And the innovators are...
By Melissa Grober-Morrow on 10/30/2014 @ 03:00 PM
CFED is pleased to announce the winners of the “Out of the Classroom: Fresh Ideas for Financial Capability” contest. More than 8,000 votes were cast and the following winners emerged from your votes:
- Alternatives Federal Credit Union (Ithaca, NY)
- Center for Financial Empowerment (Irwindale, CA)
- City of Lansing (Lansing, MI)
- District 7 Human Resources Development Council (Billings, MT)
- Economic Awareness Council (Chicago, IL)
- Family Housing Advisory Services, Inc. (Omaha, NE)
- Neighborhood Economic Development Agency (St. Paul, MN)
- Neighborhood Housing Services of Greater Cleveland (Cleveland, OH)
- Prepare + Prosper (St. Paul, MN)
- Pullias Center for Higher Education (Los Angeles, CA)
These 10 organizations were selected from among 180 applicants for their innovative approaches to expanding financial capability. A few of them are experimenting with intergenerational learning and experiential learning approaches; some are tweaking their Volunteer Income Tax Assistance (VITA) models; still others are focused on credit building and savings innovations. We hope the financial capability and asset-building field will benefit by learning about these organizations’ approaches and findings.
Join us in congratulating these 10 outstanding organizations, and be on the lookout for blog posts from them in the coming months as they share their innovations and practices with the field. Thank you for voting!
CFED extends its gratitude to MetLife Foundation for making the Out of the Classroom contest possible.
Rising Student Debt Undermines Academic Success and Financial Security
By Alexander Scarlis on 10/29/2014 @ 03:00 PM
All parents want a college education for their children and for good reason: it offers the best chance at reaching the middle class and beyond. But as college costs continue to rise and a record one in five households carry outstanding student loans, postsecondary education debt threatens to undermine the asset-building potential of America’s households.
Soaring college costs limit students’ academic opportunities by narrowing their choice of schools and even leading some to rethink going to college. In fact, two-thirds of families have eliminated some college choices due to cost, says Sallie Mae in its 2014 survey of college students and their parents.
CFED’s new Fact File, “Rising student debt undermines academic success and financial security ,” highlights how high-levels of student debt impact the financial security of households.
Here are some more shocking statistics:
FACT: Of the students who make it all the way through to earn their degree, almost 2 in 3 take on student loan debt, a decision fraught with potentially serious financial consequences.
FACT: Almost half of 18-34 year-olds without degrees say they aren’t in college because they can’t afford it.
FACT: Almost one-third of those who drop out of college in their first year report leaving for financial reasons.
FACT: Student debt equals almost one quarter of income for households earning less than $21, 044 (those in the bottom fifth of earners), a higher share than any other income group.
To learn more check out our latest Fact File on how student debt threatens young people’s financial futures.
Reflections on the Field Part III: Issues to Figure Out Together
By Jennifer Brooks on 10/28/2014 @ 05:00 PM
Part I of this blog series focused on the results of a field survey conducted prior to the Assets Learning Conference. Part II focused on how the Assets & Opportunity Network and “CFED proper” planned to respond to a few clear mandates that came from the survey results. This final blog post focuses on some of the survey results that are more challenging. We need to figure out how to respond together.
Survey result: Increase resources in the field
“Everything is about funding.”
Is everything about funding? I think yes and no. Cash keeps the doors open, but less tangible resources—like hands-on tools, connection to peers, capacity-building opportunities—increase our effectiveness. Arguing the importance of one over the other doesn’t feel like a particularly useful exercise. Both are critical.
Certainly, there are things that the field is already doing that we should do more of to make resources go farther. For example, we should continue the trend of working “smarter” through collaboration with other nonprofits. Making government-funded anti-poverty programs more effective through integrated service delivery is another must. But how can we increase philanthropic support for these strategies and engage private sector employers in delivering services?
The Assets & Opportunity Network and “CFED proper” commit to continuing to expand capacity-building resources and to working with all of you to find creative ways to increase the dollars available to deliver services, advocate and build networks. I don’t think there are any silver bullets, but here are three things I think we should try:
- Educate funders nationally about asset-building and make direct connections to local groups.
- Build Network Member capacity to be more effective fundraisers.
