april 21 and 22, 2005 chicago, il. 2 structuring strategic alliances lessons learned from h&r...
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April 21 and 22, 2005 Chicago, IL
2
Structuring Strategic Alliances
Lessons Learned fromH&R Block – Community Action Project of Tulsa
County
An Informed Discussion: Achieving Sustainability, Scale, and Impact in Community Development Finance
April 21, 2005
3
Discussion Outline
Mission and StrategyPartnersMarket TrialGoalsCapabilitiesEarly ObservationsNext StepsPartnership Lessons
4
Mission Statements
CAP: To help individuals and families in economic need achieve self-sufficiency through emergency aid, medical care, housing community development, education and advocacy delivered in an atmosphere of respect
HRB: To help our clients achieve their financial objectives by serving as their tax and financial partner
5
Partnership Strategic Goals
Leverage existing HRB tax prep infrastructure and CAP social services expertise
Broaden reach of CAP’s benefits screening tool
Increase HRB client satisfaction and retention
6
Why Tulsa?
H&R Block and CAP existing relationship
Proximity of partners
Large base of EIC eligible citizens
Cooperate vs. compete
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Profile—H&R Block, Inc.
Serves more than 20M clients annually
Over half of clients served have AGI < $30K
More than 11,000 retail outlets, plus digital solutions
Prepares 1 in 4 of all EITC returns nationally
80,000 tax professionals
8
Profile—CAP
Area’s designated community action agency
Served more than 20,000 clients in 2004
Completed 14,300 free tax returns worth $19.3M in refunds
Provides high-impact services in:Childcare and early childhood educationEmployment and savingsAffordable housingTax Preparation
9
Offer benefits eligibility screening as part of the tax preparation process
HRB tax prep software identified likely clients
Tax professionals offered the screening service
Clients screened by “outsourced” CAP benefits eligibility specialists
Trial Overview
10
The Screening Tool
“BESO” = Benefits Eligibility Screeningfor Oklahomans
Rules driven, interactive interview format
Determines likely eligibility for approximately 20 social services programs
Prepares and electronically transmits application for Food Stamps to DHS
11
Complementary Goals
Optimize completion of tax returns during limited timeframe
Introduce service “embedded” in tax prep process
Retain more clients
Offer eligibility screening service to as many clients as possible
Maximize completion and submission of food stamp applications
Serve more clients
H&R Block CAP
12
Test client acceptance of service offer
Test tax professional willingness and ability to deliver offer
Determine value to client
Assess whether offer yields shareholder value
Test scalability with non-profit partner
Complementary Objectives
H&R Block
Informally compare alternative distribution channels—”free” vs. “fee”
Test deployment of re-branded BESO application in non-CAP site
Test ability to partner with perceived “competitor” and for profit firm
CAP
13
Significant Reach
Scale: Enhance and leverage existing national infrastructure:SoftwareCompetency in defining business rules
E-file and connectivityCentralized data analysis
Tax Expertise100 hrs. training before seeing 1st client
Brand Equity
Partners’ Comparative Strengths
H&R Block
Knowledge: Expertise in eligibility criteria and rules driven application
Relationships: With Department of Human Services and other program administrators
Delivery: Trained benefits specialists
CAP
14
Clients behaved differently than expectedOffer may have “come out of the blue”
Clients strongly preferred phone screenings in practiceEarly qual may indicate a face to face preference
“Value proposition” needs strengthening“Provider of relevant information” to “Remove stress and hassle in a dignified manner”
More to follow in end of season analyticsData analysis – demographics of who received and selected offer
Qualitative study of clients and reaction to offer
Early Observations
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Next Steps
Qualitative ResearchFocus GroupsIndividual InterviewsClient Experience
De-Briefing SessionQuantify “Outputs”Lessons Learned by Field Participants
Evaluate DataModify Application?Modify Trial Parameters?Go/No Go for Next Phase
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Openness
Get past the stereotypes
Find Commonalities
Acknowledge the differences
Key Partnership Concepts
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Commitment
TimeResourcesAccessibility
Flexibility
Expect the unexpectedMake adjustments quicklyAgree on broad scope, not specifics—MOU vs. Definitive Agreement
Key Partnership Concepts
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Where We Are—Levels of Scale
Product
In early phase—experiment and replicate
To achieve scale
StandardizationInfrastructureRoll-out
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Thank You
Douglas Hartung Andrea HughesH&R Block Community Action [email protected] [email protected]
April 21 and 22, 2005 Chicago, IL
Federal Reserve Bank of Chicago
April 2005
Scale and Sustainability
Impact in
Community Development Finance
Federal Reserve Bank of Chicago
April 2005
Scale and Sustainability
“New Pathways to Scale…”Aspen Institute (Ratliff/Moy)
• Great article, interesting models, thoughtful research• Download at www.chicagofed.org
(Profitwise News & Views – Dec 2004)
But .. “Which came first – the chicken or the egg?”
(Scale or Sustainability?)
Federal Reserve Bank of Chicago
April 2005
Scale and Sustainability
• Sustainability must be first and foremost.• That’s self-sustainability, too!• CDFIs – A subsidized financial institution
is a classic oxymoron.• The World has changed – accept it!
(CRA, Community Credit Unions)
Federal Reserve Bank of Chicago
April 2005
Scale and Sustainability
• Choose a need that’s sustainable.
• Size the organization, infrastructure, and products for the need.
Federal Reserve Bank of Chicago
April 2005
Scale and Sustainability
• Scale is about doing one thing very, very well.
• Counterintuitive?
• Economies of scale do exist!
• Complexity kills!
• The Hot Dog Cart …
Federal Reserve Bank of Chicago
April 2005
Scale and Sustainability
Sustainability (Products)Yes No
√ Savings/Shares
√ Credit Cards
√ Checking
√ Mortgage Loans
√ Check Cashing, Wires, PMOs
Federal Reserve Bank of Chicago
April 2005
Scale and Sustainability
Sustainability (Products)Yes No
√ Personal Loans
√ Auto Loans
√ Business Loans
√ Debit Cards (E-Statements!)
Convenience, Phone Access
Branches√
√
Federal Reserve Bank of Chicago
April 2005
Scale and Sustainability
• Immigrant• Language• Culture• Documentation• Distrust
• Can’t fail• May not succeed• Flexible operating costs• “Creative” limitations
Latino / SECU
•Need
•SECU
Federal Reserve Bank of Chicago
April 2005
Scale and Sustainability
6 Rules of Sustainability
• Cheaper
• Better
• Quicker
• Simplify
• Control the Point of Sale (Quality)
• Local, Local, Local
Federal Reserve Bank of Chicago
April 2005
Scale and Sustainability
Why did SECU partner with
Latino Community Credit Union?
Federal Reserve Bank of Chicago
April 2005
Scale and Sustainability
Our purpose is to change the world.
Federal Reserve Bank of Chicago
April 2005
Scale and Sustainability
Don’t bet against us…
Federal Reserve Bank of Chicago
April 2005
Scale and Sustainability
For further information:
Jim Blaine
President
State Employees’ Credit Union
Ph. 919-839-5000 Fax: 919-839-5353
Thank You
…you’ll lose!!
April 21 and 22, 2005 Chicago, IL