Giving Context to Unbanked Data
By Sean Luechtefeld on 07/06/2012 @ 10:30 AM
It’s no surprise that CFED cares about financial access, and our work to promote Bank On is premised on the idea that building assets is infinitely easier with a bank account. The reason why is simple: having free or low-cost access to one’s own money is better than paying to use one’s own money.
Though the concept is simple, it’s sometimes hard to conceptualize just how dramatic the difference between having a bank account and not having a bank account can be. This is why I was so excited to find that my friends at The Sociological Cinema had posted a helpful infographic the other day providing some context about the difficulties of being unbanked. The infographic does an excellent job of visually representing the data, so I’m sharing it with readers here.
I hope you find this infographic helpful. There’s a ton more at The Sociological Cinema, so be sure to follow them on Facebook and check out their photo album on poverty issues.
Treasury Launches MyMoneyAppUp Challenge
By Sean Luechtefeld on 07/05/2012 @ 01:30 PM
EDITOR'S NOTE: Below is the press release sent out by the U.S. Department of the Treasury last week publicizing this exciting collaboration between Treasury and CFED partner organizations CFSI and D2D Fund. We hope you'll consider submitting your ideas to the MyMoneyAppUp Challenge!
The U.S. Department of the Treasury today launched the MyMoneyAppUp Challenge to help Americans gain the tools and information they need to be smarter financial consumers. The Challenge, launched in partnership with the D2D Fund and Center for Financial Services (CFSI), seeks new ideas from the public for mobile applications to empower Americans to shape their financial futures everyday – even while on the move.
The Challenge features two components – an IdeaBank to generate ideas for mobile applications, and an App Design Challenge that solicits more comprehensive mobile application designs for development. The public may begin submitting ideas today for both parts of the Challenge at MyMoneyAppUp.challenge.gov.
“Mobile technology has become an increasingly important part of many Americans’ lives, creating new opportunities to help consumers make smart financial decisions in user-friendly ways,” said Deputy Secretary Neal Wolin. “The MyMoneyAppUp Challenge is designed to tap into the ingenuity and creativity of the American public to generate ideas for mobile applications that can help families be smarter financial consumers.”
The IdeaBank: The IdeaBank is a call for ideas, in 140 characters or less, for app-based solutions from the general public. Ideas may be submitted on the Challenge website where they will searchable to the general public. Visitors to the site will be able to vote on their favorite IdeaBank submissions and a panel of judges will select the final winners from the top 10 that receive the most votes from the public. Winners are eligible to receive cash prizes ranging from $250 to $1,000.
App Design Challenge: The App Design Challenge is a call for comprehensive design proposals for mobile apps from companies, individuals, and teams of individuals. Contestants must complete an online submission form detailing their design and how it will improve financial capability and/or access. Contestants are encouraged, but not required, to use ideas from the IdeaBank as the inspiration for their proposals. A panel of judges will review and score the proposals with the winners being announced at an awards event and eligible for cash prizes ranging from $2,500 to $10,000.
Support for prizes and the administration of the Challenge by D2D and CFSI comes from the Ford Foundation, Omidyar Network, and the Citi Foundation. No government funds were used as part of the MyMoneyAppUp Challenge.
The MyMoneyAppUp Challenge is open to all U.S. citizens and permanent residents who are 18 years or older. For complete details on Challenge eligibility requirements and rules, visit MyMoneyAppUp.challenge.gov.
About the MyMoneyAppUp Challenge
The MyMoneyAppUp Challenge, launched by the U.S. Treasury Department in partnership with the D2D Fund and Center for Financial Services Innovation, is a contest offering cash prizes for the best mobile app ideas and designs to help Americans make smart financial choices, access high quality financial products and services, and control and shape their financial futures.
The Challenge is part of Treasury’s efforts to promote Smart Disclosure, a new initiative by the Obama Administration to expand access to data that can fuel the creation of new products and services to benefit financial consumers. Contestants will be encouraged to create ideas and designs for apps that incorporate data to promote financial capability and access.
To learn more about the Challenge or to submit your idea, visit MyMoneyAppUp.challenge.gov.
AFI Grantee Institute @ ALC 2012
By Jimmy Crowell on 07/03/2012 @ 01:30 PM
For this year’s Assets Learning Conference, CFED is delighted to be partnering with the Assets for Independence (AFI) Program to provide a special Institute just for AFI grantees, as well as conference sessions specially designed for IDA practitioners. Even better, the AFI Program is offering scholarships to AFI grantees who wish to attend – see below for details!
Our goals for the AFI-related conference activities are:
- To offer action-based learning wherever possible. The theme of the Assets Learning Conference is “Ideas Into Action,” and we have taken this theme to heart in designing the AFI-related sessions. Many sessions will include accompanying tools, templates or other resources that reinforce the information provided during the session.
- To deliver relevant, interesting material to grantees with a range of experience levels. We recognize that some attendees will be very new to IDAs and AFI, while others have many years of experience. To ensure that the conference is relevant to all grantees, we have intentionally developed sessions to appeal to grantees at a range of points on the programmatic “lifecycle.”
- To foster interaction and dialogue among AFI grantees, AFI program staff and other conference attendees. One of the most powerful parts of the Assets Learning Conference is the opportunity to learn from and talk with peers in the field – so we have included many opportunities for grantees to interact with one another and with AFI staff.
The AFI Grantee Institute will take place on September 19, with the full conference to follow on September 20-21. Scholarship assistance for AFI grantees is available on a first-come, first-served basis. Click here to register, and for more information, email email@example.com.
CFED Photo Challenge: What Are You Saving For?
