Financial Empowerment Centers

Financial Empowerment Centers (or FECs) are city-managed programs that offer free, professional, one-on-one financial counseling to help residents living on low incomes address their current needs and plan for their financial futures. First launched in New York City in 2008, there are now 26 centers operating in small and large cities across the country, with more in the works. Baltimore, Syracuse, and other cities are dedicating American Rescue Plan Local Fiscal Recovery Fund resources to expand their Financial Empowerment Centers.

About six percent of adults in the US are “unbanked” — meaning they hold neither a checking nor a savings account – but that figure rises to 10 percent among Latinx adults and 14 percent among Black adults. Fourteen percent of those with incomes below $40,000 per year are unbanked, compared with just 1 percent of those with incomes about $40,000. In April of 2020, the Federal Reserve reported that 35 percent of Americans would not be able to come up with $400 in savings for an emergency expense. 

Financial empowerment centers to offer training and services for managing household finances, budgeting, reducing debt, establishing and improving credit, connecting to safe and affordable banking services, and building savings. Through financial empowerment centers, residents can access resources and support to build savings to weather financial emergencies, invest in their futures, avoid predatory financial products that can entrap them in cycles of debt, and increase their financial acumen. 

Implementing a financial empowerment center requires upfront investments determined by its structure, the services it delivers, and the costs of specific programs and incentives (matched savings accounts, for example). But because these centers can be integrated into other public services — including housing and foreclosure prevention services, workforce development, prisoner reentry, benefits access, and domestic violence prevention — they can save cities money. Research shows that financial insecurity strains city budgets as well.

In addition to the PolicyLink resources listed on the right, see the Cities for Financial Empowerment Fund for more resources on financial empowerment centers.

• Elected and appointed state officials can allocate resources for the establishment of an office or department of financial empowerment charged with improving household financial security for workers and families in municipalities.
   
• Elected and appointed city officials can establish an office or department of financial empowerment charged with improving household financial security for workers and families in the city.
   
• Business leaders can work with city governments and community-based organizations to offer financial empowerment programs to their employees and may also help fund financial empowerment centers.
   
• Community-based organizations and other advocates can encourage local elected officials to build financial empowerment centers and offer their community locations as spaces for financial counseling sessions.

Mayors and city leaders have the opportunity to be creative and to fine tune services to alleviate the most pressing financial issues affecting their communities. Cities seeking to implement financial empowerment centers must consider a range of related logistical questions.

• Prioritizing service offerings: Financial empowerment centers can offer a wide array of services to city residents, so it is critical to identify the most significant financial challenges facing the community to prioritize services — in some cases, access to basic banking may supersede the need for homeownership counseling.
   
• Language access: Financial empowerment centers should strive to offer services accessible to limited English-proficient individuals in their communities by providing written translation and oral interpretation in other appropriate languages.
   
• Collaborating with community-based organizations: Financial empowerment centers thrive when they have strong relationships with community-based organizations, which serve as a point of entry to addressing many economic challenges facing workers and families.
   
• Partnering with city agencies: Various city government agencies can be critical partners for shaping policies and practices and connecting clients to available services.
   
• Private-sector engagement: Private-sector partners can provide three critical resources, among others, to support city efforts for financial empowerment: employees to participate in financial coaching, financial expertise, and possible volunteers (especially in the case of banks), and philanthropic support for financial empowerment programs.
   
• Data collection: City leaders should establish clearly defined data collection procedures at each step of client engagement to assess the effectiveness and inform financial empowerment centers' direction while safeguarding clients' privacy.
   
• Sustainability: Cities implementing financial empowerment centers must have long-term plans to sustain them, including budgetary allocations, professional training for counselors and other staff, formal relationships with private-sector and nonprofit partners, and program development plans. 

The most robust financial empowerment centers offer a full range of services, including financial counseling, bank access programs, and savings incentive programs.

• New York City was the first in the nation to develop the municipal financial empowerment center model. Mayor Bloomberg established the Office of Financial Empowerment under the Department of Consumer affairs in 2006, just before the great recession. After an initial pilot to test the financial empowerment center model, 26 centers now operate in all five New York City boroughs. As of 2018, the Centers have helped more than 50,000 New Yorkers improve their financial health through more than 90,000 sessions. Clients have reduced their debt by more than $50 million and increased their savings by more than $4.5 million.
   
• The Nashville Financial Empowerment Center was established in 2013 through a partnership between the city and the United Way of Metropolitan Nashville. The Center’s five locations are charged with helping Davidson County residents reduce debt and build assets through free, one-on-one financial counseling incorporated into existing services offered in the city. Since its opening, the center has helped 8,969 clients reduce their debt by $20 million and increase their savings by $3 million.
   
• Created in 2013, the Lansing Financial Empowerment Center is a  partnership between the City of Lansing Office of Financial Empowerment and Cristo Rey Community Center, a multi-service agency including a health clinic and food pantry. The Center offers professional, one-on-one financial counseling to all adults in the 120,000-resident city, without any income restrictions or other eligibility criteria. Its location in Cristo Rey helps the center reach those most in need. Since its opening, the center has served 5,082 residents, increasing their savings by more than $1 million and reducing their debt by $12.8 million, and helping residents open 790 affordable, safe bank accounts. The Office of Financial Empowerment also offers complementary programs including the Lansing SAVE, which provides a children’s saving account for every Lansing public school student. See the full case study from Results for America here.