Building wealth for subsidized housing residents: Boston, MA
- Building wealth for low- and moderate-income households: Wealth is distributed extremely inequitably in the United States, with the top 10 percent of households holding nearly 76 percent of wealth, compared to the bottom 50 percent of American households, which hold about 1 percent of wealth. Strategies to increase wealth for lower-income households include subsidized savings programs and renter and shared-equity programs.
- Matching participants’ savings: Individual development accounts (IDAs) are subsidized savings accounts for low- and moderate-income households. When participants deposit money into their IDA, the program sponsor deposits a matching contribution. These matching funds are eligible for withdrawal for qualified expenditures like home purchases, postsecondary education, and small business development.
- Starting wealth building early: Child development accounts (CDAs) are savings or investment accounts that allow children to build assets over time. Typically, a government agency or other sponsor provides an initial contribution and then encourages parents, relatives, and others to contribute additional funds as the child ages. In some cases, the sponsoring agency incentivizes additional contributions with matching funds.
- Investing as soon as a child is born: A related strategy is baby bonds, which are investment accounts established by a public or non-profit agency when a child is born. The agency provides initial seed money for the account, with higher amounts typically being given to children in lower income or wealth households. Additional annual contributions may also be provided.
- Leveraging federal support: Another large-scale wealth building strategy is the Family Self-Sufficiency program, run by the U.S. Department of Housing and Urban Development. In this program, residents of subsidized housing work with a case manager to build skills, acquire training, and often engage in financial counseling and education. As participants earn more, they pay increased rent, but an amount equivalent to this increase is placed in an escrow account, helping to build savings. The program is run by public housing agencies, who often collaborate with social service nonprofits to deliver components of the program.
- Building wealth through homeownership: Homeownership is often the most powerful way for households to build wealth, but down payments and other borrowing constraints prevent many low- and moderate-income households from purchasing a home. Under the shared-equity homeownership model, a government or non-profit organization purchases or builds affordable housing and then applies resale restrictions to those properties to keep them affordable in the future. This allows low- and moderate-income households to purchase a home and build wealth from the appreciating value of that home, while preserving affordability.
Rigorous evaluations of multiple practices supporting wealth building demonstrated positive, significant results in building savings and accumulating assets.
A 2018 research synthesis found that individual development accounts can be associated with an increase in asset accumulation.
A 2017 randomized controlled trial found that Family Self-Sufficiency program participants graduated the program with an average of $3,800 of savings in escrow, while those who received additional incentives had an average of $4,900 in savings.
A 2021 quasi-experimental study found that annual household earnings for residents who worked with Compass Working Capital, a non-profit that partners with housing authorities to deliver the Family Self Sufficiency program, were 21 percent higher between one and three years after enrollment and 23 percent higher up to five years after enrollment than in the comparison group.
- A 2021 research synthesis found that experts generally support child development accounts as a strategy for increasing asset accumulation and college enrollment.
Results and accomplishments
Since Compass Working Capital partnered with the Boston Housing Authority, BHA has quadrupled the enrollment in its Family Self- Sufficiency (FSS) program to 1,433 participants, making it the third largest program of its kind in the country.
Compass Working Capital’s outreach and guidance to BHA residents led participants to sign up for the FSS program at five times the 2019-2020 rate.
66% of participants in the BHA FSS program have increased their credit score, with an average increase of 30 points after 6 months. 57% have decreased personal debt or maintained zero debt.
The 1,433 BHA residents who enrolled in FSS through Compass Working Capital in have saved $882,071.34 through the program
In three of Compass Working Capital’s longer-standing programs in Massachusetts, average household earnings have increased by $6,032, according to third-party researcher Abt Associates. These programs follow the same model of the BHA program.
- Major gains to program application and enrollment rates: Compass Working Capital’s outreach to Boston Housing Authority (BHA) residents led participants to apply for the Financial Self-Sufficiency (FSS) program at five times the previous rate in 2019-2020. BHA was subsequently able to quadruple enrollment in the program.
- Third party research showing effectiveness of the program model in other partnerships: Research firm Abt Associates has continuously evaluated Compass’ FSS programs in Lynn and Cambridge, finding that Compass’ programs help participants experience an average increase in household earnings of $6,305, increase their credit score an average of 23 points, and that the programs are cost effective.