By Veronica Weis on 07/02/2012 @ 02:00 PM
This summer, CFED wants to know what Americans are saving for. As part of the 2012 Assets Learning Conference, we’re running a photo challenge aimed at rewarding those with a praiseworthy savings goal. Savers are asked to take a photo of what they're saving for – be it a new car, home, or even a university you’d like to attend – and include a 100 word description of why you’re saving for this item and why you consider it an asset.
From July 1st till August 1st, we’re accepting entries. First place will receive $500 toward their savings goal and the two runners up will receive $100. The winners will be chosen by a panel of judges based on composition, originality and overall appeal and announced at the conference in September. So show off your photography skills and don't forget that creativity is key! The top three photos – along with other entries – will be featured on our website, social media sites and will be on display at the conference photo gallery.
Check out the contest flyer for how to enter:
New Webinar: Credit Building is Asset Building
By Sean Luechtefeld on 06/29/2012 @ 10:30 AM
Wednesday, July 25 2012, 1:00 – 2:00 pm EDT
Co-presented by CFED and NeighborWorks America
Credit is an essential building block for asset building. Without a solid credit score and credit history, individuals cannot qualify for loans to buy a home or a car, start a business or even rent an apartment. Furthermore, the prevalence of predatory and payday lenders creates easy opportunities for Americans to fall into debt and damage their credit, thus hindering their ability to build other assets and financial security. Please join us for a discussion about strategies and financial products that help low-income consumers both access affordable loans and build and repair their credit scores. Presentations will be followed by a Q&A session.
Presenters will include:
- Vikki Frank – Executive Director, Credit Builders Alliance
- Nancy Yuill – Executive Director, Innovative Changes
- Kim Pate (moderator) – Chief External Relations Officer, CFED
Did you know you can listen through your computer? Connect your speakers or a headset to your computer.
For more information, contact Jimmy Crowell.
About NeighborWorks America
NeighborWorks America creates opportunities for people to improve their lives and strengthen their communities by providing access to homeownership and to safe and affordable rental housing. In the last five years, NeighborWorks organizations have generated $20 billion in reinvestment in these communities. NeighborWorks America is the nation’s leading trainer of community development and affordable housing professionals.
CFED Publishes Advocates’ Guide to Self-Employment Assistance Program Expansion
By Katherine Lucas McKay on 06/28/2012 @ 10:15 AM
Last month, the Department of Labor (DOL) sent a Guidance Letter to each state’s economic development and workforce agencies about $35 million in grant funding available for states to establish or expand Self-Employment Assistance (SEA) Programs. Today, CFED has published an advocacy guide to help microenterprise and asset-building advocates take advantage of these new resources (link).
SEA is a federal program that allows states to offer entrepreneurship training to unemployed workers who are interested in starting their own businesses. This proven program has had only been adopted by a few states because the process to opt in can be very difficult, requiring an act of the state legislature. Over the past few years, CFED worked with Senator Ron Wyden (D-OR) to develop a proposal to expand SEA and make it easier for states to participate. Many elements of our proposal became law in February when Sen. Wyden included it in Unemployment Insurance legislation that Congress passed in February.
This policy has the potential to help thousands of unemployed workers launch businesses while receiving unemployment benefits and training to help their businesses succeed. It can also help microenterprise development organizations across the nation expand their services through partnerships with state workforce agencies.
States can apply for the grant funds any time between now and June 30, 2013. In order to receive an award, however, a state must have an SEA program. Our advocacy guide includes a step-by-step breakdown of what advocates need to know. The guide details:
- How to persuade state agencies to opt in to SEA and apply for funding
- Recommendations for effective partnerships with the workforce development field
- Where to start, based on your state’s current SEA status
- Links to a variety of additional resources from DOL and some of our partners. The nation has been struggling with an unemployment rate higher than eight percent for more than three years and nearly half of all unemployed workers have been out of work for more than six months. For some job seekers, starting a business provides a way to create their own jobs.
We encourage you to read the guide and get in touch with us if you put it into action! If you have any questions about the guide, SEA or other microenterprise and self-employment resources, please contact Federal Policy Analyst Katherine Lucas-Smith.
Achieving Excellence in Affordable Housing
By Sean Luechtefeld on 06/27/2012 @ 05:00 PM
EDITOR'S NOTE: This post originally appeared this morning on NeighborWorks America's blog and features Stacey Epperson, President & CEO of partner organization NextStep.
Some of you may have read my recent interview in Forbes, and I’d like to give a little background on the transformation I talk about there. Less than five years ago, I was the executive director of Frontier Housing in northeastern Kentucky, and one of manufactured housing’s worst critics. I adamantly disliked the industry, from its perceived shady dealers to its poor quality materials, and actively steered residents away from purchasing its homes. So when counselors began to tell me that those in need of affordable housing often opted for manufactured units, I refused to listen. When colleagues told me that they struggled to build more homes than the number manufactured housing dealers shipped into the county, I refused to listen. When my own staff admitted to living in manufactured homes or using them for temporary housing, I still refused to listen. It was not until Frontier’s housing production began to slip that I finally confronted the situation: the manufactured housing industry represented a worthy opponent, and Frontier would need to rethink its tactics in order to compete.
My transformation was guided by NeighborWorks America’s executive leadership program, Achieving Excellence in Community Development (AE). During the first week, the class examined the case of a nonprofit that could not compete with local loan sharks that offered quality choices along with less complicated rules and quicker results. I came to a staggering realization: the manufactured dealers were the loan sharks in the story. Frontier was treating clients as a unified group, not as customers with individual preferences. An exciting question soon emerged from the subsequent discussion: what if manufactured housing was the solution, not the problem?
