Asset-Building News Roundup - March 7, 2014
By Sean Luechtefeld on 03/07/2014 @ 01:30 PM
This coming Wednesday at 2 EDT (don't forget to move your clocks forward an hour this weekend), Tax Credits for Working Families will host a webinar titled 'The Work to Wealth Escalator: Why a Quality Job is More Than Just Income.' You can register for the free event here.
CFED's 2014 Children's Savings Conference, From Aspirations to Achievement, will take place April 29-30 at the Omni Shoreham Hotel in Washington, DC. Agenda information for the Conference is now online. Click here for more details or to register.
This week, Rep. Joseph Crowley (D-NY) introduced legislation that would seed an account with $500 for every newborn in the country, called the USAccount. Deposits into the account would be matched through an expanded Child Tax Credit. Read our experts' analysis on this and other momentum building around Children's Savings Accounts this month.
The Office of the Comptroller of Currency at the U.S. Department of the Treasury has rolled out an improved Financial Literacy Resource Directory, which includes resources, publications, events, initiatives and more. Check it out today!
The Seattle-King County Financial Empowerment Network writes about the Paul G. Allen Family Foundation's recent report, "Disrupting Poverty: Coming Together to Build Financial Security." Find out what they have to say on the A&O Network blog.
The folks at the Cities for Financial Empowerment Fund are looking for a Program Manager to lead their youth portfolio. If you or (or someone you know) is in the market for a job in New York City, check out the position description.
The Inclusive Economy's Veronica Weis is getting married on Sunday. Mazel tov to Veronica and her new husband, Josh!
Support for Children’s Savings Accounts Mounts at the National Level
By Ezra Levin on 03/07/2014 @ 09:00 AM
In previous CFED publications, we have explored the link between savings and economic mobility and the role that Children’s Savings Accounts (CSAs) can play in expanding opportunity. It now looks like momentum around CSAs is building fast at the federal level!
This week, CFED’s Director of Government Affairs, Jeremie Greer, discussed CSAs at a savings policy event on Capitol Hill hosted by the Aspen Institute’s Initiative on Financial Security. Keynote speakers included Rep. Joseph Crowley (D-NY) and Rep. Thomas Petri (R-WI), as well as Mark Iwry, the Deputy Assistant Secretary of the Treasury for Retirement and Health Policy.
At the event, Rep. Crowley proposed a bold entry into the Children’s Savings Account space. Under his proposal, every child born in the United States would receive a USAccount with a seeded deposit of $500. Deposits made into the account would be matched through an expanded Child Tax Credit, and low-income families would receive an additional boost to build up savings for their kids.
As Jeremie noted in his remarks, Rep. Crowley’s proposal builds on the lessons we have learned since the SEED demonstration project that began in the early 2000s with CFED and several other partners in the CSA field, such as the Aspen Institute and New America Foundation. In particular, this research has shown that the best CSA proposal is universal, progressive, simple to use, protective of savers and flexible for multiple types of asset purchases. Additionally, we know from recent on-the-ground research by $aveUSA that tax time is an excellent moment to engage families to save. The USAccount proposal integrates all of this knowledge into a strong universal CSA proposal.
Rep. Crowley’s announcement comes less than a month after the new Chair of the Senate Finance Committee endorsed universal CSAs. Sen. Ron Wyden (D-OR) in particular called out the work of Sen. Chuck Schumer (D-NY), who has long championed the idea of universal CSAs. At a Senate Finance Committee hearing this week, Sen. Schumer grilled Treasury Secretary Lew on support of universal CSAs. Schumer told Secretary Lew, “I'm going to bother you until you end up supporting it, so it's now or later, take your pick.”
Interested in learning more about CSAs? Building on this national momentum, CFED is hosting the first national CSA conference in five years, From Aspirations to Achievement, in Washington, DC, April 29-30. The Conference will bring together practitioners, policymakers and researchers from across the country to explore recent innovations and discuss strategies and opportunities to expand children’s savings programs.
Opportunity For All: President's FY 2015 Budget Is a Step Towards Building New Ladders of Opportunity into the Middle Class
By Emanuel Nieves on 03/06/2014 @ 02:00 PM
On Tuesday, President Obama submitted his budget proposal to Congress for Fiscal Year (FY) 2015 (October 1, 2014 to September 30, 2015), which lays out “a set of concrete, practical proposals to speed up growth, strengthen the middle class and build new ladders of opportunity into the middle class —all while continuing to improve the Nation’s long-run fiscal position." With the recent budget deal in place, the President’s budget request begins to shift the conversation away from sequestration and deficit reduction back towards expanding economic opportunity for millions of low- and moderate-income families. Some of the highlights from the proposal include:
- Expanding Retirement Security for All Workers: Following up on his myRA proposal, the President’s FY15 budget calls again for establishing automatic Individual Retirement Accounts (IRAs) or auto-IRAs, which would allow about 13 million workers to begin contributing towards their retirement. As we highlighted in our recent Federal Policy Brief, the complementary pairing of retirement savings products like myRA with automatic enrollment can help to fight the power of inertia that keeps so many people from saving for retirement, ultimately helping to boost participation rates and total savings.
- Permanently Extending the American Opportunity Tax Credit (AOTC): The President’s proposal calls for making permanent the American Opportunity Tax Credit, which recently expired. The extension has the potential to benefit 11.5 million families and students by an average of more than $1,100.
- Raising the Minimum Wage to $10.10: The budget follows up the President’s recent executive action to expand the minimum wage for all federal contract workers by requesting the minimum wage be raised to $10.10 for all working Americans.
- Continued Support for the Assets for Independence (AFI) Program: The President has once again requested level funding of $19 million for the Assets for Independence program. AFI, the primary source of federal funding for Individual Development Accounts, provides savings opportunities and incentives for low-income families who are saving to purchase a home, go to college or start a business.