- Improved measures of financial stability: Among BHA households enrolled by Compass, 66% of FSS participants have increased their credit score after 6 months, with an average increase of 30 points after 6 months. 57% have decreased their debt or maintained zero debt in the same time period. All of this is made possible by enrollment into the FSS program so that increases to income are converted into assets via the family escrow which matches increases in rent into a savings program for the family.
- Substantial savings for an underserved population: The 1,433 BHA residents who have enrolled in FSS through Compass Working Capital (as of May 2022) have saved $882,071.34 through the program.
Boston has an extreme racial wealth gap, with the median value of assets for white families being $250,000 compared to $8 for US-born Black families. More than 80 percent of Boston Housing Authority (BHA) residents are people of color and the majority own few assets.
The US Department of Housing and Urban Development’s Financial Self-Sufficiency (FSS) program helps residents of subsidized housing build assets, but BHA’s program was underutilized. With its program coordinators overstretched, BHA’S FSS program only reached 200 residents in 2016.
In 2019, BHA launched a partnership with Compass Working Capital. Through the partnership, Compass financial coaches take on several of the responsibilities of the FSS coordinators, including providing financial coaching, building relationships with residents, and assisting with enrollment. This leaves the coordinators with more capacity to administer the program, manage escrow accounts, and track resident progress. By working with Compass, BHA’s FSS program can take on a significantly higher enrollment.
Keys to the program’s success included champions among elected officials and BHA leadership to expand the program’s reach; an innovative model of collaboration that increased capacity and played to each organization’s strengths; and strong relationships between coaches and families, which encourages participants’ active engagement in the program.
The biggest challenges faced by the program included building trust with residents and the disruptions to communication caused by the COVID-19 pandemic.
What was the challenge?
- Boston’s staggering racial wealth gap affects many residents of public housing: According to the Boston Federal Reserve, Boston has one of the nation’s largest wealth gaps between white and Black families. White families are more likely to own every type of liquid asset, and the median value of assets for white families is about $250,000 compared to a median of $8 among US-born Black families. More than 80% of Boston Housing Authority residents are members of minority groups, with the vast majority of residents in subsidized housing owning few assets.
- Residents of subsidized housing in a financial predicament: Generally, residents of subsidized housing pay approximately 30 percent of their income in rent (including utilities). This means that when residents increase their earned incomes, nearly one-third of this increase is captured in a rent increase. For a population that generally earns low incomes and holds little wealth, this is a major barrier to increased financial stability and asset building.
- A program with underutilized resources: Family Self-Sufficiency is a federal program overseen by the Department of Housing and Urban Development that channels federal funds through local Public Housing Authorities (and some private owners of affordable housing) to low-income and low-wealth residents of subsidized housing. In many cities, the program has been underutilized, in part because eligible housing providers often lack the capacity and resources to reach large numbers of residents. As a result, many residents of federally subsidized housing across the country have missed out on the opportunity to enroll in the program that helps them build savings.
- Overstretched program coordinators limit FSS program’s reach: As recently as 2016, Boston had a very small FSS program relative to the size of its population, with only 200 participants. Much of this was due to the fact that FSS Program Coordinators working for BHA were required to administer the program, manage escrow accounts, and provide financial coaching and guidance to residents, among other tasks. This large range of responsibilities meant that caseloads per coordinator were low. BHA sought a method to expand the number of residents that could be served by each FSS Program Coordinator.
What was the solution?
- An external partnership that focuses on asset building: Based on the desire to enhance and grow the FSS program, BHA put out a request for proposals (RFP) for a partner organization that could take on several of the responsibilities of the FSS Coordinators, including providing financial coaching, building relationships with residents, and assisting with enrollment. Compass Working Capital developed a detailed plan for the partnership and raised philanthropic funding to support it, ultimately winning the contract.
- A unique and robust approach to financial coaching: Drawing from many years of experience in financial capability and coaching programs, Compass Working Capital invests heavily in building relationships between financial coaches and clients that lead to long-term success. Compass Working Capital’s financial coaches strive to meet families where they are and encourage families to be as ambitious with their financial goals as they would like. According to BHA officials, Compass’s approach and level of skill resonates with families and strengthens outcomes for participants.
