By Patricia Belden, President, POAH Communities
Compass Working Capital and POAH recently released a report showing early successes in our work promoting economic mobility in HUD-assisted housing through the Family Self Sufficiency Program. The story of Rochelle shows its great promise: Rochelle, a single mom to two girls ages 7 and 1, moved into a POAH community in North Kingstown, RI in 2016. On maternity leave from a part-time, minimum wage job, Rochelle had $2.18 in her checking account and no savings. Safe, decent affordable housing is an essential part of Rochelle and her girls’ stability, because with no savings, limited income, and young children to raise, stability is thin.
It might appear that the best way for Rochelle to improve her finances would be to move from a part time to a full time position when she returns to work. The tricky thing is, each time Rochelle’s wages increase, her rent will also increase. Families living in HUD-assisted housing pay about 30% of their income on rent, so any increase in wages results in a comparable increase in rent payment. The design of the program ensures households pay what they can afford, but for a family like Rochelle’s, the rent increases can make taking on additional work seem like less of a boon and more of a burden.
For a family like Rochelle’s, the rent increases can make taking on additional work seem like less of a boon and more of a burden.
In May, Rochelle enrolled in the Family Self-Sufficiency (FSS) program, a program that enables HUD-assisted families to increase their earnings, build savings, and make progress toward self-sufficiency. FSS is designed to allow a participating household to save rent increases attributable to earnings growth in a special escrow account. The program essentially converts increased monthly rent payments into a monthly savings deposit. In this way, FSS turns a disincentive into a powerful positive incentive for employment and earnings. Participating families can use this savings, which builds monthly over a five year period, to achieve their financial goals, so long as they also come off welfare, stay employed, and make progress toward personal and financial goals that they set for themselves.
In addition to the savings incentive, the coaches from Compass Working Capital provide one-on-one “client centered” financial coaching – to help participants achieve their financial goals.
After only 10 months in the FSS program, Rochelle has made some major changes to her family’s financial situation. She moved to a full-time position with benefits at a company where she feels she can grow and excel professionally. Within a few months at that new job she received two raises and a promotion. She opened a retirement account through her employer, set up direct deposit into her savings account (which now has a balance of $1,100), and opened a 529 college savings account for her newborn through Rhode Island’s CollegeBoundBaby program. She has increased her annual income by $25,000, reduced her debt by $5,000 and saved $4,416 in her FSS escrow account, a savings account tied to participant success in the FSS program. With her escrow funds, she plans to open an additional 529 account for her other daughter, pay off the remainder of her debt and save the remaining amount as an emergency fund.
Rochelle’s story is just one among many stories of success for families who have enrolled in Family Self-Sufficiency programs across the country.
In the last two years, POAH has launched seven Family Self-Sufficiency (FSS) programs for residents of privately owned assisted housing. We’ve seen tremendous success in our program to date, with over 160 families enrolled and nearly 50% actively saving each month. The average earned income of our FSS participants is steadily rising, employment rates are growing and credit scores are improving. And, although it’s harder to quantify, we believe that an important success of our FSS programs is that they are driven by the hopes and dreams of the resident participants. When residents are empowered to make choices and set goals for themselves, we believe the outcome is more meaningful, sustainable and valuable for the entire community.
When residents are empowered to make choices and set goals for themselves, we believe the outcome is more meaningful, sustainable and valuable for the entire community.
In less than two years into this five year program, five participants have already graduated (one purchased a home) and moved out of POAH’s subsidized communities, making those affordable homes available to another family in need.
Since FSS became available to multifamily owners and operators like POAH, we’ve seen considerable interest in uptake of the program among providers. I’m excited to share our report with you. www.poah.org/fss-report
Patricia Belden is President of POAH Communities, the property management company affiliated with Preservation of Affordable Housing. She formerly worked at POAH, as project manager, managing director and chief operating officer. Patricia possesses a broad knowledge of complex deal structuring and layered finance and has employed most of the available federal, state, local, private and tax credit equity funding programs to preserve at-risk affordable housing. Prior to joining POAH, she worked at Boston Financial Group and MassHousing.
Compass Working Capital is a non-profit financial services organization that provides residents with financial education and individualized, client-driven financial coaching to help participants chart and follow a path to reach their financial goals.