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Manufactured Housing as a Bridge Over the Affordability Gap

By Doug Ryan on 10/20/2014 @ 03:00 PM

Tags: Housing and Homeownership

This article was originally published in Rooflines.

Last week, the Consumer Financial Protection Bureau released an important study called “Manufactured-Housing Consumer Finance in the United States.” For 10 years, CFED, through its Innovations in Manufactured Homes (I’M HOME) initiative, has both promoted manufactured housing as affordable housing, while also supporting fundamental changes to the financing, consumer protections, and public policies that affect the nearly 18 million Americans who call them home.

The report relied on a number of sources, including proprietary industry data, to develop its findings. The bureau reported on numerous areas, including some we know all too well, but bear repeating. For example, manufactured homeowners have considerably lower incomes and less wealth than other homeowners. We also had confirmed that the chattel, or personal property, loans most often financing manufactured homes are much more likely to be expensive than mortgages on other houses. In 2012, 17 percent of chattel loans had interest rates that would have triggered the Home Ownership and Equity Protection Act, or HOEPA (as currently enforced), compared to 0.01 percent of site-built loans that actually triggered HOEPA that year (HOEPA did not apply to chattel loans until 2014). HOEPA loans provide borrowers with additional protections, as regulators recognize that the borrowers face higher costs and potential hazards.

The study also supports what CFED and many others have seen in manufactured housing over recent years. Although the percentage of new manufactured homes placed in manufactured home communities is still relatively low–about 30 percent in 2013—78 percent of the total new manufactured homes were titled as personal property. The disconnect between titling and finance should alarm any housing advocate, but also call us to action to do things differently.

What this suggests is what I’M HOME partners have long assumed: that many chattel borrowers—the CFPB says as many as two-thirds—may have qualified for mortgages had they been given the option. Industry disputes this, stating that many new units are on “family” land that the owner would not want to use as loan collateral. No doubt this is true in some cases, but with a finance market dominated by just a few players with a deep stake in the chattel model, it stands to reason that the CFPB is on to something. This business model can also turn into higher cost for families, which in turn means riskier loans, more likely to default.

Industry sources also help dispel one of the myths of this market, that manufactured homes are mobile homes. According to the community owners surveyed, the average length of time a home is located in a community is 40 years, while the average resident stays 13 years. Nevertheless, the manufactured housing industry chooses to fund the majority of home purchases as if the families and the homes would skip town in a heartbeat.

Industry, to its credit, has made great strides in improving the quality and look of manufactured homes. It’s time that the financing be modernized as well.
We know there are better ways to do business. Any regular reader of Rooflines no doubt has heard CFED tout the success of the New Hampshire Community Loan Funds’ manufactured home loan program. Private lenders have already moved into this space in the Granite State, and we believe that other lenders in other states would follow if manufactured homes were on equal policy footings as site-built homes. The loan fund is also the basis for CFED’s assertion that titling reform would, with other tools, lead to transformation of this market. But that is not enough to turn the homes into true assets for all owners.

That’s why we are advocating strong duty to serve rules for Fannie Mae and Freddie Mac to ensure they invest in manufactured housing mortgages. This would provide the liquidity that small depository lenders desperately need to lend in this space. It’s also why we advocate for stronger zoning and planning rules to prevent localities from excluding manufactured homes and to offer policymakers and advocates another weapon in their affordable housing arsenals.

In an era of declining subsidies and reduced homeownership rates, advocates and policymakers are looking for ways to bridge the affordability gap. Manufactured housing, done right, offers a framework unlike just about any other option.

We look forward to working with all parties to move this agenda forward. The next best chance for all of us to do so is at the 10th Annual I’M HOME Conference on November 13 in Seattle. I hope you can join us.

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Asset Building News Round Up: October 17, 2014

By Paul Day on 10/17/2014 @ 01:30 PM

Tags: News

Events

EconomicCheckUp: Helping Older Adults Find Programs to Boost Their Economic Security
October 28, 2014, National Community Reinvestment Coalition, Washington, DC
This webinar is designed for financial institution professionals, financial educators and counselors, community-based organizations, asset builders and the aging network.

2014 Rural Housing Summit: Staking Our Claim: Securing a Sustainable Future
October 23, 2014, Asilomar Conference Grounds, Pacific Grove, CA
The Rural Housing Summit brings together housing professionals and advocates to examine key policy and program issues and develop a strategic action plan to improve the living conditions of low-income and rural Californians during the upcoming year and beyond.

News

It remains cheaper to buy than rent in every one of the country’s 100 largest metro areas, according to new Trulia research. In fact, homeownership nationwide has actually become a sweeter deal, coming in on average 38% cheaper than renting today, compared with 35% one year ago, thanks to falling mortgage rates and rents rising faster than prices. Read more here.

When it comes to putting money away for retirement, women outmatch men: They are more diligent savers and more likely to put a bigger percentage of their paycheck into a savings plan. But when it comes to the final savings tally, women are falling far behind. Read more here.

The ELM² Fellowship—offered by FIELD in partnership with the Capital One Foundation—supports the development of emerging leaders in the microbusiness development field. Thanks to the continued support of Capital One, FIELD announces that the Request for Applications for its third class of fellows is now available online. Applications are due November 14, 2014. Read more here.

Five years into a national economic recovery that has further strained the poor working class, an entire industry has grown around handing them a lifeline to the material rewards of middle-class life. Retailers in the post-Great Recession years have become even more likely to work with customers who don’t have the money upfront, instead offering a widening spectrum of payment plans that ultimately cost far more and add to the burdens of life on the economy’s fringes. Read more here.

Manufactured homes — factory-built structures that are transported to a leased or buyer-owned lot — offer a realistic possibility of homeownership for many lower-income buyers. But financing options are limited and expensive, which has sparked calls for reform. Read more here.

From the Assets & Opportunity Network

From Louisville Metro Community Services and Revitalization: It has been a little while since we posted new information - but that doesn't mean we've been sitting on our laurels! In August, Bank On Louisville celebrated its 4th Anniversary with 100 of its closest friends who came to help celebrate our successes.  Read more here.

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New Northwest Area Foundation Initiative Promotes Financial Inclusion

By Arohi Pathak on 10/16/2014 @ 04:30 PM

Tags: Assets & Opportunity Initiative

Under the umbrella of the Assets & Opportunity Network, the Financial Inclusion Policy Action initiative, CFED’s newest initiative with the Northwest Area Foundation, is off to a promising start!

Over the next three years, seven grantees in five states (WA, OR, ID, MN and MT) will advocate for policies that rein-in predatory lending and abusive debt collection practices, increase access to safe and affordable financial services and products, expand financial education, and encourage savings, among other financial security policy ideas. The initiative is designed to advance state and tribal policies that increase financial inclusion and security among low-income communities, Native American communities and communities of color.

We’re excited to be partnering with a number of national experts, which will allow us to bring very specific expertise to the state and tribal grantees. The experts are:

The Financial Inclusion Policy Action Initiative will use three key approaches in building policy and advocacy success at the state and tribal level:

  • Peer learning—regular opportunities for experiential and intentional learning with peers to foster new connections and identify solutions to policy challenges;
  • Technical assistance—tailored supports to help advocates build relationships with critical allies, develop expertise on specific policy issues, and identify strategies for policy success or capacity building; and
  • Honing adaptive capacity—using coaching, tools, data and other supports to help organizations adapt to complex policy environments, monitor progress, respond to new information, and evaluate policy change strategy on an ongoing basis.

