How to Engage Finance to Enable Survivors of Violence to Build Economic and Financial Freedom
Gender-based violence has significant consequences for the health and well-being of individuals, families, communities, businesses, states, and countries. While violence prevention and response have often focused on the physical and mental health of survivors, the last few years have seen an increasing focus on the economic aspects of violence—both how much violence costs cities, states, and countries as well as the financial consequences for survivors. As we better understand the many ways in which violence impacts survivors’ short-, medium-, and long-term financial health, Criterion has focused research on ways in which systems of finance can be engaged in addressing these issues. This paper is focused on a US context and based on research conducted in and about California.
Historically, preventing and responding to violence have been seen as the responsibility of governments, nonprofits, and other civil society organizations. More recently, with more focus on sexual misconduct in the workplace, dealing with violence is increasingly seen as business responsibility as well. Criterion Institute, which works on empowering social change actors to have a say in financial decision making, has a program dedicated to engaging finance—that is, capital markets, financial institutions, and the people who work in them—to address gender-based violence. In the complicated issue of survivor wealth, we believe that are several opportunities for investors and financial institutions to adopt practices and programs that benefit themselves as well as survivors of violence. Specifically, better understanding the patterns and impacts of violence can help individuals and institutions identify hidden opportunities, adapt structures and terms in ways that increase their own returns, and invest in and advocate for workplace equity models that support survivors and improve business and financial performance.
In this paper, we look at the range of impacts violence has on survivor wealth, identify which patterns are particularly relevant to financial actors and institutions, and then describe three strategies for how finance can engage, with examples of organizations doing related work.
It is important to note that the issues and solutions we describe below do not encompass the whole of gender-based violence, nor, in many cases, the most urgent needs. For example, we describe ways for commercial banks to better serve customers who may be experiencing violence, but many people who experience violence are unbanked and/or undocumented, and do not have any kind of access to formal financial institutions. Other industries and actors are positioned to address the many ways that violence harms individuals and communities. Systems of finance are not fundamentally designed to solve social problems, and in many cases, the above issues need to be addressed by policy change and implementation, changes in regulations and enforcement, culture change, tax reform, etc. Our aim here is to illuminate a few areas in which systems of finance can be part of the solution of helping survivors build wealth—ways in which finance can be the right tool for a specific set of problems, providing opportunities for businesses and investors that benefit survivors. These are opportunities to engage a new set of actors and allies in the urgent work of preventing and responding to violence.
How Violence Impacts Survivor’s Economic Safety and Wealth
Violence and economics are inextricably intertwined. For one, violence places huge costs on businesses and public systems and services. Those who are experiencing violence, whether in the workplace or in their lives, are less productive and have higher rates of absenteeism. When violence occurs in the workplace, turnover tends to be higher and work is disrupted in various ways. While there are no recent models for how to consistently measure the cost of violence at individual workplaces, one study found that violence in the workplace alone likely costs the average Fortune 500 company $6 million annually1. And of course, the costs of violence to governments is significant, comprising medical costs, investigative services, victim services, and more. The California Coalition Against Sexual Assault (CALCASA) estimates that violence cost the state of California $140 billion in 20122.
Less commonly understood are the costs of violence to survivors. Survivors of gender-based violence face a series of financial and economic challenges both during and after the period of violence that lead not only to immediate economic crises but also have long-term impacts on their ability to be financially stable and build wealth. Financial abuse—impairing or preventing someone’s access to financial assets—occurs in 99% of domestic violence cases. A recent study estimated that the lifetime cost of violence is $103,767 to women and $23,414 to men3. When issues such as reproductive coercion, which can lead to people having more children than they proactively choose to, are factored in, the costs can be much higher.
The ways in which violence impact survivors’ financial health are myriad. The economic disadvantages that occur as a result of violence include an increase in financial-related stress, decreased workforce participation, interrupted education, lower pay, and reduced and/or limited savings. More broadly, the combined impacts of gender-based violence contribute to an overall lack of economic security for survivors. Women in violent relationships are more likely to quit or be terminated from jobs and often experience restricted access to money. Additional consequences are suffered in the aftermath of separation, such as increased economic insecurity due to accumulated debts, damaged credit, loss of housing and assets, and reliance on income support. Impacts such as these often build upon themselves, leading survivors to be further marginalized out of economic and financial systems in ways that have lifelong consequences.
