For the past five years, I’ve had the opportunity to work with mayors across the country who have come to realize that the economic vitality of their city is tied to the financial stability of their residents. This understanding contextualized with the racial wealth gap, housing crisis, and strain on city and social service budgets among other pressing issues mayors grapple with has spurred the growing field of municipal financial empowerment over the past decade.
Financial instability lies at the heart of many issues families are experiencing, often regardless of income. Here are some national statistics that point to how universal the issue is:
While local governments have long played a central role providing social services, such as workforce development and public housing, at the height of the recession they learned the hard way that such financial instability both increases demand for, and decreases the success of, these types of municipal social services. Recent research shows, for example, that families with even a small amount of savings are less likely to be evicted, miss a housing or utility payment, or receive public benefits when income disruptions occur.
I often get the question, “why is this something a city should address?” or, “don’t nonprofits already focus on this?”. Well, cities uniquely must address problems of the magnitude of financial insecurity because such statistics represent people in their community who are in need–and mayors are 1) close enough to constituents to understand these challenges and, 2) are held accountable for delivering large scale, innovative, and effective solutions that help those in need. There is also a lot cities can do. Cities are a trusted voice amidst a sea of scams and predatory actors; they have the authority to regulate products and businesses in the consumer financial marketplace; they are touchpoints for people in need, often controlling the funding, program entry and referral points, and policies for social services.
Still not sure what I mean by municipal financial empowerment? It essentially is a set of tools, primarily programs and policies that cities have adopted to tackle the myriad of social and economic issues correlated to the financial stability of their residents. It is organized into four key areas:
There are numerous examples of impactful interventions cities have tested, evaluated and invested public (local, state and federal) dollars in–many of which are being replicated in cities across the country:
Now that the crash course in municipal financial empowerment is over, and I’m taking a step away from the work directly to pursue graduate school, I’d like to reflect a bit on my time working with cities on financial empowerment issues and share a few takeaways that might apply more broadly to other city work you may do.
While the field of municipal financial empowerment is still relatively nascent (10 years officially) and only a small piece of the puzzle when it comes to reducing poverty and instability, a lot can be learned from how it has approached the problem and hopefully can spur other ideas on how to better leverage city services and infrastructure for such aims. It sure has for me!
Matt Spring is a proud CHF ’13 alumnus and serves on the CHF Board of Directors. He most recently worked at the Cities for Financial Empowerment Fund in New York City. The views expressed in this post are his own.