- Strengthening and Expanding the Earned Income Tax Credit (EITC): The budget would expand the EITC benefit claimed by childless workers from $500 to $1,000 and would also allow childless adults between the ages of 21-25 to qualify for the EITC. In 2012, childless workers received less than 10% ($270) of the EITC benefits claimed by families with children ($2,790). The Center on Budget and Policy Priorities estimates that the expansion would benefit 13.5 million people, lift 500,000 people out of poverty and make 10 million people less poor.
Despite these efforts to expand opportunity and increase financial stability, President Obama's budget does not go far enough. During his State of the Union address, the President called on Congress to work with him on reforming “an upside-down tax code that gives big breaks to help the wealthy save, but does little to nothing for middle-class Americans,” yet the budget request only takes a few small steps towards flipping our tax code right-side up. Much like the recently released Comprehensive Tax Reform plan from Chairman Dave Camp, the budget request also looks to close some tax loopholes used by high-income earners, but both proposals take a more top-down approach than bottom up. Ideas such as capping the value of itemized deductions for high-income earners at 28% have the potential to raise new revenue towards either deficit reduction or tax rate reduction, but they do not fully deal with how low- and moderate-income families can have more equitable access to over $500 billion in tax incentives to build wealth through savings & investments found in the current tax code.
Overall, the Presidents’ budget is a step in right direction towards providing an opportunity for all working families to have a fair shot at the American Dream. The debate now moves to Capitol Hill, where Congressional leaders must now decide if they want to strengthen our current safety net while also building new ladders of opportunity into the middle class for millions of Americans.
Innovations in Microbusiness: New Strategies to Help Financially Vulnerable Microbusiness Owners Succeed
By Katherine Lucas McKay on 03/06/2014 @ 08:30 AM
If you’re a microbusiness training provider, microlender, microbusiness funder or small business policymaker, CFED has a new report for you. "Innovations in Microbusiness: Enhancing the Financial Security of Low-Income Entrepreneurs" details what we learned from a year working with some of the microbusiness field's most innovative organizations. The report documents what they're doing to help financially vulnerable microbusiness owners achieve financial security and explores strategies for these new approaches could grow to scale. Our partners included Accion Texas, the California Association for Micro Enterprise Opportunity (CAMEO), ECDC Enterprise Development Group (EDG) and the Washington, DC, Women's Business Center (DC WBC). Each of their featured initiatives addresses challenges that financially vulnerable microbusiness owners face in starting businesses, managing their finances, achieving growth and addressing financial setbacks.
- Accion Texas worked with the BETA Project, a collaborative effort of CFED and ideas42, to design and test behavioral interventions aimed at helping their microloan borrowers repay their loans successfully and on time.
- CAMEO coordinated a group of small-scale microlenders to affordably share access to automated microloan underwriting software.
- EDG implemented a comprehensive suite of tax assistance services for its self-employed clients, from training and education about tax responsibilities and tax planning, to free preparation, to IRS conflict resolution assistance.
- DC WBC, a training and TA organization, helped its clients access zero-interest microloans through Kiva Zip, an online crowdfunding platform.
The report identifies four strategies that other microbusiness-serving organizations can use to successfully and sustainably replicate our partners’ innovative work:
- Develop products that leverage new technology to more affordably and efficiently help lower-income entrepreneurs thrive and grow.
- Create partnerships with others to achieve economies of scale.
- Leverage platforms such as Kiva Zip and Accion Texas’s Microloan Management System (MMS) to standardize processes and serve more clients with the resources you have.
The report concludes with recommendations for policymakers and funders to use product, partnership and platform strategies to grow our partners’ innovative programs to scale throughout the industry. For example, we recommend that funders support efforts to spread awareness of behavioral economics principles within the microbusiness field. While behavioral interventions are a hot topic in the asset-building world, and there is a high level of interest in the microbusiness sector, relatively few organizations serving financially vulnerable entrepreneurs have yet applied behavioral insights to their own work. We also recommend that policymakers clarify the roles that Small Business Administration and CDFI Fund grantees can play in helping clients use crowdfunding to access capital. To read the rest of our recommendations and learn more about our partners’ work, check out the full paper here.
Saving Up, Moving Up? Children, Savings & Opportunity
By Ezra Levin on 03/05/2014 @ 10:15 AM
Fact 1: Kids today are more likely than adults to live in asset poverty—and the younger the kid, the higher the likelihood.
Fact 2: These kids growing up in families with little or no savings are less likely to complete college and less likely to move up the income ladder as adults.
Those are a couple of the hard truths in CFED’s new Fact File, Saving Up, Moving Up? Children, Savings & Opportunity, which reviews the well-evidenced link between savings and economic mobility for children.
What does asset poverty mean for a kid? Without a rainy day fund, families are more likely to experience serious economic hardship—this means late rent payments, food insecurity and forgone doctor’s visits.
And rainy days come often, especially for low- and moderate-income families. Of those in the bottom fifth of household earners—for example, a married couple with two kids making less than $50,000—20% see their income cut in half over the course of a year according to the Urban Institute. That’s one in five low-income families who will experience a massive drop in income over the next twelve months.
Given all this, it’s no surprise that kids in families with savings do better in school and in their future careers. Savings help parents provide a stable environment for their kids—it empowers parents to protect their children from rainy days and invest in their potential.
While income is important, the positive effects from savings are independent of income—children in low-income families with savings do better than children in low-income families without savings. This is evidence of something we often say here at CFED, income helps families get by, but savings and investments help them get ahead.
Read more about the link between savings, children, and economic mobility in the CFED’s new Fact File here.
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2014 Scorecard Deep Dive: Businesses & Jobs
By Lebaron Sims on 03/04/2014 @ 11:30 AM
Last month, CFED released the 2014 Assets & Opportunity Scorecard, a comprehensive evaluation of the relative financial security of the American public. This series takes a closer look at some of the outcome trends within each of the Scorecard’s five issue areas.
As mentioned in our post on Financial Assets & Income outcomes, the national economy has in many ways rebounded: the business creation rate increased for the third consecutive year, while private loans to small business continue to tick upward. Households, however, have yet to experience the same progress. Household financial indicators like household income, net worth, and liquid asset poverty have yet to fully recover from the shock of the recession.