How Survivors’ Economic Health is Relevant to Investors and Financial Institutions
Gender-based violence is often treated as a private issue, but its prevalence and the severity of its social and economic impacts mean that it shapes the ways individuals relate to systems and institutions around them. Criterion has written at length on the ways in which gender-based violence outside and within companies poses an investment risk (see our recent diligence tool on assessing the investment risk of gender-based violence). For one, gender-based violence is so widespread that it inevitably impacts workplaces, sectors, and markets. One in three women worldwide experiences violence, a figure that does not account for all the men, boys, and gender-diverse individuals who experience violence. In California, approximately 40% of women experience physical violence annually, with rates tending to be higher among marginalized populations such as transgender women and immigrants. That said, violence affects people from all demographics and walks of life.
From the point of view of investors, gender-based violence is a hidden enterprise and market risk. At an enterprise level, as described above, violence impacts a company’s operations and performance. It is also increasingly a reputational risk, as movements like #MeToo are changing the tolerance of workplace misconduct in ways that result in losses and turnover for companies that are exposed. Finally, it constitutes a market risk in several ways. For one, research shows that violence against women is a better predictor of future state stability than traditionally used metrics such as wealth and strength of institutions. It is also a regulatory risk—as attention to the issue increases, cultures and laws are changing, which could put institutions not in compliance at risk.
Zeroing in further, these high rates of violence mean that a significant number of people—based on the statistics cited above, likely over 40% of women in California—are experiencing disruptions or extraordinary needs when it comes to finances. From the point of any institution, a significant portion of their employee and customer/user base is facing issues that impact their financial health. Recent research shows that financial stressors alone lead to productivity losses and costs for businesses4. From the point of view of a commercial bank, a significant portion of their customer base is facing unique challenges related to finances, from needing emergency funds to debt accrued in their name without their participation. These kinds of challenges, in impacting customers’ ability to meet the terms of their agreements with financial institutions, negatively impact the institutions as well as the individual.
Moreover, impact investors who are looking for social and environmental impact alongside financial ones have an opportunity to increase both by incorporating analyses of gender-based violence into their existing work regardless of the issue on which they focus. In particular, the growing number of impact investors who are focused on reducing gender and wealth gaps might look at the ways in which violence impacts their target populations’ financial needs and how they might shape their strategies accordingly.
3 Strategies for Engaging Finance in Protecting and Building Survivors’ Economic Health
Through desk research and multiple conversations and workshops with individuals and organizations in California dealing with survivor issues, Criterion has identified three avenues where investors and financial institutions could be engaged in supporting survivors in building wealth. There has been increasing focus of late on survivors’ economic health and finances. Economic justice has become a core part of the policy and advocacy agenda for survivors and we see programs aimed at improving survivors’ ability to access financial services, such as credit building and financial literacy.
Where we focus is identifying where, within the many strategies and approaches, there may be opportunities to engage financial institutions and actors. The three strategies we name below are all actions for advocates, but they are geared at different audiences. The first strategy highlights a case of hidden aligned incentives between financial institutions and survivors—an opportunity for financial institutions to evolve their own processes in ways that benefit their customers as well as themselves. The second is an opportunity to influence businesses and public and private investors to create workplaces that are more supportive of survivors. The third is an opportunity for private asset holders, including impact investors, who care about gender-based violence to invest in a way that has both financial and impact returns.
1. Implementing model structures and terms for standard financial transactions
In finance, money is always moving, and the ways in which it moves is determined by how different parties are in relationship with each other. Those relationships are codified in the structures and terms of various kinds of financial documents—loans, leases, shareholder agreements, and so on. The structures and terms of any given agreement can be tailored to suit different parties’ interests, and there is enormous power in changing structures and terms to change how two parties are in relationship with each other. In this financial strategy, we propose that shifts in structures and terms that meet survivors’ needs can have significant positive impacts for them and the financial services institutions with which they are in relationship.
Many of the forms of violence survivors experience damage their relationship with financial institutions. Whether it is funds withdrawn without consent, debt accrued in their name, or damaged credit scores, survivors face particular difficulties in obtaining, retaining, and using personal banking systems in the ways they need to. This is also harmful for banks, who lose financially when customers struggle to repay loans, cannot access debt, or are short on funds.
