Designing for Financial Empowerment

A landmark partnership between the City of New York, the Parsons School of Design DESIS Lab and Citi to explore how service design can help improve the financial security of lower-income New Yorkers

About the Project

Project Name: Designing for Financial Empowerment (DFE)
Project Partners: The NYC Office of Economic Opportunity, NYC Department of Consumer Affairs Office of Financial Empowerment, the Parsons School of Design DESIS Lab, and the Food Bank for NYC
Dates Active: 2015-2018
Project URL: www.dfe.nyc

What I Did:
Brought service design to Citi; developed project proposal and secured funding; identified and vetted program partners; provided guidance and consulted on strategy, tactics, and approach; conducted ethnographic field research and helped synthesize findings; participated in co-design facilitation; oversaw project progress and provided feedback; prepared progress reports for senior leadership; developed and executed communications plan; wrote thought leadership essays, gave media interviews and spoke about the project at conferences

The Challenge

Why are so many low-income New Yorkers paying for a service they could get for free?

Tax refunds are often the largest lump-sum payment that low-income households receive all year. This makes tax time a key moment for these families to establish healthy financial behaviors, pay down debt, save money and build assets for a secure financial future. The federal Earned Income Tax Credit (EITC) is a refundable tax credit that can provide a household with up to $3,000-6,000, making it a vital source of financial relief.

For example, in 2015, 1.8 million New York State residents claimed EITC benefits and received $4.1 billion in EITC credits. 597,000 New Yorkers (statewide) were lifted out of poverty by the EITC and CTC, including 307,000 children, each year, on average, during 2011 to 2013.

However, one in five eligible New Yorkers were not taking advantage of these valuable tax credits. And more than 75% of those who do claim EITC benefits file their taxes using paid tax preparers — at an average cost of $250 — instead of taking advantage of the free, IRS-certified services offered at Volunteer Income Tax Assistance (VITA) sites around the city.

In Tax Time Services, the first project from Designing for Financial Empowerment, we explored how to expand uptake of the EITC by making free tax preparation services in New York City more effective and accessible.

APPROACH

Discovery & Insights (3 months)

  • Desk Research: Reviewed more than 60 articles in order to gain a better understanding of tax-related policies, services, and interventions, identified key stakeholders
  • Field Research: Interviews, forums, and focus groups with an interdisciplinary team of designers, advisors, subject matter experts, tax filers, and civil servants
  • Observed the intake process in action through site visits
  • Organized and analyzed insights to identify key challenges to maximizing New Yorker’s financial empowerment at Tax Time

Co-Design (3 months)

Challenges gathered from the Discovery phase were synthesized into a deck of “challenge cards”. This deck was used to generate new or improved service concepts in a series of facilitated ideation sessions.

  • Stakeholders, including the general public and former paid tax preparers, were gathered to participate in co-design sessions
  • Participants were asked to develop actionable, testable ideas for services that would take on challenges at any point in service production
  • After removing those that were clearly non-viable, concepts were organized and prioritized by how difficult they would be to implement, and whether they focused on impact that was quantitative (broadening reach) or qualitative (deepening engagement)

Prototyping & Piloting (3 months)

The Co-design phase of the project yielded more than 60 actionable, testable concepts that could be integrated into free tax preparation services. These concepts were organized by customer journey phase and illustrated into a Kit of Ideas. Citi’s partnership with the City of New York led to implementation of several of the concepts from Co-Design:

  • Launched the NYC Free Tax Prep brand, which unified and standardized the efforts of the City and the NYC Tax Coalition.This addressed tax filer challenges including perceived quality of service, and identifying trusted providers.
  • Introduced the NYC Free Tax Prep Portal website. Filers can now determine eligibility, sign up for updates and tips, and find the location of their nearest NYC Free Tax Prep siteThis addressed tax filer challenges including over commuting and lack of follow-through from filers.
  • Introduced an SMS-based queue management system at nine high-traffic NYC Free Tax Prep locations.This addressed tax filer challenges including long wait times, imbalance utilization of sites and sites that may be booked full too quickly into the tax season.

FINDINGS & NEXT STEPS

What We Learned

The Designing for Financial Empowerment: Tax Time Services project was a resounding success. While we were only able to implement two of the new service concepts in time for that year's tax season, we were able to see impact almost immediately: The City of New York met its goal of increasing the number of free tax prep filers in 2016 by 50%, returning millions more in tax refunds and fee savings to thousands of New Yorkers who were financially struggling; and many of the frustrations and obstacles that we learned about in the Discovery phase, such as long wait times, were directly addressed with the subsequent rollout of several more of the project's design solutions.

We also achieved our second goal: to enable the NYC government to use service design as a new approach for improving public services for its most vulnerable residents, and for service design's core values of collaboration, co-creation and direct engagement to reshape how local government interacts with the very people who depend on and use its services every day.

Other Key Takeaways

1. Timing is critical.

While it was very easy to talk to tax filers in January and February, it was a lot harder to speak with tax filers in October when the team was in the Discovery phase. Similarly, although the Prototyping phase ended in late July, the time needed to finalize design, clarify user privacy and data security considerations, engage City and external partners, and implement a new technology project made a launch of the VITA Portal during the 2016 tax season impossible.

2. The process yields far more than just a set of prototypes.

The service design process can create a pipeline of potential new policy and service innovations for future exploration and implementation. The process for this project began with a large number of challenges narrowed down to just a few prototyped solutions. For government officials and design practitioners it is important to find ways to work on these valuable insights and processes beyond the project timeline, which can continue to inform policy and service improvements in the future.

The service design process is a vital tool for expanding the boundaries of public sector stakeholder engagement in solving community challenges.

Through this process, the DFE team was able to bring diverse stakeholders together not just to identify challenges and opportunities, but also to co-design, refine, and test solutions, moving beyond the traditional limits of public sector stakeholder engagement. This deeper engagement brought to the surface many interesting potential solutions to VITA challenges, and helped some of those solutions gain momentum as VITA providers and other stakeholders were able to voice their support early in the process.

What Happened Next

Our partners in NYC government were so thrilled with the approach and the early findings, that before the first project was even completed the Commissioner of the Department of Consumer Affairs proposed two more projects under the DFE umbrella: one focused on helping immigrants applying for naturalization simultaneously build their financial resiliency; and one focused on improving client retention at the City's Financial Empowerment Centers. These projects, and the relationships they built, eventually led to Citi funding and supporting the launch of the NYC Service Design Studio.

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