Financial Empowerment Centers
Local governments can invest in this strategy using State and Local Fiscal Recovery Funds (SLFRF) from the American Rescue Plan Act (ARPA).
- This strategy can help address educational disparities. The U.S. Department of Treasury has indicated that strategies that help achieve this outcome are eligible for the use of Fiscal Recovery Funds.
- Investments in this strategy are SLFRF-eligible as long as they are made in qualified census tracts or are designed to assist populations or communities disproportionately impacted by COVID-19.
Program overview
Individualized financial counseling: Through the Financial Empowerment Center (FEC) initiative, local governments provide professional, one-on-one financial counseling as a free public service. By supporting residents in setting and achieving their financial goals, the FEC program may improve residents’ financial security.
Financial counseling as a public service: Local government is a trusted voice for residents as they make complicated financial choices. As such, FECs are managed and at least partially funded by local governments, though typically operated through a contract with a nonprofit organization.
Individualized financial counseling: Clients receive financial counseling from a professionally-trained counselor, who conducts an initial assessment of the client’s financial health, develops a work plan that reflects the client’s goals, and supports the client as they progress through the work plan. Counselors help consumers manage their finances, pay down debt, increase savings, establish and build credit, and access safe and affordable mainstream banking products.
Using professionally trained counselors: To work with clients at a FEC, counselors undergo a rigorous training process in accordance with the CFE Fund’s FEC Counselor Training Standards. The Standards also include a Code of Ethics which ensures the counselors are trained to offer responsible, professional, and ethical financial counseling, furthering the professional standards of the FEC model.
Data-driven model: As part of the model, data are systematically tracked across a set of defined and quantifiable behavior change outcomes. This approach allows FECs to understand their impact on clients’ financial lives, bolster program credibility, and justify public funding. The FEC database tracks over 200 points and offers a valuable counseling and reporting tool.
Integrated with city and nonprofit services: At the core of the FEC model is the integration of counseling into other social services, including eviction and foreclosure prevention, workforce development, prisoner reentry, benefits access, and more. Partnerships with social service agencies provide a source of referrals to FECs, which aim to use financial counseling to complement the services offered by those agencies (e.g., jointly working to promote a client’s financial stability). Similarly, such partnerships allow FEC counselors to refer clients to social service agencies to meet needs that cannot be addressed through counseling services.
A single study with a less rigorous design suggests that Financial Empowerment Centers are a promising strategy for improving participants’ financial health.
- This assessment is based on evidence from a 2017 program evaluation.
Note: This content is under review.
Conduct outreach to increase participation: To recruit participants, FECs develop a communications plan that aims to raise public awareness, advertise the program’s effectiveness, and leverage local champions, like mayors and faith leaders. Effective approaches may include targeted messaging campaigns to specific subpopulations (e.g., individuals with student debt who did not complete college), collaborative outreach with existing community-based organizations, and more.
Develop formal partnerships with social service agencies: FECs develop formal partnerships to effectively integrate with public and nonprofit social service agencies. Potential steps include creating written materials and delivering training sessions to educate staff on partner programs (e.g., eligibility requirements), outlining referral processes, locating FEC financial counselors on-site at other social service programs, and creating data-sharing agreements to measure shared outcomes.
Provide ongoing professional development: Local governments and their nonprofit partners ensure that financial counselors participate in ongoing professional development opportunities, such as workplace shadowing, formal coursework, or supervisor observations. Such opportunities may focus on preparing counselors to address specific local needs, like reducing student debt, foreclosure prevention, and more.
Regularly monitor performance data: The ability to quantify outcomes solidifies program credibility and political visibility at the local level and supports program sustainability as well as ongoing program improvement. City or county partners meet regularly with their nonprofit partner(s) to monitor key indicators, like appointment uptake, referral trends, and client financial outcomes (e.g., number of clients increasing credit score by 35 points or more). By monitoring these indicators over time, local governments demonstrate program impact and build relationships with potential program champions both inside and outside the local government.
Develop a sustainability plan from the onset: The FEC should be rooted within the public services landscape. There are four main components to a FEC sustainability strategy: 1) highlighting the local government’s role as the FEC’s biggest champion and leader in the field of municipal financial empowerment; 2) strategizing to effectively engage key internal and external stakeholders around FEC efforts; 3) identifying and prioritizing key partners with an eye towards garnering greater support and generating greater impact; and 4) identifying the overall funding strategy that local governments can use to sustain and grow financial empowerment programs.
