Check Out the New and Improved 1:1 Fund Website
By Carl Rist on 10/23/2013 @ 09:00 AM
We are very excited to announce the launch of our new website for the 1:1 Fund and invite you to take a look! The 1:1 Fund is a CFED platform that supports the college dreams of low-income children by ensuring that those dreams are matched with savings in the bank. The 1:1 Fund has learned a lot in our first year and we’re striving to create a more interactive, easy to share and exciting platform to match kids’ college dreams dollar for dollar.
Visit the new website to:
- Get the latest updates, read savers stories and donate to a program in your area all from our dynamic program pages.
- Learn about the impact of child savings programs.
- Stay current on what's happening at 1:1 Fund and in the world of children's savings accounts on our blog.
The 1:1 Fund team hopes you enjoy our new website and visit often to see how our child savings programs are doing! Also, if you have any feedback or comments on the new website, our team would love to hear from you.
Webinar: How the Federal Tax Code is Driving Inequity and What You Can Do About It
By Veronica Weis on 10/22/2013 @ 04:00 PM
Thursday, November 7 | 2 - 3 pm EST
The primary purpose of the U.S. tax system is to generate public revenue, but it also serves as a vehicle to advance public policy goals. For example, the tax code includes provisions that incentivize taxpayers to take certain action – like buying a home, or saving for higher education or retirement – by providing them with tax credits, deductions, exclusions, and preferential rates. These tax benefits, known collectively as “tax expenditures,” reduce government revenues, disproportionately benefit wealthier households, and provide limited benefits for low- and moderate-income families and households of color.
Deliberations about reforming the federal tax code – including discussions about the cost and benefits of various tax expenditures – are underway in Congress. These discussions provide a unique window of opportunity for advocates to call for a more inclusive, progressive, and equitable tax code – one that provides fair benefits to all U.S. households.
Please join the Asset Funders Network, CFED, PolicyLink and our co-hosts (listed below) for this upcoming webinar about why tax reform matters and opportunities for change. This webinar is intended to prepare practitioners and advocates for critical windows of opportunity to engage in tax reform debates and advocate for policies that enable low- and moderate-income families to access a greater share of the benefits.
- Heather McCulloch, Manager, Asset Funders Network/Tax Policy Project (moderator)
- Jeremie Greer, Director of Government Affairs, CFED
- Solana Rice, Associate Director, PolicyLink
- Eugene Steuerle, Co-founder, Urban-Brookings Tax Policy Center
This webinar is free, but advanced registration is required. Click here to register.
Webinar Co-hosts: CFED, The Center for Global Policy Solutions, Center for Social Development, ColorOfChange, The Greenlining Institute, Insight Center for Community Economic Development, Institute on Assets and Social Policy, Institute for Women’s Policy Research, National Coalition for Asian Pacific American Community Development, National Urban League, National Council of La Raza, New America Foundation, Oklahoma Native Assets Coalition, PICO National Network, and the UCLA Asian American Studies Center.
SF Savers: College is Part of “How to Have a Fun Life” for Barry and His Son Jaray
By Claire Sorrenson, 1:1 Fund on 10/21/2013 @ 01:30 PM
EDITOR'S NOTE: This story originally appeared on the 1:1 Fund blog, which you can read here.
Jaray Perkins, an energetic kindergartener at Sherman Elementary School, loves riding his bike and doing sports as diverse as martial arts and rock climbing. When it comes to school, “you have to drag him away,” according to father Barry Perkins.
The landscape of education has changed a lot since Barry’s youth. “College is way more expensive than when I went.” In fact, Barry calculates that his son’s preschool cost more per semester than his college undergraduate degree. But, says Barry, “I believe in planning” now for Jaray’s future education.
Barry highlights the importance of setting early expectations for his son. “We talk about your choices as an adult and how you can have a fun life.” A fun life means having the freedom to make choices, which means having a job that allows you that freedom. Says Barry, “we talk about how you have more options” with a college degree. Barry definitely sees college in Jaray’s future. For Barry, it goes beyond surviving in today’s economy: “college is a good place to figure out what you do and don’t like.”
