Background on SourceCards
SourceCards is a social enterprise which consists of SourceCards Limited, a commercial company with a common foundation of the Debs Price Foundation, a registered charity. The Debs Price Foundation has been established to 1) Help Primary School Children to read and learn about money and 2)To help the financially disadvantaged to help themselves to financial independence, using SourceCards.
The attached overview of SourceCards and a video, https://vimeo.com/168343607/3a4700e343 describe SourceCards.
In summary, the aims of SourceCards are to provide:
- flexible payment facilities for the financially excluded
- budgeting and payment control if requested by the account holder
- remote monitoring by mentors or case workers if permissioned by the account holder
- access to discounts, cash back and grants for essential items such as Food, Rent, Travel, utilities and essential goods
- a network of public funding and private philanthropy to assist and empower the vulnerable to financial independence
SourceCards has had recent meetings with the DWP and these objectives appear to support the aims of Universal Credit: in particular, SourceCards helps to solve the rent arrear issues faced by social landlords as Universal Credit is rolled out.
Universal Credit changes the way governments distribute financial help to the vulnerable and encourages them to do more for themselves. SourceCards provides the support, discounts and private grants which takes this much further.
SourceCards has also had significant encouragement from organisations such as the Centre for Social Justice, the Church of England and major charities such as the Trussel Trust.
The business model of SourceCards is to charge a fixed £5monthly operating fee, which is paid on behalf of vulnerable people by, for example, their landlord. Once SourceCards is fully operational then the discounts, cashback and other benefits will more than outweigh the monthly charge and it is hoped that account holders will see the benefit of continuing to use SourceCards independently of their Sponsor. Ultimately SourceCards Limited will be self-funding and will generate dividends which can be paid to, (mainly philanthropic), investors but with the majority shareholding being held by DPF and the dividends being recycled back to needy people.
Debs Price Foundation will also be used as a vehicle through philanthropists, whether corporate or individual, can be encouraged to donate to vulnerable account holders directly through SourceCards, subject to sponsors or case workers granting approval.
SourceCards also helps support organisations such as social landlords, councils, charities and agencies, to save cost and improve control. For example by giving SourceCards to all vulnerable tenants, a landlord can save several multiples of the cost in improved rent collection and cost savings.
The ultimate outcome is that vulnerable people will be empowered to become less dependent upon 3rd party help to move from financial dependence to independence.
Progress and Feedback
SourceCards has spent the past 20 months speaking with a very wide range of organisations, such as DWP, councils, housing associations, charities and their caseworkers, Church and community organisations such as Rotary Clubs and suppliers such as bus and tube operators, supermarkets, white goods and energy providers etc., as well as grant making foundations.
Pilots have been developed around a variety of schemes to alleviate social issues and the first pilots of the rent arrear avoidance programme are being rolled out in January.
Feedback on Financial Exclusion and support of Universal Credit.
In no particular order we would make the following points.
There is obviously also the post office and a number of “free” bank accounts and the Credit Unions.
We have not come across another payment provider which offers an account which can be configured to meet the specific needs of a range of users: those who want or need control and supervision and those who just need a flexible account with access to discounts and grants
A number of “free” accounts are not actually free. The banks charge fees for unplanned overdrafts and other inadvertent problems and the banking sector as a whole makes £billions from “free accounts”. SourceCards don’t allow people to overdraw and incur hidden costs.
There is an infrastructure cost which has to be paid for: for example Visa charge £0.50p for each ATM withdrawal: there is much more, including all the costs of the compliance regime.
If there is genuinely no account charge then these accounts have to be subsidised.
Our approach in SourceCards is to present the £5 cost up front and then to ensure that another organisation pays on behalf of the beneficiary. For example, our rent proposition is that the social landlord pays the fees for vulnerable tenants and will make an immediate 5:1 saving on rent arrears.
The account holder benefits from all the discounts, cash back and grants which should significantly offset the monthly charge, so that account holders should be ultimately be keen to pay the fee themselves to enjoy the benefits.
By providing remote monitoring and budgeting where needed, SourceCards should help educate account holders how to manage their money efficiently and make the money they have go further.
Perhaps all providers should be required by FCA to provide a “net monthly cost” statement which would identify the precise cost of accounts and the services provided.
If standard ID such as passport and driving license are not available then we have to rely on DWP or council documents. As SourceCards applicants are all initially sponsored government departments, landlords charities and support agencies this helps to establish an address.
Lack of ID is still an issue for financially excluded people. SourceCards has developed a provision to include ID data on our Essentials cards and the use for this will be explored.
SourceCards has developed a solution to this, which involves the account holder agreeing to set up his/her SourceCard to ringfence the rent portion of the universal credit as soon it is received.
Another issue is that the amount of Universal Credit fluctuates, so that in a case where there is a shortfall, a vulnerable tenant could end up paying his rent in full, but have nothing left to buy food. The solution may be to advise support organisations before the payment is made, to allow them to apply for an emergency grant, which can be delivered by SourceCards into the appropriate sub account for Food, Travel, Utilities or other Essentials.
SourceCards allows the account holder to give a sponsor, case worker or mentor remote access to their SourceCards account to assist with budgeting, buying essentials through SourceCards and paying. The platform will only allow the account holder to make the actual payment.
Summary.
All our research indicates that merely having a bank account is not enough to help some very vulnerable people to handle the advent of Universal Credit. The evidence from the DWP pilot in Kent also reiterates the importance of mentoring. In addition to which the challenges which Universal Credit places on social landlords need to be addressed. SourceCards is set up to address both of these issues.
Much more than that, SourceCards provides an innovative and holistic way to harness public funds, private philanthropy and advanced technology towards empowering vulnerable people to help themselves from dependence to independence.
Finally, the issue of funding such programmes needs to be addressed. Our aim is to fund SourceCards by private investment, which in turn entails charging a socially fair amount for the service and over time making the service self-funding from fees charged to people who no longer need subsidising. Mindful of the issues of the Kids Company and similar and the pressures on public budgets is there a way in which government can assist start up social enterprises by providing guarantees or convertible type loans which could be allocated by social investment agencies such as Social Finance and New Society Capital?
John AJ Price
Founder
SourceCards Limited
21 December 2016