- Think creatively about ways to leverage the national funding we have to attract additional local and regional resources.
What are your ideas?
Survey result: Lift up and engage those who are living in asset-poverty
“The more success we have at the very grassroots level—the people most in need—the more potential there is to turn this into a local, then statewide and then national movement.”
The Assets & Opportunity Network (and the larger assets field) is diverse—we have researchers, financial institutions, funders, governments, advocates and direct service providers, among others in our ranks. But that diversity, by and large, does not include people who directly experience asset poverty.
Most Network Members are at least one step removed from financial insecurity and asset poverty, and some are many more steps removed than that. The Network includes a preponderance of service providers, and very few community organizers. There is nothing wrong with that per se, and in fact, I think we ought to embrace that identity. However, the dangers are that we end up speaking for people living in asset poverty rather than with them, our strategies can be disconnected from the reality of their lives, and we miss opportunities to raise awareness when the New York Times calls and we haven’t engaged community spokespeople who want to tell their stories.
What do we do about this? I have three ideas.
- Expand partnerships with Network Allies. At the Assets Learning Conference, we announced a new way to partner with the A&O Network: national organizations with affiliate networks can now sign on as Network Allies. Many of the initial Allies—including NAACP and NCLR—have local affiliates focused on communities of color, who are often the very people living in asset poverty. The intention of these partnerships is to align efforts and bring the voice of underrepresented groups into the assets movement.
- Prepare community members become leaders. During the open mic part of the ALC closing plenary, one speaker lifted up an idea that seems to be in the zeitgeist: Could we design a national leadership development program to increase the direct participation of people who are living in asset poverty? I like the idea, along with variants that are more local and/or less time intensive. What are your reactions?
- Encourage service providers to embrace their role as advocates. What if we did more to empower service providers (and those who participate in their programs) to engage in systems-change work? In addition to the amazing work that providers do day to day, how could we help them also focus “up stream”? Stories of service providers—who can share their experiences of working with dozens of individuals—can be incredibly powerful with policymakers. Thoughts on how we do this?
Survey result: The top service sought in the past year was affordable housing
“People are living paycheck to paycheck often utilizing payday lenders to make ends meet.”
Although individual responses to the ALC survey highlighted different aspects of the problem of affordable housing—from homelessness, to low rental vacancy rates and high cost of living, to great distances from jobs in rural areas—it is clearly a big issue for service providers. It makes perfect sense that you’re not going to get someone to focus on financial education (let alone on saving for retirement), until their more urgent needs are met. So, what do we—as the “assets field”—do?
The obvious move is to build more alliances with those in the affordable housing field—both nationally and in communities. The I’M HOME network, which CFED coordinates, is working on building bridges in the context of our manufactured housing. But, there are many more untapped relationships we should explore.
However, more fundamentally, to address affordable housing issues and to create a unified voice loud enough to make systemic change, we need to step up our commitment to working shoulder to shoulder with other advocates. That includes advocates for affordable housing, but also for living wage jobs, for an education system that works for all, for racial equity, for investment in public programs and for all of the other facets of economic justice.
How do we do that? To quote Gloria Steinem (who I am still so sad couldn’t make it to the ALC), “It’s not rocket science. We need to worry less about doing what is most important, and more about doing whatever we can. And remember, the end doesn’t justify the means; the means are the ends.”
Asset Building News Round Up: October 24, 2014
By Paul Day on 10/24/2014 @ 12:15 PM
Raising the Bar: Transforming Communities with Capital and Leadership
November 4 - 6, 2014, Marriott Marquis, Dallas, TX
This is a first of its kind training opportunity designed for nonprofit practitioners who work to build financial capacity and community assets in low and moderate income Latino and immigrant communities.
New research from the real estate website Trulia finds that homeownership is less expensive than renting in all of the country’s 100 largest metropolitan areas. The advantage narrows considerably, however, when the home buyer uses a low-down-payment loan insured by the Federal Housing Administration. Read more here.
A new survey of college savings plans known as 529 plans rated Nevada’s at the top of the heap, along with plans available to residents of Alaska, Maryland and Utah. The survey said those four states offer plans with the best potential investment options — and analysts singled out Nevada’s plan because its size helps reduce consumer fees through economies of scale. Read more here.