Asset-Building News Roundup - October 18, 2013
By Veronica Weis on 10/18/2013 @ 03:00 PM
A&O Network Lead Organizations, Illinois Asset Building Group and Hawai’i Alliance for Community-Based Economic Development, will be presenting during a webinar hosted by the Shriver Center, Encouraging Savings: How Hawaii and Illinois Eliminated their TANF Asset Tests, on October 22.
On November 7, the emerging Connecticut Asset Building Collaborative will publicly launch at an event in New Haven featuring New York City Commissioner of Consumer Affairs, Jonathan Mintz.
The Consumer Federation of America will host its Financial Services Conference December 5-6 in Washington, DC.
Enforcing Small Dollar Lending Protections: Arkansas Attorney General McDaniel filed a lawsuit against three companies offering payday loans online, a practice that is prohibited in Arkansas. One organization, Western Sky Financial, claims to be a tribal entity exempt from the law. Separately, an Iowa administrative court ruled that online payday loans made by tribal lenders are subject to the state's payday lending law. Read more here.
Consumer Protection: The federal Consumer Financial Protection Bureau (CFPB) reiterated that employers cannot require employees receive pay on a payroll card of the employer’s choosing. The CFPB also articulated payroll card regulations, including the requirement for financial institutions to disclose all fees associated with the cards.
The CFPB conducted field hearings in Itta Bena, Mississippi, and Chicago, Illinois. In Mississippi, CFPB Director Cordray and staff heard from consumers about the effects of predatory lending in the region. In Illinois, the CFPB shared results of a report on the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act) and heard from consumers about the use of credit products in the community.
From the Assets & Opportunity Network
Think there's nothing going on in Washington? Even after the The House continues to push for drastic cuts to the food assistance program, SNAP. Continued pressure from you can maintain states' right to waive asset tests! Last week, the House named conferees for a House-Senate committee that will reconcile differences between versions of the Farm Bill. The main sticking point will likely be funding for SNAP. Where the Senate bill cuts $4 billion over 10 years and retains state flexibility to waive asset tests, the House bill cuts nearly $40 billion, achieved largely by eliminating "broad-based categorical eligibility"—the mechanism states use to waive the SNAP asset test. If enacted, the House version would force more than 40 states—probably including yours—to reinstate low federal asset limits and would deny SNAP to 4-6 million low-income people.
The YWCA of Metropolitan Dallas reports that although women have regained more jobs than men since the end of the Great Recession, most of those are in low-paying jobs such as waitresses and housekeeping, according to a recent study.
In Photos: Opportunity Finance Network Conference & Native CDFI Gathering
By Kim Pate on 10/18/2013 @ 11:00 AM
All week, I've had the pleasure of attending the 2013 Opportunity Finance Network (OFN) Conference here in Philly. It's been an incredible experience, and it's been great to see old friends and meet new ones from across the country.
While I'm still taking it all in, I wanted to share a few photos. This first one is the outgoing Board of the Native CDFI Network, whose mission is to be the national voice and advocate for creating access to resources for Native people. Right after this photo was taken, we elected new Board members for the upcoming year.
Here's another shot of some of the board members, this time signing the Native CDFI Network Articles of Incorporation.
Tanya Fiddler, Chair of the Board of the Native CDFI Network, opened the meeting. Tanya also sits on CFED's board, and has been a longtime friend to CFED and to me.
If you ever get the chance to head to OFN, do it. It's a great conference with a really diverse program, making it ideal even for those who don't work directly with CDFIs.
Did you attend OFN or the Native CDFI Network gathering? Share your thoughts with us below!
New National Effort to Help Unbanked and Underbanked Adults: Bank On 2.0
By Jonathan Mintz, Guest Contributor on 10/16/2013 @ 01:30 PM
More than one in ten adults in America are disconnected from the mainstream banking system and pay out extra dollars for costly and unproductive fringe products and services as they struggle with their monthly finances. This startling truth– and the wasted energy and dollars spent compensating for this disconnect—has long posed a critical policy challenge for public and private dollars aimed at helping working adults achieve financial stability and growth. For decades, nonprofit leaders, national advocates, and more recently local governments have attempted numerous efforts, including through innovative outreach and financial institution partnerships, to forge more productive mainstream connections. In response to this crisis and all that has been learned from these assorted efforts, the JPMorgan Chase Foundation and the Cities for Financial Empowerment Fund (CFE Fund) have announced the start of a nation-wide approach to linking safe and affordable products and services from banks and credit unions across the country with local government delivery streams of programs and services.
