Social change work is hard and frustrating and wonderful and terrible; it is also, at times, funny, quirky and just plain fascinating. With this blog we hope to capture all that goes into what we do at Capital Good Fund, and we invite you to join the conversation!

Wednesday, September 25, 2013

Event At The College Crusade

Through the Financial Coaching Corps (FCC), a program we run in partnership with Rhode Island General Treasurer Gina Raimondo, we are building some powerful partnerships.  As a case in point, we are working with The College Crusade--whose mission is to reduce high school dropout rates and increase educational and career success for low-income urban youth--to provide one-on-one Financial Coaching to the families they serve.  Last night we presented our products and services, as well as an overview of how credit works, to 80 families, of which 25 have signed up for free Coaching!

We are very excited to continue financially empowering low-income families by working with great leaders in the government, non-profit and for-profit sectors.  Special thanks to Lisa Gallant, who manages the FCC, The College Crusade, and to Treasurer Raimondo for having the vision to work with us to create and grow this program.

Treasurer Raimondo speaking to the families
A group photo of paricipating families

Saturday, September 14, 2013

Girding For A Fight

As a financial services non-profit, it is natural for us to define our enemy--and more importantly, the enemy of the poor families we serve--as the predatory service companes that, taken together, represent a $100 billion / year industry (and growing).  This industry consists of payday lenders, check cashers, pawn shops, rent-to-own stores, refund anticipation lenders, and auto title lenders.  Before getting to the meat of this post, I'd like to quickly lay out why these companies are so damaging to our clients and the economy as a whole.  Let's take payday lenders, which are, according to a report by the Center for Community Economic Development (CCED), "...small, short-term, very expensive consumer loans...which [average] $375, plus the fee--which is typically in excess of 300% APR...the high fees and short-term lump-sum payment create a debt trap that causes consumer harm."  CCED found that, in 2011 alone, "The payday lending industry had a negative impact of $774 million...resulting in the estimated loss of more than 14,000 jobs.  U.S. households lost an additional $169 million as a result of an increase in Chapter 13 bankruptcies...bringing the total loss to nearly $1 billion."

I could continue to outline why the other services are equally damaging, but you get the point.  Now comes the question: what to do about it?  From our perspective, the answer lies in a three-pronged strategy: legislation to ban abusive practices; financial coaching to obviate the need for the services to begin with; and offering a more afordable and equitable product that out-competes what predatory companies can offer.  On the legislative side, for instance, we are part of a coalition that has been trying--unsuccessfully--in Rhode Island to cap at 36% APR the interest rate that payday lenders can charge (they can currently charge up to 260% APR).  Were that legislation to pass, the consumer would immediately be better protected from the most abusive practices.  On the financial coaching side, we are working one-on-one with hundreds of families to help them budget and build savings so that, when emergencies arise, they don't need a loan at all.  And finally, recognizing that access to credit is essential in our economy, we offer payday loan alternatives of up to $500 at 36% APR, and loans of $501 to $2,000 at 20% APR.

Friday, September 13, 2013

Financial Coaching Fellow Profile - Austin Mertz

When CGF Financial Coaching Fellow Austin Mertz first told his mom about the Fellowship, her response was less-than-enthusiastic: “Why would you be a Financial Coach when I’m still teaching you how to manage YOUR money?”  However, as an economics major at Brown University, Austin was seeking opportunities to apply his skills in the community, and he already felt comfortable in a one-on-one setting: in high school he served as a tutor, a role in which he thrived.

That said, he had a lot to learn about the curriculum content and he had never worked with people that are older.  Fortunately, his extensive training at CGF taught him how to establish his credibility in a way that would allay any such concerns.  Still, Austin notes that coaching “Is an interesting relationship and one that no amount of training can truly prepare you for.  Each client is different and [being successful] takes a lot of on-the-fly thinking.”

During the first term of the Fellowship, which began in January of 2013, he served three clients.  One of his favorite clients came to him bearing the burden of a seemingly insurmountable mountain of medical debt as well as the threat of foreclosure.  “It was a tough introduction to poverty in Providence,” he says. “My strategy was to refer him to Rhode Island Legal Services to advise him on both foreclosure and the possibility of filing for bankruptcy.”  The ability to know when to refer clients to community partners is something that was emphasized during his training, and it made a huge difference: the client was able to save his house and avoid the need for bankruptcy.  This was in part thanks to a new job he was able to secure, and in part because Austin helped him to face the fear of looking at his financial situation.  “With this client, it felt more like ‘Financial Therapy’ than Coaching.  He really came out of our sessions with a feeling of hope and a sense of confidence about his financial future.”