Returning to Frontier with the AE focus on honesty and performance-driven change, I began to move away from old ways of thinking and critically assess the situation. I set an AE performance challenge for Frontier to triple the number of customers served while cutting production time in half and maintaining a loan delinquency rate below 5%. To meet this challenge, I restructured Frontier to run more efficiently and effectively, assigning staff to cross-department teams that made the best use of their strengths and encouraging them to adopt a unified commitment to measurable results.
When I went public with the performance challenge, I did not receive an encouraging response; in fact, many individuals cautioned me to “not go there” and that while “modular housing was ok, I should stay out of the manufactured field.” Although I remained confident that I was on the right path, I had also learned from the AE program to pay attention to the criticism and to constantly seek out new opportunities for growth. So, we made changes and then we changed again. By listening to the voices of dissent and continuing conversations with those in the field, I learned of Warren Buffet’s purchase of Clayton Homes and realized that, in lieu of competing with the manufactured housing industry, Frontier could align with it. We eventually teamed up with Clayton Homes to become Kentucky’s first nonprofit dealer of manufactured housing.
In the end we met our goals, and even exceeded them. We tripled total housing production and our loan fund while cutting in half the time needed to get clients into a new home. Further, we have worked to improve the image of the manufactured housing industry, and encouraged other nonprofits to form similar partnerships. We've also established the Next Step® Network in 2010, a social venture that mobilizes a national network of nonprofits to provide affordable housing solutions tailored to the needs of their communities.
I credit Achieving Excellence for helping me challenge my own ideas about the manufactured housing industry and prompting me to restructure my organization. The program also opened my mind to the partnerships that have propelled Frontier and the Next Step Network to a new level of service. With the support of groups like CFED, I’ve been able to expand our efforts even further. Our program has not only been a success for us as an organization, but for families who’ve benefitted from having exceptionally good, viable, green housing at prices that would otherwise have been unaffordable.
Declining Household Wealth and What We Can Do About It
By Ethan Geiling on 06/26/2012 @ 05:00 PM
New data from the Federal Reserve’s triennial Survey of Consumer Finances (SCF) show that household income and wealth significantly dropped from 2007 to 2010. The Survey of Consumer Finances is one of the most robust national data sets on the household balance sheet.
Median household income (adjusted for inflation) fell 7.7% between 2007 and 2010. We at CFED believe that financial security is not just about what you earn – it’s also about what you own. Household net worth – which includes assets such as a home, business, car, and money in a bank account – decreased even more drastically than income.
Median household net worth fell 38.8%, from $126,400 to $77,300 over just three years. Not surprisingly, most of this decline was driven by the collapse in housing prices. The decline was especially pronounced in populations where a home was their main asset, like families headed by someone 35 to 44 years old. For this group, net worth fell 54.4%, from $92,400 to $42,100.
These data confirm much of what we found in the 2012 Assets & Opportunity Scorecard. And in particular, low-income households and households of color have been disproportionately impacted over the past few years. It’s clear that the recession and its aftermath have left unprecedented numbers of families barely able to make ends meet.
The Federal Reserve also found that the proportion of families that saved any money dropped from 56.4% in 2007 to 52.0% in 2010.
In addition to gathering information on if a family saves, the Federal Reserve asks families why they save. From 2001 to 2007, the top reason for saving money was retirement. However, in 2010, for the first time, families identified liquidity or “saving for a rainy day or emergency” as the top motivation for saving. This makes sense given the economic context. In a weak economy with high unemployment and shrinking services, vulnerable families are prioritizing short-term precautionary savings over longer-term savings goals like homeownership or retirement.
How Policy Supports Wealth Building
The federal government helps many families build wealth and save for long-term goals like homeownership and retirement. For example, consider historical policies such as the Homestead Act, GI Bills and creation of the 30-year mortgage, as well as current policies such as home mortgage interest deductions and tax-preferred retirement savings. All of these policies are examples of government-supported wealth building.
Unfortunately, such policies have been uneven and inconsistent. And in many cases, even as government subsidizes asset building for middle- and upper-income households, it restricts such opportunities for low-income households. The reason for this disparity is simple: The primary way government supports wealth-building is through special deductions and deferrals in the tax code. So, if you don’t earn enough to have a tax liability, you can’t benefit from these subsidies. CFED’s report - Upside Down: America’s $400 Billion Federal Asset-Building Budget – investigates exactly how much the federal government spends on wealth building and who benefits from these incentives (hint: it’s not the families that need the help).
The Survey of Consumer Finances data show that families continue to struggle. It also underscores the need for us to reform the “upside down” system of wealth building incentives in this country.
CFED Announces the Saver to Homeowner Story Fund
By Stephanie Halligan on 06/25/2012 @ 03:30 PM
Submit a success story from your IDA program and earn $3,000 per saver!
Do you have an IDA saver who has recently purchased a home, and who has a compelling story to share? CFED, with support from Bank of the West, is looking for stories and photos of recent homebuyers to share with the field. In exchange, CFED and Bank of the West will provide your program with $2,000 in matching funds and $1,000 in administrative support for financial education (for a total of $3,000) for each story that is accepted.
IDA programs interested in applying must submit a homeowner’s story, photo and signed waiver for each eligible saver, and must comply with the terms on the Saver to Homeowner Story Fund website.
How to Submit Your Success Stories
To submit an entry, please visit the Saver to Homeowner Story Fund website for the terms of the program and required documentation. IDA practitioners may submit multiple entries, though we cannot guarantee that all entries will be accepted.
DEADLINE: AUGUST 15, 1012
Funds are available on a first come, first served basis, so submit your entry as soon as possible! If you have any questions, please visit the Saver to Homeowner Story Fund website.
CFED would like to thank Bank of the West for sponsoring the Saver to Homeowner Story Fund and for their continued support of IDA programs across the country.