The national program, Bank On 2.0, will build upon the success of the multi-city Bank On movement and other local banking access initiatives, leveraging the experience and expertise of movement leaders (including San Francisco’s Office of Financial Empowerment, the City of Seattle, CFED, National League of Cities, and so many others), bank and credit union partnerships, and federal regulators. Bank On 2.0 will create a unified, national approach to identifying both appropriate products and services as well as effective municipal delivery strategies to help reach millions of people in need across the country.
The Bank On 2.0 initiative is critical to advancing the mission of the CFE Fund, which is to help cities improve the finances of low-income residents by embedding financial empowerment strategies into municipal programs. Successful financial empowerment programs not only help those in need with their finances, but also deliver a “Supervitamin Effect” to host programs in cities, powerfully improving social service program outcomes.
As one example of this approach, New York City experimented with inserting a safe bank account into payment streams of its Summer Youth Employment Program, which provides New Yorkers between 14 and 24 with paid employment for up to seven weeks in July and August. Program registration of these young adults, so many of whom lacked a bank account, was an ideal opportunity both to leverage particularly safe and appropriate accounts and consumer uptake.
As planning begins for this exciting multi-year Bank On 2.0 national initiative, we will be inviting mayors, banking organizations, federal regulators, philanthropic partners, and regional and national associations to join us to develop and test the most effective national approach for connecting the under-banked to safe, affordable mainstream banking services. The CFE Fund will soon release funding opportunities for promising municipal pilots, as well.
For more information and to stay connected to the CFE Fund’s Bank On 2.0 initiative, email us at firstname.lastname@example.org. Check out our website at www.CFEfund.org for updates on all our CFE Fund programs, current job opportunities, and to sign up for our mailing list to receive “The Supervitamin Quarterly” e-newsletter.
Jonathan Mintz is Commissioner of the New York City Department of Consumer Affairs and President of the CFE Fund.
The 1:1 Fund Expands to New York
By Carl Rist on 10/14/2013 @ 01:30 PM
The 1:1 Fund team was honored to attend an energizing event on October 1 at the Children’s Aid College Prep Charter School in the Bronx that marked our first expansion beyond the 1:1 Fund’s initial two pilot sites (San Francisco Bay Area and Mississippi). With kindergarteners, their parents and a special guest appearance by NFL star, Justin Tuck, and his wife, Lauran, we celebrated the launch of the College Savers Program.
This new and innovative children’s savings program, developed in partnership with Citibank, ideas42 and CFED, and with initial support from Justin and Lauren Tuck’s R.U.S.H. for Literacy, will initially work with 170 children, including 1st and 2nd graders in CAS’s College Prep Charter School and youth participating in CAS’s African American Male Initiative. By the launch, 135 families (or 79%) had already signed up. All participants will receive a Citibank savings account with a $100 initial gift, along with a dollar for dollar match up to the first $100 in savings, a $50 incentive for parents that enroll in automatic bill-pay to contribute to the account and eligibility for raffle prizes by making deposits.
The most exciting part about the launch was the announcement by the Tucks of their $100,000 investment in the College Savers Program (via the 1:1 Fund) and their conversation with parents about their own experiences and their hopes for all of the children in the program. Justin Tuck noted that he and his wife are both fortunate to be Notre Dame graduates and that they want participants “to have the same opportunity we had.”
Since studies show that low-income students with just $500 in a college savings account are three times more likely to enroll in college and four times more likely to graduate, starting to save during the school years is a big step in seizing that opportunity. And it’s also about creating a vision for the future. As Justin Tuck noted in his final remarks at the event: “I believe in you guys and hope you believe in yourselves. I’m your fan, too!”
To see more photos from the event, check out the slideshow below.
What Music Reminds You of Asset Building?
By Veronica Weis on 10/11/2013 @ 05:30 PM
This week, we asked our Twitter followers and Facebook audience to share music that reminds them of their work in the asset-building field. The suggestions that came in were creative, inspiring and downright hilarious. For your viewing amusement, we've put together a video playlist on Youtube and a longer version for Spotify users.