Middle-class people in the USA have a median of $20,000 saved for retirement, far short of the $250,000 they think they'll need during that time of their lives, a new survey shows. A third (34%) of working middle-class adults aren't contributing anything to a 401(k), IRA or other retirement savings plan, according to the survey of 1,001 adults, ages 25 to 75, with a median household income of $63,000. The survey was conducted by Harris Poll for Wells Fargo (WFC). Read more here.
A new report from the Consumer Financial Protection Bureau (CFPB) summarizes complaints from private student loan borrowers about difficulties faced when working with a lender or servicer to avoid default. They also have steps you can take to get valuable information on repayment options to reduce your monthly payment or to temporarily postpone making payments. Read more here.
From the Assets & Opportunity Network
From the Financial Stability Partnership of Northern Nevada: More than 70,000 Nevada public school kindergarten and 1st grade students now have a college savings account thanks to the continuation of the Nevada College Kick Start Program. Starting in 2013, the College Kick Start Program has deposited $50 into an account in the name of each Nevada public school 2013-15 kindergarten student to help them save for college. Read more here.
From Southern Bancorp Community Partners: As a Community Development Financial Institution (CDFI), Southern seeks to support efforts focused on housing availability and accessibility for low- and moderate-income families in both Arkansas and Mississippi. We do so because of our belief that affordable housing is paramount to financial stability and strongly correlated to an individual’s ability to save money and achieve economic independence. Read more here.
Building the Connecticut Asset Building Collaborative
By Fran Rosebush and Roger Senserrich on 10/23/2014 @ 11:00 AM
Last year, the Connecticut Association for Human Services (CAHS) and a group of service providers, advocates and state agencies decided to launch the Connecticut Asset Building Collaborative (CABC) in order to collectively focus our energy and ideas to bring efforts in Connecticut to the next level. There were already several promising initiatives focused on financial education, budget coaching and asset building in the state, and we believed forming a collaborative would allow us to better align our efforts.
The group of organizations involved in the launch of the Connecticut Asset Building Collaborative chose to apply to the Assets & Opportunity Network Technical Assistance (TA) Fund for guidance on creating a vision and strategic plan for the collaborative. Thanks to the support through the TA Fund, the CABC was able to conduct a focused, inclusive strategic planning process, translating the energy and enthusiasm from groups at the table into a clear, well-defined theory of change with a vision statement, defined goals, and activities that we believe will allow us to achieve those goals. Our coalition-building efforts are much more intentional and focused than they would have been without the assistance. The CABC is stronger, and more effective, thanks to the work of our many partners over the course of these past few months.
Developing a Theory of Change for a Stronger Connecticut Asset Building Collaborative
After the initial group of service provider, advocates and state agencies decided to launch the CABC last year, we decided to take a first step and coordinate the first-ever Connecticut asset-building convening. The event was extraordinarily well attended, with more than 100 participants, and served as the true launch pad for our CABC efforts.
Of course, the road wasn’t always smooth when we first launched. The first bump we faced was the need to set a vision for the future of the Collaborative and identify the big picture goals of what we wanted to achieve together. What we knew was that we had a group of interested organizations, we had great energy, and there was a clear need from groups to both develop new programs and improve existing efforts. If we wanted to build on this energy, while successfully advocating for asset-building programs and policies, it was time to develop a plan. To do so, we applied to the Assets & Opportunity Network Technical Assistance Fund, supported by JPMorgan Chase, in order to tap CFED’s expertise in convening partnerships that drive asset-building initiatives forward.
CFED staff worked with CABC steering committee members to define a broad strategic plan. Using our current work as a starting point, it helped us map a path forward with collaboratively identified vision, goals and activities for CABC. CFED’s staff connected with all member organizations of the still-informal CABC steering committee individually, as well as the group as a whole, to discuss our objectives and expectations regarding the CABC. They worked closely with the CABC leaders to evaluate the needs and gaps and assess what competencies we should seek to build into the group as a whole.
After these extensive preliminary discussions and research, CFED’s staff came to Hartford, Connecticut, for a day-long workshop with the CABC steering committee. The main items on the agenda were drafting a theory of change and, from there, defining which activities and strategies CABC would need to advance the change we theorized. In addition, the group discussed how to organize the CABC, including forming a formal steering committee and workgroups, defining membership arrangements and drafting a membership plan. The session was conducted in a collaborative, organic way, with members proposing objectives, goals and tasks while CFED’s team facilitated the discussion and built a framework for the theory of change as they guided the group.
