Pathways to Financial Empowerment

We enable credit unions to empower underserved Americans through trusted financial guidance linked to goal-oriented financial products.

Photo of Chi Anunwa
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Eligibility

  • 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

Gender

  • Woman

Where are you making a difference?

California: Gaberville (95542)
New Mexico: Santa Fe (87507)
Montana: Missoula (59801)
Texas: Del Rio (78840)
New York: New York (10032)
Louisiana: New Orleans (70004)
Georgia: Atlanta (30314)
North Carolina: Asheville (28801)
Virginia: Roanoke (24019)
Vermont: Winooski (05404)

Focus Areas (required)

  • Development & Prosperity

Date Started

10/16/2015

Organization Type

  • nonprofit/NGO/citizen sector

Project Stage: Select the description below that best applies to your approach.

  • Scaling (expanding impact to many new places or in many new ways)

Budget

  • $500k - $1m

Website or social media URL(s) (optional)

Neighborhood Trust - http://neighborhoodtrust.org

The Federation - http://www.cdcu.coop/initiatives/pathways-to-financial-empowerment/

Twitter URL

Neighborhood Trust - https://twitter.com/NTFP_Official

The Federation - https://twitter.com/CDCU_Federation

Facebook URL

Neighborhood Trust - https://www.facebook.com/NeighborhoodTrust/

The Federation - https://www.facebook.com/groups/CDCUFederation/

LinkedIn URL

Neighborhood Trust - https://www.linkedin.com/company/neighborhood-trust-financial-partners/

The Federation - https://www.linkedin.com/company/national-federation-of-community-development-credit-unions

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.

Neighborhood Trust has always pursued its mission in partnership with credit unions, starting with our very own Neighborhood Trust Federal Credit Union, pairing coaching with financial products that meet the needs of low-income populations. Our “aha moment” was when our credit union survey revealed that members banked with us not for accessible products or affordable rates but because they trusted our member service representative “Marisol.” The trusted relationship was the catalyst for our clients engaging with services. Bundling trusted financial guidance into the credit union experience not only bolsters impact, but is also smart business, creating a loyal membership using products wisely to improve their financial health.

2. The Problem: What problem are you helping to solve?

Millions of working Americans are grappling with income volatility and wage stagnation. Many are underserved by mainstream banking and use predatory services like payday loans and check cashiers to cope with financial shocks, as shown by the fact that subprime credit and financing products are now a $173 billion industry. To address this, it is crucial to improve access to safe and affordable financial products for underserved communities.

3. Your Solution: How are you planning to solve this problem? Share your specific approach.

Pathways integrates financial coaching into service delivery at community development credit unions (CDCUs) – credit unions designated with a mission of serving low- and moderate-income communities. Led by Neighborhood Trust Financial Partners, in conjunction with the National Federation of Community Development Credit Unions (the Federation), Pathways achieves long-term financial inclusion for these communities by ensuring credit union products are tied to best-in-class, goal-oriented financial coaching.

Pathways uses technology to enable credit unions to integrate financial coaching into their operations as a complement to their products, while also tracking the impact of services. The platform streamlines coaching through soft credit pulls at intake and follow-up, giving the coach insight into the client’s financial life and creating a coaching experience that enables action. Automated text message “nudges” encourage clients to follow through on specific actions in their personalized financial action plan. The platform also tracks data on the long-term financial outcomes of members that use the service, creating a systematic feedback mechanism that informs best practices.

4. Example: Please walk us through a specific example of how your solution is working to solve the problem.

Freedom First Credit Union is a sterling example of how Pathways is working to empower low-income Americans and address their most basic financial obstacles by coupling financial coaching with affordable financial products. Through their Responsible Rides program, Freedom First collaborates with Pathways and community auto dealers to combine financial coaching, vehicle maintenance classes and access to affordable, low-interest car loans. The program is aimed at low-income members with poor credit who would otherwise only qualify for high-interest subprime loans. Participants not only avoid predatory, high-interest loans, they are also given the coaching and education needed for them to keep their vehicles in the long-term. To date, Responsible Rides has helped at least 136 members become car owners and has disbursed over $1.4 million in low-interest loans.

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?

Pathways is expanding financial inclusion for underserved individuals nationally, having served over 4,000 clients at CDCUs since the program’s launch. CDCUs collectively serve over 7 million low-and moderate income individuals and specialize in serving populations with limited access to safe financial services. 67% percent of CDCU branches are located in CDFI Fund Investment Areas (low-income neighborhoods) and 46% of CDCUs predominantly serve people of color.