Can mobile technology inspire a new habit of saving for the future?
By Vince Lampone on 06/22/2012 @ 02:00 PM
As any smartphone owner can attest, mobile technology continues to transform us at breakneck speed. In particular, the glut of mobile apps – nearly half a million for the iPhone alone! – allows us to waste time, and spend impulsively, in ever more creative ways.
Yet while instant gratification may be flourishing, it’s also true that mobile apps have the potential to kick-start a positive “high-tech behavioral revolution”, empowering us with highly personalized tools to manage our physical and financial health – ones which previously had been the province of the well-heeled alone.
In our field, popular apps like Mint.com continue to offer wonderful tools for savvy Americans to manage their personal finances. However, most share Achilles heels – they rely on Internet access, as well as records from official bank and credit card transactions. Great news for those of us tapped into mainstream financial institutions… but not so much for people without credit cards or smartphones.
Thankfully, a new player is stepping in to help fill this gap. Juntos Finanzas, a Stanford-bred startup, is harnessing the power of humble text messages to help cash-based families track their finances. These users can text the amount and type of their expenses to a dedicated phone number, and get a handsome mailing each month that tells them exactly where their money went. (They also receive simple budget updates by text, at any time they want.)
Since credit cards often encourage impulse buying, an electronic budgeting system that looks favorably upon cash usage is a definite plus. Also, I can’t help but suspect that the act of manually texting the dollar amount of every transaction is another helpful check against rash purchasing for many users.
As their name suggests, Juntos Finanzas is especially geared towards the Latino community. But their simple, text-based product concept could have potential appeal to a much wider swath of Americans – including anyone who can’t be bothered with paper, or those who think of financial websites like Brussels sprouts – “good for you”, perhaps, but hopelessly boring and best avoided.
DC Social Media Summit Redux
By Sean Luechtefeld on 06/21/2012 @ 05:00 PM
At the end of last month (how is it June already?), I presented as part of a session on blogging at the DC Social Media Summit, an event hosted by the Center for Nonprofit Success designed to help nonprofit leaders expand their communications reach and make sure their voices are heard. [For those of you who read my posts regularly and are wondering why they asked me of all people to present, keep your comments at bay.] Also presenting on this session were Julia Rocchi of the National Trust for Historic Preservation, Brad Weikel of EarthRights International and Mickey Panayiotakis of Infamia. I wanted to share my reactions to the session.
First and foremost, I had a blast.
I recognize that makes me sound like a nerd, but allow me to explain. First of all, the other presenters were great. Julia, for example, blogs exclusively about old stuff, and yet, by the end of her presentation, I wanted to visit her blog immediately. Mickey, on the other hand, gave a presentation about Search Engine Optimization. Did you know that when figuring out which part of a webpage gets the most attention from a user, they actually conduct retinal scans to see where your eyes focus the most? Retinal scans. My mind: officially blown.
Second, and more importantly, I guarantee I learned more from other participants in the session (presenters and attendees) than any of them learned from me. My top takeaways? Thanks for asking:
1. Good visuals are as important as good writing. This is something that people say a lot, but the extent to which people consume images is increasing way faster than the rate that people consume copy, and more and more web users receive the majority of their content visually. Need proof? Visit www.pinterest.com.
2. Partnerships are to content development as farmers are to vegetables. You can’t have quality content without having quality partnerships. Even if you don’t have formal content-sharing agreements, partners can provide information, expand your audience and provide guidance on how to frame key issues that might fall slightly out of your wheelhouse.
3. Not all audiences are conditioned to read your content. In other words, what you understand with ease as an assets practitioner may not be easily understood by a transportation specialist. But, there’s not a landing page for your blog that says “transportation specialists keep out,” so make sure your writing is inclusive of their level understanding. (Sidebar: One of Brad’s recommendations is to run your content through a readability meter before posting. My last post, for example, is written at the level of a first-year graduate student, which I consider a success, since I’ve been in graduate school for just shy of an eternity.)
Above all, I enjoyed this session because I think communicating the message – no matter what it is – is something we could all do better, and sharing insights with one another is one of many steps to achieving that higher level of impact.
3 Costly Mistakes Families Typically Make When Saving For College
By Stephanie Halligan on 06/18/2012 @ 04:00 PM
EDITOR'S NOTE: This piece originally appeared on The Empowered Dollar blog on June 14, 2012 and can be read here.
I’m still paying for the worst mistake my family made when it comes to saving for college. I totally regret it, and I didn’t even realize it was happening until it was too late.
But I’ll get to that later…
There are three financially huge and shockingly common mistakes that families make when they put aside money for their kid’s education. Certainly most of you weren’t even thinking about doing any of these in the first place… right?
The problem is that some of these mistakes seem benign, which is why I think so many families make them. Avoiding these three costly mistakes could save your retirement, thousands of dollars in financial aid, and your kid’s life after college.
Mistake #1 Your retirement account is part of your college savings plan.
Believe it or not, a large percentage of parents think their 401(k) accounts as part of their plan for paying for college. According to our How America Saves for College survey, 1 in 4 parents that are saving for college dip into their retirement accounts to help pay for school. Some parents will take disbursements or loans from their retirement plan to avoid taking out student loans.
Your retirement account may be the biggest financial asset you have, so it only seems natural to tap into those funds to cover a big expense like your child’s education. But it’s a terrible idea for a couple of reasons:
1. Money that you cash out of your retirement plan is considered income and it will count against you when you apply for financial aid the following year. Talk about backfiring.
2. Most parents with college-bound students are somewhere between age 40 and 60. That means if you’re 55 and sending your kid off to school, you don’t have much time before retirement to make up those withdrawn funds. Borrowing from your retirement plan could save you from taking out student loans, but it could also postpone your retirement.
