Embedded within the attorney general’s office, an office of financial empowerment (OFE) would be responsible for growing individual and community financial resilience. Among its priorities could be:

• Increasing access to safe and affordable financial products
• Developing tools and resources that advance, increase, and improve Colorado residents’ financial management
• Fostering community-informed policies and systems that dismantle systemic barriers to building ownership and wealth for all, especially low-income Coloradans and communities of color

To accomplish these goals, OFE would:

• Be housed in the attorney general’s office, but would prioritize building relationships with community leaders, financial institutions, statewide agencies (e.g., treasurer’s office and the Department of Local Affairs), and local governments to coordinate and develop needed financial services throughout the state
• Utilize community feedback on consumer financial experiences to identify systemic barriers to financial security. Once identified, OFE would prioritize connecting and leveraging resources to create needed change;
• Lead a statewide coalition to build a network of safe, affordable banking products for all Coloradans
• Develop technical assistance to help launch or expand local financial coaching
• Raise federal, philanthropic, and private funds to support financial empowerment efforts

Financial empowerment means taking a comprehensive and proactive approach to financial well-being. Financial empowerment relies upon a variety of tools, like coaching that helps people manage their finances. However, because financial empowerment works to holistically build long-term wealth and well-being, systemic solutions, like facilitating access to capital or protecting people from predatory products such as high-cost loans, are also involved.

To be effective, financial empowerment works best when tailored to community needs. For example, while some communities may need assistance developing resources, others may simply benefit from navigational support to better connect residents to already existent tools. A statewide office of financial empowerment can meet these communities where they are to enhance, amplify, and support their local work.

Financial literacy is a part of financial empowerment, but they’re not the same. Financial literacy refers to a person’s ability to understand and apply financial skills, like budgeting or investing. Financial empowerment builds these skills and acknowledges there are systemic roots, like inadequate access to capital or credit, which lead to financial insecurity. Financial literacy provides knowledge, but financial empowerment gives people the ability to act. By helping address fundamental gaps in financial literacy while also informing policies to build access to capital and low-cost credit at rates within Colorado’s interest rate limits, an office of financial empowerment can play a role in fostering a resilient economic future for Colorado.

Financial empowerment proactively seeks to address systemic issues related to financial insecurity, both as it relates to asset building and protection. We know many families continue to struggle, not only because they lack access to capital and credit, but also because they fall into financial traps and schemes when they are in hard times.

Creating strong, community-identified consumer protections, like minimizing the presence of predatory loan products, can help prevent vulnerable individuals from falling into cycles of debt that weaken them financially and are often hard to escape. Importantly, this ability to regulate financial products and enforce consumer products is a role uniquely suited for state government.

A Colorado OFE would support Coloradans throughout the state in accessing financial counselling, coaching, and safe banking products, and in protecting consumers from predatory financial products and services. The office of financial empowerment would also help grow government-led financial empowerment work across the state so that more people can access these services. OFE can track goings-on regarding financial security and navigation and be positioned to act in a timely manner to prevent the circulation of high-cost, predatory financial products.

COVID-19 has knock-out effects on people’s finances. Many people are struggling to pay rent and meet other basic needs, with 28 percent of adults in Colorado reporting they are having increased difficulty paying for usual household expenses. This struggle to make ends meet makes people more susceptible to predatory loan products. This reliance on high-cost predatory products without the financial ability to afford them can have long-lasting consequences that impact not only individual economic well-being, but also the health and security of our state.

Importantly, cities with offices of financial empowerment are already seeing the benefits these offices bring during economic downturns. For example, over the past several months these offices have been helping residents open bank accounts so they can receive stimulus payments; access federal, state and local resources through financial navigation efforts; learn about COVID-19 related frauds and scams; and obtain financial counselling. In addition to the direct services these offices are providing to residents, we’re seeing how OFEs help identify and secure additional funding for necessary programs and enhance interdepartmental collaboration that increases efficiency.

It’s good we have financial empowerment work currently happening in local communities, but many residents’ situations are worsening despite these efforts. More needs to be done to stop people from falling deeper into debt or edging closer to eviction. For that to happen, there must be government backing that meets the volume of statewide and community need and takes a proactive role in ensuring infrastructure exists to help and protect residents even when there isn’t a large-scale crisis like the one we’re currently in. The effect of this crisis will linger and residents can’t move forward without added support from the state. 

State government can coordinate funding and statewide resources, recognize trends, and connect the efforts of state departments. This provides more power and cohesion to efforts that help people who experience financial insecurity. For example, in Detroit, foreclosure and eviction are priority issues. In addition to targeted financial counselling for those in danger of losing their home, its OFE was instrumental in creating new partnerships between city and county government agencies to tap additional state and federal funds that support prevention efforts and make policy changes.

There are dozens of local governments across the country doing financial empowerment work, and many of them have a dedicated office of financial empowerment, or dedicated financial empowerment staff, including the city of Denver. Government-led financial empowerment programs include free one-on-one financial counselling offered as a public service, access to safe and affordable bank and credit union accounts, financial navigation services for emergency assistance, local consumer financial protection initiatives, children’s savings account initiatives, universal basic income programs, initiatives that promote free tax preparation and saving around tax time, and programs that add banking access and financial education into Summer Youth Employment Programs (SYEP). While they exist in many localities across the country, a Colorado OFE would be the first statewide office in the country.

An office of financial empowerment will help your residents and community build wealth by supporting community-driven financial coaching, affordable banking, and strong consumer protections. As we’ve seen in other places, these offices can generate additional funding for community efforts and enhance already existent on-the-ground programming to improve social service outcomes.

Results from the Denver Office of Financial Empowerment and Protection demonstrate the immense value these offices bring to their communities. For their clients, the office has

• Provided more than 20,000 coaching sessions to 8,192 clients
• Increased the average credit score by 49 points
• Reduced total debt by more than $6.2 million
• Aided in the purchase of 212 homes, while also forestalling 38 foreclosures, leading to $2.1 million in cost avoidance.

In addition to its direct benefits for thousands of residents, the Denver Office of Financial Empowerment and Protection has used this program to help inform their consumer protection portfolio, small business development, and equity work.

Legislation is needed to create a statewide OFE. As a result, in the coming months legislators may have the ability to vote on a bill to create a statewide office. In the meantime, legislators can check back on this hub to learn more as we update it with information on financial empowerment, or reach out to the Bell with any questions.