5b. Please specify if the population you are reaching is underserved due to any of the following characteristics:

  • geography
  • immigration status
  • language
  • race/ethnicity
  • socio-economic class

6. Marketplace: Who else is addressing the same problem? How does the proposed project differ from these approaches?

There is a broad market of fintech innovations working to address the needs of struggling and underserved Americans. Pathways differentiates itself through the trusted coaching relationship at the core of our service. This enables CDCUs to engage low-income and other marginalized communities who normally would not engage with a purely technological tool due to a lack of trust or literacy with financial services. In addition, Pathways enables access to a full range of financial products as opposed to an individual fintech service or product, giving clients a variety of options for their needs.

7. Impact: How has your project made a difference so far?

Pathways has 15 credit union partners that have coached nearly 4,000 low-income individuals. After 4-6 months of coaching, 59% of clients improved their credit score, 27% improved their credit category, and nearly 45% reduced their total debt. One such client is Marion from the New Orleans Firemen's Federal Credit Union (NOFFCU). In 2016, she had 4 payday loans, frequent overdraft fees, and $7,000 in debt. Using Pathways, NOFFCU helped her enroll in a debt management plan, create a strategy for the payday loans and develop a budget. Today, she has paid off nearly all her debt and boosted her credit score by 24 points. “Due to her dedication, Marion has demonstrated the kind of success that’s possible with the Pathways model,” said Kathy Breaux, NOFFCU Financial Services Manager. “This is what NOFFCU is here to do for our members.”

8a. Spread Strategies: Moving forward, what are the main strategies for scaling your impact?

Pathways is designed for scale – the model multiplies impact by 1) building credit unions’ capacity to do more for their members’ financial health, 2) targeting CDCUs with multiple branches in rural, urban and suburban regions nationwide, and 3) using technology to deliver a turnkey coaching model.

We are also testing low-touch interventions that are woven into key financial moments like applying for a loan. These can be delivered by frontline staff like loan officers and tellers and will facilitate scale by expanding Pathways to credit unions that don’t have a full-time coach.

8b. If applicable, which of the following scaling strategies have you launched?

  • Organizational Growth
  • Franchising, Licensing, Accreditation
  • Trainings, Consultation

9. Financial Sustainability Plan: What is this solution’s plan to ensure financial sustainability?

Today, Pathways is supported mainly by philanthropic support. In 2017, we introduced a fee-for-service model, taking a significant step toward greater fiscal sustainability, and we have recruited our 3rd cohort of CDCUs at this new pricing level. Over time, as our user base expands, the primary funding source will shift to earned revenue. CDCUs are also able to use retained earnings from their products to offset the costs of delivering coaching, rather than relying entirely on philanthropy.

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?

Neighborhood Trust is led by CEO Justine Zinkin, who has been deeply embedded in New York City’s economic development landscape for over two decades. In her tenure as CEO, Justine has led a transformation of the financial inclusion field in New York City, and Neighborhood Trust is now one of the nation’s leading providers of financial empowerment services. For the Pathways program, she works closely with Cathie Mahon, President of the Federation of Community Development Credit Unions.

How did you hear about this challenge?

  • Recommended by others
  • Email
  • Word of mouth

Evaluation results

3 evaluations so far

1. Overall, would you champion this entry as a excellent example to move forward to the next phase of the challenge and become a semifinalist?

Yes, absolutely! - 33.3%

Yes/maybe - 0%

Maybe - 33.3%

Maybe/no - 33.3%

No - 0%

2. Is this entry INNOVATIVE?

Yes, absolutely! - 33.3%

Yes/maybe - 0%

Maybe - 33.3%

Maybe/no - 33.3%

No - 0%

3. Is this entry IMPACTFUL on financial wellbeing?

Yes, absolutely! - 66.7%

Yes/maybe - 33.3%

Maybe - 0%

Maybe/no - 0%

No - 0%

4. Is this entry SUSTAINABLE?

Yes, absolutely! - 0%

Yes/maybe - 66.7%

Maybe - 0%

Maybe/no - 33.3%

No - 0%

5. What are some of the HIGHLIGHTS of strengths of this entry?

Connection to underserved community - 100%

Clarity of Model - 66.7%

Clarity of Writing - 0%

Idea Originality - 33.3%

Understanding of the marketplace or sector - 33.3%

Impact measurement - 66.7%

Impact Potential - 33.3%

Financial Sustainability - 33.3%

Team - 0%

Partnerships - 0%

Potential to scale - 33.3%

6. What are some of the areas for IMPROVEMENT of this entry?

Connection to underserved community - 0%

Clarity of Model - 0%

Clarity of Writing - 0%

Idea Originality - 33.3%

Understanding of the marketplace or sector - 0%

Impact measurement - 0%

Impact Potential - 0%

Financial Sustainability - 66.7%

Team - 0%

Partnerships - 0%

Potential to scale - 100%

1 comment

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Photo of Michelle Parker

Chi Anunwa Great insights about measuring the impact of financial counseling!