In mid-September, CFED held a meeting in Washington, DC with the grantees and our TA experts and coaches to talk about how organizations can create meaningful state and tribal policy change, and build advocacy capacity for long-term success. The TA experts shared knowledge on strengthening financial security, effective strategies for state and tribal policy change, and lessons learned from similar efforts.

Over the next few months, grantees will participate in an intensive self-assessment to evaluate their policy landscape, understand their strengths and gaps as advocates, and plan strategic advocacy campaigns. The assessment will inform a tailored technical assistance plan co-created by the grantee, CFED and technical advisors to guide on-going learning, adaptation, and evaluation.

As we continue working on this initiative, we will share the best practices, learning and tools through the Assets & Opportunity Network.  For more information, contact Arohi Pathak at CFED.

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Prize-Linked Savings: An Innovative Strategy for Helping Low-Income Households Build Savings

By Alexander Scarlis on 10/15/2014 @ 05:00 PM

Tags: Federal Policy, Data and Research

American households do not have enough savings. One in four lacks the financial cushion to support themselves for three months at the federal poverty level if their income is suddenly interrupted. That proportion jumps to almost half if the household’s illiquid assets, such as a home or car, are excluded from net worth.

Setting aside money for emergencies is especially difficult for those with modest incomes. Yet given the right supports and incentives, they too can accumulate savings that will help them weather financial hardships.

CFED’s new Fact File, “Prized-Linked Savings: An Innovative Strategy for Helping Low-income Households Build Savings,” highlights how an innovative and exciting asset-building policy is helping low-and moderate-income families build savings across the country.

Prize-linked Savings (PLS) is an innovation that is fun, works, and is popular among those who need it most.

  • PLS offers participants the opportunity to win a cash prize every time they deposit money into a savings account.
  • Participants keep the money they save and any interest accrued even if they don’t win a prize.
  • Research shows that PLS accountholders increase their total savings, which likely includes new savings.

Experience on the ground demonstrates these positive results. Michigan’s prize-linked savings program, the longest-running in the U.S., saw account balances of financially vulnerable participants increase on average by more than 20% after one year. Notably, the asset poor saw their balances increase on average by more than double that of non-financially vulnerable participants.

Several states have already changed their laws to promote PLS with more working to do the same, and the federal government is showing signs of increased bipartisan support.

Check out our new Fact File to learn more about this exciting innovation!

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Reflections on the Assets Field and What We Should Do Together: Part I

By Jennifer Brooks on 10/14/2014 @ 06:30 PM

Tags: ALC 2014, Assets & Opportunity Initiative

Now that the dust has settled from the Assets Learning Conference, we’ve hopefully all had time to reflect on our own personal “takeaways.” I know that some took away gold nuggets of information, others built new strategic relationships, some felt the thrill of participating in the policymaking process, and still others refilled their metaphorical coffee cups and found inspiration to redouble their efforts. My own reflection has focused on what we are called to do together in the next couple of years.

From the pre-Conference survey of participants (and those who couldn’t make it), we learned about trends in communities across the country, organizational needs and perspectives on what is most important for us to do together. While some of the findings show clear trends and point to mandates for specific kinds of collective action, others raise important issues that we need to figure out how to address together.

This blog post will focus on survey results. Parts II & III of this series will focus on what the survey findings tell us about what we should do next.

Trends and Needs in the Field

Four hundred thirty-eight individuals in the assets field responded to the survey. Of them, 362 (83%) said that the need for financial capability and asset-building services has increased in the past year.

When asked what services people were seeking, some of the answers were not surprising. For example, financial education/counseling/coaching, debt management assistance and credit building assistance ranked #2, 3 and 4, respectively. However, the #1 service that respondents reported people in their communities seeking was affordable housing. Many respondents commented on the interrelationship between high housing costs, low wages, credit and debt.

“Affordable housing is a huge issue. Clients are spending more of their income on housing, taking on more credit card debt to make ends meet, and often working multiple jobs.”

Although more than half (53%) of respondents said their organization’s ability to meet community needs had increased, nearly two-thirds (61%) said they had a significant need for funding. Many respondents noted the growing disparity between community needs and available funding.

“The funding landscape continues to be challenging. There are no offers for multi-year funding and even among regular supporters, we must apply each year. There are too many unknowns and we are unable to secure operating reserves at an appropriate level. Salaries remain flat.”

Respondents indicated that they have a multitude of needs that national intermediaries (both the Assets & Opportunity Network and “CFED proper”) might address. Best practices research, connection to others doing similar work, case-making data, and online and peer learning opportunities topped the list. However, more than half of respondents indicated a need for nearly all of the options.

“We want to know what is working in other communities and why. What should we be doing here different/better/more? Beyond best practices to a deep understanding of what really creates meaningful outcomes for individuals and communities.”

What We Should Do Together

In addition to trends, the survey also asked about what we should collectively focus on as a field/movement to increase financial security and economic opportunity nationally. Ninety percent of respondents indicated that increasing resources available to provide services and engaging and lifting up the experiences of those living in asset poverty were important activities for us to do together. More than 80% said it is important that we focus on learning from each other about effective practices and raising awareness about our issues with the media and other stakeholders. More than two-thirds of respondents said that it was also important for us to focus on coordinated advocacy at all levels of government.

When asked what was most important to focus on together, increasing resources and lifting up experiences of those living in asset poverty remained at the top of the list. However, coordinated federal policy advocacy moved into second place as critical for us to increase financial security and economic opportunity.

So Now What?

The data give us a lot to chew on. Part II of this blog series will focus on our initial ideas for how we respond. What ideas do you have? Leave a comment on how you would address the gnarly questions of funding for the field, affordable housing and engaging people living in poverty in our movement.

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Marvin Talley: Proof that Asset Building Can Change Lives

By Paul Day on 10/13/2014 @ 12:30 PM

Tags: Financial Empowerment, Housing and Homeownership, Individual Development Accounts

After going through a rough divorce, Marvin Talley lost everything—his stable, salaried job with the federal government; his passion for tennis playing and his overall stability. Marvin struggled with drug addiction, joblessness and debt for over a decade. Through a transitional shelter, he was able to rebuild his life and find a job working for a nonprofit. Eventually, Marvin would get engaged to his friend, Deborah, who encouraged him to think about their future.

“I had to acknowledge to myself the role that I played in allowing my debt to happen. Rebuilding equity back in the District was not easy!” - Marvin Talley

Deborah introduced Marvin to the homeownership classes at Manna, where he learned about Capital Area Asset Builders’ (CAAB) IDA Program. Through CAAB’s IDA program, Marvin could save for a downpayment on a mortgage. “It was a win-win situation,” Marvin says.

At the same time, Marvin and Deborah were undergoing significant medical issues: he had prostate cancer and she had triple bypass surgery that left her unable to work. Because he was the sole income earner, Marvin decided to take on the mortgage entirely himself.

It was “touch and go” for a while before Deborah was able to go back to work. Marvin struggled with paying down his credit cards while contributing to the IDA. With help from CAAB, Marvin was able to access his credit report so he could start addressing some of these issues. Along the way, he also learned how to stick to a budget.

All of Marvin’s contributions to his IDA were matched threefold, and he eventually saved enough to make a downpayment on a home in the Trinidad neighborhood of Washington, DC. In August 2006, Marvin and his wife were able to move into their new home.

“We were able to celebrate my wife’s birthday, [and] Thanksgiving and Christmas in our new home, and that really made us feel good to be able to see our hard work come to fruition because of CAAB.” - Marvin

This September, Marvin has been in his home for eight years. Unfortunately, Deborah has since passed away, but he credits her to introducing him to CAAB, which totally changed his life.

