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Asset-Building News Roundup - January 10, 2014

By Veronica Weis on 01/10/2014 @ 01:30 PM

Tags: News

Events

Next Wednesday, the Aspen Institute Initiative on Financial Security is hosting a Congressional briefing, Looking Ahead: The Savings Policy Landscape for 2014. To RSVP, click here.

On Tuesday, January 28, President Barack Obama will deliver the 2014 State of the Union. We plan to live blog it right here on The Inclusive Economy so mark your calendars!

Please join us on Thursday, January 30 from 12-1pm EST for a webinar to release the 2014 Assets & Opportunity Scorecard — the leading source of state-level data on financial security and policy solutions. During this webinar, CFED experts will discuss data on asset poverty and measures of household financial security, as well as trends on state policies that help families achieve financial security and climb the economic ladder. To sign up, click here.

Save the Date: 2014 Children's Savings Conference: From Aspirations to Achievement will take place April 29-30 in Washington, DC. Please mark your calendars and stay tuned for more details!

News

There's good news for families in Rhode Island. The state became the third in the nation to pass paid family leave legislation.

Wednesday, January 8 marked the 50th anniversary of the declaration of the War on Poverty. Our staff attended a notable event to mark the occasion with an impressive panel of poverty experts. Our President also published a piece in The Huffington Post noting that our country needs a "war for economic opportunity."

From the Assets & Opportunity Network

The Financial Stability Partnership of Northern Nevada has released a new report to help financial security in the region. To read the report, click here.

The Midas Collaborative and SkillWorks, a Boston-based workforce development funder collaborative, combined efforts to test the integration of financial stability services into workforce development programs. Read about the promise and challenge of this efficient, holistic approach in "Integrating Financial Stability Strategies into Workforce Development Programs: An Implementation Pilot in Boston."

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Opinion: It's Time to Expand the War for Economic Opportunity

By Andrea Levere on 01/09/2014 @ 08:00 AM

Tags: Financial Empowerment

EDITOR'S NOTE: Yesterday was the 50th anniversary of President Johnson's declaration of the War on Poverty. To mark the occasion, CFED President Andrea Levere wrote the following post on her Huffington Post blog, arguing on behalf of the need to expand efforts that promote financial security. Read the full post here.

Too often we forget the key line preceding President Johnson's announcement of an "unconditional war on poverty." Leading up to his famous declaration 50 years ago, LBJ first noted that "many Americans live on the outskirts of hope... our task is to help replace their despair with opportunity." Poverty was the immediate enemy, but expanding economic opportunity was always the ultimate goal.

The enemy labeled "poverty" was defined in terms of income, with an arbitrary line intended to mark the minimum flow of cash needed to pay for basic recurring expenses. Today that means $11,490 for a childless graduate student, $15,500 for a single mother and $19,530 for a family of three.

Recently, scholars and policymakers have argued convincingly that the old definitions of poverty fail to measure what it really takes to get by. In response, the federal government began releasing the Supplemental Poverty Measure, which takes into account costs such as health care and transportation, as well as income-enhancing programs including Social Security and the Earned Income Tax Credit.

But the problem with both these measures runs deeper than statistical methodology -- it goes back to the assumption that opportunity is determined by income alone. Ending poverty, however, is not enough to move families beyond "the outskirts of hope."

Take a single mother with an income of $15,500. When her income increases to $15,600, statisticians will celebrate that we've moved that mother and her child out of poverty. But is there really much reason to celebrate? This extra $100 will undoubtedly help the mom meet crucial immediate needs -- help her pay rent, keep the lights on, fill prescriptions. But is the mother now financially secure? Is she more likely to invest in her own education? Is her child more likely to make it to college? Is she more likely to save enough to buy a home or build a retirement nest egg? In other words, by ending this family's income poverty, have we replaced despair with opportunity?

Escaping the perpetual financial insecurity of low-wage work requires more than incrementally higher wages -- it requires savings and investments for the future. Income helps families get by, but savings and investments help them get ahead.

To achieve economic security, families need to be financially fit. That starts with access to a bank account and the knowledge to use it. They need financial protection to avoid falling victim to predatory lenders. They need savings to weather financial emergencies. And they need investments to build stability for themselves, and to break the cycle of poverty by nurturing the talents and aspirations of their children.

To win the larger war for economic opportunity, we will need to face down the larger enemy of financial insecurity. That means going beyond policies that attack poverty by raising incomes alone, and helping even very poor families develop the ability to save and build assets.

This is more doable than it sounds.

The five-year American Dream Demonstration in 13 communities across the country showed that given the right incentives and supports, even the lowest-income families will save for college, homeownership and to launch a small business. New York City's $aveUSA pilot program is demonstrating that low-income tax filers will save a portion of their refund to serve as a personal safety net. And in a growing number of communities, programs such as Nevada's new College Kick Start are spurring low-income children and their families to save for college starting at a very young age.

In short, with the right support, low-income families can and do save for both emergencies and long-term investments. But our policies generally fail to provide these families with the incentives they need to achieve economic security -- despite a federal budget that devotes large sums to help workers save and build wealth. CFED estimates that in 2013, the federal government spent more than half a trillion dollars to accomplish these goals through the tax code alone. But the vast majority of those dollars went to the highest income households.