Unemployment and Underemployment
The national unemployment rate continued its steady decline throughout 2012 and into 2013, decreasing every month and dipping below 7% for the first time since November 2008. Underemployment, however, remained near 15%, indicating a labor market that, though much improved, is far from healthy. Two states – New York and Delaware – saw underemployment increase in 2012. Workers of color, too, have yet to experience the benefits of the recovery – workers of color remain unemployed at a rate over 66% higher than that of White workers.
The share of jobs with a median wage compensation below the poverty threshold decreased in all but five states, demonstrating a modest trend away from low-wage compensation jobs. There is still quite a way to go, however: over one in five jobs nationally fails to provide a living wage (defined as paying an annual rate commensurate to the federal poverty line for a family of four), and a third or more of all jobs in three states (Mississippi, West Virginia and Alabama) are low-wage.
Employers Offering Health Insurance
The percentage of employers offering health insurance to their employers decreased once again in 2012, continuing a decade-long trend. In 31 states, participation rates declined from 2011; only six states – Kentucky, Minnesota, Nevada, New Hampshire, Oklahoma and Wisconsin – had higher rates in 2012. The participation decline has been largely driven by businesses with fewer than 10 employees – only 28.2% of these businesses offered health insurance to their employees in 2012. As data from the ACA’s full implementation rolls out over the next few years, it will be fascinating to see how these numbers change, particularly among small businesses.
States can continue to support working households by promoting a living wage for all workers, and help out-of-work residents build businesses by offering self-employment assistance programs, or offering support or financial incentives for microenterprises. For more data, including a breakdown of policies your state can implement to help workers and small businesses survive and thrive, visit the Scorecard website, or download the full 2014 Scorecard report, “Treading Water in the Deep End,” here.
Also in this Series
CFED Selects Six Organizations for New Savings Innovation Learning Cluster
By Parker Cohen and Evelyn Stark, Guest Contributor on 03/03/2014 @ 09:45 AM
Late last year, CFED announced an exciting new venture in partnership with the MetLife Foundation, the Savings Innovation Learning Cluster (SILC). SILC will seek to foster the development and testing of innovative products and strategies that facilitate savings by low- and moderate-income (LMI) individuals and families. Through a learning cluster model, we will work with six organizations to develop, implement and evaluate their savings innovations and identify promising ideas that can then be further refined, replicated and brought to scale.
MetLife Foundation, like CFED, believes that affordable, accessible and well-designed financial services can transform the lives of those in need. The Foundation has committed $200 million over the next five years to advancing financial inclusion around the world, and this partnership is an important step forward in meeting that goal.
While many types of strategies have arisen over the past twenty years to facilitate savings among low- and moderate-income individuals and families, such as Individual Development Accounts (IDAs) and Bank On initiatives, SILC will seek to learn from new innovations to these savings programs and from emerging savings ideas. The idea for SILC developed from the need to have a greater understanding of these savings innovations and their potential for replication and scale. While some of these savings innovations have garnered a fairly extensive reach, we know very little about the mechanics of how these strategies encourage savings (i.e., what aspects of the program facilitate saving and what might unintentionally create barriers to saving) as well as their relative effectiveness. The MetLife SILC project will shed much-needed light on these questions. The evaluations of the SILC innovations can be used to identify the most promising savings mobilization strategies and products that can be brought to scale.
In December 2013, we issued a request for proposals and received an overwhelming number of outstanding applications from organizations interested in joining SILC—114 in total! While difficult to whittle down, we ultimately, we selected six organizations to participate:
- Cooperative Federal (Syracuse, NY)
- John H. Boner Community Center (Indianapolis, IN)
- Live the Solution (Tucson, AZ)
- People's Community Action Corporation (St. Louis, MO)
- The Midas Collaborative (Boston, MA)
- United Way for Greater Austin (Austin, TX)
CFED’s Learning Cluster model is designed to create new connections and collaborations between organizations working to overcome similar challenges. For SILC, the selected organizations are implementing and evaluating savings innovations targeted at low- and moderate-income populations in various venues, including Individual Development Account (IDAs), energy assistance, consumer loan and employer-based savings programs. SILC members will work with their peers to share expertise, diagnose and solve problems and learn from each other’s experiences to implement and refine their savings innovations.
In addition to this peer learning, SILC members will receive targeted technical assistance from CFED to design and test their savings innovations. CFED will keep you updated on the Learning Cluster’s progress as its members work their way through these new endeavors, with a keen eye on how their learning can help to inform your own organizations’ approaches to helping low- and moderate-income families save. The MetLife SILC project will kick off with an in-person convening in late March, so stay tuned for updates!
Asset-Building News Roundup - February 28, 2014
By Veronica Weis on 02/28/2014 @ 01:30 PM
New America is hosting an event titled "50 Years Since the War on Poverty" on Tuesday, March 11 in Washington, DC. The panelists will discuss the ways the anti-poverty landscape has changed over the past 50 years and how the assets perspective fits in with today’s anti-poverty efforts.
In honors of America Saves Week, we would like to highlight our retirement savings event this week with the Center for American Progress and Senator Elizabeth Warren. You can read the full recap here and stay tuned for a full video recording.
From the Assets & Opportunity Network
Want to learn about how credit building is a crucial part of wealth building, especially for communities of color? The Illinois Asset Building Group has resources from a recent webinar.
The Wayne Metropolitan Community Action Agency Asset Building posted a useful list of seven ways to automate your savings.
Nevada State Treasurer Kate Marshall recently gave a presentation on financial literacy and the progress made on the rollout of the Nevada College Kick Start program. To watch the video, click here.
The Southern Bancorp Community Partners are proud to announce a new college completion matched savings program here.
Our wonderful partner, NeighborWorks America, is hiring a Marketing & Public Relations Planner in Washington, DC to start as soon as possible. Check out the job listing here.
