In a new occasional series, Chris Walker, LISC's director of research, will highlight studies that reflect and inform our work and that of the broader community development field. This month, he analyzes our new research on the value of credit-building loans, a financing tool that is helping low-income people build positive credit and make critical strides toward financial stability.
“Does it really work?”
When I talk about LISC’s strategy for revitalizing communities to people who are not practitioners, that’s what they ask. They are eager to hear about promising solutions to difficult problems. But, they are skeptical, given the persistence of urban poverty and growing inequality in many of America’s metropolitan areas.
Can community development really lift people toward a safer, healthier, more prosperous future?
The short answer is yes—though, because I’m a researcher, there is never a short answer. It is clear from an accumulating body of evidence, including LISC’s own research, that significant local investments in affordable housing, crime reduction, employment and training, and public health do pay off. Low-income communities can and do become places where people have a chance to live better lives.
But we are acutely aware that much remains to be learned about the neighborhoods where we work and the effectiveness of our efforts. So, LISC is focusing more than ever on impact research. Our research reports are intended to help build the evidence base, adding our findings to those contributed by others in the research and practitioner communities.
For instance, a new report released this month on Twin Accounts—a credit-building loan offered by Justine PETERSEN through many of LISC’s 80 Financial Opportunity Centers (FOCs) across the country—examines whether the product helps low-income borrowers save money and build credit.
The evidence is compelling: people who complete the Twin Accounts program improve their credit score twice as much as people who don’t. The gains are especially impressive for people also participating in the employment and financial coaching modules of our FOCs (you can read LISC’s full report on Twin Accounts here). It’s quite encouraging and speaks to the value of these critical services.
Our Twin Accounts results confirm findings from other research on credit-building loans from organizations like the Mission Asset Fund in San Francisco and the Self-Help Federal Credit Union, serving families in California and Chicago. RAND Corporation and Innovations for Poverty Action are in the midst of a large-scale study of credit-building outcomes for St. Louis Community Credit Union borrowers as well, so the data will continue to expand.
Thus we build evidence, study-by-study, in this and other areas of community development.
Next month, we’re showing impact in a different area, with a new report on making communities safer. We’ve long told stories of our successful efforts to bring together police officers, residents and community developers to tackle crime hotspots and improve quality of life. Our new report supports these stories with numbers, featuring three low-income communities and the strategies they pursued to drive down crime and keep it that way.
Residents judge success by what they see in their own communities. Increasingly, we can see it in our data as well. You can expect more research like this from LISC in the months to come.
ABOUT THE AUTHOR
Chris Walker, Director of Research & Assessment
Chris is responsible for assembling, conducting, sponsoring and disseminating research on community development’s contributions to the well-being of individuals, families and communities. He also supports the research activities of our local programs throughout the United States. Prior to joining LISC in 2005, Chris directed a community and economic development research program at the Urban Institute, where he led studies of affordable housing, community lending, arts and culture and other community development issues.