The federal government, for example, spent $411 billion just on the four largest tax benefits last year -- capital gains, pensions, homeownership and inheritances. The Congressional Budget Office reports that the entire bottom 40 percent of earners received less than three percent of these benefits. The top one percent of earners took in more than a third -- $148 billion.

Why should a household that earns $650,000 a year get nearly 500 times as much support to build wealth through these benefits as a family making less than $77,000 a year?

As we continue efforts to fight poverty and improve financial security, turning these upside down tax and budget policies right-side up should be at the top of our nation's political agenda. For all families to benefit from these policies, we must develop products and services, such as universal Children's Saving Accounts, that give low-income families the tools to save for college, buy a home, start a business and invest in our nation's economic growth. Perhaps then we will truly achieve the War on Poverty's ultimate goal: replacing despair with opportunity.

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Event Recap: Legacies of the War on Poverty

By Sean Luechtefeld and Veronica Weis on 01/08/2014 @ 11:30 AM

Tags: Economic Inclusion, EITC, Events, Financial Empowerment, Recommended Reading

This morning, we were excited to attend “Legacies on the War on Poverty, Lessons for the Future,” an event hosted by The Russell Sage Foundation, Spotlight on Poverty and Opportunity, and the University of Michigan’s Gerald R. Ford School of Public Policy marking the 50th anniversary of President Johnson’s War on Poverty. The event featured an all-star panel who came together to assess President Reagan’s quip that “We fought the War on Poverty and poverty won.” With this idea as the backdrop, panelists sought to assess what have been the major successes of the 1964 anti-poverty program and what public policy opportunities remain for the years to come.

Each of the panelists offered a bevy of smart ideas. Russell Sage Foundation President Sheldon Danziger, in discussing his book, Legacies of the War on Poverty (co-edited with panelist Martha Bailey), suggested a series of ideas, such as a return to the stimulus bill for the expansion of Unemployment Insurance. Furthermore, Danziger argued, we ought to expand EITC to childless low-wage workers, so that what has been called the most successful poverty alleviation method can reach more Americans.

As we listened to these and other policy recommendations, we couldn’t help notice the focus on increasing income. Indeed, having more money is an essential component of financial security, yet it is only one component. As CFED’s Household Financial Security Framework shows, the discussion about longer-term financial security cannot only be about income; it must also encompass Americans’ ability to learn how to manage and protect their money, and ensuring access to programs that encourage saving and investing.

Panelists also noted that one problem with our anti-poverty efforts has been how we measure poverty in the first place. The official federal poverty measure, which asserts that a family of four could subsist on just $22,550 per year, is markedly flawed; it suggests that a family living at the poverty line whose income increases $100 is suddenly on solid financial ground. One alternative, as CFED’s Assets & Opportunity Scorecard points out, is to look at liquid asset poverty: whether a household lacks the savings necessary to live for three months at the federal poverty level if a job loss or other emergency left the household without income. New Scorecard data on liquid asset poverty in America is due out January 30, but prior research suggests that the liquid asset poverty rate far exceeds the income poverty rate.

Together, these ideas prove two points that the panelists articulated eloquently during this morning’s event. First, there’s no hypodermic needle that will reverse some of the inadequacies of the War on Poverty. LBJ’s anti-poverty program was unpopular in part because it was complex, but those complexities speak to the depth of the problems. As we often find ourselves saying at CFED, complex problems require complex solutions. Second, if the past 50 years have been about the War on Poverty, the next 50 years need to be about the war to expand economic opportunity. This is a point CFED’s president, Andrea Levere, made on her Huffington Post blog this morning, which we recommend as a thoughtful assessment on the 50th anniversary of President Johnson’s declaration.

In all, this morning’s event was a great opportunity to reflect on anti-poverty policies, both as they were in 1964 and as they are in today’s ever-changing economy. Each of the speakers not only demonstrated a depth of knowledge on these issues that deserves applause, but also did an excellent job at refocusing our attention on some of the lingering challenges that face our work in the asset-building field every day.

Were you at “Legacies of the War on Poverty?” Share your reactions in the comments below.

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BETA Project Wrap-up: Small Changes, Real Impact

By Pamela Chan, Katy Davis, Guest Contributor and Daria Sheehan, Citi Foundation on 01/07/2014 @ 12:30 PM

Tags: Behavioral Economics

In reflecting back, 2013 was an exciting year for CFED, ideas42 and the Citi Foundation! Through the BETA (Behavioral Economics Technical Assistance) Project, we worked with Accion Texas, the Cleveland Housing Network, and Neighborhood Trust Financial Partners to design and test new solutions for their programs using insights from behavioral economics. We defined the problems to be tackled with our partners and diagnosed why clients may be missing payments or underutilizing credit union accounts. We created new solutions such as raffles, reminders, and planning tools. We then tested the designed solutions to assess their effectiveness—and found that small changes within a program can have a real impact on outcomes for small business loan borrowers, lease purchase program residents and financial education clients.

On December 17, the BETA Project team published the results of these experiments. We also hosted a webinar, Small Changes, Real Impact: Applying Behavioral Economics in Asset Building Programs. During the webinar, we shared insights we gained through the project.