3. It’s easy to get a loan to pay for college. It is not easy to get a loan to pay for retirement (I don’t know many retirement loan plans out on the market…). So while there are plenty of options to finance your child’s education, like grants, federal loans and institutional financial aid, there are not many options for you if you want to retire and you don’t have enough stocked away to pay for it.
Mistake #2 You’re saving under your child’s name.
It’s an easy step, and it’s one of the most important. If you want to maximize your family’s financial aid, make sure any accounts earmarked for college are under your name, not your child’s. Assets in accounts owned by a student, like a regular savings account or even Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA) accounts are taxed at a much higher rate when calculating financial aid than accounts under a parent’s name (20% vs. 5.64%). That means if your kid has $1,000 in his account, he’s expected to use $200 for college. But if that $1,000 was in your name, you’d only be expected to contribute $56 of that money toward school.
Also, investing your college savings in an account under your child’s name means you have limited control you have over that money. When your kid reaches the age of 18 or 21, depending on the state you live in, savings in a custodial account will transfer over to your child.
I’d bet that you have responsible and honest children. But do you really want to bet thousands of dollars of your savings on your kid doing the right thing and using all of that money for college?
I didn’t think so.
If I were a 21-year-old in school and $10,000 was suddenly transferred over to my name, you can bet I wouldn’t use all of that money for tuition… there are just too many expensive, “educational experiences” to be had in college.
Mistake #3 You stop saving once college starts.
Guess what happens after your kid graduates from college? Real life and student loans. Both of which cost a lot of money.
Whether you’re giving your kid a stipend, or he’s earning his own cash through a part-time job, keep encouraging your kid to save while he’s in school. If I could go back in time and give myself one piece of financial advice in college, it would be this: save up a few thousand dollars to use for post-grad life. When I graduated from school, I barely had enough money to put a security deposit on an apartment. My lack of cash meant my options were limited, and like many college grads in a bad economy, I had to take whatever job I could get so I could just pay the bills.
If you’re a generous parent who wants to help your kid get on her own two feet after college, consider setting some money aside as a “getting through the real world” fund to give you kid as a graduation gift. If you expect your grad to make it on her own, be sure she knows how much life after college costs and push her to save some of her disposable income.
Oh, and the worst mistake my family made saving for college?
Not saving anything at all.
It’s part of the reason I’m thousands of dollars in debt. Whatever you do, start saving for college early. Don’t worry about maximizing your tax claims or signing up for the right account – you can figure it out as you go. The most important thing is to just get started.
Register Today for More Than Just a Wish: Planning for Your AFI Project
Posted on 06/15/2012 @ 02:30 PM
Wednesday, June 27, 12:30-1:30 p.m. PST / 3:30-4:30 p.m. EST
An Upcoming Webinar from the Assets for Independence (AFI) Resource Center
French author Antoine de Saint-Exupéry said, “A goal without a plan is just a wish.” Do you have a clearly defined plan for your AFI project – or are you just wishing for success? Do you know if you’re on track to meet your AFI goals over the “life cycle” of your five-year grant? Have you identified key milestones along the way that will help you keep track of your progress?
If the answer to any of these questions is “no,” please join us for an hour-long webinar that will focus on suggested planning activities in the design, implementation and close-out phases of your AFI grant. The webinar will offer ideas and strategies for setting ambitious but attainable goals for each year of your grant; measuring your progress along the way; and what to do if your program slips off track. These planning suggestions can be applied to any project design, whether you administer one AFI grant or several, and regardless of where you are in the five-year grant period.
- Denise DeVaan, AFI Resource Center
- Leigh Tivol, CFED (moderator)
Click here to register now!
The webinar is free to all interested participants. In advance of the webinar, please send any questions you would like our panelists to address during the session to Jimmy Crowell at firstname.lastname@example.org, or call 202-207-0147.
Setting a ‘Recognition Budget’
Posted on 06/14/2012 @ 03:30 PM
Media reports often make entrepreneurship seem like a glamorous endeavor.
The truth is, though, that many of those who pursue self-employment identify with Rodney Dangerfield’s famous quote: “I don’t get no respect.” That’s because entrepreneurship is a solitary pursuit that often involves chasing ungrateful clients and struggling to define – let alone achieve – business success.
Even accomplished entrepreneurs can feel as though they toil in obscurity
Consider the public relations professional who helps others gain fame and fortune but who remains relatively unknown. The success he’s earned brings him a surfeit of work and money, but he’ll likely resent the prominence his clients have earned. With no stake in their companies, he stands to gain only from the reflected glory that comes with having worked for them. He’ll soon find that time and distance weaken such glory to almost nothing.
So what should he do?
He should give some serious thought to what needs to happen in order for him to feel appreciated.
Perhaps this means getting mentioned in news articles, delivering a seminar on public relations to a group of leaders in the industry he serves, writing a bestselling book, or achieving external validation in some other way.
Once he’s given this issue some thought, he should write a list of goals (each with deadlines) for gaining acclaim in his field. I call this list a “recognition budget.”
Let’s pause for a moment to note that the idea of seeking out praise and recognition makes some people leery.
Many people will claim they don’t care about acclaim; they say they are in the business to please customers and build a strong organization. That all sounds nice on the surface, but it falls apart upon some deeper digging.
Think about it this way: many people also say they don’t care about money. What they really mean is that they want to avoid becoming ruthless private equity barons who slash jobs in favor of short-term profits. They are really saying they are unwilling to compromise their values in the interest of enriching themselves. Fair enough, but they still need money to live.
