How Morgan Stanley helped a nonprofit financial counseling service broaden its client base and achieve its potential.
When Justine Zinkin wanted to extend the reach of her nonprofit, which offers financial counseling to low-income workers, she turned to Morgan Stanley and its Strategy Challenge pro bono program, which pairs teams of high-performing employees with charities that have key strategic questions to resolve.
The result, for Zinkin, was a detailed plan that not only dramatically expanded the client base of her organization, Neighborhood Trust Financial Partners, but also gave it a roadmap for growth well beyond its original footprint in Upper Manhattan.
“We came to Morgan Stanley in 2010 and said, ‘We believe financial counseling for lower-income individuals is a growing field, given there’s increased insecurity for so many households,’ ” Zinkin recalls. “Can you help us scale our business model?”
Yes, was the answer—along with a strategic plan for the organization to begin partnering with large employers whose workers could benefit from free credit counseling and no-fee bank accounts.
Neighborhood Trust carried out the recommendations and found that everyone came out ahead: Not only did the workers learn to avoid costly alternatives, like payday lenders and pawn shops, but the employers benefited too, in the form of a more stable and loyal workforce.
Zinkin has led the group for nearly two decades. Originally founded in 1994 as Credit Where Credit is Due, the community development organization later became Neighborhood Trust Financial Partners, and it was one of the first nonprofits to participate in Morgan Stanley’s annual Strategy Challenge. Its experience has been a shining example of what the pro bono consulting program can achieve and how nonprofit partners and the communities they support can benefit.
“Our work with Justine Zinkin’s group was just the type of collaboration that the Strategy Challenge was designed to foster,” says Joan Steinberg, Global Head of Community Affairs and President of the Morgan Stanley Foundation. “Everyone’s horizons were widened, from the Morgan Stanley professionals who worked on the assignment to the organization itself and the clients it serves.”
Finding Clients in the Workplace
A team of four Strategy Challenge participants and their mentor, Arun Kohli, a Managing Director at the firm, set about brainstorming ideas to locate additional clients for Neighborhood Trust. “There was no question they had identified a need,” says Kohli. “The question was: Where do you get the leads? How do you find the people?”
After considering a number of approaches, the Morgan Stanley team recommended that Neighborhood Trust partner with large employers and provide free counseling in the workplace to their low-wage workers. The idea made sense: Neighborhood Trust’s clients have a median income of $21,000 and are typically hourly workers who lack a high school diploma. Bringing them into the formal banking system through no-fee accounts at credit unions and elsewhere would be a boon.
“The pitch to employers was that companies would have lower attrition, because employees wouldn’t be drifting in and out of the banking system,” Steinberg says. “This was a tool that could stabilize the workforce, and would ultimately be good for companies’ bottom line.”
To test its idea, the Morgan Stanley team set about calling large employers in the New York area. “We asked if they would be interested in hosting sessions led by Neighborhood Trust,” Kohli says, “and many of them said yes.”
An anchor partnership proved crucial. Through a member of the Morgan Stanley team, Neighborhood Trust connected with NewYork-Presbyterian Hospital, which referred the nonprofit to the 1199 union representing healthcare workers at the hospital.
Through this initial employer partnership, Neighborhood Trust began offering financial literacy workshops to low-wage hospital employees, including nurses’ aides, orderlies, custodians and technicians. The program teaches employees to set up a financial plan and, as needed, to open no-fee savings accounts, either with Neighborhood Trust Federal Credit Union (a sister organization) or similar institutions. The relationship with 1199, which has benefitted hundreds of workers, continues to this day.
“After the program got under way, employee attrition at the hospital declined, and the employees were able to save more,” Steinberg says. “Everything you would hope to come out of a program like this one, did come out of it.”
From New York to a National Platform
For Neighborhood Trust Financial Partners, the advice from the Morgan Stanley team “was a light bulb moment for us,” says Zinkin. “We pivoted our approach as a result of that insight. This was not only the path for our organization to scale, but also to sustain our business model.”
Nine years after it participated in the Strategy Challenge, Neighborhood Trust continues to grow rapidly. In late 2017, it introduced a technology platform that allows workers to get counseling via Skype or phone, allowing the organization to offer its services nationwide. Today, the organization works with 60 companies with a combined 100,000 employees.
“We landed 50 new customers in 2018, and we expect to break even by 2021,” Zinkin says.
The timing of the advice Neighborhood Trust received from the Morgan Stanley team couldn’t have been better, she adds. “Now there’s huge demand for financial wellness. People are entering the market left and right—but we had a huge first-mover advantage.”