A big thank you to all of those music lovers who entertained us with their answers! I've included some highlights from social media below:
We're thinking "She works hard for the money" by Donna Summer would work.— CRHDC (@CRHDC) October 7, 2013
@CFEDNews Money by Pink Floyd— David Rothstein (@dbrothstein) October 7, 2013
@CFED For the love of Money.. The O'Jays— ET Winzer (@ETWinzer) October 7, 2013
Don't miss the Facebook post that got the most responses:
Have a song (or two) that we might've missed? It's not too late! Submit it in the comments below and I'll add it to the Youtube and Spotify playlists.
Asset-Building News Roundup - October 11, 2013
By Veronica Weis on 10/11/2013 @ 11:00 AM
Next week, the Southern Regional Asset Building Coalition Conference is taking place in Jacksonville, FL from Tuesday through Thursday.
On October 15-18, the Opportunity Finance Network Annual Conference is taking place in Philadelphia, PA. CDFI staff, funders, policymakers and investors from around the country will celebrate transformational work, learn from each other and tap into the spirit of Philadelphia.
The big news out of Washington this week and last has centered around the government shutdown and debt ceiling impasse. One perspective near and dear to CFED's policy issues is how the shutdown is affecting the nation's poor. The New Yorker shared a heartbreaking piece which outlines the programs most hurting. These include Head Start, Temporary Assistance for Needy Families (TANF), Meals on Wheels and the Special Supplemental Nutrition Program for Women, Infants, and Children, known as WIC.
In that vein, our friends at the Center for American Progress shared a revealing post highlighting the impact of the government shutdown on people of color.
The Mission Asset Fund was profiled in Marketplace this week for its efforts to improve the credit scores of low-income borrowers, a critical step toward economic mobility.
From the Assets & Opportunity Network
This past Friday, Catalyst Miami partnered with Florida Blue Foundation to host "Affordable Care: How to Get It and How to Share It." Want to see some of the highlights? Click here.
Michigan's Save to Win Program Demonstrates Successful Way to Encourage Savings
By Kori Hattemer on 10/10/2013 @ 12:00 PM
In 2009, the Doorways to Dreams (D2D) Fund partnered with eight Michigan credit unions to launch Save to Win ™ (STW), the first large-scale prize-linked savings product in the nation. Accountholders who save using the special balance building 12-month certificates of deposit (CDs) are entered into raffles for cash prizes with each deposit of $25 or more. Four years later, 58 credit unions in Michigan now participate in the program and 40,000 unique accountholders across the state have saved $72.2 million from 2009-2012.
D2D has been tracking the program in Michigan since its inception and recently published highlights from 2012, which emphasize the importance of developing innovative ways to encourage financially vulnerable households to save. Highlights from Year 4 of the program include:
- Accountholders appear to be developing long-term savings habits. Each year, accountholders are given the option to reopen or "rollover" their accounts, and a high percentage of accountholders rolled their accounts over from 2011 to 2012. Ninety-one percent of the accountholders who enrolled in 2009 and were still enrolled in 2011 once again rolled their accounts over in 2012. A high percentage of accountholders who signed up in 2010 (83%) and 2011 (77%) also rolled their accounts over from 2011 to 2012.
- Accountholders used their savings for a variety of purposes. While many accountholders rolled their accounts over in 2012, accountholders also used their savings to meet short-term needs. Account balances decreased in May and September, so accountholders may have used the funds to pay for summer child care or back to school costs. D2D also found that there is a cyclical dip in account balances during the rollover period each year, which may indicate that accountholders are making planned withdrawals between account years.
- STW continues to positively impact financially vulnerable accountholders. D2D defines financially vulnerable individuals as those who are single parents, asset poor, non-savers, or low-to-moderate income. In 2012, these accountholders had nearly identical rollover rates as their non-financially vulnerable counterparts, demonstrating the importance of STW in helping financially vulnerable individuals save.
As other organizations and financial institutions look for ways to empower financially vulnerable individuals to save, STW provides an innovative model for designing a savings product that is engaging and encourages savings habits. The success of STW in Michigan has motivated other states to launch similar programs, and D2D continues to advance prize-linked savings products as a strategy for helping low- and moderate-income individuals save.