A few models have shown that by being better attuned to the specific needs of survivors, financial institutions can both better support them and benefit themselves, often to the tune of millions of dollars. If a customer at a bank is struggling to fulfill financial obligations, this has costs for the institutions as well, in the form of expending resources seeking repayments and, in certain and more costly scenarios, having to turn situations over to collections agencies. Moreover, not providing programs that work for survivors means a reduction in an institution’s potential customer base—not necessarily because the customers they are not reaching are objectively risky, but because there is a mismatch of services to needs. Programs that focus on supporting survivors with credit-building and other financial tools have shown that individuals who are considered risky from a banking perspective are fully capable of becoming desirable customers with the right kind of assistance. The example below about National Australia Bank’s Assist program illustrates some of these points.
Drawing on the expertise of survivors, advocates, and those who work at banks, FreeFrom recently created Survivor Safety Banking Guidelines, a set of practices that would enable survivors to bank safely and keep their money secure. Banks and other financial institutions can assess these practices against their own to understand where they can both support survivors of violence and improve their own relationships and returns with an expanded customer base.
Individuals may hold debt from a variety of financial institutions for mortgages, credit cards, or personal loans, that each have a set of terms. Although the finance industry typically uses similar sets of standard terms, there is room for innovation to mutually benefit the institutions and survivors. The goal is not to convince institutions to focus more on impact than on their traditional goals—it is to introduce better data and a different kind of expertise in how they regard survivors.
Many programs and projects exist that are modeling ways in which shifting or changing terms can benefit survivors. People with expertise in patterns of financial abuse are well positioned to work with banks, credit unions, lenders, and other financial institutions to encourage the adoption of a set of terms that can be applied depending on the survivor’s situation, as well as to inform best practices of how institutions can interact with survivors to avoid bias and harm.
One example of how a financial institution changed its own calculation of risk and reward based on better understanding a population is the National Australia Bank. The Bank’s NAB Assist program benefits customers experiencing financial hardship, including survivors struggling financially as a result of domestic violence. The program offers customized payments, which can include reduced payments and waivers of old late fees, as well as access to support services and grants of up to $2,5000 to leave unsafe situations. The bank found that the program actually saves the institution $70 million per year.
Student Loan Terms
Student loans are an additional area of personal banking where adjusting the terms between a lender and survivor could allow for mutual benefit. Currently, there are very limited options for those with student loans to receive forbearance on payments. There is one exception for financial hardship for federal loans, but the requirements for qualification are strict and applications are cumbersome. In addition, even if forbearance is granted, interest continues to accrue on most loans. Thus, this option is limited in scope and will not fit the needs of all, or even most, survivors. The duration of time required for the application process could be lengthy, the loan might accrue significant interest in a period of forbearance, and a survivor might not be able to provide detailed documentation explaining why they are experiencing hardship, especially in cases where they have joint accounts with their abuser.
Recently, in order to respond to the COVID-19 pandemic, federal loan providers have issued a period of automatic forbearance from March 13, 2020 through September 30, 2020 for all student loans, along with a 0% interest rate. This change in terms was issued in the case of an international emergency, to ensure the financial stability and wellbeing of the nation. However, this kind of response demonstrates what could be possible in creating a survivor-based model to address the emergencies that are faced by people experiencing violence every day. If an instance of violence, whether financial, emotional, or physical, severely impacts a person’s daily life and ability to make payments, there should be a trigger in financial institutions that allows a period of forbearance, in addition to lowered or eliminated interest.
Credit-Building and Loan Programs
Financial hardship can negatively affect credit scores, resulting in potential ramifications for loan eligibility, employment offers, insurance costs, and housing options, amongst other things. Survivors are uniquely susceptible to credit changes, especially in instances of financial abuse. Furthermore, marginalized populations, such as women, non-binary, and gender non-conforming individuals, and people of color, are often already vulnerable to lower credit scores and/or limited credit history to begin with. A combination of philanthropic and traditional credit-building programs can address this concern. The Mission Asset Fund, for example, offers 0% interest loans to individuals in the community in order to establish and build credit, offer access to banking, and eliminate the predatory practices of payday lenders. Other more traditional credit building programs are sometimes offered through smaller financial institutions, such as credit unions. In some cases, large institutions offer programs: Santander bank has a partnership with the National Network to End Domestic Violence to offer micro-lending and financial literary resources for survivors.
Good Shepherd Microfinance, located in Australia and New Zealand, offers similar options to renegotiate loan terms in times of economic distress. They offer a “No Interest Loan Scheme,” which eliminates interest on loans of up to $1500 for essential goods and services, as well as a “Step Up Loan,” which lowers interest rates on loans of between $800 and $3000 with eliminated fees and affordable repayment options. In addition to adjusting loan terms, Good Shepherd has trained banking staff to recognize signs of financial abuse when working with clients and make appropriate support referrals.
