By Melissa J. Anderson

Citi recently announced changes to its Financial Education program, a 10 year, $200 million commitment to fund and organize programs around financial literacy.

Stacey Sechrest Carder, Director, Office of Financial Capability at Citi explained that the changes are designed to focus on long-term consumer outcomes. The change in focus represents increased interest in how organizations and individuals manage their finances, and recognition that responsible financial practices are the the key to long-term sustainability especially in light of the global economic crisis.

Carder explained, “Financial education, as an issue, has gained more exposure over the last ten to eleven years, becoming the focus of many community-based nonprofits and financial institutions. In the past 6 or 7 years, it’s become an issue for NGOs abroad as well, as the as the economy becomes more globally integrated.”

She continued, “As a global financial services provider, Citi understands that the complexities of today’s marketplace can make it difficult for individuals and families to effectively manage their finances, and we are deeply committed to helping individuals gain the financial capability they need to acquire and preserve assets over the course of their lives.”

Carder said, “In 2009, we provided over $18 million in funding to financial education programs worldwide. In fact, we’ve spent $167 million since 2004, and are well on our way to meeting our $200 million goal ahead of schedule.”

From Financial Education to Financial Capability

“Last year, we took a step back to see what we and our partners had accomplished through our investments in financial education.” Carder explained that the “step back” allowed the bank to examine the long term impact of its programs.

“We asked, ‘what did you do with the information you received when you walked out of the classroom?’ Were you able to apply it to your daily life? Did it change the way you managed your finances?”

“The fact is that classroom-based education – having people sit through hours of content without any direct link to an activity, like saving – has very limited impact, particularly for adult populations, whose behaviors are entrenched and the most difficult to change.  What we learned through our research was that, if information is coupled with an activity in a very relevant, timely, ongoing and actionable way it will be more likely have better results and a chance of changing behavior over the long term.,” she explained, “helping them move from the classroom to real situations. That’s when Citi decided to change the name of the program from “Financial Education” to “Financial Capability.”

“Financial Capability includes four key facets,” said Carder. “Financial literacy, behavioral change (this is a big hurdle for a lot of people), financial inclusion (this includes access to products with transparent terms and relevant features that meet their needs), and asset building and preservation.”

She continued, “Asset building and preservation activities can vary widely based on an individual’s economic situation and local context. They can include opening a savings account, buying a home, or starting a business. However the, purchase of a cow can be an asset building activity as well, depending on where you are in the world. Whatever the method may be, the point of asset building is to help individuals gain a strong foothold on and move up the economic ladder. At Citi, we see asset building and preservation as the ultimate goal [of financial capability].”

Getting Citi Employees Involved

One of the programs Carder pointed to as a successful part of Citi’s Financial Capability catalogue is its work with the National Urban League. “We started working with them about six years ago, to establish financial education programs with low income people around the country. Our own Citi volunteers work with the staff to deliver information or teach classes.”

In response to the economic crisis, she said, “many of our financial education partners in the U.S. shifted their focus toward foreclosure prevention, with the goal of helping individuals stay in their homes, preserving their most important asset.”

“One of Citi’s most successful financial capability initiatives from a global perspective, is our annual Citi-FT Financial Capability Summit in partnership with the Financial Times. Heading into its 7th year, this summit takes place in the Asia Pacific region, convening practitioners across Asia, as well as multilateral agencies such as the UN, central bankers, and other regulators. The economic crisis dominated the conversation at the 2009 Summit in Singapore where the attendees discussed such critical issues as ’How do we build a sustainable economic society?’ and ‘What are the needs of the underserved segments and how do we reach them?”

Employee engagement is at the core of our commitment to financial capability, she said, “We‘ve always had a lot of interest among our employees to deliver financial education in their communities, especially to groups of youth. As employees of a financial institution, we all recognize the value of establishing sound spending and savings habits as early as possible in life, and encourage individuals to begin building and preserve assets as soon as they can, even if they are still young, and helping them, at the very least, avoid serious financial mistakes and pitfalls.”

Since 2000, she said, “Citi has been partnering with the American Bankers Association Education Foundation on their Teach Children to Save Day program held each April. As early as January each year, I start getting calls and emails from employees around the country asking about plans for the program because they want to get involved.” To date, over 165,000 students have received financial education from more than 3,700 Citi employees through this program.

“One of the things we’ve done really well is collaborate with different organizations around the world to raise awareness of the importance of financial capability, but measuring our impact has been a challenge. By adopting a new results-based framework for our investments in 2010, we expect to be able to measure the impact of the programs we support more effectively, and in a few years, we’ll be able to express how many people we have truly helped to build and preserve assets.