Washington Post: Majorities of Consumers in 37 States Have Subprime Credit Scores
By Niraj Chokshi, Guest Contributor on 02/28/2014 @ 09:30 AM
EDITOR'S NOTE: This post on CFED's Assets & Opportunity Scorecard appeared in the Washington Post's GovBeat, a new-ish blog on state and local policy that we highly recommend. You can see Niraj's original post here.
We missed this report last month, but fortunately it resurfaced on a local newspaper’s site Thursday.
Every year, the Corporation for Enterprise Development, a think tank focused on the poor and middle class, releases a scorecard grading states on policies that enable or frustrate the ability of residents to improve their lot. It focuses on policies that facilitate new opportunities and make it easy for people to build up their own personal safety net. The report also provides snapshots of where people stand, and one of them is particularly striking.
In 37 states and the District of Columbia, more than half of consumers have credit scores too low to get decent (prime) rates.
Mississippi has the highest percentage of consumers with subprime credit scores (69.1%), while Minnesota has the lowest (43.8%). Many Americans also lack access to safe and affordable financial services and products. One in five (20.1%) households is “underbanked,” meaning they have a mainstream bank account but still rely on high-cost, alternative banking products. As a result, they are more vulnerable to predatory financial products and services.
Most states regulate predatory lending in some way, but rates can still be incredibly high for individuals with such low scores: “19 states prohibit or cap at 36% APR or lower payday loans, 30 states prohibit or cap auto-title loans and 22 states cap small-dollar installment loans. Nine states and the District of Columbia have prohibited or capped all three types of predatory loan products.”
CFED purchases the aggregate data from Transunion, one of the nation’s largest credit bureaus. The subprime score is based on internal ratings the bureau uses to gauge an individual’s creditworthiness.
Sen. Elizabeth Warren Promotes Policies to Expand Retirement Savings at Capitol Hill Policy Forum
By Katherine Lucas McKay on 02/27/2014 @ 04:00 PM
This morning, CFED and the Center for American Progress (CAP) cohosted “Retirement Security for All: Overcoming Unequal Tax Incentives for Retirement Savings,” a policy forum on Capitol Hill. The event kicked off with Senator Elizabeth Warren (D-MA) outlining the challenges that workers and families face in saving for retirement and ensuring that all Americans have the resources to live with dignity in old age. Following her remarks, CFED’s Ida Rademacher moderated a panel discussion on retirement savings solutions with CAP’s Christian Weller, National Council of La Raza’s Eric Rodriguez, and former North Dakota Representative Earl Pomeroy.
American families face a crisis in retirement savings. According to a recent survey by the Employee Benefits Research Institute, the median amount of retirement savings among all households is $3,000; when looking only at those who have retirement accounts, the median is still just $40,000. Speakers at the event identified several contributing factors:
- Social Security hasn’t kept up with the cost of living in retirement. It provides a shrinking proportion of the income retirees need.
- Lower income and middle class families have low overall savings rates, making it even tougher to save for long-term goals.
- Pensions have become rare and defined contribution accounts are far from universal. As a result, only half the workforce has access to any type of employer-sponsored retirement account.
- Too few accounts have user-friendly features like automatic enrollment, automatic increases in savings rates, and annuitization options.
The problem of upside down tax incentives took center stage, though, as discussion focused on how to reform a tax system that spends $137 billion per year on retirement incentives, yet provides extremely limited support for the bottom 60% of households. As CAP’s Christian Weller eloquently put it, “the tax code is stacked against the people who need to save the most.”
Senator Warren and the panelists discussed 4 policy strategies that together can ensure that retirement security is possible for all:
- Strengthen Social Security, the lifeline that keeps 14 million seniors out of poverty. Make sure the program keeps up with rising costs and that it provides enough to workers who rely on it the most.
- Expand access to retirement savings through new products like myRA or Sen. Harkin’s USA Retirement Funds proposal. It should be simple to start saving for retirement, regardless of income or whether you’re self-employed, work for a small business or part of a major corporation.
- Make saving easy through automatic enrollment policies like Rep. Neal’s Automatic IRA legislation and the state-level proposals in California and Illinois.
- Create meaningful tax incentives for low- and moderate-income (LMI) families to save for retirement. This could include streamlining retirement tax incentives and reforming the Saver’s Credit.
In addition to expanding access, panelists and audience members brought up the value of flexibility in retirement savings plans as another way to draw in new savers. Many families, especially those with young children, are eager to save for education, while young adults may be more motivated to save for homeownership. Maintaining and even expanding the opportunities to leverage retirement accounts to build other assets is another strategy to encourage and reward retirement savings.
The lively discussion demonstrated that improving retirement security is becoming an urgent policy priority, and policymakers have many strong options for reform. You can learn more about many of the ideas raised at the event in CFED’s latest policy brief, “Expanding Retirement Security for All Workers.” The brief lays out a three-part strategy for retirement security: expanding access to simple, affordable products like myRA; leveraging automation to increase participation; and creating right-side up tax incentives like a refundable Saver’s Credit.
Green Principles, Green Building Blog Series Part 1
By Susan Bond on 02/26/2014 @ 02:30 PM
EDITOR'S NOTE: This post originally appeared on the Next Step blog and can be read here.
This blog post is the first in a series on green building, which is a science-based practical approach to the market. It shifts away from a prescriptive approach and steps toward evaluating different environments to find ways to measure impact in a meaningful way. This is where studies, the right performance measures and innovation are constantly needed. In this post, I’ll take a look at the defining principles of green building to try to encapsulate what green housing might look like.
Despite the political debate about climate change, going green is now mainstream. Environmentally-friendly products abound on the market, and there has been a recent surge in green housing design. While it’s easy to think that technology and innovation can circumvent our environmental problems, all too often green ideas fail to acknowledge other issues that can negatively impact the system, like housing over consumption, sprawl, or green washing products that might not perform as well as hoped.
