By Hannah Kramer, Manager, Financial Health Network
With an estimated 15.5 million Americans in “alternative work arrangements” (independent contractors, on-call workers, temp agency workers, and workers hired by contract firms), these workers miss out on the traditional employer-sponsored benefits that many of us rely on – benefits like health insurance, retirement savings options, and tax withholding.
While the Financial Solutions Lab has supported several innovative solutions addressing the financial health needs of employees through employer-offered channels, especially the 2019 Accelerator, 2020 Accelerator, and 2020 Exchange Challenges, solutions addressing the lack of benefits independent workers face are not as common. In our work seeking out mission-aligned organizations to participate in the Financial Solutions Lab’s programs, we often connect with unique ideas that advance the financial health of low- to moderate-income and historically underserved communities.
One example of an organization advancing the financial health of independent workers is WISER (Women’s Institute for a Secure Retirement), a nonprofit organization that works to help women, educators, and policymakers understand the important issues surrounding women’s retirement income through research, programs, and partnerships. We provided WISER a $75,000 general operating grant to ensure it can continue to meet its mission and provide support to independent workers in rural Appalachia.
The Need for a “Virtual Human Relations Department”
Through its work, WISER has seen the rise of alternative work arrangements and the barriers to financial health these workers face from the lack of employer-provided benefits, leading to a need for easy-to-use financial tools and guidance on:
- Navigating unpredictable and volatile incomes,
- Tax withholding, and
- Short- and long-term savings.
WISER also found that independent workers were comfortable with online banking and responded well to the idea of a fintech benefits platform.
To address the needs of these independent workers, WISER’s Rural Retirement Project collaborated with the Appalachian Regional Commission (ARC) on Benefit U, an initiative to test whether an online fintech platform could effectively function as a virtual human relations department for entrepreneurs, self-employed workers, independent contractors, freelancers, and others without access to employer benefits.
Testing Innovation Through Collaboration
To test the platform, WISER worked with local community development organizations to give 73 independent workers access to a fintech solution that offered a range of services, including health insurance, tax withholding, retirement accounts, and “time off” savings accounts. These workers represented a diverse array of occupations, representing small business owners and freelancers, and all but one of the participants had an annual income below $50,000. Through testing, WISER found that users:
- Were most interested in the retirement savings accounts and tax withholding accounts
- Had health insurance needs mostly met through a spouse, or through a public program
- Indicated a need for financial guidance on building emergency savings accounts
Overall the testers indicated an overall positive experience with the benefits platform and roughly nine in ten (88%) would recommend the platform to a friend.
Scaling Innovative Ideas
Through our support of organizations like WISER, the Financial Solutions Lab seeks to help test and scale innovative ideas that advance financial health. WISER’s work addressing the needs of independent workers demonstrates the potential of fintech solutions and public/private partnerships in addressing the financial health needs of the 15.5 million independent workers in America who miss out on the traditional employer-sponsored benefits like health insurance, retirement savings options, and tax withholding. The Financial Solutions Lab looks forward to supporting future innovative solutions, like WISER, through our work. Learn more about innovative fintechs and other nonprofits focused on work to improve financial health for consumers.
Interested in Building a Nonprofit-Fintech Partnership?
Projects like WISER’s Benefit U illustrate the potential for fruitful collaborations between the nonprofit and fintech sectors. The Financial Solutions Lab Exchange serves as a meeting place for interested nonprofit and fintech providers to explore collaboration and swap insights on how to build high-impact partnerships. More than 200 fintechs and nonprofits currently participate in the program.