“We were able to manage our money where we were able to pay for things with cash. That meant a lot of me. That took a lot of burden off of us. I was able to maintain the daily expenses. That gives you a sense of empowerment over yourself.” - Marvin

Marvin looks forward to further building his financial future. CAAB is now offering investment and estate planning classes, which he plans to take advantage of. His story is an incredible testament to the power of asset building in changing lives and providing those lifelong pathways to prosperity for all Americans.

To learn more about CAAB’s programs, visit their website.

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Asset Building News Round Up: October 10, 2014

By Paul Day on 10/10/2014 @ 12:30 PM

Tags: News

Events

Design for Action Conference
October 14, 2014, Artisphere, Rosslyn, VA
Want to learn how to design products that help people change their daily behavior and routines? At Design for Action, you'll learn from a dozen of the most prominent experts in the country.

News

A new TransUnion study found that the consumer loan wallet – the composition of loans that people typically carry – has materially changed for both the youngest and oldest segments of the population during the last decade. Read more here.

The 30-year mortgage is the foundation of the real estate market largely because it makes housing more affordable. But there's something new that's getting a lot of attention. It's called the Wealth Building Home Loan because it helps people own more of their house more quickly. Read more here.

The U.S. Treasury Department has awarded a $1.08 million research contract to the Center for Social Development (CSD) at Washington University in St. Louis’ Brown School. One of 11 contracts awarded nationally under the Financial Empowerment Innovation Fund, this award will fund research on myRA accounts (“My Retirement Accounts”). Read more here.

This AARP survey looked at the extent to which 50+ workers are planning for their future retirement and where potential health care costs fit into this planning. It also looked at whether individuals are concerned about these costs and what sources of income they plan to use to cover potential costs.

Freddie Mac is building a business to originate small apartment loans, between $1 million and $5 million, as part of its mandate to support affordable housing. The average loan will be about $2.5 million, the McLean, Virginia-based company said in a statement. The mortgage giant plans to originate as much as $1 billion of such debt in 2015, according to David Brickman, the head of multifamily operations at Freddie Mac. Read more here.

From the Assets & Opportunity Network

From Cataylst Miami: US businesses are in. The American public is in. So what’s next on the minimum wage, Congress? It has long been the argument from some voices in business—or at least their Washington lobbyists and the Members of Congress who listen to them—that raising the minimum wage would hurt business—and workers—by eliminating jobs. Read more here.

From Wayne Metropolitan Community Action Agency Asset Building: On September 15, the American Savings Promotion Act (H.R. 3774) passed the United States House of Representatives! This legislation would clear the way for all interested financial institutions to offer prize-linked savings (PLS) products by removing federal barriers that currently prohibit banks and thrifts from offering them. Read more here.

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Three Reasons You Should Be Concerned about the Racial Wealth Gap

By Dominique Derbigny on 10/09/2014 @ 11:00 AM

Tags: Economic Inclusion, Financial Empowerment

During the Assets Learning Conference special event, “Unfinished Business: Winning the Battle for Economic Opportunity,” Cy Richardson of the National Urban League declared that in the battle for economic opportunity, “We’re not winning. We’re losing.” As part of the event, ABPN hosted a discussion about closing the racial wealth gap and expanding economic opportunity.

The racial wealth gap has tripled in size since 1984. According to the U.S. Census Bureau, African American households earn just 67% of the national average, and CFED recently found that households of color have approximately one-tenth the median net worth of white households. While we know wealth has declined for many families since the Great Recession, parallels between race, ethnicity and inequality remain staggering, and households of color are struggling to regain an economic foothold. Evidence illustrates that the black-white economic gap hasn’t budged, and ABPN urged us to address an important question: why should people care?

Here are three reasons we should all be concerned about the racial wealth gap:

  • Minorities are needed to grow and sustain the economy.
    The minority population in the US is growing and, as Wade Henderson expressed during the event, we increasingly rely on these workers to support productivity and maintain our quality of living. We need to invest in communities of color through asset development (Bob Annibale mentioned various forms such as tax credits, tax reforms, credit building, citizenship and others) and sustainable employment in order to grow and support the economy.
  • The student loan borrowing gap delays economic advancement and contribution to the economy.
    Student loan debt has surpassed the trillion dollar mark nationally, but minorities are disproportionately impacted as there is a major gap in borrowing. According to a National Journal article, “half of all black graduates reported taking on at least $25,000 or more to complete their undergraduate degrees between 2000 and 2014, compared to 34% of white graduates.” Gaps in income and wealth mean black families have fewer resources to cover rising college costs. The debt burden not only disrupts college completion, but delays economic advancement. Students with large debt loads are more likely to forego large purchases, such as vehicles and homes, lessening their potential contributions to the economy.
  • Mass incarceration, the school-to-prison pipeline and the racial wealth gap are self-reinforcing.
    Evidence from Pew reveals that the incarceration rate of black men is more than six times higher than that of white men, and New America explains that time spent behind bars can reduce annual earnings by 40% and has permanent negative consequences for economic mobility that affects younger generations. Many minority children are not only impacted by parental incarceration rates, but are subject to the school-to-prison pipeline. The U.S. Department of Education Office for Civil Rights reports that black students represent merely 18% of preschool students, but make up over 40% of preschool student suspensions. Southern Poverty Law Center reports that black students are almost three times more likely than white students to be suspended in middle school. Too often, students who endure multiple suspensions are driven out of the classroom and into the juvenile or criminal justice systems. Additionally, higher suspension rates may prevent high school completion resulting in reduced earning potential and decreased economic opportunity.

Although the racial wealth gap is ever present, speakers during the ABPN event posed innovative ideas for how to level the economic playing field. For example, we could provide a savings account for every child born in the US or a generational “baby bond” whereby the amount of the bond is based on household wealth (i.e., less wealth = larger bond) and is able to grow from birth through adulthood. Another suggestion is to replace the home mortgage interest tax deduction with a simple, flat, refundable homeowners’ tax credit, so that the U.S. tax code can truly support more people achieving the dream of homeownership. While no single solution will close the racial wealth gap, perhaps we have to start by acknowledging that we are not yet a post-racial society and then determine strategies that improve economic opportunity for all.

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We Need to Focus on Strategies for Building Generational Wealth

By Solana Rice on 10/08/2014 @ 12:00 PM

Tags: Financial Empowerment

This article was originally published in The Root.

During a recent Monopoly night with my husband, I was ahead, with lots of cash and some properties. But a few bad rolls of the die later, I found myself mortgaging my properties. I lost more equity at every turn despite the $200 in play money I had amassed. And then, to make matters worse, I made a bad deal with my husband that put me in a cycle of debt. I’m lucky; for me, it was just a game.

But the Monopoly spiral mimics a devastating reality for far too many Americans—particularly black Americans. African Americans, and most people of color, have only a fraction of the wealth of their white counterparts. According to a new analysis just out of theFederal Reserve Consumer Finances Survey (pdf), the median white family in 2013 had a net worth of $134,000. The median net worth of Latino families was $14,000, and that of African-American families was just $11,000. For every $1 of wealth for white families, black families had just 12 cents.

It brings to mind a classic 2008 Chris Rock comedy bit, in which he spells out the difference between “rich and wealthy.” Rich is temporary; wealth is enduring and is passed on to generations.