Austin is now beginning his second term as a Fellow, and he is excited to serve more families, pointing out that “The first term was a rude awakening to the nature of poverty, but it was very rewarding and I now feel more confident than ever in my ability to serve my clients.”  The impact of the Fellowship has gone beyond the lives he’s changed: when he first applied for the position he was unsure of what path he wanted to pursue after graduation.  “Now that I have had a chance to see how CGF operates, I have become interested in non-profit consulting and social impact investing.  I’ve been mentioning the Fellowship in cover letters for jobs, and this past summer I worked at a social innovation non-profit.”

In short, for Austin the Fellowship has given him the opportunity to expand his understanding of finance, crystallize his career path and, of course, empower families.  When thinking about his upbringing, he recalls that his parents were very financially conscious, which has translated to his own aversion to needless spending.  Nevertheless, Austin recognizes that every person’s experience is unique, which means that every Coaching session is unique.  As he likes to put it, “Sometimes Coaching is therapeutic, sometimes it’s educational, but regardless of one’s situation, it is always transformational.”

Monday, September 9, 2013

Financial Coaching Fellow Profile - Mike Casinelli

Mike Casinelli found himself in full business attire at a Starbucks in Providence, RI, waiting to meet with George, a CGF Financial Coaching Fellow.  His background as a finance major at Bryant University colored his expectations for the interview: leather stuffed chairs, mahogany desks, book cases filled with leather bound tomes, large windows overlooking a body of water or expanse of greenery.  So when George, wearing a t-shirt and shorts, shook Mike’s hand and sat across from him on a plastic chair, he immediately knew that this would be something different—finance related, yes, but with rather nontraditional goals.

Tuesday, September 3, 2013

Financial Coaching Fellow Profile - Jerome Thompson

CGF Financial Coaching Fellow Jerome Thompson grew up in a family that practiced what he likes to call “Survival Finance,” by which he means that financial issues were dealt with on an emergency basis.  As a result, debts piled up to the point that, as he half-jokingly asserts, caller ID was a godsend to his parents because it allowed them to screen the calls of creditors.  Lacking a bank account and plan for building savings, the family was always on the brink, and Jerome had no role model for how to manage money.

One day, while riding the bus to work, Jerome struck up a conversation with CGF’s first Head Financial Coach, Jon Erickson.  Having already heard about our work, Jerome was intrigued by the opportunity to become a Coaching Fellow: intrigued, but daunted by how little he knew coming in.

When Jerome started the Fellowship in September of 2012 he was part of the 2nd cohort of Coaches.  After receiving three weeks of intensive training, during which he was exposed to information that he quickly began to apply to his own life, he served his first low-income family.  Now, a year later, Jerome has served 12 clients, completed 25 free tax returns through the IRS VITA (Volunteer Income Tax Assistance) Program and mastered our Coaching curriculum.  He has also seen us grow from a small organization with only 4 employees and a handful of Coaches, to a rapidly growing non-profit with 12 employees and over 20 Fellows.

“Money is deeply connected to psychology,” Jerome said to me during our interview.  “A lot of financial issues are rooted in the environment in which people grew up.  If you aren’t given a positive example, it’s easy to fall into the same traps.  What I experienced is true of many people in my community.”  Leveraging his own experience, he often tells his clients to scrutinize offers they get: “It costs more to be poor,” he says, but an understanding of the system and one’s own motivations can lower that cost.

“One of my favorite clients,” he proudly notes, “Was able to consolidate debt from an interest rate of over 20% to 8% thanks to our sessions.  Now she has extra money to build savings and meet her and her family’s long-term goals.”  So what’s next for Jerome?  “Thanks to the network to which CGF introduced me, I am now training to be an agent with New York Life.  I also plan to continue helping CGF as a Coach and a tax preparer. I believe that income inequality is the civil rights issue of our time, and I want to do anything I can to further CGF’s mission of empowering families to move forward.”

Monday, September 2, 2013

Two Tremendous Opportunities for Impact

Here are two statistics that represent "low-hanging fruit" opportunities for social impact: 
  1. "Nearly two-thirds of the 5.4 million legal immigrants from Mexico who are eligible to become citizens of the United States have not yet taken that step." (Pew Hispanic, The Path Not Taken February 2013)
  2. "Roughly a quarter of Americans eligible for federal nutrition assistance don't sign up for it," and "The U.S. Department of Agriculture...says that in fiscal 2010 nearly 51 million Americans were poor enough to qualify [for food stamps] but only 38 million received benefits." (Huffington Post, Food Stamps Avoided By Million of Eligible Americans August 2013)
Being a U.S. Citizen confers numerous monetary and non-monetary benefits, from increased access to benefits such as student aid, to the ability to vote, petition family members to come to the U.S. and eliminate the fear of deportation.  In the same vein, food stamps not only can mean the difference being being hungry and eating three square meals a day, they also reduce one of the main stressors of being poor: the fear of not having enough income to meet expenses.  Clearly, then, given the induspitably high impact of becoming a citizen or qualifying for SNAP (Supplementary Nutrition Assistance Program), combined with the (relative) ease of taking either step, we are presented with an opportunity to change lives at low-cost.