Putting Financial Skills into Action: New FIELD Whitepaper
There’s a renewed awareness today that it’s not enough to simply be knowledgeable about financial concepts–it’s about applying that knowledge–even in simple ways. We all know that eating vegetables are good for us yet, more often than not we reach for the french fries instead. This simple scenario also holds true in the realm of financial skills. Many of us know that we need to save, budget and work on our credit score but all too often we give in to impulses and put things off until tomorrow.
This move from gains in financial knowledge toward putting these skills into practice has been termed ‘financial capability’. A commitment to building financial capability is growing amongst microenterprise organizations, as discussed by the Aspen Institute’s FIELD program’s new white paper on the topic. Microenterprise organizations like ACCION USA use financial products coupled with financial education, allowing microentrepreneurs to not just learn about managing finances, but to effectively put that knowledge into practice with a financial product.
How is ACCION USA building financial capability? ACCION USA’s small business loans, secured loans (guaranteed with the money of the applicant) and small dollar credit builder loans (for individuals with no credit history) allow microentrepreneurs to build a strong installment credit history through on-time payments over an extended period of time. Financial education on credit and other small business fundamentals is provided by AUSA staff throughout the application process and the life of a small business loan, building skills around credit management that lead to long-term financial success.
Keep your eyes peeled for new tools that are emerging to support work around financial education for microentrepreneurs, like ACCION USA’s e-learning course on credit, or other web-based training sites like assetplatform.org.
New Summer Survey Under Way!
“A life is not important except in the impact it has on other lives.” – Jackie Robinson
We hear this philosophy often, and I believe it to be true. Think back to all those who have shaped your life, your thoughts, and your decisions: teachers and family, friends and mentors, coaches, neighbors, and pastors. Sometimes, short, one-time experiences can be just as impactful.
That is the hope of ACCION USA’s financial education team. We aim to build lasting relationships with program participants, and often we do; individuals will attend a webinar, we’ll then invite them a speed coaching event, and they will eventually apply for a business loan. Many times, though, we have only an hour – the length of a webinar or community workshop – to impact someone’s life.
Samuel Adams founder Jim Koch (right) offers business advice to a Boston business owner at a recent financial education event.
With that understanding, ACCION USA recently developed and launched our first-ever financial education longitudinal impact survey. We’ve gathered the names and contact information of financial education participants over the past year and half and are, through the end of July, surveying them on the quality, outcomes, and long-term impact of our financial education events.
Thus far, the results are very positive. Participants – even those from as far back as January 2009 – remember the events, remember what they learned, and can explain how the event content has since shaped their financial decisions. I’m personally interviewing speed coaching participants, and nearly all remember specific business advice they received! One man explained a coach’s advice to simplify his business logo, and another woman gushed about a coach’s suggestions to reach new clients with her niche business.
Currently, we gather feedback at the end of each financial education event; it helps us understand the event’s immediate effect on participants. But this longitudinal survey will be even more helpful by reporting the event’s long-lasting effects. Does a woman now have a habit of making a budget? Did she review her credit report for the first time and dispute an error? Did she improve her credit score, qualifying herself for a small business loan?
Above all, the survey results will help ACCION USA learn what we are doing well and how we can change our programs to more effectively serve entrepreneurs.
Stay tuned for the full survey report in August!
Tags: Financial Education, impact, Sam Adams, speed coaching, workshop
Survey Says … Microloans Working
Over 100 ACCION USA clients completed the 2009 MicroTest Client Outcomes Survey.
Despite an extremely challenging environment for small businesses during 2007-2009, the vast majority of ACCION USA clients managed to sustain their businesses, with many creating new jobs. So says a new report made possible by the hard work of two intrepid summer interns (thank you Max and Kathryn!) and the Aspen Institute’s MicroTest Client Outcomes Survey project. You can read the full report here.
To generate the data in the report, ACCION USA surveyed over 100 clients who had received microloans in 2007. We questioned them on number of employees, business contributions to household income, owners’ draw, etc. By comparing responses to those in the clients’ loan applications, we found several important longitudinal results, including:
- Job creation. Client businesses that received loans created or retained on average 2.4 jobs (not counting the owner), predominantly in low- to moderate-income communities.
- Wage increases. The median hourly wage provided by businesses owned by ACCION USA borrowers ($9 an hour) is 24% higher than the federal minimum wage.
- Business survival. 98% of existing businesses were still in business by year-end 2008 (compared to a national average of 70%).
2009 was a year marked by debate about how to measure the impact of microfinance in the developing world. Here in the U.S., MicroTest remains the gold standard for measuring client outcomes, and ACCION USA is pleased to participate in this project. We look forward to teaming up with the Aspen Institute once again in 2010. (And we’re looking for interns to help!)
Tags: Aspen Institute, impact, outcomes, recession