Financial Capability Innovation Funds

Through our research, we theorized that combining relevant, timely, actionable, and ongoing guidance with access to high-quality financial products and services would positively impact consumer financial behavior. Some of our findings are detailed in From Financial Education to Financial Capability: Opportunities for Innovation.

Financial Capability Innovation Fund I

In 2010, CFSI selected five cutting-edge projects to receive $1.5 million total in grant support, from among 246 applications totaling more than $67 million in requests. The grantees were:

• Clarifi (Formerly Consumer Credit Counseling Service of Delaware Valley) tested whether social commitments and text alerts can help consumers reduce debt.
• Co-opportunity, Inc. developed technology via a new online platform called MyBudgetCoach to enhance the effectiveness and scale of its volunteer budget coaching program. MyBudgetCoach is currently under the management of the nonprofit Solutions for Progress.
• Filene Research Institute tested whether rewarding consistent and timely loan payments with interest rate reductions leads to better payment behavior.
• Piggymojo used goal visualization, social dynamics and mobile technology to help low-income savers turn impulse buys into “impulse saves.”
• Mission Asset Fund franchised its Cestas Populares, or Lending Circles program, a peer loan coupled with product-specific peer-led education, to help immigrant and low-income customers build credit and manage credit wisely.

CFSI is serious about program evaluation and ensuring that the Financial Capability Innovation Funds contribute to building a knowledge base about what works to promote financial capability. Toward that end, nationally renowned researchers evaluated each of these innovative programs to see what really works to promote financial capability. The research partners included the following organizations: Innovations for Poverty Action; the Center for Financial Security (University of Wisconsin-Madison); the Center for Community Capital (University of North Carolina-Chapel Hill); and the César E. Chávez Institute (San Francisco State University).

The Financial Capability Innovation Fund I is supported by a collaborative of funders led by the Citi Foundation and also including Bank of America, Capital One Foundation, Experian, Morgan Stanley, US Bank, and Visa.

Financial Capability Innovation Fund II

In 2012, CFSI selected eight cutting-edge projects to receive a total of $2.5 million in grant support from among 127 applications totaling more than $40 million in requests. The grantees were:

• 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.
• 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.
• MyPath (formerly 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.
• 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

Nationally renowned researchers are evaluating each of these innovative programs to gauge the effectiveness of the strategies they employ. Research partners include: Harder+Company; Innovations for Poverty Action; the Center for Financial Security (University of Wisconsin-Madison); the Center for Community Capital (University of North Carolina at Chapel Hill); the Take Charge America Institute (University of Arizona); Michael Sherraden (Washington University in St. Louis); Margaret Sherraden (University of Missouri-St. Louis); Vernon Loke (Eastern Washington University);  and the National Association for Latino Community Asset Builders.

The Financial Capability Innovation Fund II is supported by a collaborative of funders led by the Citi Foundation and also including Capital One Foundation, NYSE Euronext Foundation, Charles Schwab Bank, Charles Schwab Foundation, and Experian.