Recognition works the same way. We mock reality TV stars who devote their lives to grabbing attention, but we, too, require some degree of recognition to stay motivated and regard ourselves as successful. (But if your goal is to have a reality TV show, sit tight. Recent trends suggest everyone in New Jersey will eventually get one.)
You already (I hope) make a budget for your business each year and project the amount of customers you intend to serve. Your next step should be making a list of ways in which you would like to be recognized.
Consider options that allow you to share your expertise with a mass audience or a few influential people. Speak at conferences, write opinion editorials, start a blog, write a book. Do something.
After all, making yourself known is your best chance to get the respect you so richly deserve.
Alternative Financial Services Aren’t Just for Low-income People
By Sean Luechtefeld on 06/12/2012 @ 02:30 PM
As the Bank On Site Administrator, one of my jobs is to keep up with news about Bank On and other financial access initiatives. Like everything else in my life, I do this with Google. Among my Alerts for ‘Bank On’ are notifications that “the bank on 14th Street was robbed” and “you can bank on the Celtics winning the Eastern Conference Finals.”
Imagine my surprise, then, when one Alert was about financial access but didn’t have to do with Bank On. In an article published on May 23, Spectrem’s Millionaire Corner highlights findings from a report that concludes that middle-income Millennials – and not just low-income individuals – rely on alternative financial services. For example, the rate of prepaid debit card use is as high for those making between $50,000 - 75,000 per year as it is for those making under $25,000 annually.
What struck me about this article – aside from the obvious omission of Bank On initiatives despite the article being titled “Millennials Bank on Alternative Financial Services” – was that no mention of alternatives to these “alternatives” was made. In other words, the Think Finance report and Millionaire Corner’s accompanying recap simply state that use of pawn shops, payday lenders and the like is ubiquitous among a wide swath of the population, but no discussion of how we might approach this problem exists. In fact, the data aren’t even presented as a problem at all.
But, a problem it is. That a sizeable barrier exists not only for low-income people but also for somewhere around half the population would seem like impetus enough to do something. Yet, inaction has been the path for policymakers who see the issue simply as a challenge among many rather than as one of the largest factors preventing people from building assets.
Luckily, there is good news: an alternative to predatory lending practices and products that keep people from accumulating wealth exists in the form of the Bank On USA initiative. The 70 or so state and local Bank On initiatives have proven immensely important, and their value should be expanded at a national level so financial access can be a reality for everyone in the United States, not just the people lucky enough to live in the select locales where enough support for the initiative exists.
Of course, as I see it, there’s another takeaway from the Millionaire Corner article: if you’re going to talk about financial access and put “bank on” in the headline, at least reference Bank On so I don’t get overly excited when sifting through my daily Google Alerts.
Asset-Building and the Racial/Gender Wealth Gap
By Inemesit Imoh on 06/08/2012 @ 02:30 PM
Perspectives from the National Council of Negro Women’s National Convention
On Thursday, May 24, I participated in a workshop at the National Council of Negro Women (NCNW) 55th National Convention. The workshop panel entitled Exploring Public Policy Solutions to Narrowing the Race/Gendered Wealth Gap also featured NCNW Executive Director Avis Jones-DeWeever and James Carr, Chief Business Officer of the National Community Reinvestment Coalition.
Each of our presentations highlighted aspects of the growing racial and gender wealth gaps--the differences between the median net worth of individuals of different racial and ethnic groups, and between men and women. Ms. Jones-DeWeever framed the conversation by explaining the history of the racial and gender wealth gaps and how both grown substantially as a result of the recession. Mr. Carr explained the origins of the foreclosure crisis and how deeply it impacted communities of color. Finally, I spoke on the various other dimensions of the wealth gap, particularly around the inability of people with disabilities and young adults to invest in themselves.
Attendees brought up several issues that impact their communities:
- The lack of sustainable employment and income in communities of color makes it extremely difficult for households to consider saving and/or investing in themselves.
- The foreclosure crisis has devastated minority households’ primary source of wealth, homeownership, and has greatly set back the decades of progress minorities had made to improve their economic mobility.
- Young people of color with low-income and low-wealth families face difficult decisions for their college education—high levels of debt or no college at all.
The discussion among presenters and attendees revealed that the racial wealth gap is a significant problem that impacts people of color on a daily basis and also limits opportunities for long-term wealth building. Throughout the conversation, attendees emphasized their interest in identifying public policies that can help narrow the wealth gap. Some of those include:
Employment and Wages
When high quality jobs are not available within a community, many people turn to self-employment and entrepreneurship. These small businesses are often supplementary sources of income for workers whose traditional jobs aren’t sufficient to make ends meet. There is a successful national network of service providers who help these business owners maximize their income, grow their businesses, and achieve their entrepreneurship goals. The federal government and many states provide some support for this field, but could do more. In particular, research demonstrates that providing technical assistance to businesses that are not finance-ready is a particularly important intervention, but also difficult to support through private donations and fee-based service delivery. Governments should therefore provide more for technical assistance and training targeted at new entrepreneurs.
Owning your own home has long been considered the hallmark of the American Dream. Families must have access to services that help them make this dream a reality. Families with limited means could qualify for an individual development account program in their area, which are matched savings programs designed for low-income households to save and purchase an asset, including a first home. Research has found that IDA programs can improve homeownership outcomes for low-income households.
A college education is a proven tool in improving someone’s economic security and mobility. Research shows that savings is a powerful strategy for increasing the likelihood that students will attend and complete college. One way to make college more affordable for low-income students is to create incentives for them to save in tax-free 529 college savings accounts. Several states have already taken steps to encourage college savings for young residents within their state. In addition, when paired with a savings account, financial education gives children and young adults a stronger and more tangible chance to test financial decisions. CFED has examined how states use their public education systems to improve personal financial literacy and lists financial education policies and standards by state.