And comedian Louis C.K., who’s white, does a pretty good job of expanding on Rock’s riff in one of his own stand-ups. It’s a funny line that’s sort of depressing at the same time: “When white people are just rich, they’re just rich forever and ever. Even their kids are rich. But when a black guy gets rich, it’s countdown to when he’s poor again.”

Clearly it’s an oversimplification, but you get the picture.

In a study (pdf) of why this racial wealth gap has widened, the Institute on Assets and Social Policy found that length of homeownership accounted for the majority of the gap. Household income, unemployment and college education were also strong factors, which give black folks a clear blueprint for steps we need to take.

Homeownership remains an important part of building assets and wealth, despite the recent foreclosure crisis. As foreclosures reportedly slow (pdf) in some parts of the country, we should champion efforts to make homeownership more affordable and sustainable while also creating opportunities for renters to have some of the same advantages for building wealth as homeowners.

Only 44 percent of black families (pdf) own a home—down from 46 percent in 2010. So how do we extend the savings and credit-building mechanisms that are inherent in homeownership to black families who are currently renting?

Programs like rent reporting and family self-sufficiency get renters on a path to a wide range of more affordable, entry-level financing products, like car loans.

And, of course, the jobs picture is a key factor, to provide families not only with sustaining wages but also benefits and a mechanism for saving. I grew up in a solidly middle-class family in the suburbs of Cleveland. My father had a job working for Ford Motor Co. for 30 years that provided benefits and allowed us to live comfortably and save for my education and my parents’ retirement, and also enabled my parents to own a home.

So with the important gains recently in various states on minimum wage increases—which allow individuals and families to earn more—it is essential to build on that by fostering mechanisms to encourage workers to save more of their pay.

Right now, though, 2 in 3 families of color don’t have the three months’ worth of savings needed to live above the poverty line should they have a disruption in income. This—in addition to the pain and hurt of generations of American families, particularly black families, who work, earn and even own and then lose it all—is real.

Hearing “countdown till you’re poor” in the back of your mind can cloud your every life decision. It can make you averse to or ill-prepared for the financial risks that are necessary for growing ownership, building wealth and really participating in the economy. But we have a fighting chance at ending the countdown and that cycle—leveling opportunity for economic mobility—and, I suspect, even improving our economy, if we focus on strategies to end the racial wealth gap.

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Levere’s New York Times Op-Ed Calls for Universal Children’s Savings, Fixes to Higher Education Tax Benefits

By Kristin Lawton on 10/07/2014 @ 02:00 PM

Tags: Children’s Savings Accounts, Federal Policy, Financial Empowerment, Matched Savings

Recently, many of us have speculated that the issue of children’s savings has been gaining momentum, and that attention to children’s savings as a solution for financially vulnerable families has been heightened. This morning, an op-ed published in the New York Times by CFED President Andrea Levere confirmed exactly that. The article shows that now, more than ever before, children’s savings are attracting a national spotlight.

In the op-ed, CFED President Andrea Levere discusses growing support for CSA programs across the country with the potential to serve more than 200,000 low- and moderate-income families. Yet, that number could soar into the millions with the help of federal policies that make it easier, not harder, for financially vulnerable families to save for higher education. The problem with many of our existing higher education policies, Levere argues, is that they act as “Pell Grants for the rich,” making it even easier for wealthier families to afford college while missing the middle class and leaving the poor behind. By turning this upside-down system right-side up, postsecondary education can be a reality for all young people, regardless of the ZIP code into which they are born.

I hope you’ll take some time today to read “This Little Piggy Went to College.” As you read the piece and its accompanying comments, I hope you’ll also take a look at the comments, recommend the thoughtful ones and adding your own ideas. Together, we can use this remarkable opportunity to advance a meaningful conversation about the challenges facing financially vulnerable families.

Click here to read Andrea Levere’s op-ed in the New York Times.

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Reflections on the ALC Platforms for Prosperity Awards: A World Within Our Grasp

By Kim Pate on 10/07/2014 @ 01:00 PM

Tags: ALC 2014, Financial Empowerment

It’s been almost three weeks since the ALC Platforms for Prosperity Awards and our celebration of CFED’s 35th anniversary. That night we set out to envision together an America of truly equal opportunity—an America where, as I said at the ceremony Thursday night, success is not predicated on being born into wealth or privilege, and there are real pathways out of poverty. An America within our grasp.

That evening we honored five organizations on the frontlines for their commitment to transforming lives one at a time through innovation, dedication and delivering essential services. Five leaders in the field committed to creating financial security in their communities across meaningful and tangible platforms.

But it goes so far beyond that.

As I have reflected on the ALC and CFED’s 35 years, I am continually reminded just how many individuals and organizations, in all sectors, are doing this work every day, every year and most without awards or recognition.

People committed to a simple but powerful idea that by creating economic opportunity, we can alleviate poverty. People who have bought into the game-changing idea that given a reasonable opportunity, every family can save, build assets and create a more prosperous future for themselves and their children.

These people—YOU—are the ones working to transform how and where we bank, to shape and improve where we work, to change the way we get comprehensive services, to allow more of us to start businesses, and to build better homes and neighborhoods where we live.

Together, we mark this milestone in our campaign and together, we continue our work and redouble our commitments. We pledge to make the next 35 years even better than the 35 before.

Will you join us? Send us your stories about what you are doing to help families turn opportunity into enduring economic and social benefits, and take another look at the organizations and videos below.

ALC 2014 Platforms for Prosperity Awards Winners

Where We Bank: HOPE Enterprise Corporation
HOPE ensures that everyone, especially those in some of the country’s most underserved communities, has access to affordable, responsible financial services, so that all of us can pursue economic opportunity.
View the HOPE Enterprise Corporation video here.

Where We Get Comprehensive Services: Alameda County Community Asset Network and Alameda County Social Services Agency
Alameda County Community Asset Network works with the Alameda County Social Services Agency to go beyond dealing with only the downstream effects of poverty and families in crisis, but instead, investing in families and neighborhoods proactively to lift up communities in need.
View the AC CAN video here.

Where We Live: Hawaiian Community Assets
Hawaiian Community Assets works with Native Hawaiians to provide bridges out of homelessness and create stability and opportunity for families.
View the Hawaiian Community Assets video here.

Where We Start Businesses: Opportunity Fund
Opportunity Fund is pioneering new ways, including innovative loans, to help families realize their dreams and prepare for the future.
View the Opportunity Fund video here.

Where We Work: Step Up Savannah
Step Up Savannah is helping families move out of poverty through innovative workplace-based supports that lead to greater economic security of workers, more stable employment, and higher earnings.
View the Step Up Savannah video here.

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Helping Employed Youth Get Banked, Save and Manage Money

By Kori Hattemer on 10/06/2014 @ 04:30 PM

Tags: Economic Inclusion, Financial Empowerment, Integrated Service Delivery

Nearly 20 million young people were employed in July 2013. Summer youth employment programs are a great opportunity for young people to develop job skills and experience. As youth receive a paycheck—possibly for the first time—and prepare for adulthood, they should also be developing the knowledge, skills and access to financial management resources that will help them manage their finances effectively now and in the future.

Research says that financial education should involve hands-on application and be relevant at the time people receive the information. What better time to help youth become banked, start saving and learn financial management skills than when they receive their first paycheck? Across the country, organizations that manage youth employment programs have begun to integrate financial education into their programs, establish partnerships with employers to build financial capability and identify effective strategies to collaborate with financial institutions.