First, our findings affirmed several principles from behavioral economics. For example, our designed solutions seemed to have a greater impact on certain clients, many of whom were considered the most vulnerable. This parallels the recent book on Scarcity by Sendhil Mullainathan and Eldar Shafir. They suggest that living in conditions of poverty imposes a heavy cognitive burden - and that interventions that relieve that burden (like reminders) may be especially powerful.

Second, our partners uncovered many lessons about how practitioners can approach program design from a behavioral perspective. More often than not, asset-building organizations come to us with ideas about what they need to do to improve their programs. However, starting with a new solution without taking the time to better understand the nature of the problem at hand can cause issues down the road (e.g., wasted money on an ineffective solution). To prevent this, we recommend putting the problem before the solution. By taking time to refine the problem and generate theories about what’s going on, you can test whether or not your theories are valid.

Find out more about what we learned with the BETA Project partner sites, plus additional tips for incorporating behavioral economics principles into your own work. Links to our webinar, related brief and full report are available here.

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Upside Down – $500 billion in Tax Incentives to Build Wealth in 2013

By Ezra Levin on 01/06/2014 @ 04:00 PM

Tags: Economic Inclusion, EITC, Federal Policy

Now that 2014 is here, we can step back and take a good look at how the tax code helped American families build wealth in 2013. Check out CFED’s new Federal Policy Brief, which reviews the half-trillion dollars in tax incentives for savings and investments last year.

Yes, half a trillion dollars. Also known as $500 billion. In one single year. This is what flows through the tax code in the form of exclusions, deductions and credits to help households save for emergencies, build nest eggs for retirement, and invest in homeownership, higher education and entrepreneurship.

If you’re getting a head start on your 2013 tax return, you’re probably wondering: how can I get my slice of that pie? Well, it’s easy!

The best thing you can do is become one of the richest 1% of American families, such as a four-person household making more than $654,000 a year. This is an important step. These folks get more than a third of the $411 billion spent on the four biggest wealth-building incentives in the tax code.

Can’t retroactively join the 1%? No problem! Just be sure to make it at least into the top 20%—an income of more than $162,800 will get a four-person household there. They rake in nearly 80% of these tax incentives to build wealth.

Whatever you do, don’t fall into the bottom 40% (I’m looking at families of four making less than $77,000). If you do, on average you’ll get less than 1/50 of your top-twenty counterparts’ benefits from these tax incentives. One fiftieth.

Now you might be asking yourself: why does the tax code mostly just help the already-wealthy build more wealth? And shouldn’t we be helping all families build personal nest eggs and save for college, homeownership and entrepreneurship?

Those are great questions to ask your members of Congress this election year. Go ahead and send them the Federal Policy Brief while you’re at it.

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Good News for Our Twitter Followers!

By Veronica Weis on 01/02/2014 @ 11:00 AM

Tags: News

We have good news for our Twitter followers who often find themselves economizing with characters while writing a tweet (this CFEDer included). As of December 30, we're now tweeting as @CFED instead of @CFEDnews. All of our account information has transferred along with the switch but please let us know if you notice any old references to @CFEDnews. That account is active but mostly as a reminder to use our new handle.

We hope that you continue to follow along with us for the latest asset-building news, resources and events from across the country. Thanks for noting the switch and enjoy your extra four characters!

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The Inclusive Economy: 2013 in Review

By Sean Luechtefeld and Veronica Weis on 12/23/2013 @ 12:00 PM

Tags: Assets & Opportunity Initiative, Events, Just for Fun, Recommended Reading

Here at The Inclusive Economy, we like to fancy ourselves as one of your go-to sources for all things asset building. Assuming you’re here because you think we do a good job discussing what you care about, then we thought it would be fun to let you know what you cared about most in 2013. So, we’ve compiled the top five most trafficked blog posts this year.

     5. Recording of the 2013 Scorecard Release Webinar (January)

     4. 2013 Action to Eliminate Asset Limits (March)

     3. Save the Date: 2014 Assets Learning Conference (July)

     2. New Scorecard Data Show Household Net Worth on the Decline (May)

     1. Wealth Inequality: Its Causes and Cures (March)

As these posts—and the word cloud above—prove, people come to our site looking for data about assets and wealth building. We hope we delivered these well in 2013, and have big plans for doing the same in 2014. In late January, be on the lookout for the release of the 2014 Assets & Opportunity Scorecard. Likewise, be sure to mark your calendars for our two signature events: the 2014 Children’s Savings Conference April 29-30, and the 2014 Assets Learning Conference September 17-19. Both of these events—to be held in Washington, DC—will highlight data that will prove useful to assets advocates.

Are there other things you’d like to see on The Inclusive Economy in 2014? Use the comments section below to let us know what topics you’d like to see covered here. And, if you’re feeling especially adventurous, consider being a Guest Contributor in 2014. Find out more here.

On behalf of all of our colleagues at CFED, we wish you the best for a happy holiday season and a prosperous and productive New Year!

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Asset-Building News Roundup - December 20, 2013

By Veronica Weis on 12/20/2013 @ 12:30 PM

Tags: News

Events

On January 8, 2014, The Pew Charitable Trusts will host Legacies of the War on Poverty, Lessons for the Future, which will examine the effects of anti-poverty policies in the US. The event will be webcast live.

On January 14, 2014, University of Wisconsin’s Center for Financial Security will host a webinar introducing the Lower Interest for Timeliness project, which aims to improve financial capacity by rewarding timely payments on automobile loans.

