Sherry Riva became aware of the difficulties that families trying to climb out of poverty face while she was working at a transitional women’s shelter.
“Despite our best efforts, so many of the women we were serving were still a paycheck away from being back on our doorstep,” she said.
Riva came to realize that poverty assistance programs shouldn’t just focus on income but also on creating savings and assets, such as a home or business. That way, if people encounter a surprise expense, such as a major car repair, it won’t send them into a downward financial spiral.
She formed the nonprofit Compass Working Capital in 2005 to provide financial counseling to low-income families in the Boston area, teaching them how to budget, pay off debt and start saving toward their long-term goals, such as buying a home or sending their children to college.
Five years later, Compass began working with the U.S. Department of Housing and Urban Development’s Family Self-Sufficiency initiative, which allows people in subsidized housing to put extra income into a savings account rather than increasing their rental contribution. Under the partnership, Compass provides financial coaching through a free, five-year program that helps the clients learn how to manage those funds.
Riva and her 30-member team are now helping about 1,200 families in Massachusetts, Rhode Island and Connecticut. They’re working to share the public-private financial coaching and savings model with other states as well.
At the beginning of the program, clients attend group sessions to learn about the program and take financial education classes. Participants are then assigned a financial coach, who meets with them one-on-one to set short-term and long-term goals.
“It’s a client-driven model, so this is not our coaches telling clients what we think they should do,” Riva said.
Often, clients will decide to purchase a home, which in certain areas can be pricey. So even after strengthening their credit and saving enough for a down-payment, they might have trouble finding a home they can afford, she said.
Compass helps connect clients with other programs and resources, such as first-time homebuyer assistance, that can help in that situation. Compass itself is funded through the federal housing authority and philanthropic donations.
Riva said 141 people have graduated from the five-year program so far.
Potential clients learn about Compass’ program through postcard campaigns and posters advertising its services in public housing developments. But the best recruiting tool is through word of mouth, Riva said.
“Once we have a family participating in the program, they tend to go and share their success and their experience with their friends and neighbors,” she said.
One of the program’s success stories is single mother Vilmarys Cintron, who grew up in subsidized housing and was raising her children there as well. She completed the Family Self-Sufficiency program, bought a home and started an in-home daycare business. In November, she spoke at the group’s graduation, bringing practically everyone to tears, Riva recalled.
“To see that cycle of poverty being broken,” was meaningful not just for the graduates but for herself, Riva said. “On days where I feel stressed about the day-to-day work, I remember stories like hers, which should be the norm and not the exception.”