To read more about the success of the STW program in Michigan in D2D's recent report, click here.
To learn more about D2D's pioneering prize-linked savings work, click here.
Applying “Financial Coaching” for Scale
By Margaret Miley, Guest Contributor on 10/09/2013 @ 11:30 AM
In the field of financial stability, providers seek effective strategies that engender positive changes in the financial circumstances of residents. Often lost in the discussions are environmental factors: wages, local economic conditions, medical coverage, dangerous financial products and a legacy of discrimination in national policies that support the building of individual assets. For example, the erosion of wages for American workers that began in 1973 is a most pressing influence on economic insecurity. The current reality is often that two full-time workers in a household cannot support a family at a survival level, which has a destabilizing effect on the family, the culture and the larger economy. The setting is aggravated by a less-regulated financial marketplace that includes high-cost, unsafe financial products and services, luring consumers into a cycle of debt and insecurity. Within these confines, however, positive individual changes can be cultivated.
In Massachusetts, we have seen an increased need for services, as borne out by more acute financial indicators for residents, such as CFED’s Assets & Opportunity Scorecard data indicating that 48% (~ 2.4 million) of the state’s adults have subprime credit scores and 27% (~1.7 million) do not have enough cash to survive three months with an interruption in income. At the same time, we see reduced investment by the public sector and diminished capacity in the nonprofit sector to address the increased need. This is accompanied by increased pressures for providers to demonstrate “impact” in condensed time periods, such as one-year funding cycles. Clearly, the need for efficiency and scale must be balanced against the promise of deep, transformational, individual assistance. In this challenging context, The Financial Confidence and Coaching Campaign, Midas’s model of “financial coaching,” combines new ingredients learned from years of financial education and asset building, as well as the broader coaching field. More background is provided in our White Paper. Briefly, the strategies include:
- Treating financial coaching as a “method,” not a “service.” Though coaching has a long history, some current writings on financial coaching suggest that service providers be limited to discrete roles of “coach” or “counselor.” However, we see little application for this costly and constraining format. With residents working more than full-time and staff members overburdened, time and funding limitations do not allow for one provider to be a content resource and one to be a purely process-oriented coach, as that would require participants to manage time and relationships with both. With proper training and ongoing peer support, coaches can refine their practice to maintain the participant-led environment while using coaching and counseling methods as appropriate.
- Integrating the “coaching method” into many service delivery contexts. Many disciplines are pursuing integration in service delivery. This conserves resources and reflects a participant-centered approach to service and treatment. Indeed, as medical practitioners have expanded the patient-centered “medical home” model, innovative asset builders have introduced a component of “fiscal health” to cooperatively address the links between financially-induced stress and health issues. Midas has hosted trainings of financial content and the coaching method to providers of matched savings, college access and career development programs to increase their own financial knowledge and to integrate and strengthen coaching techniques in their daily meetings with participants. Initial data and staff feedback have been positive.
- Bringing in the technology. Though in-person meetings are ideal for building a trusting relationship, the current stable of city-based providers cannot serve the need alone. Currently, corporations, schools and professional services have migrated to audio/visual platforms via the web, many with good results. Midas is providing services on these platforms to serve more residents, particularly those with mobility, transportation, scheduling or language issues that limit their access to existing in-person services. The use of appropriate interactive tools, products and services can expand knowledge and sustain engagement.
- Inviting participants to change the world. It is comforting for participants know that financial issues are not theirs alone. Joining efforts to affect policies, enforcement and others’ financial education gives them a sense of community, purpose and larger vision.
- Scaling it up. If we are going to help millions of people, we need to broadly apply coaching techniques into more accessible formats. This involves (1) developing online content and tools to support and update the financial coaches on changes in laws, issues and techniques to continually develop their skills and content (see MassSaves.org for more information), (2) sprinkling coaching and participant-centered components throughout online platforms used by participants, (3) cultivating a narrative by using videos and social media platforms to tell and share stories and connections, and (4) changing the economy by connecting participants with policy discussions on financial services and economics to improve the economic setting that they must navigate.
At Midas, we see great power in the depth, humanity and scalable promise of adding financial coaching to the many efforts to assist residents struggling in this tumultuous economy.
Margaret Miley is Executive Director of the Midas Collaborative in Allson, MA.