In an earlier blog post, I wrote about the Tiny House movement, which revealed that America’s square footage for homes is growing at a rate that make even newly designed green homes less energy friendly because of their sheer size. This reminded me of a job I had as a student selling energy-efficient light bulbs door to door. When I got to the neighborhood with the largest homes, many of them were empty, and several of them were undoubtedly being financed with a gigantic mortgage on the verge of default. This was the suburban landscape on the cusp of the 2008 economic crisis and mortgage backed securities. While you don’t have to live in a tiny house, part of the big picture solution is redirecting our resources as a society to affordable housing instead of empty, debt ridden, energy inefficient larger homes. This change will hopefully come from a cultural shift when substantial green policy and education comes into place.
In light of the tiny house blog, there are three general rules you can follow when deciding what makes a green building. First, the greenest building would be no building at all. Second, the next greenest will be the smallest building. Third, green means using urban infill instead of creating “greenfield” sites that expand our footprint. Sometimes space can be repurposed and reclaimed for affordable housing, but with policy, zoning, funding, and all the other things that can influence your ability to act, new construction is the way to go. With the lack of available space and affordable housing it’s hard to say no to new construction if it means housing families.
Green building takes into consideration process as well as the source of materials. With its inherent efficiencies, factory-built housing eliminates more waste material than site-built homes while protecting the materials in the factory so they don’t have to be replaced due to weather damage. A house is not only built from the materials dropped off at the factory, however. It is also dependent on the systems that extract those materials. Embodied energy is the energy and resources used to extract all materials, and when possible we should seek to reclaim resources. Apart from the most famous R, Recycling, the other R’s are Reduce and Reuse. A recent blog post about Team Kentuckiana’s Solar Decathlon entry, the Phoenix House, provides an example of this, as they used reclaimed wood from a barn.
Building a green home is only the first step. Once you get a family into an energy-efficient home, they need the right resources to take advantage of its infrastructure. You can’t talk about green building without also addressing how going green changes other aspects of society, including human behavior. At Next Step, we address the life cycle assessment of a home’s energy use, and pair it with sustainable financing, to optimize the lives of families while giving them a manageable, quality home. The human behavior variable in green living is essential, and positive outcomes to this can lead to better management and critical thinking skills which can increase work productivity and improve health at the home level, creating a ripple effect on a national scale.
The biggest lesson for living by green principles is understanding how to apply environmental and energy-efficient values across the board. This means developing a green mindset of making large and small connections to how each decision impacts another part of the ecosystem. Even though we all have our own house, we all share the same home, so we all have a stake in green building.
The Assets & Opportunity Network Launches New Technical Assistance Fund
By Fran Rosebush on 02/24/2014 @ 04:30 PM
This week, the Assets & Opportunity Network kicks off targeted technical assistance to four Network Lead Organizations as part of a new Technical Assistance Fund, which is designed to leverage expertise within the Network to help organizations address their critical issues, strengthen their work and explore new avenues to increase their impact. With support from the JPMorgan Chase Foundation, the Fund will demonstrate how the Network can spread knowledge, share tools and assist organizations with achieving their goals.
The Technical Assistance Fund is a 10-month pilot project, which was announced in December to approximately 50 Network Lead Organizations in the JPMorgan Chase footprint. Four projects were selected to receive assistance in the first round:
- The Minnesota Asset Building Coalition will receive assistance creating asset-building toolkits to share with stakeholders at regional asset-building convenings later this year. The toolkits will demonstrate to new stakeholders concrete strategies for integrating asset-building approaches.
- Women’s Opportunities Resource Center will receive guidance on strategically expanding asset-building services the organization provides.
- The Oregon IDA Initiative will receive assistance with finding solutions to data reporting inefficiencies and fund disbursement barriers for IDAs.
- The Connecticut Asset Building Collaborative will receive guidance on building a statewide asset-building coalition.
Subsequent rounds of the Technical Assistance Fund will run from April 14-July 15 and June 23-August 30, respectively. We will be watching these projects and tracking their outcomes, not only to help these organizations address their specific needs, but also to learn how the Network can better learn from each other. We will keep you posted on the progress and lessons gleaned from the Technical Assistance Fund!
America Saves Week 2014 Has Begun!
By Kristin Lawton on 02/24/2014 @ 01:00 PM
We're excited to participate in America Saves Week this year and help promote good savings behavior and encourage individuals to assess their own saving status.
Through March 1, we'll be sharing activities, graphics, tips and other resources provided by America Saves through our social media channels to encourage more Americans to build wealth, not debt. Below are some relevant numbers and action items in case your organization wants to get involved.
Did You Know?
- Only 54% of Americans say they have a savings plan with specific goals.
- Only 43% of American say they have a spending plan that allows them to save enough money to achieve the goals of their savings plan.
- Only 66% of America have sufficient emergency funds for unexpected expenses like car repairs or a doctor’s visit.
How To Participate
From promoting the benefits of savings to employees - to offering incentives for people to open or add money to savings accounts - to holding workshops and developing new partnerships - there are so many ways to help people take financial action during the Week.
Asset-Building News Roundup - February 21, 2014
By Veronica Weis on 02/21/2014 @ 11:30 AM
Network Lead Organization Illinois Asset Building Group will co-host a webinar on February 24, How the Game of Credit Perpetuates the Racial Wealth Gap.
On February 25, the New America Foundation and the Center for Social Development will host a discussion on tax-time savings, The Tax-Man Giveth? Refunds, Savings, and Promoting Economic Security in Washington, DC.
On February 27, CFED and the Center for American Progress will host Retirement Security for All: Overcoming Unequal Tax Incentives for Retirement Savings in Washington, DC. Senator Elizabeth Warren (D-MA) will deliver remarks.
Asset Limits: After a two year-debate, the U.S. Congress reauthorized the Farm Bill in February. The law, which is a compromise between the two parties, cuts SNAP funding by $8.6 billion, but maintains an important provision that supports saving and asset-building: state flexibility to streamline public benefit program eligibility and waive SNAP asset tests through a provision known as Broad-Based Categorical Eligibility.
