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Financial empowerment at a crossroads: Are we going big or going home?

26 November 2020
This November, the Financial Consumer Agency of Canada (FCAC) is celebrating the 10-year anniversary of Financial Literacy Month (FLM), an idea originally conceived by a handful of nonprofit organizations in a boardroom one Friday afternoon in an effort to raise awareness and support for their efforts to build the financial capability and health of Canadians.
Since then, with public investment, the effective leadership of FCAC, and the participation of hundreds of organizations that now make up Canada’s financial literacy field, Financial Literacy Month has become a notable success – showcasing new resources, emerging knowledge, and the many ways in which organizations in all sectors are engaging Canadians in a shared effort to build their financial stability and well-being.
This effort has never been more important as we contemplate the financial impact of COVID-19 on Canadian households, particularly those with low and moderate incomes who have borne the economic brunt of this pandemic from its start and continue to lag other Canadians when it comes to joining the economic recovery.  
The financial stresses many Canadians are experiencing, however, did not begin with COVID-19. If we look at the data from 1990 to 2020 just before COVID, there are clear trends that suggest these changes have been at least 30 years in the making. Here are just a few indicators that illustrate the almost uninterrupted slide of Canadian households into poorer financial health:
  • Personal savings peaked in the 1980’s at around 22 per cent of income but then dropped through the 1990’s reaching a low of 0.4 per cent before rising to just 3.6 per cent
These numbers are not the entire story of course – average net worth, for example, rose over this period, but there are important disparities beneath these national averages. We know that households with low and moderate incomes are more likely to be financially vulnerable and, since the onset of COVID-19, Black Canadians, Indigenous Peoples, people of colour and those with annual incomes under forty thousand dollars are struggling the most.
In light of these troubling trends and disparities that a decade of financial literacy efforts have failed to reverse, perhaps now is a good time to reflect on whether financial education alone is an adequate response to the story these and other indicators tell – that household financial well-being is eroding for many Canadians, not improving.
Nobody will dispute the value of building Canadians’ financial knowledge, skills and confidence and this work should continue, but it is time we admitted that Canadians who are financially struggling also need something more – access to free, quality, financial help services from an accessible source that they can trust. 
Through timely federal and provincial investments in pilot projects to develop and test these services, we now have a cadre of highly expert nonprofit organizations in most regions of Canada that are helping over one hundred thousand Canadians a year to build their financial capability and health through financial education, but also hands-on tax-filing and benefit navigation help, and one-on-one financial coaching and counselling. 
Over the past five years, these organizations have helped over 500,000 Canadians and connected them to over $794.5 million in new income.  There is also a larger pool of community organizations delivering financial help that could be leveraged to do more, if we let them, including nonprofit credit counselling services for Canadians struggling with debt. 
With the advent of COVID-19, many of these organizations have rapidly pivoted to offering virtual and hybrid services that open up exciting new possibilities to reach beyond their traditional catchments to also serve rural, remote, and Indigenous communities that would otherwise be left behind. New technology tools are also equipping frontline service providers in every sector to become effective benefit navigators with a minimum of training. But investment is needed if we are to leverage the full potential of these advances to urgently address the rapidly growing demand for financial help. 
Thanks to parallel efforts in the United States, we have a growing body of evidence that points to the clear value of integrating financial help interventions into other public services – like welfare, employment, housing, shelter and primary health care – where they boost service outcomes as well as the financial health of service users.  Building financial help into existing public services is an effective and sustainable way to quickly scale this help to reach those who need it most, leveraging the trust and confidence vulnerable populations have in their community service providers and the expertise they have developed.
Canada is a graveyard of successful pilot projects, however, and these highly successful programs are on the cusp of disappearing unless governments recognize that a significant proportion of Canadian households need what they have to offer, and need it now. To illustrate, in October, Prosper Canada commissioned Leger, a public opinion research firm, to examine changes in people’s financial health over the past six months.  Among respondents with incomes under $40,000:
  • Forty-six per cent said their employment earnings had worsened
  • Forty-three per cent said their savings had worsened 
  • Thirty per cent said their personal debt situation had worsened
  • Twenty per cent said their reliance on credit had worsened 
  • Twenty-one per cent said their ability to pay bills on time had worsened.
A public investment of just $15 million, with a complementary investment of $5 million from philanthropic sources, could enable existing financial help organizations to help over 750,000 financially struggling Canadians to access over $500M in new income, achieve the financial stability needed to safely weather the current economic crisis, manage their debt and begin to rebuild their financial health. 
Canada’s private sector has been stepping up handsomely to this challenge. TD Bank Group, Capital One, IG Wealth Management, Intuit, JPMorgan Chase, BlackRock, Maple Leaf, Power Corporation, Paypal and Haventree Bank are already active investors in this field nationally and discussions are underway with many more companies. Other companies, including Canada’s credit unions, are investing locally and regionally. United Ways and foundations are also making important investments and municipalities are working closely with community partners to help their residents get the financial help they need.
Federal and provincial government chairs at this table, however, are conspicuously empty.
Canada has only to look at its closest peer nations – Australia, New Zealand and the UK – to see that other countries have already made foundational national investments in debt and money help services for citizens, and have doubled down with additional investments of CDN$30-65 million as a core element of their economic recovery plans. 
It’s time for our governments to do the same. Canada’s financial empowerment field is at a critical juncture. In five short years we have painstakingly built an extraordinary service system that assisted over 172,000 people in the last year alone and is poised and ready to do far more if given the chance.
If I were a government, this is one bet I would have no trouble making, and I would consider it a steal at twice the price. 
So, to our elected leaders, please tell us and Canadians – is it time to go big and meet the challenge of declining household financial health head on and with the seriousness and urgency it deserves? Or should we just pack it in, go home, and try not to think about the over one in five Canadians who really need our help right now, but will not receive it?