Federal, state, and local government agencies,  nonprofits, the private sector, and academia all play important roles in  providing financial education resources, which can include print and  online materials, broadcast media, individual counseling, and classroom  instruction. The Federal Government Plays a Wide-Ranging Role in Promoting Financial Literacy

Efforts to improve financial literacy in the United States involve a range of  public, nonprofit, and private participants. Among those participants, the  federal government is distinctive for its size and reach, and for the  diversity of its components, which address a wide array of issues and  populations. They noted that the federal government has  a built-in “bully pulpit” that can be used to draw attention to this issue. At our first forum on financial literacy in 2004, participants noted that the  federal government can serve as an objective and unbiased source of  information, particularly in terms of helping consumers make wise  decisions about the selection of financial products and services. In preliminary results from an ongoing review, we have identified that, in  fiscal year 2010, there were 16 significant financial literacy programs or  activities among 14 federal agencies, as well as 4 housing counseling  programs among 2 federal agencies and a federally chartered nonprofit  corporation. That report, conducted by  the RAND Corporation, was based on a survey that had asked federal  agencies to self-identify their financial literacy efforts. We believe that our count of 16 significant  federal financial literacy programs or activities and 4 housing counseling  programs is based on a more consistent set of criteria. During his confirmation hearing, Comptroller General Dodaro noted that  financial literacy was an area of priority for him, and he has initiated a  multi-pronged strategy for GAO to address financial literacy issues. First,  we will continue to evaluate federal efforts that directly promote financial  literacy. Second, we will  encourage research of the various financial literacy initiatives to evaluate  the relative effectiveness of different financial literacy approaches. Third,  we will look for opportunities to enhance financial literacy as an integral  component of certain regular federal interactions with the public. Finally,  we have recently instituted a program to empower GAO’s own  employees. This program includes a distinguished speaker series, as well  as an internal website with information on personal financial matters and  links to information on pay and benefits and referral services through  GAO’s counseling services office. Having Multiple Federal Agencies Involved in Financial Literacy Offers Advantages as Well as Risks

Having multiple federal agencies involved in financial literacy efforts can  have certain advantages. In particular, providing information from multiple  sources can increase consumer access and the likelihood of educating  more people. Moreover, certain agencies may have deep and long- standing expertise and experience addressing specific issue areas or  serving specific populations. Further, the participation of multiple agencies highlights the need for  strong coordination of their activities. In general, we have found that the  coordination and collaboration among federal agencies with regard to  financial literacy have improved in recent years, in large part due to the  multiagency Financial Literacy and Education Commission. In our recent and ongoing work, we have found instances in which  multiple agencies or programs share similar goals and activities, which  raises questions about the efficiency of some federal financial literacy  efforts. Program Evaluation and the Bureau of Consumer Financial Protection May Offer Avenues to Enhance Effectiveness

In prior work we have noted the importance of program evaluation and  the need to focus federal financial literacy efforts on initiatives that work. We believe these  measures are positive steps because federal agencies could potentially  make the most of scarce resources by consolidating financial literacy  efforts into the activities and agencies that are most effective. As such, the bureau offers potential in  enhancing the federal government’s role in financial literacy. At the same  time, as we have seen, some of its responsibilities overlap with those of  other agencies, which highlights the need for coordination and may offer  opportunities for consolidation. This underscores the importance of steps the Bureau of  Consumer Financial Protection has been taking to delineate its roles and  responsibilities related to financial literacy vis-à-vis those of other federal  agencies, which we believe is critical in order to minimize overlap and the  potential for duplication.
Why GAO Did This Study

Financial literacy plays an important role in helping to promote the financial health and stability of individuals and families. Economic changes in recent years have further highlighted the need to empower all Americans to make informed financial decisions. In addition to the important roles played by states, nonprofits, the private sector, and academia, federal agencies promote financial literacy through activities including print and online materials, broadcast media, individual counseling, and classroom instruction.
This testimony discusses (1) the federal governments role in promoting financial literacy, including GAOs role; (2) the advantages and risks of financial literacy efforts being spread across multiple federal agencies; and (3) opportunities to enhance the effectiveness of federal financial literacy education efforts going forward. This testimony is based on prior and ongoing work, for which GAO reviewed agency budget documents, strategic plans, performance reports, websites, and other materials; convened forums of financial literacy experts; and interviewed representatives of federal agencies and selected private and nonprofit organizations.
While this statement includes no new recommendations, in the past GAO has made a number of recommendations aimed at improving financial literacy efforts.

What GAO Found

The federal government plays a wide-ranging role in promoting financial literacy. Efforts to improve financial literacy in the United States involve an array of public, nonprofit, and private participants, but among those participants, the federal government is distinctive for its size and reach and for the diversity of its components, which address a wide range of issues and populations. At forums of financial literacy experts that GAO held in 2004 and 2011, participants noted that the federal government can use its bully pulpit, convening power, and other tools to draw attention to the issue, and serve as an objective and unbiased source of information about the selection of financial products and services. In prior work, GAO cited a 2009 report by the RAND Corporation in which 20 federal agencies self-identified as having 56 federal financial literacy programs, but GAOs subsequent analysis found substantial inconsistency in how different agencies defined and counted financial literacy programs. Based on a more consistent set of criteria, GAO identified 16 significant financial literacy programs or activities among 14 federal agencies, as well as 4 housing counseling programs among 3 federally supported entities, in fiscal year 2010. The Comptroller General has initiated a multi-pronged strategy to address financial literacy issues. First, GAO will continue to evaluate federal efforts that directly promote financial literacy. Second, it will encourage research of the various financial literacy initiatives to evaluate the relative effectiveness of different approaches. Third, GAO will look for opportunities to enhance financial literacy as an integral component of certain regular federal interactions with the public. Finally, GAO has recently instituted a program to empower its own employees, which includes an internal website with information on personal financial matters and links to information on pay and benefits and referral services through its counseling services office and a distinguished speaker series.
Having multiple federal agencies involved in financial literacy offers advantages as well as risks. Some agencies have long-standing expertise and experience addressing specific issue areas or populations, and providing information from multiple sources can increase consumer access and the likelihood of educating more people. However, the participation of multiple agencies also highlights the risk of inefficiency and the need for strong coordination of their activities. GAO has found that the coordination and collaboration among federal agencies with regard to financial literacy has improved in recent years, in large part as a result of the Financial Literacy and Education Commission. At the same time, GAO has found instances of overlap, in which multiple agencies or programs, including the new Bureau of Consumer Financial Protection, share similar goals and activities, underscoring the need for careful monitoring of the bureaus efforts.
In prior work GAO has noted the importance of program evaluation and the need to focus federal financial literacy efforts on initiatives that work. Federal agencies could potentially make the most of scarce resources by consolidating financial literacy efforts into the activities and agencies that are most effective. In addition, the Bureau of Consumer Financial Protection offers potential for enhancing the federal governments role in financial literacy, but avoiding duplication will require that it continue its efforts to delineate its financial literacy roles and responsibilities vis-à-vis those of other federal agencies with overlapping responsibilities.