Minimum Wage: Delaware Governor Markell signed legislation that will raise Delaware’s minimum wage from $7.25 to $7.75 an hour on June 1, 2014, and to $8.25 an hour on June 1, 2015.
Retirement Savings: Also during his SOTU address, the President announced myRA, an individual retirement account-type plan available to workers who don’t have access to a 401(k). Under the plan, a portion of an employee’s pay would be deposited into an account invested in U.S. government bonds. Once the account reaches a certain amount, the money would be rolled over into an IRA. The U.S. Treasury will work with employers to set up individual accounts.
In-State College Tuition: Several states, including Florida, Indiana, Massachusetts, Missouri, Mississippi, New Hampshire and Virginia have bills under consideration that would extend in-state tuition to undocumented students.
College Savings: The Texas State Securities Board approved a new rule that allows financial coaches to provide information on college savings programs and assist families in completing the program applications. Previously, coaches were not allowed to share any materials unless they were specifically requested by the client.
From the Assets & Opportunity Network
Eleven competitively selected organizations will participate in the Bank of America Learning Cluster to integrate financial capability strategies into their workforce, housing or emergency assistance programs. For the list of participating organizations, click here.
Five Network organizations were selected to participate in the Head Start Financial Empowerment TA and Peer Learning Project supported by the Administration for Children and Families’ ASSET Initiative.
The five are: Head Start of Greater Dallas, Texas; Community Services Agency of Reno, Nevada; Action Partnership of Kern, California; Muskegon Area Intermediate School District, Michigan; Northern Kentucky Community Action Commission
Cities for Financial Empowerment (CFE) Fund is hiring a Manager of Policy, Research and Evaluation. The position is based on New York City.
Hope Enterprise Corporation is seeking a Director to manage the Mississippi Economic Policy Center and conduct analysis, public education and coalition support of economic opportunity policies.
The W.K. Kellogg Foundation is searching for a Program Officer for the Community Leadership Network Fellowship Program. The position is based in Battle Creek, MI.
The Affordable Housing Future Must Include Manufactured Housing
By Doug Ryan on 02/20/2014 @ 02:30 PM
EDITOR'S NOTE: This post originally appeared on the National Housing Conference's Open House blog here.
In the debate on the future of housing, one thing is clear: it’s on the nation’s agenda. In some circles, manufactured housing is, too. On January 28, Richard Cordray, the Director of the Consumer Financial Protection Bureau, appeared before the House Financial Services Committee. Manufactured home lending received a surprising amount of attention, including critical comments on the Bureau’s new rules. If nothing else, the interest of lawmakers recognizes that it is an important part of the affordable housing landscape.
Manufactured housing is the largest source of unsubsidized housing in the county, housing 20 million Americans in eight million homes. And, in an era of reduced federal support for affordable housing, we need to look at how to provide affordable housing in new and sustainable ways.
While the committee’s interest is appreciated, much of the criticisms are misguided. The rules, which took effect this month, need a chance to work. Furthermore, the manufactured housing industry has something of a reputation for high-cost loans, questionable underwriting and resistance to competition. Standardization of lending products, with additional flexibility that already applies to most loans, could help the sector enter the mainstream. The quality of the home is vastly superior to those built twenty or thirty years ago; we think the policies and lending products can be, too.
Any discussion of manufactured home lending must include the GSEs’ duty to serve home buyers. Last year in this space, Ethan Handelman wrote why this requirement is so important. Largely due to how homes are financed, manufactured homeowners are often unable to benefit from the appreciation, consumer protections and financial stability that most homeowners take for granted. A true secondary market would likely lead to improved financial products for owners by attracting lenders who know manufactured housing is vital to their communities but do not want to (or cannot) hold the loans in portfolio.
Furthermore, lenders and advocates need to help change the laws that make manufactured homes fundamentally, and unnecessarily, different than site-built homes. Only about 15% of new manufactured homes are titled as real estate, even though 70% are on private land. States need to adopt titling reform, such as the Uniform Manufactured Housing Act, as it would no doubt lure lenders to the market and help deliver better loan products to consumers.
As we debate how to address housing finance, we need to be sure not to exclude how manufactured housing fits into the equation. Failure to do so closes the door on potential financial safety and security for millions.
Doug Ryan is the Director of Affordable Homeownership at CFED. CFED launched the I’M HOME (Innovations in Manufactured Homes) initiative in 2005 to promote policy, product and lending changes to transform the manufactured housing market.
The Racial Wealth Gap is Growing
By Jeremie Greer on 02/19/2014 @ 11:00 AM
In a month when we celebrate the bravery and sacrifices made every day by extraordinary people to advance racial equality in the United States, we are also reminded that despite incredible progress we have not come far enough. The financial security of communities of color is still incredibly fragile, and in many communities across the country, families are barely getting by—if they are getting by at all. In a speech marking the 50th Anniversary of the March on Washington, President Obama articulated this struggle—far better than I ever could—by describing the measure of progress as defined by those who gathered in Washington, DC, 50 years ago. During this speech President Obama said:
“The test was not, and never has been, whether the doors of opportunity are cracked a bit wider for a few. It was whether our economic system provides a fair shot for the many - for the black custodian and the white steelworker, the immigrant dishwasher and the Native American veteran. To win that battle, to answer that call - this remains our great unfinished business.”
In addressing the question of whether communities of color are accumulating wealth, building assets or achieving financial security for their families, unfortunately the answer—as articulated by President Obama—is that as a country we have “unfinished business."
On January 30, CFED released its annual Assets & Opportunity Scorecard, which profiles state data on household financial security and 67 policy solutions, and highlighted the many families who are living in a persistent state of financial insecurity. One major and troubling finding was that two out of every three (61%) households of color are liquid asset poor, which means they have less than three months’ worth of savings (conservatively measures as $5,887 for a family of four). Further, and as reported in a recent post by Lebaron Sims, African-Americans are twice as likely to be liquid asset poor as white households. This lack of savings corresponds with overall lower wealth and assets. CFED found that households of color have approximately one-tenth the median net worth (assets minus debt) of white households ($12,377 and $110,637, respectively).