In November 2013, the Consumer Financial Protection Bureau (CFPB) collaborated with other agencies on the Financial Literacy and Education Commission (FLEC) to bring together national and local leaders from promising programs across the country. Four lessons emerged from this roundtable and are outlined in Building Financial Capability in Youth Employment Programs, a report we prepared for the CFPB and Administration for Children and Families (ACF):

  • Lesson 1: Partnerships with the private sector, nonprofit organizations, government agencies, financial institutions and youth are necessary for successful program implementation.
  • Lesson 2: Financial education should be tailored to the needs of youth, employers and financial education providers.
  • Lesson 3: Financial products offered to youth should be carefully selected by weighing the costs and risks of various options.
  • Lesson 4: Organizations should develop explicit strategies for engaging youth in the short and long term. Efforts to engage youth are important both during and after the employment program.

Check out the report for insights from national and local leaders, and for specific examples for how you can help youth that you serve build financial capability.

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Asset Building News Roundup: October 2, 2014

By Paul Day on 10/03/2014 @ 10:00 AM

Tags: News

Events

CAAB Celebration + Film Premiere Event
October 7, 2014, True Reformer Building, Washington, DC

Please join us as we celebrate the successes of CAAB's participants, from graduating from Money Management 101 to successfully saving for a first home. We will hear the inspiring stories captured by Stone Soup Films and meet several successful savers.

FDIC’s 4th Annual Consumer Research Symposium
October 16-17, 2014, FDIC L. William Seidman Center, Arlington, VA
The symposium will facilitate discussion of recent research on consumers’ capabilities, knowledge, preferences, and experiences in the market for financial products and services, as well as the effects of public policy interventions and new regulations on consumers, households, communities and financial institutions.

News

Five years after the Great Recession, foreclosures in the U.S. are still three times the normal level. While the number of homes in trouble is high by historical standards, they are on the decline. Around 629,000 homes nationally were in some stage of foreclosure last month — also known as the foreclosure inventory — compared with 936,000 in August 2013, a year-over-year decrease of 33%. Read more here.

Financially stressed-out workers aren't good for businesses. Yes, employees who bring their money worries tend to be less productive and less engaged, and even raise employer health care costs. And so, it is with good reason that employers are now adding "financial wellness" program to their menu of employee benefits. For one, companies that offer this sort of benefit could save $3 for each dollar they spend, according to a recent Consumer Financial Protection Bureau (CFPB) report. Read more here.

Speaking Monday at a regional housing summit in New Windsor, New York State Attorney General Eric T. Schneiderman announced he will allocate an additional $40 million from New York’s share of a national mortgage settlement to extend for two years his office’s Homeownership Protection Program for distressed borrowers facing the loss of their homes. Read more here.

Tennesee State Treasurer David H. Lillard Jr. announced a new program to provide state funding to assist low-income families in building college savings accounts. Through the new Tennessee Investments Preparing Scholars Program, the state will provide enhanced matches for money invested by families that have accounts in the Treasury Department’s TNStars College Savings 529 Program and meet the income requirements. Read more here.

From the Assets & Opportunity Network

From the Illinois Asset Building Group:
On September 10, Chicago City Treasurer Stephanie Neely, launched the new Office of Financial Inclusion (OFI). The launch event took place at Instituto del Progreso Latino and included community partners, financial institutions and other community stakeholders. Read more here.

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TA Fund: Sharing Lessons & Insights on Data Collection and Evaluation

By Fran Rosebush on 10/02/2014 @ 10:30 AM

Tags: Assets & Opportunity Initiative

Program evaluation can seem daunting, but is essential. It’s crucial for demonstrating value, making the case to funders and other stakeholders, monitoring efforts, and determining promising practices for ourselves and for the field. At the Assets & Opportunity Network Leadership Convening last December, a number of Network Lead Organizations shared that data collection and evaluation was a top challenge they faced, and one they’d like to face with others, rather than alone. In particular, Lead Organizations shared that some of their hurdles were (1) identifying what to measure, (2) selecting the right database, (3) ensuring consistent data collection and (4) building a theory of change.

To help these organizations overcome these challenges, the Assets & Opportunity Network created a three-part peer learning series on data collection and evaluation through the Technical Assistance Fund, supported by JPMorgan Chase. Assets & Opportunity Network Lead Organizations were invited to participate in a peer learning series to explore challenges and solutions together on data collection and evaluation. Eleven groups participated in the three-part virtual series in July and August, and ultimately shared their experiences, challenges and successes with representatives from CFED’s Applied Research team.

The number-one topic identified by participants in the series as helpful and meaningful for their work was building logic models. Logic models can provide a strong foundation on which to develop new or strengthen existing programs. Logic models help us to:

  • Describe the sequence of events thought to bring about change over time.
  • Portray the chain of reasoning used to make decisions about inspiring change.
  • Provide a simplified picture of a program in response to a given situation.
  • Portray the underlying rationale of the program.
  • Illustrate the core of program planning, monitoring and evaluation.

Since this information was so helpful for the participants, the Assets & Opportunity Network will offer a webinar on Thursday, October 30 from 2-3:30pm EDT to provide an overview of logic models, share tips on building one of your own, share insights on common mistakes with logic models and how to overcome them, and provide an example of how one program is currently building a logic model to strengthen their design and evaluation process.

Register for “Logic Models: Laying the Foundation for Strong Programs” webinar on Thursday, October 30 from 2-3:30 pm EDT/ 11 am-12:30 pm PDT here.

Other key areas of focus for the Evaluation Peer Learning Series had to do with identifying what to measure, such as the outcomes that will help you demonstrate that your program made a difference. CFED’s Applied Research team indicated that identifying specific, measurable outcomes requires time, thought and a clear understanding of desired results. They shared the following tips with the group:

Ask yourself:

  • What is/will be different as a result of the initiative and for whom?
  • What will be changed/improved?
  • What do/will beneficiaries say is the value of the program?
  • What do/will they say about why they participate in the program?
  • Think about what you want to be able to say to your funder or the taxpayers who finance your program. For example, what would you want to say to your state legislator?

The answers to those questions can you help you identify the outcomes that you want to track. Another challenge facing groups was scarcity of time and resources needed for effective evaluation. The groups shared tips on how to streamline efforts and reduce some resources needed. Some of the ideas shared were to:

  • Combine intake information for multiple programs on one intake form.
  • Embed monitoring activities in the daily operations of the institution as much as possible, including timing programmatic reports to coincide with other monthly, quarterly or annual activity reports.
  • Combine pre-test information on client intake forms.
  • Leverage community resources by linking with local colleges and universities for assistance with surveys, focus group discussions and/or more sophisticated sampling and analysis activities.

The group also explored shared challenges they encountered when working with multiple databases. To tackle this problem, CFED’s Applied Research team shared the following tips:

  1. Download data from most of your databases into Excel, so that data may be combined into a single spreadsheet.
  2. Work to ensure each database collects data in a similar way (e.g., participants’ age data is reported using the same age brackets).
  3. Collect the same unique client identifier in each of your databases so that you can merge them. This will put you in a position to be able to see the full range of services you’ve provided to an individual, as well as the number of unique individuals your organization has served.
  4. Find an affordable data geek—this could even be an IT or statistics undergraduate intern.
  5. Try to work with your funders—they may be more flexible than you think when identifying outcomes and reporting forms for projects. Let them know what systems you’re currently working with.

Sharing lessons and insights from groups was a great way to spread knowledge and speed up the adoption of effective practices. If you’re interested in learning more on these topics, we invite you to join us on Thursday, October 30 from 2-3:30 pm EDT for the webinar “Logic Models: Laying the Foundation for Strong Programs” to continue this conversation.