On January 30, CFED will release the 2014 Assets & Opportunity Scorecard. Stay tuned for webinar details.

Save the Date: CFED will host the 2014 Children’s Savings Conference, "From Aspirations to Achievement," in Washington, DC, April 29-30.

News

The Massachusetts Senate voted to raise the state’s minimum wage from $8 to $11 per hour over three years. The bill would also increase the hourly wage for tipped workers from $2.63 to $4 per hour. The bill now moves to the House.

The Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) finalized guidance that directs banks to end abusive bank payday lending. The guidance stresses the importance of requiring lenders to assess a customer’s ability to repay loans and establishes a limit on the number of loans a customer can take out each year.

To inform its rulemaking process, the federal Consumer Financial Protection Bureau is collecting information on the accuracy of data used by debt collectors, on collector communication tactics and on strategies to ensure consumers know their rights.

Lawmakers in Houston approved a city ordinance protecting employees from wage theft—the practice of withholding wages for hours worked by failing to pay overtime, requiring off-the-clock work or violating minimum wage laws. The law improves options for workers to report abuses and prohibits wage theft violators from doing business with the city.

From the Assets & Opportunity Network

108 leaders, supporters and funders from the Assets & Opportunity Network converged on Washington, DC, for the Network’s first-ever Leadership Convening. You can find a list of highlights and pictures from our social media pages here.

Job Opportunities

CFED is currently hiring a Director of Entrepreneurship, to lead the effort to reinvigorate the entrepreneurship portfolio, and a Senior State and Local Policy Manager, to provide leadership for a new local data project. Both positions will be based in Washington, DC.

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MASALA Giving Circle: Spicing Up Assets for Social Change

By Nisha Patel, Guest Contributor on 12/18/2013 @ 11:00 AM

Tags: Recommended Reading

Nisha Patel, Co-founder, MASALA Giving Circle

Pretty much any South Asian, or any avid cook for that matter, knows what masala is—that delicious blend of spices, the whole of which is richer and more amazing than the sum of its aromatic parts. And the same is true for the Mid-Atlantic South Asians Leveraging Assets—or MASALA—Giving Circle. We are a group of donors who pool our assets to make grants to nonprofits working to empower underserved and disadvantaged South Asian communities in the DC metro area. Each of us could certainly go it alone with our individual philanthropy, but by leveraging one another’s ideas and financial contributions, our dollars can go further and have greater impact.

Less than one percent of philanthropic resources in the United States go to Asian and Pacific Islander communities, and an even smaller percentage to South Asian communities in particular. Yet, as the Washington DeSi report identified, there are significant needs in the South Asian community in the D.C. region. And there are also potential South Asian donors with the capacity to give. MASALA Giving Circle connects donors with nonprofits and is part of a growing national movement and network of giving circles supported by Asian Americans and Pacific Islanders in Philanthropy (AAPIP) to build democratic philanthropy and community. Thanks to the support of AAPIP, all individual contributions from our members (and those of 30 plus giving circles across the nation) are matched 50 percent, creating an even greater incentive for collective giving. To date, AAPIP’s circles have made grants totaling over $1.3 million to more than 200 nonprofit organizations.

Giving circles represent a creative way to leverage assets for social change. I have spent my career working on solutions that create economic opportunity and reduce inequity in the US. Fifteen years ago, I got my M.S.W. at Washington University in St. Louis, where Assets and the Poor is practically required reading. So, I do believe there is a case to be made for leveraging assets for goals such as home purchase, higher education and small business capitalization. However, I also believe strongly that personal assets can be applied toward democratic and innovative philanthropy. The minimum contribution for voting membership in the MASALA Giving Circle is $250. If members put aside just $25 per month for ten months, that’s $250. And this year, those combined small contributions have been leveraged to produce $15,000 in grants to three top-notch grassroots organizations for whom a little goes a long way—and who are not on the radar of big philanthropy: CHAI, DVRP and APALRC.

My last job was actually in big philanthropy, working as a program officer at the Bill & Melinda Gates Foundation. I greatly admire the way Bill and Melinda have leveraged their assets to be a force for good globally—and inspired many others in the one percent to do the same with the Giving Pledge. What if those of us in the 99 percent contributed even just one percent of our assets and pooled them to underrepresented causes locally? Together, I think we could spice up the assets movement and shake up philanthropy.

For more information about MASALA Giving Circle, visit http://masalagc.wordpress.com/.

For more information about AAPIP’s national network for giving circles, visit http://aapip.org/.

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Staff Profiles: Meet CFEDer Bill Pate

By Veronica Weis on 12/17/2013 @ 11:30 AM

Tags: Just For Fun

I recently sat down with CFED's new Senior Program Evaluator, Bill Pate, to learn more about his fascinating work and projects, experience at CFED and how his role here will benefit the asset-building field.

Q: How did you become interested in program evaluation?

It happened by accident. I was working for the American Psychological Association as a Research Associate and our office was asked to propose an evaluation for an intensive four week summer experience for underrepresented minority graduate students in neuroscience. My experience to that point had been experimental research, so I designed something from that perspective with input from my supervisor. That evaluation project was funded and I’ve been working on it now for 13 years.

Q: What has been the most interesting/challenging evaluation project that you’ve worked on?