This week, CFED’s Government Affairs team has released a new fact file, titled “The Racial Wealth Gap is Growing,” which highlights the disturbing trend of wealth inequality regarding households of color in the United States and some of the reasons it exists and persists in the United States. Here are some of the alarming facts:
- The racial wealth gap far exceeds the racial income gap. As mainstream rhetoric tends to focus on income inequality, CFED’s new Scorecard data brings into light the reality that inequality is more extreme and pervasive when looking at different households’ net worth.
- The racial wealth gap is growing. According to research by the Urban Institute, the wealth gap has doubled in the past few decades. In 1983, the average wealth of white families was $230,000 higher than the average wealth of African-American and Hispanic families; in 2010, it has increased to over $500,000.
- Homeownership rates for households of color are 26 percentage points below the rate for white households. Research by the Institute on Assets and Social Policy (IASP) has determined that the homeownership gap is a result of a broad legacy of systematic racial segregation, discrimination and unequal opportunity. Additionally, new research from Zillow, Inc., in collaboration with the National Urban League, found that there were significant differences across race and ethnic groups with the success of mortgage applications.
These facts and trends are explored in more depth in the Fact File.
All in all, we know that in order to finish the “business” of expanding opportunity, whether it is through investments in homeownership, college education or small businesses, disparities between white households and households of color must be erased. In his State of the Union Address, President Obama offered hope that this vision can be realized when he said, “Opportunity is who we are. And the defining project of our generation must be to restore that promise”.
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Congressman Donald Payne, Jr. Introduces New Entrepreneurship Training Legislation
By Katherine Lucas McKay on 02/19/2014 @ 08:00 AM
This week, in recognition of National Entrepreneurship Week, Rep. Donald Payne, Jr. (D-NJ) introduced the Growing Small Businesses Act (H.R. 4063), new legislation that would make more training and resources available to low- and moderate-income (LMI) prospective entrepreneurs. The Growing Small Businesses Act would remove barriers that currently prevent most workforce development providers from offering entrepreneurship training.
The unemployment rate is falling, likely in part because job seekers are becoming discouraged, unable to find jobs after months of searching. Traditional skills training and job placement services aren’t helping some workers find new jobs, but those who want to build their own jobs through self-employment and business ownership are often unable to get help through the workforce development system. CFED and others in the microbusiness sector have long identified the Workforce Investment Act’s (WIA) performance measures system as creating an unnecessary barrier: the metrics track data related to a worker’s new job, wages, employer and industry, few of which are applicable to new entrepreneurs. As CFED put it in our recent report, “Enhancing Support for Lower-Income Entrepreneurs Through Major Public Systems,” even successful business starts are recorded as reemployment failures under the current measures. As a result, WIA-funded organizations that do provide entrepreneurship training have lower performance ratings; mostly simply do not provide support to those seeking to start businesses.
CFED and other leaders in the microbusiness sector have long argued that WIA needs additional performance measures to accurately assess the progress of prospective entrepreneurs and the effectiveness of WIA-supported training opportunities. In fact, CFED consulted with microbusiness and workforce experts across the country about how to better integrate entrepreneurship into the workforce development system, the number one response was to reform WIA performance measures. In the previous Congress, Rep. Lois Capps (D-CA) introduced a bill, the Entrepreneurial Training Improvement Act, to establish entrepreneurship-specific measures, but Rep. Payne’s bill is the first to address the issue in the 113th.
The Growing Small Businesses Act would require the Department of Labor (DOL) to create separate performance measures for individuals who receive entrepreneurship training through WIA. It also directs workforce development providers who offer entrepreneurship training to partner with experts in the microbusiness field and report to DOL about how many clients pursue entrepreneurship and how many successfully start businesses. It is exciting to see Rep. Payne take up this issue and advance new legislation to support LMI entrepreneurs.
2014 Scorecard Deep Dive: Financial Assets & Income
By Lebaron Sims on 02/18/2014 @ 09:30 AM
Last month, CFED released the 2014 Assets and Opportunity Scorecard, a comprehensive evaluation of the relative financial security of the American public. This series takes a closer look at some of the outcome trends within each of the Scorecard’s five issue areas.
While the national economy continues its ascent from the depths of the recession, America’s working households struggle to maintain their standing. Household income poverty is as high as ever, average annual pay remains largely unmoved from the early 2000s, and household net worth continues to erode. Though there are a few bright spots – credit card debt and bankruptcies are both on the decline – the average American household is in no better position than it was three years ago, and is one crisis away from financial ruin.
Income Poverty and Liquid Asset Poverty
Though the income poverty rate remains at an historic level (14.7% in 2012), it is still an inadequate measure of the financial security of America’s working households. The rate of American households without a three-month safety net – liquid asset poverty – is far higher: 43.5% nationally. The liquid asset poverty rate is more than double the income poverty rate in every state, and, in seven states, a majority of households are liquid asset poor. Of these, six – Alabama, Mississippi, Georgia, Kentucky, Arkansas and North Carolina – are located in the southern United States. In fact, at least one in every five households in every state, regardless of geography, is liquid asset poor.
Consumers with Subprime Credit
As household incomes remain stagnant, families have resorted to taking on debt to stay afloat. In 37 states and the District of Columbia, more than half of consumers do not qualify for credit at “prime” rates; nationally, 56.3% of all consumers have subprime credit. Of the states, Mississippi has the highest percentage of consumers with subprime credit scores at 69.1%, while Minnesota has the lowest percentage at 43.8%. Meanwhile, at $40,309, average annual pay in Mississippi remained 9.6% lower in 2012 than its 2007 level ($44,584); Minnesota’s 2012 pay was 3.6% higher than its 2006 level. Across the states, a general correlation is clear: states with higher rates of consumers with subprime credit tend to have lower average annual pay.
