Leveraging Housing Assistance as a Platform for Economic Mobility
We leverage an existing federal housing program to support families to build financial security as a pathway to greater economic opportunity
Juan's dream is that his children will have more opportunities than he once did. He is working to make that possible.
Lidia is a mother and grandmother. Reaching her goal of homeownership means she has a place where her whole family can come together.
Mariluz had worked her entire life but never felt stable. Now she runs her own business and is preparing to become a homeowner.
Rosa's dream was always to own her own home. It was a dream she used to think she could never make come true. The Compass FSS program gave her the chance to build savings for a down payment and build the financial security she needed to become a homeowner.
I am not an employee of BNY Mellon, or an immediate family member of a BNY Mellon employee
I am over 18 years of age
My organization is incorporated as a non-profit, for-profit, or hybrid organization, or I have a partner that is incorporated and could accept funds on my behalf
I have already piloted my initiative and have some initial evidence of impact
My organization is headquartered and creating impact in the United States
Where are you making a difference?
Massachusetts: Boston (02125), Cambridge (02139), Hyannis (02601), Lynn (01902), Springfield (01109) | Rhode Island: North Kingstown (02852), Providence (02909) | Connecticut: Hartford (06101), Willimantic (06226) | Mississippi: Jackson (39201) | Missouri: Independence (64056) | et. al.
Project Stage: Select the description below that best applies to your approach.
Scaling (expanding impact to many new places or in many new ways)
Website or social media URL(s) (optional)
1.Founding Story: Share a story about the "Aha!" moment that led the founder(s) to get started or the story of how you saw the potential for this to succeed.
Tanya is a single mother of two teenage children. She lives in the city of Lynn, Massachusetts, works full time, and, until recently, had been receiving housing assistance through her local public housing authority for several years. Like many families in the subsidized housing and welfare systems, Tanya was getting by -- but she very much wanted to get ahead and build a better life for herself and her children. Tanya’s dream had always been to own her own home. But she believed that owning a home was not, in her words, “for families like mine” -- that is, a single, low-income mother who lived in subsidized housing, and grew up in a family where no one had ever been a homeowner. The Compass FSS Program helped her reach that goal.
2. The Problem: What problem are you helping to solve?
There are so many families like Tanya’s across the country who have similar hopes and dreams for the future. While our subsidized housing system provides a crucial safety net for many families, current rules in these programs actually discourage and penalize savings, creating traps that make it more difficult for families to reach their goals. There is more that can be done to leverage this assistance as a platform for economic mobility.
3. Your Solution: How are you planning to solve this problem? Share your specific approach.
Households receiving rental assistance typically pay about 30 percent of their income toward rent. The unintended consequence of this policy is that it may create a disincentive for families to increase their income, because working more means paying more rent and possibly losing other benefits tied to income, a structure which also makes it more difficult for families to build savings. In 1990, Congress introduced the FSS program to address this disincentive. As families work more and earn more money, the FSS program allows them to capture the increased portion of their rent payment in a savings account, held in escrow by the housing authority. The program essentially converts increased monthly rent payments into a monthly savings deposit. Despite its potential to help lift families out of poverty, FSS has been underutilized around the country. In 2010, Compass launched a new asset building and financial capability model for the FSS program, with the belief that a new approach could drive stronger results for participating families and expand the program’s scope and impact around the country. Compass is now working to expand the scope and impact of the program on a national scale.
4. Example: Please walk us through a specific example of how your solution is working to solve the problem.
In 2010, Tanya enrolled in a FSS program operated through a partnership between her housing authority and Compass. Over the course of five years in the program, she worked with a Compass Financial Coach who helped her figure out how to pay down her debt, increase her annual income by nearly $8,000, and improve her credit score by more than 140 points. As she earned more money, her rent increased as well, but the program allowed her to capture that increase as savings. Tanya built over $3,000 in savings in the program. When she graduated from the FSS program, she used those savings to achieve her dream of becoming a homeowner -- the first in her family ever to do so.
5a. Too many people in the U.S. have unmet needs for financial products and services. How is your work reaching a population(s) that is currently underserved? If it is not reaching an underserved population yet, how might it in the near future?
The Compass FSS program serves families who receive federal housing assistance. Rules in federal housing assistance and other programs often discourage and penalize families for building savings and make it difficult for families to work toward their financial goals. These families are also historically underserved by providers of high-quality financial products and services, and lack access to the type of financial opportunities and high-quality guidance that make financial progress possible.
5b. Please specify if the population you are reaching is underserved due to any of the following characteristics:
6. Marketplace: Who else is addressing the same problem? How does the proposed project differ from these approaches?
While a constellation of local and regional organizations do important work to support families with low incomes to build savings and assets, Compass is the first nonprofit organization in the country to leverage the FSS program to help families in this way. There is no other anti-poverty program like FSS in the country, one that provides a built-in savings account to participating families. It is the federal government’s largest asset building program for families with low incomes. Compass is the first to combine financial coaching and counseling expertise with this unique program.
7. Impact: How has your project made a difference so far?
There are many more stories like Tanya's that we could share, some of which are included on this submission or available at our website. To date, the Compass program has supported over 1,200 families to work toward their financial goals and collectively build more than $4,000,000 in savings. In September 2017, Abt Associates released the final results of a rigorous, multi-year study of Compass’ FSS programs, which found that program participants earned more and received less welfare payments than their matched peers, including an average increase of $6,305 in annual household earnings. Participants also achieved positive credit and debt outcomes that exceeded benchmarks, including an average decrease in derogatory debt of $764. The study also found that every $100 in cost to operate the program returned $3,600 to each participating family.
8a. Spread Strategies: Moving forward, what are the main strategies for scaling your impact?
In 2016, Compass launched a National FSS Network to expand the scope and impact of the FSS program on a national scale, and expand access to our model to a broader share of the more than estimated 2 million families across the country who could access the program if it were offered to them. The Network provides housing and nonprofit partners with training and ongoing technical assistance to integrate asset building and financial capability strategies into their own FSS programs, and has helped to surface new learning and ideas to enhance Compass' own approach to the program.
8b. If applicable, which of the following scaling strategies have you launched?
Franchising, Licensing, Accreditation
Large Scale Partnerships
Lobbying, Policy Change
9. Financial Sustainability Plan: What is this solution’s plan to ensure financial sustainability?
Congress has held funding for the program steady since it was created 25 years ago, demonstrating broad bipartisan support for FSS. Congress recently passed legislation to streamline and improve the program, which will allow more funding to flow to high-performing and innovative FSS programs and also position Compass and its policy partners to expand overall funding for the program. While government plays this important role, philanthropy has shown great interest in the model as well.
10. Team: What is the current composition of your team (types of roles, qualifications, full-time vs. part-time, board members, etc.), and how do you plan to evolve the team’s composition as the project grows?
The Compass team has grown steadily in recent years to support the continued growth and impact of our work on FSS. Compass' local and national program teams provide direct support to clients and partners, while our financial services and knowledge management teams support ongoing improvement to how we support clients and measure program success. We are focused on further expanding our coaching team, engaging more mission-aligned Network partners, and leveraging technology to facilitate coaching.
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