- A partnership that enables larger caseloads and higher enrollment: Compass supplements BHA’s program administration with remote outreach, online application and enrollment processes, and continual financial coaching once people enter the program. This allows BHA’s Program Coordinators to manage significantly higher caseloads, between 350-400 per employee. Once residents are enrolled, BHA staff tracks residents’ progress towards financial goals and manages resident escrow accounts. Through this partnership, BHA is able to serve significantly more potential applicants, ensure that more applicants successfully apply to the program, and keep participants engaged once they are enrolled through ongoing financial counseling.
What factors drove success?
- Positive pressure from political leadership: In 2018, Andrea Campbell, who then served as President of Boston City Council, learned from one of her constituents that the FSS program was underutilized in Boston. Though Compass had previously met with BHA to discuss potential collaboration, conversations had stalled. Campbell re-initiated discussions between the two groups, and upon meeting, BHA leadership were interested in exploring a partnership that could expand the FSS program’s reach.
- An innovative model of collaboration. BHA and Compass created a partnership where each organization is responsible for specific work that complements the other. While BHA Program Coordinators administer the program and manage individual escrow accounts, Compass conducts marketing and outreach, enrollment, financial coaching, evaluation, and general program management services. (Compass uses this model of collaboration in all of its partnerships.) Previously, FSS program staff at BHA were responsible for all of these tasks, hampering the number of residents they were able to serve.
- Champions at BHA who were eager to innovate: The close partnership and division of labor established between BHA and Compass would not have been possible without the leadership and support of William McGonagle, former BHA Administrator, Kate Bennett, current BHA Administrator, David Gleich, Chief Officer of Leased Housing and Admissions, and Kelly Cronin, the Director of Rental Assistance Programs at BHA. These leaders designed the division of labor between BHA staff and Compass and repurposed existing revenue streams (drawn from administrative fees) for services provided by Compass.
- Strong relationships between financial coaches and families: Compass Working Capital trains its financial coaches to be empathetic, culturally competent, supportive, and ultimately build strong and positive relationships with their clients. This encourages the active participation of clients in goal-setting and money management meetings, which BHA officials believe is a critical ingredient to the program’s success.
What were the major obstacles?
- Frustrations stemming from a previously broken system: Once Compass began serving residents as part of its contract with BHA, the first order of business was to address the backlog of applicants who had not been successfully enrolled in the program. This was a slow and painstaking process because the list of applicants was long and the software required to navigate it was outdated. Moreover, many of the people who had waited for years to join the program expressed frustration with BHA once they were reached.
- Disruptions and barriers to communication caused by COVID-19: As it did everywhere, the COVID-19 pandemic disrupted business as usual for BHA and Compass. Fortunately, Compass had migrated processes, applications, and orientations online before the pandemic, allowing the organization to pivot to a remote model of service delivery relatively quickly.
Compass’s first partnerships with public housing agencies occurred in the nearby cities of Lynn and Cambridge. Exploratory analysis found that Compass FSS participants in both cities had higher annual earnings than non-participants 1-3 years after joining the program.
Building on its success in Lynn, and with strong philanthropic support, Compass Working Capital then approached BHA with the idea to partner on the FSS program. Although BHA expressed some initial interest in partnering with Compass on its public housing portfolio, the conversations ultimately broke down.
Compass gains a foothold in Boston with a new FSS partnership with Metro Housing | Boston, a regional partner that manages federal housing vouchers for the Massachusetts Department of Housing and Community Development. Prior to this partnership, private owners of affordable housing, like the Caleb Group and Preservation of Affordable Housing (POAH), were made eligible to offer FSS to some residents, and Compass launches first such programs of this kind in the country, beginning in Rhode Island and Massachusetts.
Building on its successful partnerships in Lynn and Cambridge, Compass Working Capital approached BHA again, but BHA were not in a position to create a partnership. In 2018, Compass partners with BHA on “Mass LEAP,” a state-led asset building program led modeled after, but distinct from, FSS. After demonstrating success with that program, BHA staff advocated internally for a partnership with Compass on FSS.