From “To Do” to “Done”: Simple Plan-Making Strategies
Take a look at your to-do list. Which task do you expect to complete first? Probably something fairly simple and concrete: “Buy groceries,” “Pay phone bill,” “Clean bathroom.”
Now, which task always gets pushed to the bottom of the list? Learning conversational Spanish would be fun and would make you a stronger job candidate, but as the day goes on, it’s easily put off for another day.
Despite fully intending to, we may have trouble accomplishing tasks—even very important ones—that we fully intend to do. The tasks we define for ourselves can be vague, contain multiple steps or involve obstacles that we just don’t want to think about. These are situations where a technique called simple plan-making may be useful.
Simple plan-making is a strategy to turn our intentions into action. In a study aiming to improve voter turnout at elections, eligible voters received a phone call asking them if they intended to vote. However, some voters were also asked: (1) when they would vote, (2) how they would get there and (3) where they would be beforehand. Adding these three plan-making questions more than doubled the effect on voter turnout. The act of creating a well-constructed plan helps us think through potential obstacles, plan how to overcome them, and remember to execute that plan at the right time.
In the BETA Project, we incorporated plan-making into our design at partner site Neighborhood Trust Financial Partners (Neighborhood Trust) to help clients follow through on their intentions to open and use credit union accounts. Below, we share some elements of our plan-making designs at Neighborhood Trust.
Why Did We Choose to Use Simple Plan-Making at Neighborhood Trust?
Through Neighborhood Trust’s financial education course, a significant number of participating clients open credit union accounts. Our behavioral diagnosis at Neighborhood Trust revealed that some clients open an account, intending to use it; however, they never take that first step towards actually using the account.
Neighborhood Trust appeared to be an especially promising candidate for plan-making tools based on some key characteristics:
- The intentions already exist. Making a plan won’t work if we don’t actually want to perform the action. At Neighborhood Trust, many clients open accounts during the class, suggesting that they intend to use those accounts…eventually.
- Using an account is complicated. The more vague or complex the steps, the more likely we are to procrastinate. Clients at Neighborhood Trust may not think through the large number of steps required to use their credit union account, from learning how to use a debit card to planning regular trips to the ATM. We saw an opportunity to break out each step to make them more concrete and achievable.
- Timing matters. In order to act on an intention, we must remember what we planned to do at the right time. For clients, fitting in a trip to the credit union amid a busy work schedule may be daunting or easy to forget. Creating a plan to go to the credit union could help clients set an explicit intention for completing the action and writing it down could help them to remember their intentions at the right time (“I’ll go to the ATM right before I shop at the grocery store…”).
- There are opportunities for commitment and enforcement. There are numerous forces pulling our attention away from our intended goals, and it takes a lot to keep ourselves on track. We all need ways to stay committed to completing our intended goals. Neighborhood Trust’s five-week financial education course presents an opportunity for clients to publicly commit to their plans during class discussion, and report back during the next class.
We often tell ourselves that the more important a task is, the more likely we are to complete it. However, because we assume that our strong intentions will be enough to carry us to completion, we fail to take the necessary steps towards completing our goal. Plan-making can be MOST effective (and usually most needed) when intentions are strong. It helps to remind ourselves of all the things that need to happen in pursuit of our goals and to make sure we take action to complete them all.
The BETA Project Design
We designed a set of plan-making activities for Neighborhood Trust clients to use during the five-week financial education course. The activities included bringing the necessary documents to open an account, locating the nearest ATM and making an initial savings deposit.
To make sure we were helping clients follow through on an existing intention, we instructed clients to choose a plan rather than be assigned a plan.
We made sure plans were actionable by making them concrete and granular.
To discourage clients from giving up on a plan, we allowed for flexible timing: “If I don’t finish it this week, I can work on it again next week.”
Financial Advisors acted to guide and enforce the plan-making activities by helping clients select and create a plan at the end of each class and checking in on their progress during the next class.
Make Your Next Plan
Now look at your to-do list again. Is there anything on that list that needs to be rewritten as a plan? When will you read our next blog post? Where will you be? What will you be doing immediately beforehand? Make a plan—and stick to it.
