Here's how to better support women living on low income, according to Families Canada

Content warning: This story mentions domestic abuse. 

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When DUCA Impact Lab began screening participants for their escalator loan pilot program, they did not have a gendered focus – at first. 

DUCA’s goal was to assess how predatory loans were impacting people with lower incomes by replacing high-interest payments with their flat rate loans. They worked with a credit counselling non-profit to identify clients who would be a good fit for the program – people with high debt and low credit scores, but whose income could potentially chip away what they owed if they weren’t constantly dragged down by predatory debt. 

The screening revealed that 65 per cent of people who would benefit from borrowing from the program were female. When the program launched, 85 per cent of borrowers were women. All the women borrowers were Black, Indigenous, or women of colour, and a number of them were newcomers to Canada.

“Over the next year, we’re trying to do some evaluation and figure out if we can find a way to understand that better,” says Keith Taylor, DUCA Impact Lab’s executive director. “And also find a way to assess how this type of finance is changing non-financial outcomes for those folks, like food security, housing security, their ability to participate in the economy, start businesses, pursue education.”

But financial empowerment programs are not always accessible to those who need them most. Some organizations in Canada are trying to change that.

In November, Families Canada released Financial Empowerment for Women Living on Low Incomes: An Action Plan when their research showed that many of Canada’s financial literacy programs did not meet the needs of women living on low incomes. They collaborated with 30 other organizations across the government, corporate, and non-profit sector to address barriers to financial services for women. 

Their report includes 20 call actions to change this under three main categories: adopt trauma and violence-informed approaches, program outreach and delivery, and systemic change. 

The trauma and violence-informed practices aim to improve a woman’s sense of safety and control when she tries accessing financial services, and help her reach better financial outcomes.

Creating and delivering more accessible programs is supposed to reduce more barriers that stop low-income women from seeking health from financial services.

Addressing the systemic changes with stakeholders from public, private, and philanthropic sectors aims to change the landscape of financial services so there will be less hurdles to financial empowerment over all. 

The report is described as being for “anyone who has the opportunity to influence or impart financial literacy knowledge, skills, and confidence in women living on low incomes.”

Marlene Chiarotto, vice president of Impact and Operations at Prosper Canada, which contributed to the action plan, says financial literacy is the foundation of financial empowerment, but it is not enough as a starting point. 

“Often when you’re living with all of these barriers and challenges, taking that information and turning it into action can be quite a feat. And so we want to acknowledge that people will and understandably need extra help, and that’s what our community partners do,” says Chiarotto. 

Prosper Canada is a national network focused on financial empowerment. Their partnering organizations provide a range of financial services for people living on low income. From helping people set up savings accounts to helping people file taxes, Prosper Canada organizations try to cater to various pillars of financial empowerment. 

In January 2022, Prosper Canada launched Benefits Wayfinder, a bilingual digital tool to help Canadians find government benefits they could be eligible for. In November, they launched the Disability Benefits Compass so people living with disabilities could find more ways to support themselves financially. The national tool has over 300 benefits across federal, provincial and territorial governments. 

Though these tools help people identify where they can seek more services, Prosper Canada also recognized that some people may need help accessing them.

“One of the good principles of design that we think about, in terms of helping women overcome those barriers, is meeting them where they’re at,” says Chiarotto. “Rather than having this single mother of two running around to five different organizations to get tax filing help, why don’t we find where she naturally goes? Maybe that’s her early childhood centre that’s run by her municipality, and when she goes there, there’s actually a financial coach that’s co-located as part of that service.”

Prosper Canada’s Prosperity Gateways Program works with the municipalities of Edmonton, Ottawa, Thunder Bay, and Toronto to identify community centres where they can make financial empowerment services convenient and accessible. 

Last month, the Toronto Public Library launched a pilot of the service in two of its branches.

“Someone takes their kid to the library. They’re reading a book and at the same time, she’s getting help to file taxes,” explains Chiarotto. She says it’s important for municipalities to embed financial empowerment into their programming.

“We see a lot of possibility and promise, in terms of being able to scale and replicate this type of program,” says Chiarotto. “Not only in municipal governments. We see some of this is happening in the health sector. We’ve worked with community health centers to integrate benefits screenings and employment programs.”

But it is difficult to budget yourself out of poverty and access financial services you don’t qualify for to begin with. 

Creating systems change across sectors

DUCA Impact Lab is a charity established and funded by the DUCA Credit Union because they recognized that some people can’t access traditional banks to help their finance needs.

Taylor explains that credit unions were created by and for people without established credit histories and less money because they couldn’t depend on banks to deliver services for them.

“They weren’t able to send the right signals to banks that they would be good banking customers,” says Taylor. 

But with DUCA Impact Lab’s latest escalator loan program, people are loaned money from DUCA Credit Union’s funding, based on what they can afford.

“What was interesting was that they turned out to be excellent banking customers,” says Taylor.

Taylor says the program is meant to be a solution for people who have been stuck in the cycle of the high cost of debt dragging them down financially. Generally, the pilot participants have incomes of $30,000 or less with credit scores up to 500. Taylor says these are borrowers who wouldn’t typically have access to unsecured lending in mainstream financial services. 

So far, they are seeing that replacing borrower’s debt payments and allowing them to pay loans back without increased interest is a viable option with manageable risk.

“At the very minimum, [the pilot] tells us that the signals that we’re using to figure out who gets access and who doesn’t under what terms, are imperfect,” says Taylor. “And if we want to come up with some better signals, we would have to create some space to experiment with those signals and see how they work.”

By partnering with credit counsellors, DUCA could provide access to people seeking debt management services and provide them with a supportive loan program to help them manage their services. Even though they did not design the pilot for women specifically, the majority of identifying the need and benefiting from it being women is an area of interest Taylor says DUCA wishes to unpack in the future. 

“Experiment with different models of lending that address an inequity of some sort, see what the risk of those models of lending is, figure out how they can be scaled and whether they create the desired impact we are hoping to have.”

The escalator loan pilot began in 2018 and will continue for at least another year and a half. 

“The intention is just to figure out what the risk is and see how we can transition this type of lending into a regulated financial institution,” says Taylor. 

Chiarottos says to build, scale, and promote financial empowerment services for people living on low incomes, organizations need to work together to advocate for the government to change the way benefits are designed, change policies that may be hindering financial wellbeing of people living on lower incomes, and include women in those processes.

“How do we bring together people that have a vested interest in this space?” says Chiarotto. “And that’s the non-profit sector, but we are also trying to build this ecosystem of cross sectoral partners. Bringing government, bringing financial institutions, bringing researchers.”

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