Also in This Series

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Reflections on the ALC Plenary: Public Sector Leaders in Asset Building

By Diana Greenwald on 10/01/2014 @ 10:30 AM

Tags: ALC 2014

The 2014 Assets Learning Conference plenary— “Public Sector Leaders in Asset Building”—featured speeches by several men and women working on asset building initiatives at the Federal level.  The session was, in some ways, structured like a classic jeremiad—doom and gloom followed by optimism and a roadmap to a better future.

The session began with a video message from Janet Yellen, the Chair of the Board of Governors of the Federal Reserve System. She discussed a series of unfortunate statistics that will be familiar to people working in the field. For example, according to a recent report based on the Survey of Household Economics and Decisionmaking, an unexpected expense of just $400 would prompt the majority of [U.S.] households to borrow money, sell something, or simply not pay at all.” This reality seems somehow even more urgent and dire when pronounced by the head of the Fed, the country’s most senior economist.

Yellen’s tough truths were followed by similarly dark pronouncements from Ray Boshara, a senior adviser and assistant vice president at the Federal Reserve Bank of St. Louis. He spoke frankly about the fact that the Great Recession wiped out all of the assets that the bottom 40% of American households (by net worth) had built in the previous twenty-five years. Houses, college and retirement savings evaporated in the crisis. As Boshara said—and has discussed in detail elsewhere—it was more than two decades of asset building advocacy and work swiftly and unceremoniously undone. From this point of Boshara’s speech forward, the tone of the event became decidedly more upbeat.

The next speaker, Deputy Assistant Attorney General for the Civil Rights Division Roy Austin, described how asset building is a priority of the Obama administration. He discussed a series of programs meant to improve the average American’s financial security. The most exciting of these was the MyRA program. This innovative program will be government-guaranteed no-fees retirement savings program for Americans earning less than $129,000 a year. It promises to be a safe, easy and accessible way for people to save for their futures. Austin’s announcement and description of the program was met with applause from the crowd.

The session concluded with a panel of several former and current Federal appointees in three separate government departments. Panelists were Elsie Meeks, State Director from South Dakota for the United States Department of Agriculture’s Rural Development program, Martha J. Kanter, Under Secretary of the Department of Education from 2009 to 20013 and Michelle Greene, the former Deputy Assistant Secretary for Financial Education and Financial Access at the Treasury Department. Lisa Mensah, who was recently appointed to be the Under Secretary for Rural Development at the Department of Agriculture, moderated the discussions.

The clear message was that the executive branch of Federal government supports asset building efforts. There is money and a willingness to help. What is needed to tap these resources is local enthusiasm and constituents’ insistence that programs be started and funded. This community-based drive can break the red tape and remind government that, as Greene said, “In a resource scarce environment, asset building has a return on investment.” This positive concluding message was clearly meant to electrify and encourage conference attendees—and it did.

It is not only necessary to recap and respond to what was said in the Thursday morning plenary session, but to also draw attention to who said it. The majority of the leaders in asset building who spoke are women. After opening comments from the director of the conference and president of CFED (both women), there was video message from Yellen, the first female Chair of the Board of Governors of the Federal Reserve System. The closing session featured four women who have held or will soon hold powerful leadership positions in federal government.

It is appropriate to invoke one of keynote speaker Gloria Steinem’s many famous quips: “Some of us [women] have become the men we wanted to marry.” This session—like the conference in general—is I think not just a strong testament to the growth of the recognition of the importance of asset building, but evidence of the growth of female leadership. In this way, Steinem—someone dedicated to equality between the genders, but also economic equality generally—was the perfect choice of keynote speaker for the following day’s closing plenary.

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CFED Supports Expanding FSS Program at No Cost in 2015 Budget

By Alicia Atkinson on 09/30/2014 @ 06:00 PM

Tags: Federal Policy, Policy Alerts, Housing and Homeownership

Last week, CFED joined with 11 other national asset building and affordable housing organizations in asking Shaun Donovan, Director of the Office of Management and Budget (OMB), to support the expansion of the Family Self-Sufficiency (FSS) program to more families at no cost to the federal government.

CFED is longtime supporter of the FSS program, which provides families that receive federal rental assistance a powerful opportunity to achieve their financial goals and reduce their reliance on public assistance. It combines three services:

  1. Stable affordable housing;
  2. Case management to help families access services needed to pursue employment and achieve other financial goals; and
  3. A savings account that grows as a families’ earnings increase over a five year period.

Over 69,000 households currently participate in FSS. In the Housing Choice Voucher FSS program, 56% of continuing participants have positive escrow balances due to increased earnings. The average escrow at graduation for those with a positive balance is $6,000. Many participants use this money as a downpayment on a house or to help pay for continuing education for themselves or their children.

Despite the FSS program’s well-conceived design and documented success in moving families off public benefits, it currently does not allow families who are in Section 8 Project-Based Rental Assistance (PBRA) to participate. PBRA provides housing to more than 2 million people, a significant proportion of the approximately 10 million people receiving federal rental assistance.

The Senate’s FY 2015 Appropriations bill for Transportation and Housing and Urban Development (S. 2438) would enable PBRA assisted housing residents to participate in FSS, and a similar provision was included in the President’s fiscal year 2015 budget. CFED, as well as other low-income housing organizations and advocates, have asked Director Donovan to support the expansion of FSS eligibility to PBRA as he and Congressional leaders negotiate an agreement to fund the federal government in the next fiscal year.

See full letter here.

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Thrift in Early 20th-Century America and Today

By Andrew Yarrow on 09/29/2014 @ 10:30 AM

Tags: Just For Fun

The United States is not a thrifty nation and “thrift” is often seen as an antiquated value in a society in which consumption is encouraged and most Americans either don’t or can’t save money. But that was not always the case. In early 20th-century America, thrift was the rallying cry for many civic, professional, business, and other organizations and was enthusiastically embraced by millions.

The YMCA, teachers, the banking industry, government, temperance advocates, anti-poverty activists, every President from Teddy Roosevelt to Herbert Hoover, and many other strange bedfellows played central roles in defining and promoting thrift. The movement’s many components and its philosophy were presented in books, pamphlets, juvenile and adult short fiction, posters, cartoons, and even silent films. Thrift was taught in schools and factories. This virtue was described and promoted during the annual National Thrift Week that was kicked off each January 17 on Benjamin Franklin’s birthday, from Gotham to small-town America.

Thrift represented a quest for control over an array of roiling social problems. Profligacy and waste threatened lives, businesses, the environment, and the country’s strength; poverty was a daily threat to the well-being of millions; and consumer society threatened values of restraint and modesty. These threats galvanized different people and groups with different concerns and agendas. For a time, they united under the banner of thrift, using a common language to respond to disparate problems.

Fast-forward from the 1920s to 2014: Although the United States is by many measures the world’s wealthiest country, the median assets of an American adult, about $53,000, are below those of 15 other countries. Our national savings rate, which stayed above 10 percent into the early 1980s, plummeted to zero in 2005, only to regain a little ground since the Great Recession. Still, the 2013 savings rate of less than 4 percent is a far cry from what individuals or the nation needs for economic health and is only a tiny fraction of what early 20th-century thrift advocates proposed. But even these alarming aggregate statistics dramatically understate the problem. Well-to-do Americans are doing just fine when it comes to saving, building up substantial fortunes in securities, real estate, and other investments. Since the savings rate is an average, the healthy savings of the affluent are counterbalanced by a vast swath of the population with minimal savings and a similarly vast swath who have no savings and are, in fact, mired in debt.

