> Posted by Jeffrey Riecke, Communications Assistant, CFI
In school, my in-class instruction was mostly lectures from teachers and reading out of text books. In fact, before beginning other types of learning activities, such as games or role-plays, my teachers would often feel the need for a prefacing remark like everyone learns differently, so today we’ll be trying something new. My teachers were right. Everyone has their own learning style, and if we want everyone to learn, we need to adhere to this. Financial capability is no different. It isn’t enough to give someone a pamphlet or a fact sheet if we want them to be equipped with the knowledge and skills necessary for making sound financial decisions and for appropriately using financial services.
To this end, the Center for Financial Services Innovation (CFSI) is catalyzing advancements in financial capability through its Financial Capability Innovation Fund. The fund, now in its second iteration, selects non-profit led financial capability projects targeting low-income and underserved clients through a request for proposals process, and backs their development and testing through financial and non-financial support. Eight winning projects were selected in April for this round of the fund, receiving a total of $2.5 million in support. Paired with quality financial products and services, the selected projects leverage the power of new technologies and social networks to impart tailored, timely, and actionable guidance. A brief description of each project, in the words of CFSI, follows.
- Center for Community Self-Help is testing underwriting models and behavioral design features with small-dollar credit products.
- Doorways to Dream Fund is employing “gamification” mechanics on a national scale to encourage positive savings behaviors.
- Juma is developing a Facebook application and mobile alert system to supplement their college savings program for high school youth.
- Mission Economic Development Agency is offering secured cards at tax time and using text messages to encourage responsible use.
- Mission SF is leveraging technology, the power of peers, and behavioral economics to integrate a scalable savings-focused financial capability model into municipal employment programs for youth and young adults.
- Moneythink, in partnership with IDEO.org, is developing a mobile application to support savings behavior and supplement a financial mentoring program between college and high-school students.
- The National League of Cities Institute is offering financial coaching and repayment supports for households behind on utility bills.
- Neighborhood Trust is partnering with employers through their new program, PayGoal, to allocate a portion of employees’ wages toward their financial goals and communicate progress toward these goals as part of every paycheck. (I wrote about this project in greater detail, here.)
The eight projects will be evaluated on their effectiveness as they roll out by research partners, which include Innovations for Poverty Action, the Center for Financial Security, and the Center for Community Capital. Coinciding with the announcement of the eight winning projects, CFSI released a white paper on the trends exhibited in the 127 submitted project proposals. The trends included leveraging technology and social networks, offering incentives to motivate clients, and concertedly coupling financial capability efforts with financial products. This round of the fund is supported by a collaborative of funders, including Citi Foundation, Capital One Foundation, and NYSE Euronext Foundation.
For the full white paper, click here. For more on the fund and the eight selected projects, click here.
Image credit: Moneythink
Have you read?
A Financial Plan With Your Paycheck
Four Insights into Youth Financial Capability