OFFICE OF FINANCIAL EMPOWERMENT
Leveraging the power of City Hall to strengthen economic
security and mobility for low income families
The Office of Financial Empowerment (OFE) is a unique private-public partnership housed within the Office of the Treasurer of San Francisco that convenes, innovates and advocates to strengthen the economic security and mobility of low income San Franciscans. For more than a decade, under the leadership of Treasurer José Cisneros, the OFE has engaged partners inside and outside City Hall to equip San Franciscans with knowledge, skills and resources to strengthen their financial health and well-being. At the same time, the OFE has leveraged what has worked on the ground to model what is possible for cities across the country.
The OFE designs, pilots and expands programs and policies that help low income families build economic security and mobility. Our programs include:
Kindergarten to College – the first and largest universal child savings program of its kind in the country manages accounts for over 26,000 public school children.
Smart Money Coaching – delivers financial coaching through 27 sites across San Francisco.
Summer Jobs Connect – equips youth with a credit union account, financial education, and strategies to save during summer employment.
Bank On San Francisco – helps residents access safe, affordable accounts at responsible banks and credit unions.
Our work also includes policy efforts to fight predatory financial practices and help families build assets, and an economic Mobility Lab (mLab) to test innovations.
History of Innovation
Working Families CreditNationally 15-25% of families eligible for the federal Earned Income Tax Credit (EITC) do not claim it. In San Francisco the estimated annual amount of unclaimed credit equaled $12 million.
Bank On San FranciscoFifty thousand households, including half of all African-American and Latino adults, in San Francisco were unbanked, relying on alternative--often predatory--financial services to manage their day-to-day financial needs.
Payday Plus SFPayday loans are predatory in nature, with annual percentage interest rates (APRs) as high as 400%, or $15 for every $100 borrowed. With repayment required in full within two weeks, borrowers often take out a new loan to pay an old one, creating a debt cycle that is hard to break. By 2007, 36 payday lenders in San Francisco were lending over $60 million annually to residents.
Kindergarten to CollegeOne in three San Francisco children are born into families with no savings or assets of any kind; one in two for African America and Latino children. Yet children with a college savings account, even with modest savings, are more likely to attend and graduate from college than those with no account.
CurrenC SFMore than 67,000 working households in San Francisco did not get paid by direct deposit, receiving their pay in check or cash. Employees receiving checks often turn to check cashing companies, paying as much as $1,000 in annual fees. Processing checks is also expensive for employers and moving to direct deposit can significantly lower payroll fees.
Summer Jobs ConnectWhile San Francisco’s summer youth employment programs have been successful in building work-related skills and career pathways, participants lacked financial knowledge and skills, and often relied on check cashers to cash their paychecks.
Smart Money CoachingMany Americans have limited money management skills and struggle to make sound financial decisions. And they know it; the National Foundation for Credit Counseling estimates 40% of Americans give themselves a C, D or F in their understanding of personal finance (2015).
Bank On San Francisco 2.0Thanks to the contribution of a strong Bank On San Francisco coalition launched a decade ago, the percentage of unbanked residents in San Francisco dropped from 5.9% in 2011 to 2.1% in 2015. However, 16.5% of residents with bank accounts continue to turn to high-cost payday lenders, check-cashers and other alternative services to meet financial needs (FDIC, 2015).
Mobility LabIn response to growing inequality, diminishing mobility and a surge in citizen calls for city government to act where federal and state government can’t or won’t on behalf of low income families, OFE is called to advance the next generation of municipal innovations.
To understand how best to sharpen our role, we engaged in a strategic planning process between late 2016 and early 2017. We listened to key stakeholders, assessed our work, honed our mission and identified unique ways we can best support low income San Franciscans over the next five years. The results of this process are outlined below.
A City Where Everyone Can Thrive
We leverage the power of City Hall to strengthen economic security and mobility for low income families
Goals and Strategies
With income and wealth inequality on the rise, and families struggling to get ahead, we are prioritizing support to those communities across the city that face the greatest economic challenges — low income communities and communities of color. The next five years will see us prioritizing families that reside, work or receive city services in San Francisco’s low income neighborhoods. We will work closely with the treasurer and a broad group of thought and implementation partners inside and outside city government to pursue three primary goals in support of our mission.
Goal 1: Demonstrate Promising and Expand Proven Innovations
Within this goal, we will focus on strategies to innovate while strengthening our flagship initiatives.
Strategy: Identify and demonstrate promising ideas
In 2017, we will launch an economic Mobility Lab (mLab) designed to test promising program and policy innovations that strengthen the economic security and mobility of low income San Franciscans. Over the next three years, mLab will systematically test 4-6 promising ideas by: (a) defining key financial challenges faced by low income families; (b) employing human-centered design and behavioral science to understand these challenges, and identify promising solutions; (c) partnering with innovation funders and private, nonprofit and city partners to co-design, pilot and evaluate these program and policy solutions; (d) documenting and sharing insights with advocates, policy makers and social service providers, including municipal peers across the United States; and (e) exploring opportunities to replicate and scale those solutions with the greatest proven potential.