After the meeting, CFED’s staff produced a more fleshed-out theory of change, which contains a vision statement, goals/outcomes, and the activities the collaborative believes will help achieve those outcomes. They proactively gathered feedback on their proposals, keeping a fluid dialogue with all CABC partners in a dynamic, inclusive process.
Thanks to the support from the Technical Assistance Fund, the CABC was able to conduct a focused, inclusive strategic planning process, translating the energy and enthusiasm into a clear, well-defined theory of change. Our coalition-building efforts were much more intentional than they would have been without the CFED’s assistance. The CABC is stronger, and more effective, thanks to the work of our many partners over the course of these past few months.
Technical assistance from CFED to the Connecticut Asset Building Collaborative was made possible thanks to generous support from JPMorgan Chase for the Assets & Opportunity Network Technical Assistance Fund.
Also in this Series
An Asset Advocate’s Guide to the Exciting World of Tax Reform
By Ezra Levin on 10/22/2014 @ 02:00 PM
Last month, CFED released its report on wealth inequality and the upside-down tax code. In case 45 pages of tax policy analysis doesn’t excite you as much as it does me, I want to point you to our 3-page Federal Policy Brief, which summarizes the key points from that report. We want this guide to be useful to advocates on the ground, because reforming these asset-building tax programs is an enormous opportunity for the asset-building field.
If you’re an advocate who works on housing for low-income communities, how many times have you heard from policymakers that there’s just not enough money to expand this lending program or that down payment assistance program? Well, the federal government is spending nearly $100 billion on just two homeownership tax programs every year—and the low- and moderate-income clients and communities you serve are getting little or no support.
Or maybe you work on higher education? Or retirement security? Or savings and financial security more broadly? The story is the same for your issues too. All told, the federal government spent $542 billion last year on asset-building tax programs. The vast majority of this spending goes to those at the very top of the income spectrum.
It’s worth pausing on that number for a minute: $542 billion. When you think of the big “welfare” programs, what do you think of? Medicaid? About $265 billion last year. Food Stamps (SNAP)? That cost $76 billion. Section 8 vouchers? $18 billion. TANF? $17 billion. Bottom line: traditional social service spending pales in comparison to spending on asset-building tax programs.
If the thought of tax policy makes your eyes glaze over, don’t think of it as tax policy. Think of it as asset-building policy, because that’s what it is. The way the federal government boost assets is, as a rule, not through grant programs like Assets for Independence (AFI), which cost about $19 million last year. Laudable though these asset-building grant programs are, they are microscopic in comparison to asset-building tax programs. Multiply AFI by 28,000 and you approach what we spend on asset-building tax programs. In short, when the federal government wants to boost assets for Americans, it does so through the tax code; and it does so primarily for the wealthiest Americans. That’s Upside Down.
So if you’re looking for big federal policy reforms to get more low- and moderate-income folks into homes, look at making the tax programs more equitable. If you want to get more students into higher education, check the tax programs. If you want to expand retirement security, reform the tax programs. Or if you simply want to expand savings and wealth more broadly for low- and moderate-income Americans, take a look at the tax programs. That’s what this Federal Policy Brief and the full report do. The asset-building programs and funding are there, but they’re just not serving the families and communities who need it the most. Let’s change that.
Reflections on the Field and What We Should Do Together Part II: A Few Clear Mandates
By Jennifer Brooks on 10/21/2014 @ 12:00 PM
The first blog post in this series focused on results from a survey of Assets Learning Conference participants (and those who couldn’t make it) that asked about trends in communities across the country, as well as organizational needs and perspectives on what is most important for us to focus on together. The big takeaways were:
- The demand for services has increased across the country; financial capability, debt and credit issues are inextricably linked to high housing costs and low wages.
- To meet demand, not only is more funding is needed, but the field also needs best practices research, connection to others doing similar work, case-making data, and online and peer learning opportunities.
- The most important issues to focus on together are increasing the resources in the field, lifting up the experiences and engaging those who are living in asset poverty, and coordinated federal policy advocacy.