Next BETA Project Post: Testing, Testing
After we define problems, diagnose behaviors and design solutions, we test those solutions. Our next post on the BETA Project will discuss our testing methodology. This post and other helpful insights from the BETA Project are available on CFED’s Behavioral Economics blog and BETA Project website.
New Opportunity: CFPB’s Innovations Project
By Sean Luechtefeld on 10/07/2013 @ 12:00 PM
EDITOR’S NOTE: Will Tucker, one of our friends at partner organization ideas42, sent this announcement this morning. It’s about an exciting new opportunity being offered by the Consumer Financial Protection Bureau, and I think it will be of interest to many of our readers.
Ideas42 and its partners, the Doorways to Dreams (D2D) Fund, the Center for Financial Services Innovation (CFSI), and the Corporation for Enterprise Development (CFED), are excited to announce a call for prototyping partners on the CFPB Innovations Project. The project seeks to develop and test prototypes of new approaches for helping consumers overcome common decision-making challenges in managing their finances. We’re seeking innovators, businesses, and other organizations to work with us to prototype innovations and evaluate their effectiveness. Prototyping partners will have input into refining the design features of innovations, and will get the opportunity to be part of a behavioral design process led by ideas42 and its team.
The Innovations Project is being conducted by the Consumer Financial Protection Bureau (CFPB), with ideas42 serving as a CFPB contractor tasked with managing this project. Organizations should indicate their interest by submitting a brief letter of interest describing their interests and capabilities via email to email@example.com. Please include “Innovations Project” in the subject line. Please contact us today if you are interested in this opportunity, and make sure you submit your interest by November 8, 2013.
For more information on the project and criteria selection, see http://ideas42.org/CFPBinnovations and http://www.consumerfinance.gov/blog/were-looking-for-innovative-partners-for-financial-education-research/.
Asset-Building News Roundup - October 4, 2013
By Veronica Weis on 10/04/2013 @ 11:00 AM
Save the Date: Please join us and the Center for American Progress on October 10 for a Breakfast Policy Forum, Retirement Security for All: Fixing Unequal Tax Incentives for Retirement Savings, from 9:30-11am in the Capitol Visitors Center, Room SVC 209-08. Breakfast will be served at 9am and this event is free. Click here to RSVP via email.
One government program which stands to suffer from the shutdown is the Special Supplemental Nutrition Program for Women, Infants, and Children, known as WIC. According to NPR, "among those affected by the chaos of the government shutdown are 9 million low-income women and children who may be worrying where next week's meal is going to come from."
The Investment Connection helps match financial institutions, corporate enterprises and community foundations with organizations that have Community Reinvestment Act (CRA) eligible community and economic development proposals in need of an investment, grant or loan. Now, your organization can be a part of Investment Connection On-Line. You can submit your organization’s proposals to the all-new Investment Connection On-Line and reach potential funders. In order for your organization’s proposal to appear on Investment Connection On-Line, you must supply your organization’s information by completing an online form for consideration. Investment Connection proposals must be CRA eligible, benefit populations below 80 percent area median income, and within the Tenth Federal Reserve District which includes CO, MO, OK, KS, NE, NM, and WY. Questions regarding this Request for Proposals may be addressed to Ariel Cisneros at firstname.lastname@example.org or 303.572.2601.
From the Assets & Opportunity Network
The Consumer Financial Protection Bureau (CFPB) held a public hearing in Chicago on October 2nd. CFPB Director Richard Cordray joined a panel of advocates and industry representatives at the Harold Washington Library to discuss findings from their report on the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act). The CARD Act represents a large step forward in consumer protections and financial accountability.
In more news about the Consumer Finance Protection Bureau (CFPB), the Coalition for a Prosperous Mississippi reports that the CFPB concluded its meetings in Mississippi by announcing a new partnership with the City of Jackson. Consumers may now call the city’s 311 line with complaints regarding financial products and services. Consumers that dial the number with complaints will be connected directly with the CFPB where questions may be answered or formal complaints may be lodged.
Crisis Assistance Ministry shared an opinion piece that originally appeared in the Raleigh News and Observer on September 29 about poverty in North Carolina.
Mississippians Report Financial Challenges to Consumer Protection Bureau
By Bill Bynum, CFED Board Member on 10/02/2013 @ 03:00 PM
EDITOR'S NOTE: This post originally appeared on the Huffington Post and can be read here.