That summer program evaluation has been the most educational. The program had already been in existence for over 10 years, so some measures were in place, but others were not. I needed to blend archived data with information from new surveys, searches of national databases, and work closely with instructors, administrators, and the students. I’ve been fortunate to have great collaborators help me understand and prepare for the demands of the competitive renewal process for federally funded programs.

Q: What attracted you to CFED? How has the experience been so far?

Before coming to CFED, I was an independent consultant for two years. The opportunity to be a Senior Program Evaluator for such an innovative and purpose-driven non-profit was both a great change of pace and a chance to be part of something big again. Since coming to CFED, I’ve been learning so much about the asset-building field and how program evaluation has and can be applied to this field.

Q: What’re the main projects that you’re focusing on at the moment?

Helping to edit two reports for CFPB, gearing up for two learning clusters taking place in 2014 and beyond, and providing technical assistance for a number of existing projects.

Q: How do you feel that your role at CFED could help the field?

I think it’s all about leveraging program evaluation expertise for the field. Having an in-house evaluator allows CFED to rapidly deploy technical assistance as needed for existing work, design emerging evaluation projects, and build evaluation capacity.

Q: Favorite activity around DC?

One of my favorites is catching performances at Woolly Mammoth. Really looking forward to the Pajama Men.

Q: Are you saving for anything special?

Body work and paint for my 1973 Chevy Nova.

Q: Last question is a fun one. Do you have a favorite song?

My favorite song of the moment is Tipp City by the Amps.

Thank you for sharing your story with us, Bill!

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Tomorrow: Small Changes, Real Impact

By Sean Luechtefeld on 12/16/2013 @ 12:00 PM

Tags: Behavioral Economics, Events

Applying Behavioral Economics in Asset-Building Programs

Tomorrow! | 3 - 4 pm EST

Last year, the BETA Project was launched to improve the effectiveness of products and services designed to help people bolster their financial security. In the 12 months since, we’ve worked closely with three organizations to understand a problem in their program, design solutions and test them.

Tomorrow, join CFED, ideas42 and the Citi Foundation as we discuss findings from this year-long project. During the webinar, speakers will report on the research conducted at BETA Project partner sites, explore the implications of applying insights from behavioral economics to asset-building program design and provide helpful tips on how to incorporate the behavioral perspective into your organization. More information on the project is available here.

Speakers:

  • Daria Sheehan, Citi Foundation
  • Katy Davis, ideas42
  • Matthew Darling, ideas42
  • Pamela Chan, CFED

Advanced registration is required for the event and space is limited. Click here to sign up.

If you have any questions, please don’t hesitate to contact Pamela Chan, Senior Research Manager, at pchan@cfed.org.

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Asset-Building News Roundup - December 13, 2013

By Veronica Weis on 12/13/2013 @ 04:00 PM

Tags: News

Events

Exactly 50 years after President Johnson declared a "War on Poverty," Spotlight on Poverty and Opportunity, with support from the National Poverty Center at the University of Michigan's Gerald R. Ford School of Public Policy and the Russell Sage Foundation, will host a forum offering diverse perspectives on the effects of anti-poverty policies in the U.S. over the past five decades and in the years to come. The event will focus on research highlighted in a new book, Legacies of the War on Poverty (Russell Sage Foundation, September 2013), featuring a discussion among the book's editors and commentators from across the political spectrum. The forum will be held from 9-11 a.m. EST at The Pew Charitable Trusts in Washington, D.C., and will be webcast live. Click here for more information. Click here to register for the live webcast.

Save the date for this January 9 conference, Moving to Higher Opportunity Summit: Exploring Options and Opportunities for Housing Mobility. The U.S. Department of Housing and Urban Development (HUD) will host a day-long conference to raise awareness of the advantages of programs that promote housing mobility and improve access to better housing and education for low-income households. Deputy HUD Secretary Maurice Jones will provide keynote remarks. The event will be held from 9 a.m. - 4 p.m. EST at the Montgomery County Community College in Blue Bell, Pennsylvania. Click here to register.

News

The Northwest Area Foundation, in partnership with the Evans School of Public Affairs at the University of Washington and the Humphrey School of Public Affairs at the University of Minnesota, launched the Ideas for Action Award to honor new thinking and programs across the country that help low-income people build better futures for themselves and their families. We encourage your organization, or others doing innovative work in your community, to consider applying for the 2013-14 award. Send in your proposal here by January 24, 2014.

The Illinois Asset Building Group launched an online timeline of policies and practices this week that have contributed to the expanding racial wealth gap in this country. According to the timeline, the racial wealth gap — measured as the difference in wealth accumulated by white households and black and Latino households — is the largest it has been since the Federal Reserve began tracking it. In 2010, for every dollar held by the median black or Latino family, the median white family had eight. To explore the timeline, click here.

From the Assets & Opportunity Network

The Indiana Institute for Working Families has announced their 2014 Policy agenda in order to better prepare Indiana's working families for a more secure economic future. To read the agenda, click here.

Don't miss the Illinois Asset Building Group's top 4 takeaways from the Assets and Opportunity Leadership Network Convening earlier this month.

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Is the Value of a College Degree Worth the Cost?

