Mayor and Lansing City Council to secure $60,000 in City of Lansing General Fund dollars. The Office of Financial Empowerment, which houses the FEC, is identified as a potential growth agency.
Expanding beyond the FEC, the OFE begins to administer the Lansing SAVE program, which, over the next four years, creates college savings accounts for all of the city’s 5,000 K-6 public school students. A partnership between the City of Lansing, the Lansing School District, and the Michigan State University Federal Credit Union, the program is initially housed within the City Treasurer’s office. The Office of Financial Empowerment begins administering the program in 2016. The Michigan State University Federal Credit Union takes over day-to-day operations in July 2020.
After Lansing Mayor Andy Schor is elected, his first executive order creates the Department of Neighborhoods and Citizen Engagement. The OFE, which had essentially been operating independently, joins the new department, allowing for increased funding and staff capacity. The FEC thus seeks to deepen its impact among Lansing families.
The OFE, building on momentum from a supportive new mayor and increased institutional capacity, joins the Department of Neighborhoods and Citizen Engagement. This leads the FEC and Lansing SAVE (including MSUFCU and the Lansing School District) to partner with CapCAN and the Lansing Promise. Together, they join Results for America’s WWC Economic Mobility Initiative. The Initiative provides flexible funding to develop, test, and evaluate the pilot of BOLD Lansing. As part of the Initiative, the pilot program receives design and implementation assistance from the Behavioral Insights Team, including a survey and needs assessment.
After working with the WWC cohort and the Behavioral Insights Team, BOLD Lansing goes live, creating a streamlined system and K-12 action plan for students and families to take advantage of the city’s existing college access resources. COVID-19 strikes shortly after launch, requiring BOLD Lansing partners to move all services and marketing efforts, which largely relied on in-person interaction, to virtual delivery.
How did leaders confront the problem?
- Rising barriers to economic mobility: Following the Great Recession, low- and medium-income Lansing families face high unemployment, home foreclosures, and drastic cutbacks to the state’s social safety net. At the same time, higher education, a vital mechanism for upward mobility, is increasingly unaffordable and inaccessible to those same families.
- Launching the Financial Empowerment Center: To address the growing barriers to higher education and upward mobility, the City of Lansing is awarded a grant from the CFE Fund to launch an evidence-based Financial Empowerment Center. The grant is for three years and comes with $1.5 million in start-up funding.
- Delivering college access services to families: With many Lansing families still struggling financially, local civic and government leaders develop three programs in addition to the FEC: Lansing SAVE, another OFE program that provides a college savings account to every kindergarten student in Lansing public schools; CapCAN, a college readiness program; and the Lansing Promise, a college scholarship fund. Together, program leaders identify that they can reach more families if they integrate their marketing and recruiting efforts.
How was the strategy designed?
- Free financial counseling for all: The Lansing Financial Empowerment Center offers anyone 18 years or older professional, one-on-one financial counseling for free. During sessions, counselors work with clients to develop sustainable personal finance strategies and to deepen their knowledge of financial best practices.
- Addressing current financial challenges and supporting future goals: Professional counselors are trained to support clients in addressing both current challenges and supporting future goals, like paying for college. To do so, the FEC counselors work with clients on issues including money management, budgeting, reducing debt, establishing and improving credit, building savings, and opening affordable and safe bank accounts.
- Leveraging the “Supervitamin Effect”: The evidence-based FEC model is built on the “Supervitamin Effect,” the idea that integrating financial counseling into traditional social services will amplify each service’s impact. To that end, the Lansing FEC delivers its counseling at Cristo Rey Community Center, a multiservice social agency providing behavioral and physical health services, food access, and more. By offering its services at Cristo Rey, the FEC has more direct access to potential clients.
- Integrating services to reach families: The FEC sought to help more students and families save for college, a goal shared by Lansing SAVE, the Lansing Promise, and CapCAN. Program leaders identified that by creating a unified entry point to all of these services, more families could access relevant resources and receive recruiting and marketing materials. To make this unified entry point a reality, the partners joined Results for America's What Works Cities Economic Mobility Initiative, which provided the technical assistance and funding necessary to launch BOLD Lansing.
How was the approach funded?
- Launching the FEC and OFE: In 2013, the CFE Fund awarded the City of Lansing a 3-year, $1.5 million grant to launch the Financial Empowerment Center (and its parent agency, the Office of Financial Empowerment). When the grant period ended, the FEC had some funds left over to continue operations and ultimately secured $60,000 in City of Lansing funding to continue operations in Year 4 (2016). The CFE Fund continues to provide the Lansing FEC with free access to its financial empowerment counseling software.
