SAN DIEGO–Is all that financial education in which credit unions invest significant time and money going wasted?
The answer could very likely be yes, according to one person, whose organization’s efforts came to a “screeching halt” after learning its award-winning financial literacy efforts—including being invited to the White House for recognition—were actually having very little impact in the long-term.
That lesson didn’t come, however, until after Moneythink and its organizers had come to mistakenly believe firmly in its effectiveness and business model, admitted Ted Gonder, CEO and cofounder of Moneythink, a nonprofit organization dedicated to building the financial capability of young adults through technology-enhanced peer mentorship. Gonder shared the story of Moneythink and what it has learned (and re-learned) about financial education during CO-OP’s THINK 16 Conference at the Hotel Del Coronado in San Diego.
While a student at the University of Chicago, Gonder and a number of his fellow students had been going to local high schools to lead workshops. The work all came down to what he said was a simple, altruistic idea: To bring financial education to low-income teens.
Screeching Halt
“That simple idea started to gain traction,” noted Gonder, referring to how it began to spread to numerous schools. “We reached out to all the leading financial education organizations in our space, and we tried to build on the shoulders of giants. The cool thing is this simple idea really caught on.”
Ted Gonder speaking to THINK 16 meeting in San Diego.
Indeed, Moneythink caught on to the point it won the Champions of Change competition and Gonder and others involved were invited to the White House as part of the recognition.
And then, said Gonder, “All our work came to a screeching halt.”
Slamming on those brakes were the results of 200 studies of 168 different financial ed programs that found there was just a 0.1% variability among consumers’ good vs. bad financial behaviors that could actually be explained by the financial education they had received.
“What the studies were showing was none of this worked,” said Gonder. “And here we were assuming that our simple idea from the very beginning would produce the world that we envisioned, where finance would not serve as a barrier to a person pursuing their dreams. Now the research was showing us that was false. Of course, that was disconcerting. At the same time, we had worked with students and we knew anecdotally that some of our students did experience transformational results as result of our program. So the question wasn’t whether financial education should be challenged on its inherent value; the question was what was wrong with the approach? We thought about all of this.”
What Gonder and Moneythink concluded was that there is a critical difference between an educational program that is transactional/informational in nature, vs. being transformational.
“The traditional approach is transactional and informational, rather than transformational,” explained Gonder. “We realized we needed to meet our students where they were and meet them at the door in their own context. That is a very different thing than pushing information at our students in a transactional way. I think this really applies to business too, and credit unions especially, and I think you guys get this. You meet the consumer where they are. You speak to and solve their biggest stresses and concerns.”
An Inflection Point
All of that led Moneythink to what Gonder called an “inflection point” at which “we had to ask ourselves how are we going to change?”
It changed itself through a two-step process he called “simple, but not necessarily easy.” The two steps were listen, and then redesign for context (with the three parts of the latter being content, delivery, and augmentation).
“We left everything at the door and went in and talked to our students about what they cared about. We asked, ‘What are your dreams and goals and priorities right now?’ Once we had a grasp of that, we gave ourselves permission to redesign our programs and our approach.”
Gonder said that in the redesign phase, content and delivery are fundamental, while the third piece, augmentation, is more challenging.
“When it comes to content we didn’t want to be providing one-way communication about here are all the things you need to learn and remember for the rest of your life,” he told the THINK meeting. “We wanted instead to find out ‘what is relevant to you right now?’ For a lot of students it was ‘How the heck am I going to pay for college?’ Everybody is telling them they should go to college, but no one is telling them how they should actually pay for it. That was the biggest thing on their minds.”
Lesson in Delivery
As part of that tough look in the mirror, Moneythink also looked at delivery. Goner noted its partners had traditionally been high schools, where the program was dependent on different people in different roles.
“When it comes to delivery we realized it has to be consistent,” said Gonder. “So we went to the schools and said ‘we think we can work with you on a more powerful delivery method; what are you concerned with?’ We had never asked our partners this before. It turns out they had the same concerns as our students.”
One big disconnect between perception and reality, said Gonder, is what is known as “the summer melt.” That is a reference to the fact that while a lot of schools boast 90%-plus rates of graduation for students who they say are ready to attend college, the reality is that 40% never show up at college on the first day.
“It isn’t that (students) aren’t getting grant money; they are good at that,” said Gonder. “It’s that nobody ever told them how to navigate cash flow or how to get an account.”
This is where augmentation often fails. That piece is often all about technology, but as Gonder noted, if the fundamental building blocks aren’t there, all the augmentation doesn’t matter.
After seven and a half years of “sweating it out,” Gonder said Moneythink had to change everything, including the make-up of its staffing, its board, and even its funding base.
“This is real hard change, but when you lean into it and evolve it is really worth it,” he said. “This has been powerful. This has had a 50x effect on reach. Usually reach happens at the expense of depth. But no, this is reach happening because of depth. And 50x is just the beginning.”
A Challenge For Credit Unions
Gonder also issued a “challenge” to credit unions. He said that approximately 350,000 teenagers every year get their first summer jobs through public/private partnerships hosted by cities. “This can be a tremendous opportunity to develop self worth, and it’s an incredible teachable moment when you are learning about money,” he observed, before adding, “That sounds awesome, but case in point, we sat down with a student who had gone through a program and who had also done a financial education course and earned money. When we asked him what did you do with the money, he opened his backpack: it was full of checks that had expired. He had a financial education class but no one even told him that checks expire or how to cash a check. This stuff isn’t intuitive.”
Gonder said that a new law requires financial education be taught as part of the summer jobs programs, and he wants credit unions to get involved—and to also do their own tough self-evaluations and recognize they will have to change, as well.
“When you tell these young people to go to a bank or credit union, it often means they have to convince their mom to take time off work to drive them to a strange building to use a product they don’t know how to use,” said Gonder. “So we are looking for partners to solve this with us and to make the location issue less of a problem.”
There are also issues around kids who may be undocumented and who might need non-custodial accounts, said Gonder.
“This is not just 350,000 kids every summer; this is 20-million working youth across the United States every year who have the potential to be incredibly loyal,” he said. “Very few of our students are aware of credit unions. Let’s think about ways to unlock the possibilities for these young people.”