By Dominique Derbigny on 12/11/2013 @ 02:00 PM

Tags: Children's Savings Accounts, Education, Matched Savings

Lately we’ve been hearing a lot of folks proclaim that college has gotten so expensive that it is no longer a worthwhile investment. They say that with rising tuition costs and student loan debt surpassing the trillion-dollar mark nationwide, maybe college isn’t for everyone. Yet we know that a college education is the linchpin to upward mobility for many people, particularly for students from low- and moderate-income (LMI) families. Rather than abandoning higher education altogether, we should figure out how to reform the way we finance higher education to make it attainable for students from LMI families. I recently attended two events that explored innovative strategies to address the challenge of paying for college.

At a Hamilton Project event on October 21, 2013, Sandy Baum and Judith Scott-Clayton–authors of Redesigning the Pell Grant for the Twenty-First Century–proposed making major reforms to the Pell Grant program including:

  • Simplifying the eligibility and application process
  • Providing financial guidance and coaching services to incoming college students
  • Providing visible incentives to reward college completion and not just enrollment

The suggested reforms help to promote both college enrollment and completion among LMI students, addressing the current challenges of low graduation rates and a missed opportunity to encourage college going under the existing program.

During the same event, Susan Dynarski, Professor of Education at the University of Michigan, discussed developing an income-contingent student loan repayment plan that would:

  • Create a debt repayment system that automatically raises or decreases monthly payment amounts based on earnings
  • Forgive any remaining debts after 25 years of payments
  • Include an interest rate that adjusts annually over the life of the loan and is not nominally capped
Eliminate in-school interest subsidies (e.g., subsidized Stafford loans)

While I’m not convinced about extending the standard repayment period by 15 years, I believe that the automatic nature of this proposed system eliminates the arduous and often daunting process of making changes to student-loan repayment plans each time a borrower has fluctuations in income.

I also virtually attended a Kansas University Assets and Education Initiative event on November 7, 2013, entitled, “Rethinking the American Dream: Education, Student Debt and Asset Building.” William Elliott noted that shifting more of the costs of college to loans has a negative impact on college enrollment, completion and financial health after college particularly for LMI students. Instead, he suggested that asset-based financial aid strategies, like Children’s Savings Accounts, can increase college enrollment and completion rates, as well as lower student debt for LMI students. Not only do savings accounts promote college attendance, but they make it easier for individuals to cover costs and complete their education once they get there.

With persistent differences in the earnings potential of college graduates as compared to high school graduates, it’s clear that college degrees are not going out of style anytime soon. We need to continue to explore ideas for changing the way we finance higher education to ensure that all Americans have an equal chance of attaining this valuable asset.

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Asset-Building News Roundup - December 6, 2013

By Veronica Weis on 12/06/2013 @ 12:30 PM

Tags: News

Events

Please join CFED and the Center for American Progress on December 10 from 9:30-11 am EST for a discussion on tax incentives and retirement savings in the Dirksen Senate Office Building, Room SD-G50. This event will address how the tax code greatly encourages retirement savings by high-income earners while leaving behind middle- and lower-income families. The event will also discuss policy reforms that have the potential to expand retirement security for all Americans. Senator Elizabeth Warren (D-MA) will give remarks, followed by a panel discussion and audience Q&A. This event is free, but space is limited, so advanced registration is required. Click here to RSVP via email. Can't make it? Follow along with us on Twitter using #saveforretirement.

On Tuesday, December 17, the BETA Project Team will host a webinar called "Findings from the BETA Project" from 3-4 pm EST. The webinar will explore findings from the Behavioral Economics Technical Assistance Project, a year-long collaboration between CFED, ideas42 and the Citi Foundation. Click here to register.

News

President Barack Obama directly addressed increasing economic inequality and stagnating mobility in a speech this week in Washington, D.C. As The New York Times notes, "He will spend the rest of his presidency, he said, on “the defining challenge of our time:” reducing economic inequality and improving upward mobility." For the full transcript, click here.

Does your neighborhood determine how far up the economic ladder you can climb? A new Pew study suggests so. The report concludes that neighborhoods play an important role in determining a family’s prospects of moving up the economic ladder. Metropolitan areas where the wealthy and poor live apart have lower mobility than areas where residents are more economically integrated.

From the Assets & Opportunity Network

What happened at the 2013 #AOConvening? At the A&O Network Leadership Convening, Network Lead Organizations learned about salient asset-building issues, built relationships with peers, educated policymakers and decided the future direction of the Network. Whether you attended the conference or couldn’t make it to DC, you can follow what happened in one of three ways here.

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New Holiday Campaigns Support Students’ College Dreams

By Michael Chasnow on 12/06/2013 @ 10:00 AM

Tags: Children's Savings Accounts

As 2013 comes to a close, the 1:1 Fund is ramping up its efforts to support the college dreams of low-income children by matching those dreams with savings in the bank.

In San Francisco, the 1:1 Fund is partnering with the Lt. Governor Gavin Newsom and Crowdtilt to encourage San Francisco kindergarteners to start saving for college. Through San Francisco’s universal college savings program, Kindergarten to College, over 13,000 public school students (60% of whom qualify for free or reduced lunch) now have their own college savings account. To date, parents in San Francisco have saved more than $420,000 of their own dollars towards their children’s college dreams. One of the big ways Kindergarten to College encourages families to save and plan for college is by matching the first $100 in parent contributions dollar-for-dollar. With support from Lt. Governor Newsom and Crowdtilt, the 1:1 Fund is raising the needed matching dollars to provide this incentive for every kindergartener that started school this year. Please check out the campaign here.