Average Credit Card Debt
Average credit card debt, however, decreased in every state from 2012 to 2013, with real dollar declines ranging from $9 (0.2%) in Arkansas to $1,296 (9.3%) in California. This trend is indicative of the household deleveraging that has marked the years since the financial crisis. Although average credit card debt continues to slide downward from its high in 2009, it remains higher than its pre-crisis levels in the early-2000s. The average consumer in 19 states and the District of Columbia still holds more than $10,000 in credit card debt, with Connecticut’s $14,717 setting the pace nationally.
Though these outcomes seem entrenched, there are steps we can take to stem the tide. States must take the lead by promoting policies that allow working households to increase their incomes, and build and maintain wealth. As we know, the stronger the American middle class, the greater the growth potential for the economy as a whole. For more data, including a breakdown of policies states can implement to help residents find stable economic ground, visit the Scorecard website, or download the full 2014 Scorecard report, “Treading Water in the Deep End,” here.
2014 Assets Learning Conference Call for Ideas
By Kim Pate on 02/12/2014 @ 02:00 PM
As you may know, this September, the 2014 Assets Learning Conference (ALC) will convene over 1,200 stakeholders to explore cutting-edge strategies to promote assets and close the opportunity gap. The venue for this year's signature event will be the brand-new Washington Marriott Marquis in the heart of our nation’s capital.
This year, we're inviting you to submit your ideas for the Conference. As you will see in the Call for Ideas here, the 2014 ALC will include intensive capacity-building workshops, plenaries, sessions, roundtables and receptions. The Conference theme, Platforms for Prosperity, invites participants to explore platforms (in housing, education, employment, banking, health care and social services) that move individuals and families from poverty to financial security and economic opportunity.
We want your input on the content of this year’s ALC. Do you have ideas for topics that should be covered within one of the platforms? Are there topics related to research, policy, practice or anything else that you want to see? Do you know of specific ways of delivering content that are particularly effective? If so, we want to hear from you!
If you have ideas to share, please fill out this short questionnaire by February 21. You can also let us know what you're most looking forward to at the ALC by using the comments section.
We hope to see your ideas now and you in September!
Banking on Children and Parents Together
By Andrea Levere on 02/12/2014 @ 10:00 AM
EDITOR'S NOTE: This post originally appeared on the Aspen Institute's Ascend Program blog. Special thanks to Ascend for working to increase the visibility of Children's Savings Accounts as a two-generation approach to financial security.
Can you imagine a child in preschool with her own bank account? How might she feel as she takes a trip to the local bank or credit union branch to make her deposit? Equally important, how can this account not only change her life, but also change the lives of her parents?
Preschool children in Mississippi today and in Colorado later this year will have the chance to build their savings for college through a relatively new product known as a “Children’s Savings Account,” or CSA. CSAs are long-term, matched savings accounts for children that are generally used for higher education, engaging low-income parents and their children in financial education and savings activities. CSAs can serve as a bridge to connect families to financial management and asset-building tools and products. The rapid growth of CSAs has been supported by an influential body of research which illustrates that even modest asset ownership - something as simple as a savings account - can both increase financial security and, perhaps even more importantly, raise the hopes and aspirations of both children and the adults in their lives.
The increasing interest in Children’s Savings Accounts reflects today’s economic reality: while college is indisputably the most secure pathway to economic opportunity, the soaring cost puts it out of reach for too many families. According to the Brookings Institution and the Pew Economic Mobility Project, barely one in three children from the poorest fifth of families enroll in college, and only about one in ten graduates. By comparison, among the wealthiest fifth of families, four in five children go to college and more than half (53 percent) graduate. It should come as little surprise that Ascend at the Aspen Institute embraced CSAs as a powerful two-generation strategy that engages both children and their parents with products and services that can move families toward opportunity. In particular, the two-generation approach integrates education, economic supports, social capital, and health and well-being to create stability and generate significant financial outcomes for low-income families. This framework also uses CSAs to mobilize savings for education within a social context trusted by low-income families, such as early childhood programs.
It was through the Ascend Fellowship that I had the good fortune to meet Reggie Bicha, the visionary leader of the Colorado Department of Human Services (CDHS), who was in the process of re-inventing the design and delivery of services to align with a two-generation approach. He had already identified the lack of financial literacy programs as a gap in his department’s services when he was introduced to CSAs, and it didn’t take long for him to decide that this was a product that must be brought to Colorado.
Colorado will join several other CSA initiatives launched by local and state policymakers over the last several years. Last year Cuyahoga County, Ohio, home to Cleveland, launched a program that will provide all kindergarteners with college savings accounts seeded with $100 each starting this fall. The Nevada State Treasurer recently started the Nevada College Kick Start Program, which is establishing college savings accounts with $50 for all Nevada public school students enrolled in kindergarten in 2013-2014. These efforts follow in the footsteps of San Francisco’s pioneering Kindergarten to College program, which provides a $50 deposit in a college savings account to every child entering public kindergarten.
The Colorado CSA program will be distinctive in that it will open accounts for students in the state’s public preschool programs, and therefore will be the first statewide initiative in the nation to serve children this young. In the proposed model, a 529 college savings account would be opened and seeded with an initial $50 deposit and each child would be eligible for another $100 per year in savings matches for up to five years. By incorporating the CSA program into the state’s preschool programs, Colorado is including asset building for children in programs that engage their parents. Moreover, CDHS can use CSAs as a “hook” to link parents to a range of other asset-building resources, such as financial education, banking products, credit counseling and free tax preparation assistance. Funding to “seed” and “match” the accounts can come from private and philanthropic sources. For example, CFED recently launched the 1:1 Fund, which raises private dollars for the purpose of matching college savings by lower-income kids through an online platform.
Every five-year-old wants a piggy bank to fill with nickels and dimes that hold the promise of dreams. But for too many low-income children, even filling a toy bank can be a challenge.
To learn more about how to help the youngest students save for a future that includes college and teach them and their parents the benefits of depositing their money in a real bank, please join me today on Ascend's webinar on Children's Savings Accounts: What's in Your Piggy Bank? Click here to register.
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