EITC Gains and Losses: 2012 Legislative Update
By Elvis Guzman on 06/07/2012 @ 12:15 PM
The Earned Income Tax Credit (EITC) is one of the strongest public benefit programs that help to reduce poverty and is mainly intended to increase the incomes of low-wage families with children. Over 27 million families claimed the federal EITC in 2009. The amount of the credit depends on the recipient’s income, marital status, and number of dependent children. In 2010, the federal EITC lifted 6.6 million people (including 3.3 million children) out of poverty. Twenty-five states, plus the District of Columbia, supplement the federal credit with their own state-level versions of the EITC. States typically calculate the credit as a percentage of the federal EITC and most programs are refundable.
For years this program has been praised by both major political parties; in fact, the federal EITC was first proposed by the Nixon administration and was later expanded by administrations from both parties. State EITCs, however, continue to face political challenges. Following is a brief overview of changes or proposals to state-level EITC programs in the past year.
In the wake of the recent economic recession, state EITCs have been part of several public programs targeted for possible austerity. Recent fiercely contested battles in Kansas and Oklahoma demonstrate the strong opinions surrounding the credit. Kansas Governor Brownback proposed to eliminate the EITC and Child and Dependent Care Tax Credit (CDCTC), along with the state’s income tax. Ultimately, legislative negotiations resulted in a “compromise” where the EITC was left intact, while the CDCTC and other provisions were eliminated. Similarly, Oklahoma Governor Fallin proposed to eliminate the state’s EITC, CDCTC and Child Tax Credit (CTC), to help fund the elimination of the state’s income tax. After similar bills passed the House and Senate, groups advocated critically against these cuts. Ultimately, both chambers could not come to an agreement and no tax reform was passed in the recent legislative session.
EITC programs in other states faced similar legislative challenges. In 2011, Michigan legislators voted to decrease the state’s EITC rate from 20 to 6 percent of the federal credit. Earlier this year, House Bill 5407 was introduced to amend these changes but has made little progress. North Carolina’s EITC is set to expire at the end of this year. After the legislature proposed eliminating the credit in 2011, this year a bill was introduced and is under consideration in the House and Senate to extend the EITC, CTC and CDCTC. In Iowa, the Senate passed Senate File 2161 to increase the EITC from the current 7 percent to 20 percent of the federal credit by 2014. Governor Branstad, gave his support for an increase in the EITC if commercial and industrial property taxes were cut in a reform package. The state legislature ended its session in May with no agreement on a bill.
Wins and Opportunities
While the economic recession has posed threats to existing state-level EITC programs, some states have proposed or enacted legislation to improve this credit. After a long push by local advocates dating to 2003, in late 2011 Illinois passed a bill that doubled its credit to 10 percent of the federal EITC over the next three years. The measure also increased the personal exemption and indexed it to inflation. In New Jersey, Governor Christie pledge to slowly increase the state’s EITC back to 25 percent, after he reduced the rate to 20 percent in 2010.
Legislatures in Maryland and Utah proposed measures to improve or create EITC programs, however both sessions ended with unsuccessful results. The Maryland state Senate proposed to increase the state EITC to 30 percent of the federal credit, along with an increase in the income tax, however the house failed to pass this package. The Utah state Senate passed a bill to create a state EITC at 5 percent of the federal credit, but the session ended with no resolution. While these pushes were not successful, they demonstrate that there is clear support for state EITCs and have opened the window for local advocacy groups and policymakers to take future action.
There are a few upcoming political battles that may affect the federal EITC during the lame-duck session, including the extension of the Bush tax-cuts, the cuts in the Budget Control Act and the looming debate over raising the federal debt ceiling. Advocates are closely watching these highly-contested issues since they may result in cuts to the federal credit.
Benefits of the EITC
States often see cutting tax credits for low- and moderate- income families as an easy way to reduce spending. However, legislators frequently fail to see the benefits tax credits provide to working parents and their children. Enacting state-level EITCs is linked to better health related outcomes for children, including higher rates of private insurance and less reliance on public health programs, such as Medicaid and the Children’s Health Insurance Program (CHIP), (Baughman, 2012). This research also indicates that parents receiving the EITC are more likely to move into better paying jobs with more benefits, particularly health care. Other studies indicate the EITC increases employment, shifting dependence away from cash and food assistance programs; between 1993 to1996, economists estimate over a half million families moved from AFDC and the food stamps program to employment (Greenstein, 2005). Millions of hard-working families and children thrive with EITC assistance and it’s counterintuitive to cut these essential programs.
To help protect the federal and state EITCs, keep yourself updated on legislative changes. Lend your voice to local advocacy groups and contact your state’s elected officials. We must continue to act in unison to ensure low- and moderate-income families are not left behind.