We live in a society in which too many who can save don’t, and too many simply don’t earn sufficient income to be able to save. Without savings, we are less able to take care of future needs, less able to provide the next generation with a down payment on a good life, and less able to help others in need. While the United States remains an attractive destination for foreign investment, our own people’s lack of savings diminishes the pool of funds available for investment in current needs or new ideas, products, or businesses. Without private savings, there is less money available for the private and public investments necessary for a flourishing economy. Private saving is the major source of funding for investments that enhance productivity and, in turn, raise real wages and living standards.

The numbers are grim. Many upper-middle-class Americans have frighteningly little in the way of savings, but much of America’s savings crisis stems not from either rampant consumerism or individual character flaws but from the extraordinary degree of socioeconomic inequality that has developed in the United States since the 1970s. The average net worth of the top 1 percent of households is about $16.4 million, whereas the poorest 20 percent of the population had negative net worth averaging -$27,000 and the second poorest quintile had average net worth of just $5,500 in 2010. Approximately one-fourth of Americans are in debt and have no savings.

Although the early 20th-century thrift movement waned in the 1930s, do many of its ideas have relevance in the 21st century? Does an idea predicated on wise resource use have new meaning today, at a time of high public and private debt, when the economy is floundering, the middle class is strapped, the Earth faces environmental threats, and profligacy and waste seem more widespread than ever? Can a new iteration of thrift, recalibrated to contemporary social realities, illuminate a path to a better future?

Andrew L. Yarrow, a historian, public-policy professional, and former New York Times reporter, is the author of the forthcoming book, “Thrift: The History of an American Cultural Movement.” For more information on the book, to be published this winter, visit Amazon.

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Asset Building News Round Up - September 26, 2014

By Paul Day on 09/26/2014 @ 01:00 PM

Tags: News

Events

Financial Literacy Leadership Conference
September 29-30, 2014

Hilton Crystal City Hotel, Arlington, VA
Theme: Financial Literacy – Research, Techniques and Initiatives

Grantwriting Made Easy
October 10, 2014, 9:00 AM – 12:00 PM

1776 // Boardroom, Washington, D.C.
Have you always wanted to get grants, but don’t know how to get started? Been interested in opportunities, but intimidated by all the jargon? Then this workshop is for you.

News

The Washington Post reports that the widening gap between the wealthiest Americans and everyone else has been matched by a slowdown in state tax revenue, according to a report being released Monday by Standard & Poor’s.

According to a recent survey, median retirement nest eggs among employed adults of all ages either doubled or tripled between 2007 and 2014. The increase in retirement savings can be credited, in part, to a booming stock market and increased awareness of the need to save. Read more here.

Every kindergartner in Nevada public schools now has a college savings account with a $50 balance. The Nevada state treasurer’s office opened these 35,000 accounts and made the $1.8 million in deposits using no taxpayer money, repeating what it did last year for that kindergarten class of about the same size. Read more here.

In this latest issue of Community Investments by the Federal Reserve Bank of San Francisco, CFED’s Andrea Levere, Solana Rice and Doug Ryan, among others, detail the traditional role of homeownership in building overall wealth, explain why LMI households and households of color found themselves particularly vulnerable to loss during the recession and discuss why it is critical to restore and support affordable and sustainable homeownership options for LMI households.

From the Assets & Opportunity Network

From the San Francisco Assets & Opportunity Network:
Mission Asset Fund is holding a SB 896 Policy Briefing webinar on Monday, September 29 at 10:00 AM PST. MAF’s CEO, Jose Quinonez, will lead the discussion on the historic passing of California’s SB 896 from its initial conception to finally becoming law on August 15th, 2014. Read more here.

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Building the Children’s Savings Movement: Interviews with CSA Leaders

By Paul Day on 09/25/2014 @ 04:00 PM

Tags: ALC 2014, 1:1 Fund, Children's Savings Accounts

Last week at the Assets Learning Conference, I had a chance to sit down with leaders from the children’s savings movement to discuss why their work is so important. Below is my interview with three of these leaders: Ilana Zimmerman (Director of Financial Empowerment Initiatives, Children's Aid Society), Annie Liu (Outreach Coordinator, Kindergarten to College) and Eugena Oh (Legal Counsel, “I Have A Dream” Foundation). These organizations are partnered with the 1:1 Fund, which raises matching funds to ensure that kids’ college dreams are paired with savings in the bank.

1) What inspires you in your work?

Ilana (CAS): I'm inspired by the way students rally their friends, family and their communities to invest in their college savings accounts. For example, I’m inspired when they ask for family members to invest as a birthday present or as a gift for the holidays. Also, I'm inspired when community leaders talk to our students and demonstrate confidence in their ability to go to college, whether it’s Justin Tuck (a football player), Citibank executives or the Deputy Mayor. I think both the financial investment and demonstration of confidence by really successful role models has been very impactful.

Annie (K2C): The program's direct impact on parents and children inspires me. For example, after teaching a financial literacy lesson to students, the kids were coming up and saying, “Wow, I'm so excited to go to college! It's going to be so much fun to save,” and it was great having them get so excited about saving at a young age. I have parents come up to me and say “I love that with K2C I can't touch the money until my child goes to college so I know I have to save.”

Eugena (IHDF): Our more traditional program with its long-term wraparound services has been very impactful and really inspiring. Because we've been around for 33 years, we have good data that says this program has helped break the cycle of poverty not only for our dreamers, but for their children who are sometimes more financially capable and stable than their parents were since they are the first in their families to go to college.

2) What are the challenges you face in your programs?

Ilana: While it's exciting to work in this new and innovative field, it's also challenging because we as the practitioners are learning alongside the financial partner. It's been a great experience for both sides, but it's challenging and we have to learn as we go – whether it's setting up families with direct deposits for the first time or getting them acquainted with online banking platforms.

Annie: We're the first universal college savings program, so the challenge is getting the word out, “Hey you already have a college savings account, and the City of San Francisco has put $50 in and there are these matches and incentives.” So it's really helping people understand the program and that it's really meant to support them and that it's free and that it has so many benefits to their child's future.

Eugena: There are two main challenges: One challenge is around funding and fund raising and trying to attract more private donors to this space and articulate the value to private donors in a way that's compelling. Another challenge is growing our program and trying to scale it in a thoughtful way.

3) How do parents make your programs successful - and how have you helped them successfully save?

Ilana: I think the parents who have been the most engaged are the ones who share their children's aspirations for going to college. We had one parent who was working as a home health aid and she had direct deposits on 5 separate paychecks – and that was a sizable amount. We worked with her as she and she ultimately decided to keep the direct deposit coming out of all the paychecks because she said, “I have one child and I really want her to go to college. I've managed to make this work for the past couple months and I'm going to keep doing it.” That was a huge success when a parent said, “I can save this amount of money.”

Annie: I think what's made it easy for families to start saving is the fact we automatically open the accounts with $50 and it's easy for the families because they don't have to navigate a bunch of options. I think we've helped parents set more realistic goals. For example, if you put $10 into your account each month, imagine what you could save over 12 years? We're showing families they can also pay for the hidden costs of college, including books, transportation, ect. - it can really help pay for those other costs.

Eugena: One story that really sticks out is a parent who was extremely enthusiastic about the program who had opened up a 529 plan for her older high schooler who was not part of our program. She asked if she could use our curriculum to make her son understand that even though she had been ahead of the game and saving for his education, he had a responsibility to do certain things to make good on that money that was waiting for him. That really struck a chord with me and made me feel we were doing something of good value.