After learning that Boston’s FSS program was relatively small compared to other major cities, Boston City Council President Andrea Campbell advocated for an expansion of FSS. She spoke out publicly, pressured BHA officials to address the issue, and helped set up meetings between Compass and BHA.
New personnel at BHA expressed interest in an external partnership that would help expand FSS. Compass made efforts to reach these new decision makers and make their case, which ultimately helped make the partnership possible.
Building on numerous discussions, BHA released a request for proposals for a partner to bolster administration of the FSS program and provide additional services to help residents build assets. Compass Working Capital developed a proposal highlighting its expertise in providing these services and was able to raise philanthropic funding to serve more residents. Ultimately, Compass Working Capital won the contract.
To kick off the program, Compass and BHA held a launch meeting to set up initial steps. This first meeting helps determine the meeting schedule between Compass and BHA staff, roles and accountability structure, resolve data security issues, and clarify ambiguities in the RFP.
Compass’s first priority was to follow up with the people who had already expressed interest in joining FSS. They first had to determine where the waitlist was stored, who managed it, and how they should conduct outreach to the people on it. Working through the list was challenging, as many people did not remember applying or had signed up years ago. As a result, this first phase of work took significant effort and did not result in much new uptake.
Once BHA residents began enrolling in FSS through Compass, they also began to attend regular financial coaching sessions from Compass coaches and accrue savings through their FSS escrow accounts. New participants typically meet with a coach four times in the first year, and at least twice in each subsequent year. BHA managed participants’ escrow accounts.
Within the first year of partnership, about 100 people enrolled in FSS through the partnership between Compass and BHA. Throughout the first year, Compass and BHA worked out issues in the process, designed digital tools for the application process, and increased the number of applicants.
Compass begins to develop an online enrollment portal to enable residents to enroll in the program on demand and make the enrollment process more efficient. Multiple iterations of a portal are tested with BHA residents. By December 2020, it is the primary means of enrollment for the BHA partnership.
As Compass and BHA continue to pursue enrollment growth and test new methods to accelerate enrollment, the partnership enrolls more BHA residents in the program in a single fiscal quarter than ever before - enrolling nearly 250 households between June and August. Compass and BHA also began to test new tactics to increase enrollment, such as the incorporation of a simple FSS enrollment form into the document that residents periodically must complete to recertify their rent.
How did leaders confront the problem?
- City and community leaders recognize staggering inequality in Boston: Increasing numbers of Boston residents and leaders recognized the pressing need for action to address the city’s income and wealth inequality. A 2015 report by the Boston Federal Reserve found that white families had a median net worth of $247,500 while median Black family wealth was close to zero.
- Boston’s FSS program is identified as underutilized: Prior to the Compass partnership, Boston had only the 67th largest FSS program in the country, despite Boston being the 23rd largest city and having an FSS-eligible BHA tenant population of around 10,500. Boston City Council President Andrea Campbell learned about this underutilization from one of her constituents and she saw an opportunity for expansion. She began to advocate for expanding BHA’s program and set up meetings to facilitate a discussion between Compass Working Capital and BHA.
- New decision makers at BHA recognize the potential of an external partnership on FSS: After several years of discussions about FSS, new staff entered leadership roles at BHA who were interested in exploring a partnership to expand FSS. These new decision makers had learned about Compass’s work in Lynn and Cambridge in previous engagements and saw the value in the kinds of services that Compass provides.
- The Boston Housing Authority releases an RFP for a partner organization to help expand FSS: Recognizing that setting up a robust FSS program would require more one-one-one services than BHA was able to provide, BHA released an RFP that sought a partner to help the agency expand FSS through application support and financial counseling. Compass submitted a strong proposal and was chosen for the contract.
How was the strategy designed?
- A collaborative organizational structure: Compass and BHA structured their partnership in a way that capitalized on each organization’s strengths. Compass provides long-standing expertise in asset-building and financial coaching, while BHA utilizes their experience in managing and administering programs for residents of subsidized housing. Under the standard guidelines for the FSS program provided by the Department of Housing and Urban Development (HUD), BHA’s staff would only be able to serve a few hundred clients, but with Compass taking the lead on outreach, enrollment, financial coaching, and general program management, BHA staff are able to enroll more than four times as many residents in the program.
