Set Up to Fail
Fines, Fees & Financial Insecurity
Aspen Institute Financial Security Program
CHRONIC DEBT is a rapidly growing problem among households across the US and a significant barrier to financial stability and wealth building.
Prior to the COVID-19 pandemic, many households were already struggling; 77% of Americans held some form of debt. COVID-19 presented an unprecedented challenge to both households and the broader economy. Widespread unemployment left many scrambling to cover rent, utility payments, food, and medical bills — and many took on debt to cover these costs and other expenses.
There is an urgent need for debt-reduction tools, strategies, and solutions. Debt reduction is particularly important for Black, Indigenous, and people of color who, because of structural racism, are more likely to encounter predatory lending practices, face difficulties with repayment, and have little or negative net worth.
SETTING CONTEXT: Understanding the Consumer Debt Crisis and the Financial Stressors We Live With
While borrowing has historically been used as a tool to acquire greater economic mobility and choice, consumer debt is a growing problem area on the household balance sheet.1 Disturbingly, the increase in debt is not due to wealth-creation opportunities such as homeownership or investing in a small business, but for basic needs, including medical care.
More than one in three U.S. households live in housing that is unaffordable to them, and one in four renters spend more than 50% of their income on rent.4 This instability is disproportionately pronounced among communities of color.
“In my research in Alabama, I encountered countless people who experienced financial penalties as the disruption that derailed their lives. They’d lost drivers’ licenses, jobs, even their liberty. Over and over, they expressed dread and hopelessness.
‘What can I do?’ a woman who had been paying off fines and fees for nearly a decade asked me. ‘You can’t get blood from a turnip.’ “
ALABAMA APPLESEED CENTER FOR LAW AND JUSTICE
Promising Practices for Mitigating the Impact of Fines and Fees
These are examples of the various projects cities and states have developed and
implemented to address the issue. Funders may use these examples to draw inspiration in
getting started or in taking steps toward supporting this work.
CONDUCT RESEARCH AND GATHER DATA ON IMPACT
ALABAMA APPLESEED CENTER FOR LAW AND JUSTICE
Based in Montgomery, Alabama, Appleseed conducted foundational and groundbreaking qualitative research across the state (cited throughout this brief) to better understand and explain the intersection of fines and fees, race, wealth, and economic outcomes. GRANTMAKER LEADERSHIP: Funders can invest in nonprofits and community organizations, including legal service and advocacy organizations working directly with those most impacted by fines and fees.
ASSESS THE EFFECTIVENESS OF CURRENT SYSTEMS
Ramsey County, Minnesota; Nashville- Davidson County, Tennessee; and Dallas County, Texas
These counties secured third-party technical assistance to assess collection methods and revenue streams, as well as the social and economic impact of their justice system’s reliance on fines and fees. GRANTMAKER LEADERSHIP: Philanthropy can work with jurisdictions to fund assessments of collection measures and revenue streams to better understand where fines and fees factor into budgets.
ELIMINATE PUNISHMENTS THAT IMPEDE LIVELIHOOD
Durham Expunction and Restoration (DEAR) Program
The DEAR program in Durham, North Carolina, helps residents resolve outstanding traffic charges that cause longterm license suspensions. The program provides the following free services: 1) identifying people eligible for restoration of a suspended or revoked license, and 2) dismissing old traffic tickets. Its success is reflective of the diverse collaboration that helped with its creation. GRANTMAKER LEADERSHIP: Philanthropy can help fund pilots aimed at remedying existing systems.
WHERE FINES AND FEES EXIST, IMPLEMENT FLEXIBLE AND EQUITABLE COLLECTION PRACTICES
San Francisco, California
The city offers a payment plan for money owed to the city and offers residents who may struggle to pay flexibility and alternatives to paying parking tickets. GRANTMAKER LEADERSHIP: Philanthropy can help fund pilots aimed at remedying existing systems, like payment plan trials and other ability-to-pay tools.
PURSUE WIDESPREAD REFORM AND ELIMINATE FINES AND FEES WHERE THEY NO LONGER MAKE FISCAL SENSE
PolicyLink, the San Francisco Financial Justice Project, and the Fines and Fees Justice Center
Awarded 10 jurisdictions grants to pursue fines and fees reform, as well as technical assistance and training to develop and implement new, promising policy practices. GRANTMAKER LEADERSHIP: Grantmakers can fund jurisdictions and practitioners in continued efforts to pursue broad reform.