Financial inclusion product providers such as Good Shepherd offer services that do not further entrap survivors within cycles of debt. Their programs take a people-centered approach to building economic security and well-being among vulnerable and marginalized populations. This is a safe and affordable alternative to other high-cost finance options such as payday loans or “rent to buy” agreements. The NILS also does not require credit checks, something that frequently prevents people from securing financial services. The Circular Community Credit aspect of the NILS ensures that funding is readily available for those who need it and contributes to the 95% repayment rate of these loans.
2. Shareholders and investors advocating for a survivor-centered lens on business practices, including workplace equity models
As with financial structures and terms, incorporating an analysis of survivors’ needs can help workplaces adopt or shift practices that support survivors and result in healthier, more productive, and more equitable workplaces. Public and private investors can use their capital and influence, such as shareholder advocacy, to encourage companies to adopt this lens as part of their business practices.
Workplace equity has become an increasing focus of impact investors as well as businesses, nonprofits, and consultants. Increasing evidence demonstrates that workplaces with diverse employees and policies and practices in place that are inclusive and supportive of employees perform better financially. Many models of workplace equity exist, including models of gender, racial, and LGBTIQ equity. However, while workplaces are increasingly putting into place policies and procedures to prevent violence in the workplace, few are thinking about ways to support employees who may be experiencing violence at home or in the world. Organizations such as Futures Without Violence have developed sets of best practices and trainings for supportive workplaces. There is an opportunity to turn these practices into a framework for investors to evaluate potential and existing investments and influence companies to adopt better practices. Investors can then play a role in ensuring these are incorporated into existing models of workplace equity so that businesses are better supporting all employees, at the same time increasing their operational efficiency and mitigating their risks.
This has the potential for wide ranging impact, as this kind of framework can be adapted by various investors across asset classes. Private investors can use their influence to encourage investee companies to better their practices. On the public side, such a framework can be translated into metrics that are incorporated into new or existing indices, parallel to indices such as the Corporate Equality Index (see details below). Because a number of high-profile companies, such as the Weinstein Company and CBS, have suffered stock price hits due to sexual misconduct scandals, there is appetite among investors to find ways to screen out future risks related to gender-based violence.
Financial Health Network and the Financial Inclusion Action Plan
Institutions are increasingly realizing the extent to which individuals struggle with navigating personal finances—and the amount of stress and anxiety this causes to workers and families. Corporations are also realizing that improving employees’ financial health and peace-of-mind is good for business: Morgan Stanley recently released a report making the business case for companies helping workers manage their finances. According to the report, individuals’ financial stress can cause companies up to $7,000 per employee per year. As survivors experience very high rates of financial uncertainty and anxiety, personal financial support should be part of any workplace that wants to be inclusive of survivors.
Human Rights Campaign’s Corporate Equality Index
While not inclusive of survivor needs, the Human Rights Campaign (HRC)’s Corporate Equality Index is a model that advocates can use to engage businesses and investors on issues related to violence. HRC, a leading global LGBT rights organization, created a tool that businesses and investors use to influence company practices on LGBT inclusion. The Corporate Equality Index rates companies on a series of policies and practices. HRC sends surveys to hundreds of private and public companies with questions related to four categories: workforce protections, inclusive benefits, supporting an inclusive culture and corporate social responsibility, and responsible citizenship. Companies that score 100 are placed on a list called “Best Places to Work for LGBTQ Equality.”
Such a tool is strategic on multiple fronts. From a business point of view, appearing on HRC’s list of top businesses is a reputational benefit, helping with recruitment. For investors, such an index enables them to easily screen out companies that are not supportive and inclusive of LGBTQ staff and people and screen in companies that have strong practices—practices that research has shown are correlated with better business performance. In addition, analysts and asset managers were able to use this index to build investment products for investors who were interested in LGBT issues. For example, both Credit Suisse and UBS created LGBTQ-focused exchange traded funds built off the Human Rights Campaign’s Corporate Equality Index—an investment product that trades on stock exchanges and is easily accessible to multiple investor types.
3. Channeling resources to enterprises that employ survivors
One of the most basic ways in which finance can be engaged in social change is by channeling capital to companies that are having a positive social and/or environmental impact. In this case, investors can seek out opportunities to support businesses led by and/or employing survivors of violence.
