Ways to Work^® works!

Program Summary

What began in the mid-1980’s as a program to help single mothers in Minnesota move off and stay off of welfare has evolved into the nation’s largest and most successful alternative to predatory auto loans for working poor families. Since the mid-1980's, Ways to Work has helped more than 26,000 families stabilize or improve their financial situation through over $45 million in loan funds used for a variety of work-related purposes.

Ways to Work is a unique Community Development Financial Institution (CDFI) based in Milwaukee, WI. Through our national network of loan offices, we provide small, short-term, low-interest loans to working poor families with challenging credit histories. In effect, we provide an alternative to predatory lenders for people with a demonstrated commitment to achieving increased self-sufficiency and intent on achieving a higher level of participation in mainstream financial markets.

All Ways to Work loan offices are hosted within member agencies of the Alliance for Children and Families, our sister company. These nonprofit, human service organizations typically offer a broad range of community-based programs and services which complement the Ways to Work program. This ensures that our borrowers have ready access to a wide variety of resources to help them be successful with their loan and with the lifestyle change that this effort often requires.

All Ways to Work loans are used to help individuals remain in or move forward in their job. The vast majority of our loans are made for the purchase of modestly priced used vehicles. Besides stabilization or improvement in their employment situations, our clients also find that our program has caused an increase in their financial literacy, raised their credit rating, heightened their sense of self-esteem, and for those obtaining a vehicle, brought about a significant improvement in their family’s quality of life.

For most of us, a car loan is not a big deal. In fact, car dealers often fall over themselves to finance our new and used car purchases. However, for those of us with damaged credit ratings, the pursuit of a car typically leads to a choice between financial disaster and remaining afoot. Predatory lenders (such as “buy here, pay here” car lots) are usually happy to put anyone into one of their poor quality, high priced vehicles, financing included. These dealers “prey” on their buyers, knowing that they are desperate for a vehicle. In return, the buyers get unreliable transportation, with weekly payday payments at interest rates of 30%, 40%, 50% or more.

Without a personal vehicle, retaining or moving forward in a job, going to school or job training, getting your family to doctor or dentist appointments, grocery shopping, or picking your children up after extra-curricular school activities may be problematic at best.

The positive impact of owning a car to improve the income and quality of life for a family striving to become economically self-sufficient has been documented by a number of recent studies; including one commissioned by Ways to Work. Borrower outcomes from our ongoing evaluative study offers validation for many of the longstanding goals of the program. For instance:

• borrowers have experienced a 41% average increase in earnings (take-home pay)

• 67% of borrowers have opened some type of bank account (i.e. become banked)

• more than 90% of program participants indicate that their car loan has helped them maintain or improve their employment situation

• over 80% of borrowers with young children have moved their children to more appropriate childcare providers.

As an asset-building and economic self-sufficiency program for underserved populations without access to conventional financial resources, Ways to Work helps families move off and/or stay off of welfare and other public assistance programs. Instead of handouts, it provides families a helping hand-up toward a more stable financial future.

Program Background

The concept for what is now Ways to Work came out of a series of discussion forums in the greater Twin Cities area of Minnesota with several women who were leaving welfare and striving to become self-sufficient. Conducted in the early 1980’s by the McKnight Foundation, the theme for these discussions was to identify the types of support needed by these families to help move them beyond their cycle of poverty and public dependence. The overwhelming message was a call for temporary financial resources (loans) to help with unexpected expenses that might cause them to drop out of the workforce. These mothers were not looking for another handout; they wanted the dignity of paying back these temporary infusions of cash.

As a result of this investigation, the McKnight Foundation established loan funds at a number of human service agencies around the Twin Cities metropolitan area. The Single Parent Loan Program marked the beginning of the development of the Ways to Work model. The original loan program’s successes and challenges provided the experience necessary to refine and improve the program over the years.

In 1996, the program was entrusted to the Alliance for Children and Families to replicate nationally. Known as the Family Loan Program, the first loan offices were established outside of Minnesota, hosted by the human service agencies that comprise the membership of the Alliance.