In New York City, the Children’s Aid Society launched a new College Savers Program at the beginning of October. Designed in partnership with Citibank, ideas42 and CFED, and with initial support from Justin and Lauran Tuck’s R.U.S.H. for Literacy, the College Savers Program already has several families that have started saving toward their children’s college futures. You can learn more about the College Savers Program here, and our efforts to begin raising matching funds to encourage eligible participants to start saving and planning for college.

It’s great to see our newest partner make great early progress, and we look forward to updating you on the future success of all of our 1:1 Fund partners.

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What Are We Missing When We Talk About Poverty?

By Alicia Atkinson on 12/05/2013 @ 04:00 PM

Tags: Economic Inclusion, Individual Development Accounts

As a Psychology major in college I was assigned to take Rotters’ 1966 “Locus of Control” test in my Child, Family and Community class my senior year. The thirteen-item questionnaire evaluates whether you have an “external” or “internal” locus of control. Those who score low, or “internals,” believe that the events in their life are primarily consequences of their own actions. “Externals,” those with high scores, place less importance on their own behavior and believe the events in their life are generally outside of their control.

My score categorized me as an “external,” which Rotter claims could be a sign of hopelessness and even depression; however, when asked to explain the reasons for my responses, I said that I knew the circumstances of our lives did not always come down to how hard we work but rather start simply from where we are born. Children who are born into families experiencing poverty grow up in poor housing conditions, poor education systems, poor health and sometimes violent communities and are more likely to experience poverty in adulthood.

Opportunity Nation recently released their new Opportunity Index which illustrates the strong affect a ZIP code can have on the future of a child. The Index looks at economic, educational and civic factors that contribute to upward mobility and creates an overall “opportunity score” for each county in each of the 50 states. This, as well as similar research, illuminates how much your destiny is outside of your control.

Despite research outlining the stark differences in accessing opportunity in our country, mainstream rhetoric often puts the blame on individuals for their circumstances. While many Americans are quick to point their finger on others, we hardly take into account the opportunity and privilege many of us have accessed in our lives. At the 2012 Assets Learning Conference, Cory Booker opened up the conference and openly acknowledged the privilege in his life, saying, “My dad would look at my brother and I and if we ever got proud, he would say ‘Boy, don’t you dare walk around here like you hit a triple, you were born on third base.’”

Americans are often uncomfortable acknowledging their privilege because we are raised to believe we did it all our own. This might seem like a harmless practice because we want children to believe they are in charge of their own destiny and that their hard work will pay off. (Or in other words, the United States tends to raise “internals.”) However, this philosophy feeds an overall feeling of inherent meritocracy and a deep sense of entitlement that hard work will always pay off and result in success.

Despite broad and deep notions that we have succeeded without assistance, history demonstrates that policy has stepped in to help certain individuals get ahead while leaving others behind. For example, the Homestead Act of 1862, which was one of first government-sponsored asset-building policies, was largely unavailable to African-Americans due to racism and the lack of assets needed to purchase the land being granted. Similarly, there have been historic differences in access to credit and many decades of residential segregation, such as redlining that has decreased equity in housing for families; we see today that homeownership rates for white families are 28.4% higher than the homeownership rates for black families. These policies allowed certain individuals to begin to build wealth, which led to years of intergenerational wealth transfers. New research from the Institute on Assets and Social Policy shows that among individuals receiving an inheritance, whites receive about ten times more wealth from family members than African-Americans.

Although many families and individuals do not want to admit it, their families’ wealth holdings were increased by government-sponsored policies. Acknowledgement of the historical access to asset-building policy is not often highlighted in the mainstream media; rather we are much more likely to hear about people who beat the odds. As long as this dominates the mainstream rhetoric, we will not see the importance of designing policies that allow families to access wealth-building vehicles.

The way we frame and view individuals’ plight into poverty greatly influences how we believe assistance should be delivered. If you believe you hit a triple then you probably find it hard to believe why others can’t do the same and therefore would most likely not support programs that provide opportunities for families to gain financial stability. However, if you can sit and recognize the fortunate events in your life, you may be able to begin to view others’ situation with more compassion and understanding. Policies that support Individual Development Accounts and Child Savings Accounts provide much needed opportunity to low-income families to purchase houses, invest in small businesses and save for education. All in all, we need to start recognizing that none of us do it all on our own.

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Recap: Big Ideas for Job Creation

By Sean Luechtefeld on 12/02/2013 @ 04:45 PM

Tags: Entrepreneurship, Events

EDITOR'S NOTE: Last Monday, the Aspen Institute hosted "Big Ideas for Job Creation," an event at which CFED's Ida Rademacher was a featured speaker. In case you missed it, Aspen sent along this recap of the event. If you were there, use the comments below to share your takeaways!