Some of the responses show clear trends and provide a mandate for specific kinds of collective action; however, others raise important issues that we need to figure out how to address together. While CFED, as the backbone organization for the Assets & Opportunity Network, doesn’t have any silver bullets in our bandoleer, we do feel an obligation to respond in ways that will move our field and our movement forward.
This blog post focuses on where we see some clear mandates. Part III of this series will focus what we need to grapple with together.
A few clear mandates …
Connect Network members to others doing similar work
“We need to be connected with models that work and shown how to make it happen ourselves.”
One raison d’être of the Assets & Opportunity Network is to connect and organize the assets field. The newly launched Network Experts Directory, which lets you find Network leaders by their area of expertise or geography, is a new way to find others doing similar work. Other ways to connect are through learning groups, “virtual coffees,” affinity groups and more. Check out the Network Learning Community for more information. What more should we be doing? Your ideas are always welcome.
Provide case-making data
“We need solid data that is localized to demonstrate need to funders.”
The demand for local data is not new, but our ability to meet that demand is. To complement state-level data in the Assets & Opportunity Scorecard that CFED produces annually, we launched a new tool at the ALC called the Assets & Opportunity Local Data Center. It provides city- and county-level data on asset poverty, liquid asset poverty, unbanked and underbanked rates.
Offer online and peer learning opportunities
“I want to hear from other organizations that have tread this path before.”
In addition to the learning groups mentioned above, the Network will continue to develop virtual and peer learning opportunities on topics that are relevant to you, such as credit building and logic models. What are your ideas for online and peer learning opportunities?
Coordinate advocacy efforts
The survey results affirmed that we’re headed in the right direction with our advocacy coordination efforts. Now we need to do more. The Network’s Federal Policy Working Group is drafting a policy agenda for the 114th Congress that will guide the Network’s advocacy efforts for the next two years. Be on the lookout for your opportunity to weigh in. At the state level, a learning group on children’s savings policy advocacy kicks off this month. Is there a state or local policy issue that you think is ripe for a learning group? Share it here.
With clear mandates, the job is to just dive in and do the work. However, some of the issues raised in the survey of the field—funding for the field, affordable housing and engaging people living in poverty in our movement—are ones we need to address together. Part III in this series will focus on those gnarly questions.
Manufactured Housing as a Bridge Over the Affordability Gap
By Doug Ryan on 10/20/2014 @ 03:00 PM
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.
Asset Building News Round Up: October 17, 2014
By Paul Day on 10/17/2014 @ 01:30 PM
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.
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.
New Northwest Area Foundation Initiative Promotes Financial Inclusion
By Arohi Pathak on 10/16/2014 @ 04:30 PM
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:
- Center for Responsible Lending
- National Consumer Law Center
- Center on Evaluation Innovation
- Spark Policy Institute
- First Nations Development Institute
- Seven Sisters Community Development Group
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.
Prize-Linked Savings: An Innovative Strategy for Helping Low-Income Households Build Savings
By Alexander Scarlis on 10/15/2014 @ 05:00 PM
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!
Reflections on the Assets Field and What We Should Do Together: Part I
By Jennifer Brooks on 10/14/2014 @ 06:30 PM
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.
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.
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.
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.
Marvin Talley: Proof that Asset Building Can Change Lives
By Paul Day on 10/13/2014 @ 12:30 PM
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.
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.
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.
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.
Asset Building News Round Up: October 10, 2014
By Paul Day on 10/10/2014 @ 12:30 PM
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.
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.
Three Reasons You Should Be Concerned about the Racial Wealth Gap
By Dominique Derbigny on 10/09/2014 @ 11:00 AM
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.
We Need to Focus on Strategies for Building Generational Wealth
By Solana Rice on 10/08/2014 @ 12:00 PM
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?
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.
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
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.
Reflections on the ALC Platforms for Prosperity Awards: A World Within Our Grasp
By Kim Pate on 10/07/2014 @ 01:00 PM
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.
Helping Employed Youth Get Banked, Save and Manage Money
By Kori Hattemer on 10/06/2014 @ 04:30 PM
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.
Asset Building News Roundup: October 2, 2014
By Paul Day on 10/03/2014 @ 10:00 AM
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.
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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