This February, New York City’s Department of Consumer and Worker Protection announced an expansion of its network of Financial Empowerment Centers. The number of centers — which offer free one-on-one financial counseling to anyone over the age of 18, who lives or works in NYC — would more than double to 34 across the Bronx, Brooklyn and Staten Island.
Since the centers first opened in 2008, counselors helped New Yorkers reduce over $70 million in debt and increase their savings by $5.8 million. But in March, when COVID-19 started shutting down the city, their role abruptly changed: Help clients navigate an unprecedented public health and economic crisis while shifting to remote services.
“Financial Empowerment Centers allow you to be responsive and smart about how you use your resources,” explains Lorelei Salas, the Department of Consumer and Worker Protection commissioner, about the transition. That flexibility is reflected in Financial Empowerment Centers around the country, which have navigated both benefits and challenges to remote counseling. And at a time of economic uncertainty, many believe it’s time to push the resource as an essential city service.
The Financial Empowerment Center is a relatively new model that’s emerged over the past decade. At its basic level, professionally trained counselors provide free, one-on-one counseling to help clients manage finances, pay down debt, increase savings, establish and build credit and access banking products. Crucially, the center runs as a city service (often in partnership with community-based organizations), so counselors integrate financial counseling with other social services like foreclosure prevention, workforce development, prisoner reentry and benefits access.
The Cities for Financial Empowerment (CFE) Fund was launched in 2012 to provide funding and technical assistance to U.S. cities to develop financial empowerment strategies, including Financial Empowerment Centers. The fund now works in over 80 cities, according to Tamara Lindsay, principal at the CFE Fund overseeing its Financial Empowerment Center initiative.
Though COVID-19 “upended our world,” as Lindsay puts it, Financial Empowerment Centers could quickly be used as a city resource. “With all of our cities with Financial Empowerment Centers, mayors now had something embedded in their infrastructure they could just activate as part of the emergency response.”
First, centers quickly shifted to remote work. The Pittsburgh Financial Empowerment Center did so in less than two weeks. “The technology, setup and getting proper consents were our biggest barriers,” explains Becky Johnson, the program manager. “But we’ve been able to ramp up services and continue to see people come for our services, because we were able to switch over to virtual counseling relatively quickly.” The program also addressed one-off questions around issues like the unemployment process, utility payment options and student loan options in phone calls to its intake line.
The CFE Fund works with 19 cities and counties with operational Financial Empowerment Centers, as well as 11 others in various stages of the planning process. By the end of March, all the centers CFE Fund works with offered counseling through digital platforms like Zoom, FaceTime and WhatsApp, as well by telephone. The fund tracked a 40 percent uptick in some cities in demand for counseling, according to Lindsay.
After moving online, Pittsburgh’s client demand increased as no-shows for appointments decreased. In New York, the no-show rate also decreased. Detroit’s Financial Empowerment Center increased its reach to potential clients, explaining its services in Facebook Live events and weekly calls.
The Financial Empowerment Center for Greenville County, South Carolina, even attracted clients outside the state. “I had a client, a truck driver living in Alabama, thinking about moving to Greenville and wanting to get everything together to prepare for it,” says counselor Lori Ford. “If it wasn’t for virtual counseling, we wouldn’t be able to help her.”
Centers also realized they needed to shift to meet client’s economic concerns under the pandemic. “We retooled our initial intake, our milestones and outcomes to reflect the direct needs of residents during COVID-19,” says Chelsea Neblett, financial empowerment director for the city of Detroit. Counselors used a COVID-19 assessment created by the CFE Fund that helps counselors understand the full financial impact of the pandemic.
Counselors across the country are tracking local, state and federal resources, like unemployment benefits and stimulus checks, then working with clients to secure them. “If an unemployment check didn’t come through for a resident, because it got flagged for fraud at the state level, and they’re having trouble paying their rent, the counselors have resources to track that,” says Neblett. “We’re shifting to immediate needs, while keeping the long term financial goals in place.”
Some counselors found clients had more money than their regular paycheck — due to unemployment benefits and the federal stimulus check — so they worked with clients to save money or pay down debt. In New York City, one counselor helped negotiate with debt collectors on behalf of their client, substantially reducing it.
Kristen Griffith, a financial counselor with Pittsburgh’s program, speaks of her work as “triaging … I told everybody to focus on their immediate needs first, and that credit companies can wait.” To her, the key is building trust and removing any shame or frustration around finances or financial decisions. “The financial industry, for so long, didn’t focus on the literacy aspect and blocked out a lot of people, because they don’t use language people can understand,” she notes. “The one-on-one model allows us to focus on an individual’s needs, in that moment, and make sure they don’t feel judged.”
Financial empowerment centers collect data around client needs and services provided, which can help cities better understand the economic impact of the pandemic, according to Lindsay. And their role will be crucial in the months to come: “When things like extended unemployment or eviction moratoriums end, our Financial Empowerment Centers are gearing up for a wave of new clients,” she notes.
“Just a few years ago, Financial Empowerment Centers were a new pilot approach for cities,” Lindsay says. “Now we are seeing it as being part of the frontline infrastructure of city emergency response.” To fill in a need for cities without Financial Empowerment Centers, CFE Fund is launching a Financial Navigator Program as a “call center model” in which residents are referred to local and national social services and benefits. (It is not yet live, although some grantee cities are preparing to launch in the coming weeks.)
In New York, the Financial Empowerment Center expansion is still underway — though it’ll roll out on a longer timeline due to the pandemic. “It’s a smart way for us, as government, in an era of diminishing resources, to identify where is the most need,” says Salas.
This article is part of The Bottom Line, a series exploring scalable solutions for problems related to affordability, inclusive economic growth and access to capital. Click here to subscribe to our Bottom Line newsletter.