Association for Public Policy Analysis & Management

In this presentation, Sherry Riva, the Founder and Executive Director of Compass Working Capital, will describe a new approach to HUD’s Family Self-Sufficiency (FSS) program that Compass has developed to focus on helping residents build assets and financial capability. The presentation will explore the innovative structure of this program model, outcomes for participating families, and the program’s impacts on earnings, credit scores and debt levels. The presentation will summarize key learnings from Compass's work on the program over the last eight years, as well as the organization's strategy for expanding access to the program to a broader share of the more than 2 million households who could be taking advantage of FSS.

Compass Working Capital (“Compass”), is a nonprofit financial services organization whose mission is to empower families with low incomes to build assets and financial capabilities as a pathway to greater economic opportunity, and out of poverty. Its work builds on the research and practice of a broader asset building field, which has demonstrated the key role that savings, assets, and financial capabilities play in breaking the cycle of poverty. For the past seven years, Compass has focused its efforts on the federal housing system, through the development and implementation of an asset building and financial capability model for HUD's Family Self-Sufficiency (FSS) program. The program was established by Congress to remove a potential disincentive for households receiving assistance to increase their income. Assisted families typically pay about 30% of their income toward rent, a formula designed to ease the rent burden for those who receive assistance while allocating larger amounts of subsidy to those who need it the most. However, an unintended consequence of this structure is that it discourages some assisted families from increasing their income since they worry about paying more rent and losing other benefits. The rent calculation in assisted housing effectively functions as a marginal tax on increased earnings – an effect which also makes it difficult for families to build savings.

The FSS program fundamentally shifts the incentive structure by allowing participants who increase their income through work to capture a portion of their increased rent payments in an escrow account, held by their housing provider, which can be accessed upon successful completion of the program. Participants can utilize their savings to achieve their financial goals, such as for a down payment on a home, or to save for their children’s college education.

Starting in 2010, Compass aimed to build on FSS’ strong potential by developing and launching an asset building and financial capability model for the FSS program. Strong early program results at the first site in Lynn, MA allowed Compass to expand to Cambridge, MA in 2012 and to Greater Boston in 2014. Today, the organization operates local FSS programs in three states. In September 2016, Compass launched a National FSS Network to expand the scope and impact of the FSS program on a national scale.