- Operations and staff: Today, the OFE funds its operations and personnel with roughly $1.2 million, about $630,000 of which is dedicated toward the FEC and Lansing SAVE. Those funds come from Lansing General Fund allocations and HUD CDBG grants. The office currently employs three full-time administrators, including the director, an operations specialist, and an Offender Success program specialist. The FEC also employs three full-time financial empowerment coaches.
- BOLD Lansing and What Works Cities: As part of Results for America’s What Works Cities Economic Mobility Initiative, BOLD Lansing received roughly $125,000 in flexible funding to launch and advertise the program. The program used the funding to hire a local designer (Redhead Design) to build, rename, and rebrand the website. It contracted with Public Sector Consultants to provide back-end administrative support, marketing, and to develop a governance and sustainability plan. BOLD Lansing also receives pro bono technical assistance from the Behavioral Insights Team as part of the Initiative.
How was the plan implemented?
- Securing local government buy-in: As a condition of Lansing’s initial CFE Fund grant, FEC’s director, Amber Paxton, was required to be part of the Lansing Mayor’s cabinet. Paxton and her partners pitched Lansing’s Mayor and other city leaders on the grant opportunity. Quickly, they agreed to add the FEC Director position into city leadership. The position is no longer cabinet-level as the FEC has been integrated into another department.
- Hiring and training counselors: To launch the FEC, the OFE recruited, hired, and trained four financial counselors. Today, the counselors are housed at Cristo Rey Community Center, allowing them to host sessions with clients visiting the Center for other services, like medical care and a community kitchen. Due to budget constraints, there are now only three full-time financial counselors.
- Recruiting clients: With counselors in place, the FEC began delivering free financial counseling to Lansing-area adults. It primarily recruited clients through referrals from community partners and marketing materials. Counseling at the FEC remains available to anyone over the age of 18.
- Reaching more families through BOLD Lansing: Through its participation in the What Works Cities Economic Mobility Initiative, the FEC worked with three partners to launch BOLD Lansing. As part of the Initiative, BOLD Lansing received support from the Behavioral Insights Team, which scoped the intervention and ensured results could be testable and measurable. Public Sector Consultants, meanwhile, provided back-end administrative support, marketing, and is now developing a governance and sustainability plan. A Lansing-based designer, Redhead Design, led branding and website design.
How was the approach measured and refined?
- Securing public funding: By carefully measuring client outcome data throughout the three-year pilot period, the FEC leaders made a clear case to City of Lansing leaders to provide significant public funding in 2016 and beyond. Lansing’s FY22 budget allocates $630,000 to OFE’s FEC and Lansing SAVE operations, up from the initial public investment of $60,000 in 2016.
- Data-informed counseling: The FEC utilizes sophisticated software provided by the CFE Fund to collect and analyze clients’ financial data. This analysis helps counselors develop individualized guidance and financial strategies for clients. For instance, the software allows the FEC to develop client-specific debt reduction and restructuring plans directly with their creditors.
- The impact of COVID: The FEC has carefully tracked the impacts of COVID on its clients to help counselors prioritize the most urgent financial strategies and tactics. The FEC’s internal COVID assessment indicates that 29% of FEC clients applied for COVID benefits, and 32% have lost at least some of their income.
- Surveying students: To develop its student engagement strategy, the FEC, as part of the BOLD Lansing launch, conducted a survey (in partnership with the Behavioral Insights Team) of 1,200 Lansing Promise scholars. The data surprised the FEC team and shaped both counseling and outreach strategies. For instance, many students were already familiar with and engaging in some strong personal finance practices (like maintaining a budget). Instead, they were seeking help with more sophisticated techniques to reduce debt and increase savings. As a result, the FEC incorporated these concepts into their marketing strategy and in designing counseling intake sessions.
- BOLD Lansing’s integrated governance and sustainability: While still in the development phase, BOLD Lansing is partnering with Public Sector Consultants to launch an integrated governance structure. The governance plan will help BOLD Lansing sustain the cross-organizational partnership over the long term.
Results for America would like to thank the following individuals for their help in the completion of this case study: Amber Paxton of the City of Lansing Office of Financial Empowerment; Justin Sheehan of the Lansing Promise; Lauren Kotlarczyk of the Michigan State University Federal Credit Union; Kelsey Gohn of the Behavioral Insights Team; and Andi Crawford, formerly the City of Lansing's Chief Innovation Officer.