Strategy: Strengthen Kindergarten to College
We will strengthen our flagship Kindergarten to College (K2C) program in four key areas to enable the program to serve more families, more effectively. First, we will prioritize outreach to low income neighborhoods across San Francisco. Second, we will integrate K2C more fully into the spectrum of city services for children, youth and families. Third, we will research and develop a hybrid account model that combines the benefits of K2C’s current custodial account with an account that provides market returns. Fourth, we will strengthen K2C’s operational capability by: (a) providing critical stakeholders access to a technology platform that improves their ability to support the program; (b) increasing the number of retail financial institutions participating in K2C, and the number and type of channels families can use to make deposits; and (c) defining clear policies and procedures to distribute funds to college-bound students in a way that minimizes families’ tax liability and the impact on financial aid. With these steps, we seek to help families double their contributions to $5 million and increase the percentage of families actively saving to 25% by 2020.
Strategy: Expand and deepen Bank On San Francisco
One in five San Franciscans are unbanked or underbanked, often relying on wealth-stripping, fringe financial products and services to manage their money. After an important decade focused primarily on bringing the unbanked into the financial mainstream, we are now focused on building residents’ trust in responsible financial institutions, and directing them to safe, affordable accounts that help them build wealth and resiliency. This strategy will include partnering with at least one Bank On San Francisco institution to evaluate impact on underbanked families, and pilot innovations that improve efficiency. With these steps, we seek to help low income families save $1 million by June 2020.
Strategy: Integrate financial capability into the work of other city departments
We are uniquely positioned to engage other city departments to integrate financial capability principles and practices into existing municipal services to low income residents. For example, we have successfully integrated financial coaching into city services to public benefit and housing recipients. We will work with city departments to expand this work by training front-line staff; supporting the development and integration of financial capability curriculum in the public school system; and embedding financial capability into the city’s contracting and procurement processes.
Goal 2: Use Our Voice for Economic Justice to Help Families Build and Protect Wealth
Leveraging the power of City Hall, we will pursue two strategies to protect consumers from predatory financial practices and strengthen the impact of our programs.
Strategy: Build City’s capability for consumer financial protection
We will use our unique position to launch a consumer financial protection initiative by 2020. Under this initiative, we will equip San Franciscans with a mechanism to voice their complaints of predatory practices, develop a system to capture and investigate these complaints, and hold predatory financial service providers accountable.
Strategy: Advocate policies that most directly support our program priorities
We recognize the importance of policy to support programs and strengthen impact among low income families across San Francisco. To be most effective, we will focus our advocacy on policies that support our flagship Kindergarten to College, Bank On San Francisco and Financial Capability Integration programs.
Goal 3: Amplify Our Work with Strong Funding, Research and Communications
To increase our effectiveness, we will pursue three key organizational strategies.
Strategy: Measure our performance and capture learning
We are committed to evidence, clear metrics to track performance and a systematic way to capture and share learning. To support this commitment, we will put evidence at the heart of our programs, planning and day-to-day decision-making. At the same time, we will deploy a knowledge management system to effectively harvest learning.
Strategy: Share our performance and learning
We are committed to sharing our performance and insights with implementing partners, policy makers, funders, municipal peers and San Francisco residents. To support this commitment, we will leverage an array of communication channels to share our ideas, impact and learning. First, we will communicate our performance and insights through a public dashboard, blog, a revised website, a regular newsletter, and policy and program briefs. Second, we will convene stakeholders to highlight innovation, share learning and facilitate collaboration. Third, we will launch a ‘State of the City’ report to communicate the financial challenges and needs of low income families living, working or receiving services in San Francisco.
Strategy: Strengthen our organization by diversifying staffing and funding
We are committed to the principle of diversity. To support this commitment, we will maintain a diverse team that brings broad perspective and reflects the lived experiences of the communities we serve. We will also diversify our funding to expand the reach and impact of our work.
Family Image: Image Property of MEDA. Young Children Image: Image Property of Kindergarten to College. Timeline Image 1 – Working Families Credit: Dept. of Children, Youth and Their Families. Timeline Image 2 – Bank On San Francisco: Property of Bank On San Francisco. Timeline Image 3 – Payday Plus SF: iStock ID#173368416. Timeline Image 4 – Kindergarten to College: Image Property of Kindergarten to College. Timeline Image 5 – CurrencyC SF: Image Property of CurrenC SF. Timeline Image 6 – Summer Jobs Connect: Image Property of United Way Bay Area.Timeline Image 7 – Smart Money Coaching: Flikr, Creative Commons (https://www.flickr.com/photos/41284017@N08/6764058985).Timeline Image 8 – Bank On San Francisco 2017: Image Property of MEDA. Timeline Image 9 – OFE Staff: Image Property of Jade Moy. Bayview Mural Image: “What’s Going On?” Artist: Christy Majano, Photo Credit: Madeleine Johnson.