More Smart Programs on a Small Scale

 The NY Times has embarked on series called Fixes, which "looks at solutions to social problems and why they work". Last month they wrote about the Family Independence Initiative (FII), which seeks to get people out of poverty. This month they're looking at another approach to attack poverty: a better car plus counseling.

The article discusses a non-profit based in New Hampshire, where a car is essential as there is little, if any, public transportation. The organization is known as More Than Wheels. The "More Than" is primarily credit counseling and a fairly stern approach to the beneficiaries of this program living up to their commitments. The "Wheels" is usually a newer, more efficient car than they own; most of the times this lowers the beneficiaries monthly costs, as transportation costs are a large part of their monthly budget.

Not every applicant is approved by More Than Wheels. First, the applicant goes through a screening process to determine whether his credit can be repaired. If it appears likely to be repairable, then the applicant pays $60 to 'join' plus they are obligated to take a course in basic household finance. After six months of paying off his debts, the client is eligible for a car loan provided he holds the same job and lives at the same place for the six months.

The client does not simply go and buy the car he chooses. Together with "More Than Wheels" he decides what is the best car for him at this stage in his life. "More Than Wheels" (MTW) does the negotiation with the car dealer and the local bank (the rate is usually lower than the client would get on his own). The client pays MTW $895 and the car is his. But he is still not totally on his own. He has to demonstrate that he is following the scheduled maintenance program for the car, check in periodically with MTW and maintain or improve his credit score.

The program seems to be working well. Only 5% of the 1,450 clients have defaulted on their loans. Most have better health care and a better life style overall. And, the environment is a bit better off as they are driving more efficient cars.

Both organizations - MTW and FII - interact fairly extensively with their clients and hold the clients to relatively rigid standards. Some may see this as too much of a Big Brother approach. It may be, but these clients need help in turning their lives around.