LISC Moves the Needle on Jobs and Poverty with Financial Opportunity Centers

LISC Moves the Needle on Jobs and Poverty with Financial Opportunity Centers

Taking a holistic approach to empowerment by combining job placement with financial coaching and financial supports.

Jane Addams Resource Corporation (JARC) of Chicago is a leading expert in job training, offering a manufacturing bridge program to un- and underemployed adults while similtaneously helping them raise their math and reading scores so they can move into more advanced training.  (Photo courtesy LISC)

For years, job placement for the chronically under- or unemployed was the go-to remedy for addressing poverty. However, in the last 15 years, the Local Initiatives Support Corporation (LISC) has expanded the scope of its workforce development programs to improve the long-term economic prospects of low-income, disadvantaged and underserved people and communities throughout the United States. LISC, one of the largest non-profit Community Development Financial Institutions (CDFIs) in the country, has done so by supporting financial opportunity centers.

LISC officials found that helping someone find a job wasn’t quite enough, says Katrin Sirje Kärk, LISC’s Director of Workforce Innovations. “Oftentimes the jobs were lower wages, and didn’t have benefits and had schedule volatility,” she says. Federal funding sources emphasized the work first. “Get someone into a job and that will address poverty and solve everything, which it did not.”

The financial opportunity center model combines job placement, financial coaching and financial supports. Early on, these aspects of the program were separated. But the preponderance of low-wage jobs was a challenge. Even after receiving financial coaching, an individual may stumble on the path to wealth building when falling victim to check-cashing fees and predatory loans, Kärk says. After growing the number of FOC sites over several years, LISC and its partners realized just how important credit had become for their clients — important to secure a fairly priced loan, and critical to obtaining more stable rental housing and jobs.

LISC’s Bridges to Career Opportunities (Bridges) program offers training and other financial education and help to chronically unemployed and underemployed adults. The Citi Foundation, a major supporter of the Bridges program, has committed $10 million to help 40 financial opportunity center partners in 19 cities over the last three years. (Editor’s Note: Citi Foundation is also a funder of Next City.) Through Bridges, participants work with LISC’s network of financial opportunity centers to improve their literacy and math skills, get financial coaching and technical training, and even earn industry certifications.

So far, 6,100 people have participated in Bridges. Among them, 3,400 raised their credit score, while 2,600 increased their net worth. Some 78% of the participants across the program identified as BIPOC. Of that number, 55% were Black and 62% were women.

According to Kärk, one of LISC’s recent innovations in the Bridges program is to offer a type of matching loan account. An individual receives a $300 loan that goes into a locked savings account. That individual pays $26 per month to pay back the loan. At the end of the loan’s term, not only do they have $300 on hand, they receive a matching amount. In the process, they also have practiced making on-time payments, which improves their credit score and makes fairer-priced banking and credit products available. “What most people do is use the match to go onto a secured credit card to stay engaged,” Kärk says.

Another innovation accessible to LISC’s financial opportunity center partners, Kärk says, was the training and support on LISC’s data system to measure a set of key outcomes: net income, credit score, net worth, job placement and job retention.

There are financial opportunity centers in 46 cities or towns in 26 states that LISC works with, Kärk says. Most are in urban areas and some in smaller rural communities. LISC’s largest and most long-standing networks are in Chicago and Detroit. Chicago has approximately eight financial opportunity centers and Detroit has 12.

One of the earliest LISC partners in the financial opportunity center and Bridges program is the Jane Addams Resource Corporation, in Chicago. Its president, Regan Brewer Johnson, notes that the financial opportunity center model now has four components: digital literacy, financial education and coaching, worker readiness and income support that includes public benefit screening.

Jane Addams had been doing training in jobs that target manufacturing and metalworking, machining, stamping and welding. But Johnson says now, for example, a welding trainee also attends workshops around work readiness, financial coaching and financial education, plus digital literacy. The focus on digital literacy has been a welcome addition; Johnson notes that “everyone is accessing tech on their phones, even banking.”

The center’s programs are free, and generally serve BIPOC job seekers. In Chicago, more clients are Black and Latinx. In Baltimore the breakdown among job seekers is 80% Black and 20% white. More than half of the center’s clients have been involved in the justice system and 25% are experiencing homelessness. In the center’s Baltimore office, more than 70% report having had substance abuse problems.

The process starts with triage. LISC has provided Jane Addams with a significant amount of technical assistance on second-chance banking, which allows people to recover from past financial problems and reestablish their credit, Johnson says. She adds that LISC recently invested in the center’s Baltimore location to help support the delivery of robust services there.

At the same time, the COVID-19 pandemic has had its effect on financial opportunity centers, including Jane Addams. “We have been doing more triage — emergency cash assistance to people who need it,” Johnson says.

Despite the pandemic, the focus continues to be on cultivating career paths, improving wages and increasing net worth, Johnson says. The center has a job placement rate of 86% and a job retention rate of 89%. Its programs run five to six hours a day, Monday through Friday. They can last anywhere from 10 to 20 weeks. Approximately halfway through the program, participants get help finding a job. “Once they are working, we are working on more of the asset development — a car, a home, investing in 401(k), thinking about retirement,” Johnson says.

LISC is determined to stick with the individuals being helped by financial opportunity centers so they can reach their lifelong goals, Kärk says. “The coaches are committed to being there for as long as needed.”

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This story is part of our series, CDFI Futures, which explores the community development finance industry through the lenses of equity, public policy and inclusive community development. The series is generously supported by Partners for the Common Good. Sign up for PCG’s CapNexus newsletter at capnexus.org.

Frances McMorris is a Tampa-based writer who has been a staff reporter covering courts and legal affairs for the Wall Street Journal, the New York Daily News and Newsday. She specializes in legal and business topics.

Tags: jobschicagocdfi futurescdfis

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