Aspen Institute: Microenterprise and Job Creation

Just in time for Small Business Saturday, the Economic Opportunities Program hosted an event at the Aspen Institute's headquarters highlighting the role that microbusiness plays in creating jobs, and identifying policies to further catalyze the growth and expansion of these small firms. Don Graves, Deputy Assistant Secretary for Small Business, Housing and Community Development, U.S. Department of the Treasury; and Executive Director of the President's Council on Jobs and Competitiveness, set the stage for the event with his opening remarks. Joyce Klein, the Director of EOP's FIELD program, then facilitated a conversation among Elaine Edgcomb (FIELD), Beth Kregor (Institute for Justice Entrepreneurship Clinic), Ida Rademacher (CFED), Connie Evans (Association for Enterprise Opportunity), and Christy McFarland (National League of Cities).

Key highlights from the event include:

  • Microbusinesses are responsible for an estimated 41 million jobs in the U.S., including direct, indirect, and induced employment effects.
  • Both our federal tax code and local business licensing requirements inhibit many microbusinesses from formalizing and growing.
  • There are opportunities to better leverage existing policies--including the Community Development Block Grant program, state Capital Access Programs, and the Workforce Investment Act--to support microbusiness formation and growth.

As panelist Connie Evans noted, "Part of the policy challenge lies in data that helps policy makers to understand the role that microbusinesses play in our economy. They need to understand the labor market and economic trends of the 21st century, and realize that microbusinesses are and will increasingly be a key source of employment."

The event was funded by the Annie E. Casey Foundation as part of its Big Ideas for Job Creation initiative. The event was covered live by CSPAN, and live-streamed on www.aspeninstitute.org. To view a recorded version of the event, visit the Aspen Institute's web site. Copies of the research papers that formed the core of the discussion can be downloaded at www.bigideasforjobs.org/the-ideas.

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Happy Thanksgiving from CFED!

Posted on 11/27/2013 @ 03:00 PM

Tags: Just For Fun

We wish you a happy holiday and safe travels if you're heading out of town for Thanksgiving!

P.S. Don't forget to support a local small business this Saturday, November 30th.

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Eliminating Asset Limits Helps Families Save

By Ezra Levin on 11/26/2013 @ 02:30 PM

Tags: Federal Policy, News

Read CFED's new Federal Policy Brief on Asset Limits for Federal Programs.

As Congress debates the Farm Bill, we here at CFED are focused on an eye-glazing phrase: “broad-based categorical eligibility.” That incomprehensible wordsmithing refers to a feature of the SNAP program (formerly Food Stamps) that allows families that receive TANF benefits to automatically receive SNAP benefits. This simplifies SNAP administration, and, crucially, it allows states to eliminate the $2,000 asset limit that would otherwise apply to most families on SNAP.

Raising asset limits is a no-brainer for state administrators who want low-income families to save, which is why 41 states have used this provision to raise or eliminate SNAP asset limits. But this wonderful provision is on the chopping block. The House Farm Bill proposal eliminates “broad-based categorical eligibility,” reinstating the $2,000 asset limit for every state.

Will this really impact families all that much? Yes, it will.

Just as an example, consider the Earned Income Tax Credit (EITC), which boosts tax refunds for low-income working families. Last year, 27 million households qualified for the EITC, with an average refund boost of $2,200.

Now think about what happens if a family decides to save that refund for the future. Currently, in states that have eliminated the SNAP asset limit, families can put that tax refund away for a rainy day without fear of losing public benefits that they need to make ends meet. But without “broad-based categorical eligibility,” families that choose to save that money risk losing their SNAP benefits.

So let’s review the House Farm Bill proposal

While families in most states can currently save without fear, the House Farm Bill reforms will give families two options:

Option 1

Earn income -> get tax refund -> save your tax refund for the future -> lose your SNAP benefits

Option 2

Earn income -> get tax refund -> spend your tax refund today! -> keep your SNAP benefits

How is this better than letting low-income working families save for the future without penalty? It’s not. This is bad policy that eliminates state flexibility and stops families from investing in the long-term for themselves and their children.

For more information on asset limits, read our new Federal Policy Brief, which describes how eliminating these barriers to saving can help families that are struggling to get ahead.

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Asset-Building News Roundup - November 22, 2013

By Veronica Weis on 11/22/2013 @ 03:30 PM

Tags: News

Events

The Consumer Federation of America will host its 26th annual Financial Services Conference, which will include discussion about new research, new policy proposals, and legislative and regulatory prospects. Click here for more information.

News

The 2009 federal Recovery Act’s temporary boost in SNAP benefits ended on November 1, cutting benefits for nearly 48 million recipients. To see how the cuts are hitting different parts of the US, check out this NPR piece.

The federal Consumer Financial Protection Bureau (CFPB) began accepting payday loan complaints, which it commits to resolve within 60 days. The Bureau also penalized two non-bank mortgage lenders for reporting erroneous data to regulators. Read more here.

From the Assets & Opportunity Network

The Coalition for a Prosperous Mississippi recently shared news of a report which argues that Mississippi must provide more aid to low-income college students.

According to Catalyst Miami, ten states have banned cities and counties from passing paid sick days, including Arizona, Florida, Georgia, Indiana, Kansas, Louisiana, Mississippi, North Carolina, Tennessee, and Wisconsin.

The JPMorgan Chase Foundation and the Cities for Financial Empowerment (CFE) Fund announced the creation of Bank On 2.0, a new effort to create a unified, national approach to delivering safe, affordable banking products and services to low-income and underbanked people through municipal programs across the country like Bank On Chicago.

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