4) I'm a parent and I want to save for college. What advice would you give?

Ilana: It's about sitting down, doing the research and finding someone to talk to that you can trust who can point you in the right direction.

Annie: I think it's telling parents that a little bit goes a long way and starting to think early and getting kids excited at a young age so that they do want to study hard and thinking about their futures.

Eugena: It's important to stress the message of starting early, but also that it's never too late. So if you have a child that's in the 9th grade, it's not too late to save. Also, stressing the concept of incrementality – that they just need to put away a little bit of money and it will add up. I think that sticker price on a college's website is so overwhelming and it can seem just daunting and impossible, but if they put just a $10 a month, it can really make a difference.

5) What value does the 1:1 Fund bring to your work?

Ilana: The 1:1 Fund really helps unite us as a movement. We're programs that are trying to connect with younger donors who are really trying to figure out what their giving looks like. This has been a great partnership for us.

Annie: The 1:1 Fund plays a key impact by raising money for the matching bonuses. For a lot of the families I work with, the reason they start saving is for those bonuses. The impact of that is just so wonderful because it really gets them thinking about their children's futures.

Eugena: The 1:1 Fund plays a key role in helping us build this national movement in children's savings. It's great to share best practices and talk to other people who are actually implementing programs and understanding their challenges to learn from each other. From a very practical standpoint, the 1:1 Fund has provided us with an online tool that seems pretty simple but it was not something we were ready to take on as a relatively small nonprofit and that has provided so much value to us.

About the Programs

Learn more about how these 1:1 Fund partners support kids’ college dreams.

About the Children’s Aid Society’s CSA Program (New York City)
As part of its commitment to helping more children break the cycle of poverty through college attainment, CAS has designed the College Savers Program in partnership with Citibank, ideas42, and CFED, and with initial support from Justin and Lauren Tuck’s R.U.S.H. for Literacy.

136 children, including 1st and 2nd graders in CAS’s College Prep Charter School and youth participating in CAS’s African American Male Initiative, participated in the initial pilot year. In 2014, Children’s Aid will enroll 225 new CAS College Savers -- expanding the program from 136 to 360 college savings accounts. Over the course of the school year, students will have the opportunity to earn a 2:1 match for the first $100 they contribute to their accounts. That’s a $200 match for every saver who contributes at least $100. Newly enrolled CAS College Savers will also receive a $25 account opening gift.

About Kindergarten to College (San Francisco)
Founded in 2010, Kindergarten to College (K2C) is the first publicly funded, universal children’s college savings account program in the United States. Through K2C, every child entering kindergarten in San Francisco’s public schools automatically receives a Children’s Savings Account (CSA) at Citibank, containing a $50 deposit from the City and County of San Francisco. Children enrolled in the national free and reduced-price lunch program receive an additional $50 deposit. To date, over 13,000 students participate in K2C, and K2C families have saved more than $730,000 of their own money towards college.

About the “I Have A Dream” Foundation (Nationwide)
Since 1981, the “I Have A Dream” Foundation has been working to expand opportunities for children in low-income communities, with a focus on increasing access to higher education. “I Have A Dream” sponsors entire grade levels of students starting no later than third grade, and supports them after school, on weekends, and during the summer as they work toward high school graduation. Upon high school graduation, each “Dreamer” receives guaranteed tuition assistance for higher education. The Foundation recently launched a new College Savings Account (CSA) initiative aimed at tying programmatic activities on the path to college with dollars for post-secondary education. “I Have a Dream” currently has College Savings Account programs in Portland, Oregon and New York, New York with plans to expand over the next few years.

Visit the 1:1 Fund web page to learn more and to invest in their life changing programs!

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How Crowdfunding Expands and Enriches Communities

By Diana Greenwald on 09/23/2014 @ 02:00 PM

Tags: Innovation, ALC 2014

In 1990, the University of Chicago economist Robert Lucas published the article “Why Doesn’t Capital Flow from Rich to Poor Countries?” in the American Economic Review. In what has since been dubbed the “Lucas Paradox,” Lucas observed that, according to neoclassical economic theory, capital should flow from rich countries with diminishing returns on investment to poor countries where capital is scare and should have high return on investment. In reality, this does not happen—that is why it is a “paradox.” Rich countries invest in rich countries, and poor countries stay poor. Why is this the case? There are a number of explanations, but one of the most common and compelling is that investments in poor countries are riskier than those in rich ones. Because of unstable government, weak institutions and uneven past debt repayment, it is riskier to invest in a poor place than a rich one.

While Lucas deals only with lending and investment between countries, there are analogues to his paradox on the individual level. Lending to capital poor people or businesses (like poor countries) is risker than lending to capital rich ones. Poor people have less or no collateral and potentially uneven credit histories. To make capital flow from rich to poor—whether it is from rich country to poor country or rich person to poor person—we need to decrease the risk of lending. Enter the idea of crowdfunding, a topic discussed at the 2014 Assets Learning Conference in the session “Crowdfunding and Community Development”. In a crowdfunding model, risk is spread among hundreds of lenders of small amounts of money who are not counting on a particular percentage—or even any—return on investment.

While a bank looking to loan has a clear set of criteria that must be satisfied in order to authorize lending, a successful crowdfunding campaign demands the ability to appeal to the amorphous expectations distant online lenders’ hearts and wallets. The speakers at the workshop attempted to define and discuss these expectations. The goal of the session was not to debate the success of crowdfunding as part of the global micro-lending and fundraising universe, but rather to show the gathered asset-building professionals how to use crowdfunding for their own organizations and those organizations’ beneficiaries.

The most general and perhaps comprehensive guidance came from Michael Gale of the crowdfunding platform GlobalGiving. He used an acronym—SMART—to describe what the goals of every crowdfunding campaign should be: specific, measurable, realistic, and time-bound. An insistence on having a clear and succinct campaign pitch was a recurrent theme in the speakers’ talks. A compelling but quick story as to why an individual or an organization needs funds is essential to a successful campaign.

It is not, however, all about the narrative. Jonny Price of Kiva Zip pointed out that choosing the right photograph—a colorful shot of the borrower engaging in the business or charitable activity that he or she is raising funds for—is essential.  This emphasis on the choice of photograph is not dissimilar from conclusions that the staff at online dating sight OkCupid have discussed in their fascinating blog OkTrends. Whether it is finding a lender or finding a partner, the ability to market oneself visually is essential for any online interaction.

Crowdfunding platforms are designed to raise funds from individuals around the world. For example, Price showed a map of Kiva Zip donors to a single campaign that stretched from Australia, to China and to Alaska. Though this geographic breadth of financial contribution is impressive, all of the speakers emphasized the continued importance of in-person communities. Whether it was for kicking off a campaign with a strong start or ensuring that a funded project succeeds, crowdfunding cannot replace engagement with real human communities—it can just expand and potentially enrich those communities, just as speaker Chris Avila Hübschmann’s crowdfunded initiatives at Credit Do have.

Exactly how much is crowdfunding able to expand and enrich communities? The answer to this question is not clear. One attendee representing a larger organization asked (approximately): is there anyway to increase the scale of the giving? $10,000 is a lot of money, but for some organizations it is not enough to justify the work that has to go into a successful campaign. This question brings back the Lucas Paradox. If the strength of crowdfunding is the ability to spread risk by recruiting hundreds of people giving small amounts, will those small amounts ever add up to enough capital to make a lasting and permanent change to borrowers and their communities? On this relatively new financial frontier, only time will tell.

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