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Training, employment, and education

Fragmentation of financial literacy efforts makes coordination essential

Why Area Is Important

Improving financial literacy is essential to ensuring consumers' economic well-being and security. Poor money management and financial decision making can lower a family's standard of living and interfere with crucial long-term goals, such as buying a home and financing retirement. Financial literacy has broader public policy implications as well. For example, financial markets work best when consumers understand how financial services providers and products work and know how to choose among them. Federal financial literacy programs and resources are spread widely among many different federal agencies, raising concerns of potential duplication or fragmentation.

What GAO Found

Federal financial literacy activities are fragmented across multiple agencies, with more than 20 different federal agencies providing about 56 programs related to financial literacy. This increases the risk of inefficiency and highlights the need for strong coordination of these efforts. Federally funded financial literacy programs cover a number of topics (such as saving for retirement and avoiding fraudulent practices), target a range of audiences (such as schoolchildren, prospective homeowners, and investors), and include a variety of delivery mechanisms (such as classroom curricula, print materials, Web sites, broadcast media, and individual counseling). To streamline federal efforts in this area and improve coordination, Congress created the multiagency Financial Literacy and Education Commission (the Commission) in 2003. It charged the Commission with, among other things, developing a national strategy to promote financial literacy and education, coordinating federal efforts, and identifying—and proposing means of eliminating—areas of overlap and duplication.

GAO recommended in 2006 that the Commission use an unbiased, third-party evaluator to examine the extent of overlap and duplication among federal financial literacy activities. In response, the Treasury Department, which staffs and chairs the Commission and coordinates its activities, contracted for two studies, both of which found limited evidence of overlap and duplication. Staff at four federal agencies and two research institutions that GAO spoke with noted that even when different agencies' programs appeared similar, closer inspection can reveal important differences in such elements as the target audience or the specific content.

However, with 20 different agencies playing a role in financial education, federal financial literacy efforts clearly are fragmented. There are some advantages to having multiple federal agencies involved in financial literacy—for example, agencies can focus their efforts on the particular subject matter or target audiences for which they have expertise. At the same time, fragmentation across agencies can also make it difficult to develop a coherent global approach for identifying gaps and needs and for rationally allocating overall resources. In part to encourage a more coordinated approach to federal financial literacy resources, Congress mandated the Commission to develop a national strategy. However, as GAO has reported, the 2006 National Strategy for Financial Literacy largely was descriptive rather than strategic; generally did not include a plan for implementation; and only partially addressed or defined elements such as performance measures, resource needs, and roles and responsibilities. In December 2010, the Commission released a new national strategy, which identifies five action areas—policy, education, practice, research, and coordination—as well as a series of goals and related objectives intended to help guide financial literacy efforts over the next 3 to 5 years. The Commission stated that in 2011 it will release an implementation plan for how the Commission, its members, and other organizations can best incorporate the new strategy into their activities and initiatives. As that implementation plan is developed, GAO believes that one of its goals should be to address the fragmentation of federal financial literacy efforts.

Fragmentation across federal agencies has the potential to result in inefficient, uncoordinated, or redundant use of resources. In the case of financial literacy programs, there are numerous funding streams and little good data on the amount of federal funds devoted to financial literacy. Financial literacy efforts are not necessarily organized as separate budget line items or cost centers within federal agencies and there is no estimate of overall federal spending for financial literacy and education, according to the Department of the Treasury. The Commission was charged with coordinating federal resources, but GAO has noted in the past that the Commission faces significant challenges in its role as a centralized focal point: it is composed of many agencies, but it has no independent budget and no legal authority to compel member agencies to take any action.

Actions Needed

GAO has identified several possible steps that could be taken to address fragmentation in federal financial literacy efforts:

  • Improve coordination among federal agencies.Because of the crosscutting nature of financial literacy, it would be difficult, if not impossible, for one agency alone to address the issue, but coordination among agencies is clearly essential. In prior work, GAO has identified barriers to coordinating programs and initiatives across the federal government, which can include competing missions, concerns about protecting resources, and a lack of clearly articulated roles and responsibilities. The Commission should enhance its efforts to coordinate federal activities, such as by exploring further opportunities to strengthen its role as a central clearinghouse for federal financial literacy resources.
  • Delineate roles for two key financial education offices.In 2010, Congress enacted legislation creating an Office of Financial Education within the new Bureau of Consumer Financial Protection. This office is charged with duties that are in some ways similar to those of the separate Office of Financial Education and Financial Access within the Department of the Treasury. The respective offices will need to coordinate their roles and activities closely to avoid unnecessary overlap and make the most productive use of their respective resources.
  • Foster public-private partnerships.Given the wide array of state, local, nonprofit, and private organizations providing financial literacy programs, it is essential to leverage private sector resources and coordinate federal activities with resources at the community level. The Commission should build on progress it has made in recent years in promoting such partnerships. Federal collaboration with state and local governments may be particularly important given the critical role that school districts can play in improving financial literacy among young people.
  • Measure outcomes and focus resources accordingly.Federal financial literacy resources should be focused on those agencies and programs with the most expertise and best track records. The Commission and the Bureau of Consumer Financial Protection could potentially play a role in developing or disseminating a standard set of evaluation tools or benchmarks that would help assess which federal initiatives have the most effective outcomes.

The potential monetary savings to coordinating or consolidating financial literacy efforts is unknown. As noted earlier, there is no estimate of overall federal spending for financial literacy and education, and most federal agencies do not have an estimate for spending on "financial literacy" per se. However, streamlining federal financial literacy resources would have other benefits—it would make the best use of scarce resources and focus efforts on programs and initiatives that have been shown to be most effective in improving the financial literacy of the American people.

Framework for Analysis

The information contained in this analysis builds upon prior GAO work, which is cited under the "Related GAO Products" tab. To supplement that work, GAO reviewed two studies on federal financial literacy resources that were conducted by private entities and commissioned by the Department of the Treasury. GAO also conducted interviews with staff at four federal agencies and two research organizations.

Area Contact

For additional information about this area, contact Alicia Puente Cackley at (202) 512-8678 or

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