Finding and/or keeping employment is one of the challenges survivors of violence face. Moreover, studies show that any interruption to employment has long-term consequences on a person’s lifetime earnings and, therefore, ability to build wealth. In addition to encouraging companies to adopt survivor-friendly practices, there is an opportunity for different types of investors, such as small banks, venture capitalists, and impact investors, to invest in businesses that are led by or employ survivors. We know that multiple layers of biases are built into how potential investment opportunities are evaluated, with marginalized populations facing additional barriers. Moreover, many survivors have experienced financial crises or abuse that have impacted their own finances and credit ratings, increasing barriers to accessing loan capital. Thus, such businesses’ actual potential is systemically undervalued, and present an opportunity for lenders. Investors can help to ensure the success of such enterprises by pairing them with technical support and creating financing terms that match capital to needs.
Criterion has written in the past about the diversity of ways in which investors can think about businesses that are having an impact on gender-based violence, and we share examples below of ones that are creating impact by employing survivors.
Gifted by FreeFrom
FreeFrom, a leading organization harnessing the power of capacity building, innovation, and systems change to create pathways to financial security and long-term safety for survivors of gender-based violence, has an innovative business model. The organization’s programmatic work occurs out of a 501(c)(3) nonprofit, which works with and advocates for survivors. FreeFrom also has a social enterprise arm called Gifted, which sells hand-made care products crafted by survivors via an online shop. Gifted, whose first product was made by a survivor when she was living at a shelter, pays a living wage to the survivor entrepreneurs that craft the products and package and deliver them to customers. The profits are divided as follows: 70% of the price goes to the entrepreneur, 15% is shared as a living wage to survivors working for Gifted to package and manage orders, 10% goes toward programming for supporting more survivor entrepreneurs to achieve stability and long-term safety, and 5% is overhead for eco-friendly product packaging.
Women’s Bean Project
This a non-profit organization that packages and sells bean soup mixes, baking mixes and other dry food products in stores across the United States. Their mission is to change women’s lives by providing stepping stones to self-sufficiency through social enterprise. Women’s Bean Project hires women who are chronically unemployed and provides them with opportunities to discover their talents, develop skills to join the workforce and assists them in breaking the cycle of poverty. The social enterprise model of Women’s Bean Project includes a 6-9 month program for participants to earn steady income while receiving support services to overcome barriers to employment through job readiness skills, mentorship, computer and financial literacy training, interpersonal and life skills.
Sari Bari is an ethical fashion company based in India and the US that employs women who have been exploited in the sex trade or are vulnerable to trafficking. Its employees receive fair wages and benefits, and the company provides women with a series of supports such as job training, housing support, and debt relief. Like FreeFrom’s Gifted program, Sari Bari has an innovative model whereby its for-profit business is based in India and works with women who have been trafficked in one of the largest red light districts in the country. It has a US-based nonprofit entity that gives customers the option to donate alongside purchases.
Survivors of violence face barriers to economic and financial security due to a complex set of social, political, cultural, and economic factors, and it will take a range of tools—policy change, culture change, philanthropic capital, legal services, and more—to address them. This paper seeks to lay out places in which finance and investment capital can be the right tool for addressing components of various issues.
The solutions laid out above are not all geared at a single audience within finance. Some solutions, like moving capital to enterprises that employ survivors, are suited to impact and gender lens investors who are looking to realize social change alongside financial returns. Other solutions are targeted at institutional investors, including banks and public investors, for whom incorporating a survivor analysis could lead to more accurate financial decision making and, ultimately, stronger business practices and better returns. There are models for these solutions in other social finance fields—for example, bank employees being trained to recognize signs of potential trafficking when talking to customers.
The call to action here, then, is to several audiences. For investors who want to make an impact on gender-based violence, there are ways to move their own capital differently and to advocate to their peers—for example, to lead shareholder activism efforts to influence business to have survivor-friendly practices. This is also a call to action to advocates, gender-based violence experts, and funders. Finance can be a tool to achieve change and various individuals and institutions within finance can be partners and even allies on certain aligned goals. We hope this research demonstrates just a few of those potential paths forward and leads to new partnerships and lines of work.
2 www.calcasa.org/wp-content/uploads/2018/02/CALCASA_CCofSV_FINALSpreads_2018.pdf ^ back
3 iwpr.org/wp-content/uploads/2018/10/C474_IWPR-Report-Dreams-Deferred.pdf ^ back
4 www.morganstanley.com/ideas/financial-health-employees ^ back