Should Human Services Programs Offer Financial Incentives? Lessons Learned from Two Employment Coaching Programs
OPRE Report #2023-195
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Key Findings
- Program staff and participants alike viewed the financial incentives positively: they alleviated financial pressure on participants, bolstered the coach-participant relationship, and allowed participants to practice financial management skills.
- Discussions with participants and coaches suggest that the incentives may have improved program participation and employment outcomes, but the improvements were unlikely to be large.
- Program staff raised considerations regarding the cost of implementing incentives, including: the cost of the incentives themselves, the time spent explaining the incentives to participants and verifying documentation, and the cost of an accounting system that can track the incentives and staff time to track and pay the incentives.
- Several factors emerged from the discussions as important to consider when administering incentives:
- Larger incentives are preferable but the size of incentives will be limited by a program’s budget as well as tax and benefit implications for participants.
- Participants prefer to receive the incentive as cash in person or a direct deposit into their bank account. If this is not possible, they prefer reloadable digital cards to mailed checks or gift cards.
- When considering the incentive amount and what to base the incentive on, there are benefits to simplicity.
Some employment coaching programs and other human services programs offer financial incentives to reward desired behaviors such as engaging in specific activities or achieving certain goals. Employment coaching involves trained staff working collaboratively with participants to help them set individualized goals, directly or indirectly related to employment, and providing motivation, support, and feedback as participants work toward those goals.
Financial incentives can provide concrete and immediate rewards for steps that participants take toward their goals rather than participants needing to wait until they achieve a longer-term goal before feeling rewarded for their effort. By addressing financial needs, incentives can also reduce some of the stress related to having low income and thus help participants focus on reaching their goals.
This brief discusses what we learned about using financial incentives from studying the experience of two employment coaching programs serving adults with low incomes that offered financial incentives. It focuses on incentives that are provided in the form of money rather than other tangible incentives, such as personal hygiene products, or intangible incentives, such as public acknowledgment of success. The brief discusses reasons that programs may offer incentives to participants; participants’ and programs staff’s perceptions about offering incentives; and factors for program staff to consider when administering incentives.
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