The Family Independence Initiative is developing innovations that will change the system as we know it to respond to initiative, build community, and expand low-income people’s abilities to be agents of their own change. Our innovations in funding approaches, tools, and consumer feedback are among the many building blocks the Opportunity Platform that can catayze economic and social mobility for low-income people and help rebuild the middle class.
FII’s Demonstrations provide an opportunity to test new tools and approaches to address priorities identified by families. We have piloted the following innovations and will be sharing them with others to replicate in communities across the country.
In 2010, in partnership with Mission Asset Fund, FII launched a pilot loan program that broadened traditional underwriting used by lending institutions and incorporated “character” information, mutuality, and payment history traditionally not used by banks (rent, cell phone bills, utilities, etc.). The “character” criterion can be used by any community-based organization to underwrite a loan, based on the personal relationships and knowledge that organization might have of the families. Community members can “vouch” for a borrower, and their word has power. People who provide references that prove reliable are eligible to access resources while those that may be unreliable lose access. These components of the underwriting process reinforce the building of relationships, reputation, and trust that naturally happens in communities.
Credit-building Lending Circles
Similar to the Character-based Loan, which was developed in response to family demand, FII is responding to the demand of families to organize and run their own Lending Circles within FII.
A lending circle is when people who may not have access to bank credit or prefer to borrow from people they know and trust get together to form a group loan. Everyone in the group contributes money to the loan, and everyone gets a chance to take the loan out. People across the world organize loans between friends or family without a financial institution all the time, and lending circles are known throughout the world: Susus throughout Africa, Paluwagan in the Philippines, Lun-hui in China, and Tandas in Mexico.
Because informal lending circles do not help people build credit, FII formalizes these financial transactions with the use of electronic payments. These payments in turn are tracked and reported to the credit agencies and help improve participants’ credit score.
The families in our demonstration projects often require access to additional social and financial capital to realize their goals. FII is piloting UpTogether, a community building website using social networking technology to expand access to social capital for people participating in our family groups by connecting them with individuals who have access to resources, connections, and information. Through UpTogether, people can identify and track their goals. They can also form groups around common interests to share information, get support, and hold each other accountable. Learn more about UpTogether.
Direct Consumer Feedback
Consumer satisfaction is one of the primary ways we assess private sector services. We know that providers of goods and services face competition and that our reviews influence others and deliver useful feedback for providers. Consumer reviews expand our choices, help us determine quality, and are a form of power—businesses that ignore feedback can find themselves with fewer customers. But despite the ubiquity of consumer voice, there is a notable void of consumer feedback for people receiving free or low cost services.
Why? Low-income people are seen as recipients, not consumers, and their opinions are not consistently gathered or considered in program and service evaluation. As a result, providers are accountable to the funder not the consumer. This means funders are not considering consumer voice when making funding decisions, and programs do not benefit from ongoing adjustments responding to consumer experience. And the consumers remain powerless—without recourse or voice.
FII is creating and testing consumer feedback systems to gather and deploy input from low-income consumers to change this. Our online data tracking system asks FII families to rank and share program experiences that will allow others to research their options.
We are working to expand this feedback and advocating that funders use this sytstem in evaluating programs they support to help determine continued funding. Service providers will use the feedback to improve their program when their funding is contingent on such responsiveness. We want to see innovations in the public sector in response to consumer feedback and demand.