In 1998, due to the early success and continuing promise of the program, the Family Loan Program was separately incorporated as Ways to Work and given the charter of a ten-year demonstration program. The operating model was further refined and Ways to Work continued the process of replicating the program across the United States.

At the end of a comprehensive strategic planning process and internal program evaluation, the Board of Directors voted in the spring of 2004 to consider the demonstration program at an end and began the process of converting Ways to Work to a more sustainable business model.

The Work of Ways to Work

The overarching aim of Ways to Work is to reconnect our clients and their families with the hope and growth embodied in “The American Dream”. For too many people, economic challenges and financial realities have dashed any hope of significantly improving their lot in life or that of their children. Ways to Work is designed and operated to restore that hope.

This work is not accomplished overnight. There are several intermediate steps. Our program criteria help us to identify people who have demonstrated the will and preparedness to move ahead. Ways to Work does everything possible to avoid making loans to individuals that are not yet ready for the responsibilities that come with a loan. We hope to prevent these individuals (and families) from being set up for failure and further credit damage.

Everyone participating in the application process is provided an opportunity to realistically assess where they are today, in straight-forward financial terms, and where they could be in just a couple of years. The cornerstone of this phase is the development of a monthly family budget.

About 95% of all Ways to Work loans are made for the purchase of used vehicles. While many of us view our cars as depreciating assets, Ways to Work clients have a different view. Their car is an earning asset, a critical piece of their family’s operating equipment. They know that with it, their earning power and personal freedom goes up and their living expenses go down.

Understanding that expenses go down may be counterintuitive until you live without access to a vehicle. Without a car: you shop for food and other household needs at nearby convenience stores rather than supermarkets; you pay per-minute late fees at childcare providers when your bus runs late, and any number of other expenses we normally wouldn’t consider. All of this is captured during the budgeting process.

Our clients are provided with financial literacy training to help them to better understand the world we live in and the economic impact of their decisions. Because nearly all of our clients have severely damaged credit, much focus is given to credit repair strategies and techniques.

The real work of Ways to Work, however, begins with origination of the loan. For two years our clients are held accountable for their loan commitments. They are expected to make all of their payments, in full and on time. If they run into difficulties, they are expected to work proactively and honestly with their loan officer. If they don’t, their loan will be called and their car repossessed. This is a very rare occurrence since Ways to Work borrowers understand the value of the vehicle associated with their loans.

Ways to Work provides significant assistance to make our clients successful, but all within the context of the financial real world. The primary goal of the program is that our borrowers function successfully on their own after their experience with Ways to Work comes to an end.

Program Model

As the national headquarters and program replicator, Ways to Work, Inc. is located in Milwaukee, Wisconsin. Its role is much like that of a concept franchisor except that Ways to Work is able to also provide loan capital in addition to business plans and materials, custom business software, and program implementation counsel and oversight. Plus, Ways to Work performs this role without charging any kind of franchise fee!

The model calls for a member agency of the Alliance for Children and Families to host each loan office. This means that a local human service agency is providing the staff, office space, supervision, as well as operational and loss reserve funding. Even though each office is a part of a national network, they are local programs in every important sense.

The loans are marketed and applications processed by the local Ways to Work staff. Once an applicant has met all program criteria and supplied the necessary information, the credit decision is made by a local, volunteer loan committee. Each decision is based on the applicant’s character as revealed during the application process and presented by the loan officer. In short, it boils down to whether the loan officer, and consequently the loan committee, believes that the applicant will pay back the loan as required.

Once approved, the loan is actually originated at the loan office with state compliant documents provided by the national headquarters. This process maintains a single point of contact, in that the person who helped the applicant through the application process is the same person who helps them through closing and repayment. Local offices are supported and loans are serviced by the national office staff that is intimately familiar with the program and borrower needs/issues, and is vested in their success.

Learn More!

We invite you to learn more about how Ways to Work can make a meaningful difference in your community and for your organization. Please contact the Ways to Work Business Development Coordinator toll free at (866) 252-7171 or by email at bizdevelopment@waystowork.org.