ALC Alert: Program in Development Now Available
By Veronica Weis on 06/06/2012 @ 02:00 PM
We're excited to announce our Program in Development for the 2012 ALC. Stay tuned as we revise and add more! Below is the list:
Wednesday, September 19
9:00 am - 5:00pm
- AFI Grantee Institute
- Assets & Opportunity Advocates College
- Children's Savings Institute
- Savings and Entrepreneurship Institute
- CFSI Bidders Conference
- Native CDFI Network Meeting
- First Nations Oweesta Corporation Building Native Assets Training
Thursday, September 20
8:15 am - 9:30 am - Plenary I: State of the Field
9:30 am - 10:45am - Concurrent Sessions I
- Entrepreneurship Development Systems: Creating Strong Native Communities
- Philanthropy, Social Enterprise and Impact Investment
- Prize-Linked Savings in Asset-Building Programs
- Behavioral Economics
- Success Measures Financial Capability Tools
- Asset-Building for Children: The Role of the Public Sector
11:00 am - 12:15 pm - Concurrent Sessions II
- Success Measures Financial Capability Tools
- Self-Employment Tax Preparation and Business Development
- Social Enterprise Innovations
- Financial Education for Youth
- Asset-Building for Children: The Role of the Public Sector
- CFSI Financial Inclusion Innovation Fund
12:30 pm - 2:00 pm - Plenary II: Assets & Opportunity Award
2:00 pm - 3:15 pm - Concurrent Sessions III
- How to Talk About Assets: What Works with Policymakers, Allies and the Media
- Credit Builders Alliance Score to Win Initiative
- Entrepreneurship as a Community Building Strategy
- Asset Building for Low-Income Fathers
- The Future of Financial Education
- Capitol Hill Visit Training
3:30 pm - 4:45 pm - Concurrent Sessions IV
- Integrated Service Delivery
- Setting the Stage: Building the Advocacy Network
- Avoided Costs and Asset Building
- Kids, Assets and Opportunity: Recent Research Advances
- Winning Strategies for State Asset Policy Change in a Time of Budget Shortfalls
- Immigrants and Financial Access
5:00 - 8:00 pm - Networking Reception
Friday, September 21
8:15 am - 9:30 am - Plenary III: Conversation with Savers
9:30 am - 10:45 am - Concurrent Sessions V
- Asset Building and Disability Partnerships
- Youth Savings Banks
- AFI Program Basics
- Credit Building is Asset Building
- Foreclosure Mitigation and Prevention
- Cooperatives and Their Role in Asset Building
11:00 am - 12:15 pm - Concurrent Sessions VI
- Housing as an Asset Building Platform
- Eliminating Assets Tests
- Helping Domestic Violence Survivors Build Assets
- Applying Behavioral Strategies to Improve Asset-Building Outcomes
- State and Local Strategies to Curb Predatory Small Dollar Lending
- Asset Building in Communities of Color
12:30 pm - 2:00 pm - Plenary IV: Call to Action
2:00 pm - 5:00 pm - Capitol Hill Visits
For more information about the 2012 ALC, please visit the conference site.
CFEDers Spend Too Much Time Thinking About Savings
By Sean Luechtefeld on 06/04/2012 @ 04:00 PM
You might think that when they leave the office each day, CFEDers’ attention turns away from asset building and toward simpler things like walking the dog or vacuuming the house. You might also think that at the end of the day, the last thing we want to think about is finances, since that’s how we spend 8 or more hours a day.
If these are things you think, consider yourself mistaken.
Take Inclusive Economy contributor and Savings & Financial Security Program Manager Stephanie Halligan, for example. Last week, Stephanie launched her own personal finance blog, aptly titled The Empowered Dollar.
The new site is premised on the idea that by empowering people to take control of their finances at a young age, they can avoid financial disaster and grow into successful and wealthy adults. Stephanie’s personal story – and the motivation for The Empowered Dollar – hits too close to home for too many of us. Plagued by student loan debt and making a mere $12,000 per year despite her college degree, Stephanie made money management and fiscal responsibility somewhat of a hobby. Now, just a few years later, she’s offering her insights to the public in an attractive and easy-to-navigate website.
The content of the site is organized into simple principles like “invest early,” “save often” and “stay out of debt.” The tools, tips and tricks offered are geared toward kids, teenagers and college students and their parents, but the lessons gleaned are almost universal. In a recent post on allowances, for example, Stephanie discusses the Entitlement Effect, which suggests that when paid for nothing, people will be disinterested in getting paid to do “crappy work.” This doesn’t just apply to kids’ allowances and the need to attach allowances to opportunities for money management; it also explains the common misconception that people on unemployment have no incentive to work. In actuality, they have incentive to work; they don’t, however, have incentive to do something that most people are unwilling to do for less money than it takes to pay rent, much less a mortgage payment or a tuition bill or anything else.
The site is still new, so I’ll be looking forward to what else The Empowered Dollar has to offer. In the meantime, I encourage you to check out the site and let Stephanie know what you think.
Department of Education Announces Plans for Children's Savings Accounts Through GEAR UP
By Leigh Tivol on 06/01/2012 @ 04:30 PM
CFED is delighted to share an exciting new announcement from our friends and colleagues at the U.S. Department of Education. For the past several years, CFED and others have been working closely with the Department to explore the potential of linking children’s savings and financial education with efforts to help more students get to and through college. One particular effort the Department supports is the GEAR UP program, a federal initiative that helps low-income middle- and high-school students prepare for college.
Yesterday, at an event hosted by the New America Foundation, the Department of Education took the idea to a thrilling new level with the announcement of a College Savings Account Research Demonstration (click here for a summary), which will offer savings accounts and financial education to 10,000 students in GEAR UP programs across the country. The project will include a robust research component that will compare educational outcomes for these students with similar students who do not receive accounts. Not only will this project offer the opportunity for matched savings to thousands of low-income students – it also represents the largest research effort to date on children’s savings accounts in the U.S., and will provide important new insights into the power and impact of college savings.
The demonstration will leverage the extensive network of GEAR UP grantees across the country, which are already providing high-quality, comprehensive support, information and encouragement to low-income children and families to prepare them for college. GEAR UP is an ideal delivery system for children’s savings; by linking the two, the Department of Education has created a perfect marriage of college readiness and asset building.
The Department of Education has asked for public comment on the proposed demonstration. CFED will offer comments through this process, and we welcome your input; please share your thoughts and ideas with us at email@example.com. Of course, we also encourage interested stakeholders to submit comments on your own. Please note that the comment period closes on July 2, 2012.
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