- Significant investments in building relationships between financial coaches and residents: Recognizing that resident trust was essential to success, Compass trains financial coaches to be unconditionally supportive and encouraging toward clients. This ensures a positive relationship and client success and builds Compass’ credibility among participants, which in turn encourages more residents to apply for FSS.
- Technology improves the application process: Recognizing that transportation was a barrier in the enrollment process, Compass made orientations and other meetings available by phone or internet from the beginning of the partnership. They also prioritized creating online tools that would make it possible for residents to apply for FSS quickly via their smartphone. The onset of the pandemic only accentuated the need to create processes with as little friction for residents as possible.
How was the approach funded?
- Federal funds and administrative fees support FSS program delivery: Federal funds from HUD support the salaries of BHA's FSS-focused staff. In partnering with Compass, BHA leadership decided to repurpose funds from existing administrative fees to support services provided by Compass. Compass operations are also supported by philanthropy.
- Per-participant cost of approximately $1,100: In 2022, Compass’s FSS program in partnership with BHA program cost around $1.4 million. With 1,433 participants as of May 2022, the per-participant cost per year of approximately $1,100.
- Federal dollars to match resident savings: Through the FSS program, when residents’ income increases, the accompanying increase in rent is matched by HUD contributions to an escrow account, managed by public housing authorities (like BHA). After participating in the FSS program, residents can then draw upon these savings to invest toward their financial goals.
How was the plan implemented?
- Launching the partnership and making a game plan: Once Compass Working Capital had been awarded the contract to work as BHA’s partner in delivering the FSS program, the first collaborative activity was a launch meeting between all the key stakeholders in Compass and BHA. This first meeting established the meeting schedule, roles and accountability structure, resolved data security issues, and clarified ambiguities in the RFP.
- Tackling the waitlist: At the launch meeting, Compass and BHA agreed that the highest priority was to work through the waitlist of more than 900 people who had applied for FSS but had not yet been enrolled. This was a difficult and time intensive process, because the software managing the waitlist was outdated and because families on the wait list were frustrated by the length of time between application and enrollment.
- Beginning broader outreach efforts: After addressing the waitlist, the next step was to engage new residents who could benefit from the program. To do this, Compass began marketing efforts such as letters, postcards campaigns, and flyers, and the development of an online enrollment portal. Creating an online portal was a substantial digital transformation from a largely paper-based application process to a web-based process. Compass tested and iterated the online process during early 2020, inadvertently preparing them for remote-heavy engagement when COVID arrived in March.
- An immediate boost in application numbers: As a result of the new partnership, Compass and BHA were able to enroll 100 participants in the first year, a promising indication that the partnership was working
How was the approach measured and refined?
- Continuous evaluation from a third-party researcher: Since 2014, Compass Working Capital has engaged the research firm Abt Associates to evaluate the impact of their programs. Abt has conducted several qualitative and quantitative analyses using quasi-experimental methods and has performed two cost-benefit analyses. In a 2021 impact report, Abt found that the average household income of Compass FSS participants was $4,997 higher than a comparison group.
- Tracking data on participation and asset building: BHA maintains a database on the roster of the FSS program and the growth of participants’ savings accounts. As of May 2022, BHA found that 1,433 participants had saved $882,071.34 as part of the program. Compass Working Capital also tracks participants’ credit scores, data related to debt, and progress towards financial goals.
- Increasing the online accessibility of the program: Since launching the online portal, Compass has continually refined and experimented with the online accessibility of FSS at BHA. For example, Compass has offered seminars and training via Zoom. Engagement with online offerings has been varied, so Compass is continuing to try new approaches to see what works.
- Setting vision for growth: Building on the success of the partnership over its first few years, BHA and Compass have set a goal to enroll 2,000 households in the program, making it the largest FSS program in the country out of more than 700 programs.
Results for America would like to thank the following individuals for their help in completing this case study: Sherry Riva, Markita Morris-Louis, James Stuart, and Ann Lentell of Compass Working Capital; and David Gleich and Kelly Cronin of the Boston Housing Authority.
This case study was written by Jonathan Timm and Ross Tilchin.