Volunteers coach economically vulnerable about savings accounts and accountabiity
Several hundred working-poor persons in Hennepin County are getting the opportunity to climb the economic ladder and achieve self-sufficiency, thanks in part to two big metro-area Lutheran organizations.
Lutheran Social Service (LSS) and Thrivent Financial for Lutherans, both members of the Faith in the City collaborative, have teamed up with the federal government to offer a program called Family Savings Accounts. It’s modeled after the government’s Assets for Independence program, which is operating successfully in some 400 locations across the nation.
The idea behind the program is to give a worker training in basic financial literacy, match a sum of money he or she saves, and then provide guidance as the worker prepares to invest those savings in one of three general areas.
Those areas for investment are additional education, purchase of a home, and start up of a new business or expansion of an existing one.
Research has shown that low-income workers who receive financial-literacy training and invest savings in one of these areas “really narrow their risk of poverty,” said Tony Girard, program coordinator for the Family Savings Account (FSA) project.
Thrivent Financial and the federal government have each committed $700,000 to the FSA program, an amount designed to cover the costs of 400 clients over a five-year period ending in September 2009. LSS is the project manager.
So far, four or five persons have completed the program and 188 are currently enrolled, Girard said. New applicants continue to be added.
The FSA program is one of a pallette of services offered by the Personal Finance Center, a major Faith in the City initiative located in the LSS Minneapolis office. The finance center is staffed by four full-time LSS workers and also draws on the expertise of LSS’ financial counseling specialists.
The Personal Finance Center is responsible for publicizing the FSA program and interviewing and screening applicants.
Persons who apply must be currently employed but have earned income that does not exceed a level set by the federal government. The program initially was limited to residents of the Phillips inner-city neighborhood in Minneapolis, but has been expanded to include all of Hennepin County.
Successful applicants first attend six weeks of evening classes on basic financial-literacy topics taught by volunteers. Among the subjects covered are savings and checking accounts, savings management, loans, insurance, and the wise use of credit cards.
At the conclusion of the classes, clients attend a graduation ceremony, set up a Family Savings Account, and are assigned to a financial coach.
The coaches, who are also volunteers, meet periodically with the clients, make sure they are contributing regularly to the savings account, give advice, and provide answers to questions that arise.
For every dollar that the client contributes to the account, Thrivent and the federal government contribute two dollars apiece — a total match of 4 to 1. The account grows until the client has contributed a maximum of $1,000 and the two sponsors a maximum of $4,000.
As early as the literacy-training stage, the finance center can make arrangements for the client to get additional training from an organization in the community with expertise in the area in which the client intends to invest his or her FSA — home purchase, ad-vanced education, or business development.
The finance center pays for this additional training. Expenditures from the client’s FSA are not made until the client has contributed a maximum of $1,000, or a lesser amount if that person feels ready to start applying the savings toward the goal he or she has identified.
In the beginning stages of the project, the various components — financial-literacy training, work with coaches, and advanced training by a community organization — proceeded in an orderly sequence. Today it’s more likely that the components take place simultaneously and the process is speeded up.
“Right now it’s all burners on high,” Girard said.
Volunteers play a significant part in the FSA program. More than 60 are used as coaches and teachers, and there is a 15-member advisory board.
ELCA church member Jerry Olson, a member of Transfiguration Lutheran Church in Bloomington, has served as a financial coach in the FSA program since the fall of 2005. He had recently retired from a career as a computer programmer when he saw an ad for a “financial coach” in a listing of volunteer opportunities that appealed to him.
He went through a day of training and then was assigned his first client in January 2006. He now has three clients. Olson spends two hours a month working with each client — an hour for face-to-face discussion and another hour researching answers to questions the client has raised.
Olson says he has really enjoyed working with the three clients and getting to know members of their families. He describes them as “interesting people” and figures he has learned as much from them as they have from him.
Describing one of his clients as an example, Olson said the woman with whom he has worked for two years is married and the mother of seven children, ranging in age from about 3 to 17. She’s employed as a “birth consultant” for a social-service organization and deals primarily with single mothers. Her husband is a remodeling contractor.
For both parents, employment is sporadic and their income falls far short of their family’s needs. Although the woman is a college graduate, she has decided to return to school and get a nursing degree, which she hopes will provide a source of more regular employment.
She has almost completed her savings and is nearing the end of the program, Olson said. He plans to remain in his role as her financial coach until she has started her nursing education.