In this country where we place such a high value on individual freedoms, we often feel a little uneasy about government power.This is especially true when it comes to the economy, the business sector and the market. We've been taught to suspect government intervention, believing that democracy thrives when there's a "free market."
I like to frame government power in the marketplace in a slightly different way. Think of sports. The government writes the rulebook, employs the referees and insures the integrity of the game. This is the analogy I evoke for the Consumer Financial Protection Bureau (CFPB), the government agency created by Congress in 2010 after the worst economic crisis this country has seen in generations.
I serve as vice chairman of the CFPB's Consumer Advisory Board (CAB), and this week the CAB and key bureau staff met in my home state of Mississippi. The reason CFPB holds meetings at different locations across the country -- and away from Washington, DC -- is to gain greater insight into the circumstances unique to particular communities, and to spread the word about the bureau's work.
In small towns from the Mississippi Delta to the southwestern corner of the state, we heard from teachers, students, retired people, business owners, bankers, public officials and ordinary citizens. They spoke about the challenges they face when they try to borrow money to buy a house, to cover emergency medical expenses, attend college or to start a business. A big obstacle, they told us, is the closing of bank branches in small towns and low-income neighborhoods.
"When the bank told us they were leaving in five weeks, it set off a small panic," said Kenneth Broome, the mayor of Utica, Miss. "For our people, especially our senior citizens living on a fixed income, it's kind of a hardship to have to get transportation to a town further away."
According to a Bloomberg report, 93 percent of bank closings since 2008 have been in low income areas.
"When you don't have a face-to-face relationship with a bank manager and a teller, you lose something important about the American economy," said Lauren Wilkes, who co-owns a small business in Utica. "So many loans for small businesses are made based on relationships."
One of the most important ways the CFPB can have an impact on this kind of large scale, national problem is to make sure the information is available to assess whether a bank or other financial institution's actions have a disproportionate affect on vulnerable populations such as senior citizens, students, active or reserve military personnel and underserved communities.
"One of the bedrock principles at the (CFPB) is transparency," Bureau Director Richard Cordray told people at a public meeting in Itta Bena, Miss. "We have a deep respect for the power that knowledge conveys."
To advance the goal of making sure information is meaningful and available, the CFPB has recently released a set of web-based tools to provide consumers with easier access to public information collected under the Home Mortgage Disclosure Act. With access to information and rules in place for the entire sport -- banking services -- the CFPB can determine whether the playing field is level. The other way the CFPB can exert its power is to protect individual consumers.
A major contributing factor to the financial crisis was the fact that many individuals borrowed more money than they could afford to repay by signing up for mortgages that they did not fully understand. The banks should never have approved these loans.
A key provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act is the requirement that "financial institutions must ensure that borrowers can repay the loans they are sold."
In Mississippi this week, people asked for protection from predatory lenders. "I am a victim of predatory lenders," said Pauline Rogers. "They will entice you with a quick fix because they are strategically located in low income areas, but one thing they will never give you is a future." Mississippi has the highest per capita concentration of payday lenders in the nation. The allowable fees for a small dollar loan in the state are higher than those in neighboring Tennessee.
At Hope Credit Union, where I serve as CEO, we have assisted more than 400,000 people through responsibly structured financial services since 1994. One example is consolidating eight payday loans for a member who had taken out the loans in quick succession, to cover an emergency car repair. A small degree of effort and responsible judgment by any of the eight lenders would have revealed that she could not repay the debt by her next payday. Not surprisingly, it did not take long for rapidly accumulating renewal fees to create an inescapable debt trap.
Fortunately, the CFPB is working hard to understand how these and other abusive financial practices impact lives across the country, and is establishing and enforcing rules that protect every individual equally.
Someday soon, let's hope that whether a person is suiting up for a team in Itta Bena, Mississippi or in New York City, the rules will be fair to all who play the game.
Follow Bill Bynum on Twitter: www.twitter.com/HopeCUbill
Designing for Difficulty – The BETA Project
“Make It Easy” – it’s not just a Staples advertising gimmick, but a key design principle from behavioral economics. How can we make sure people sign up for 401(k) savings accounts? Make it easy by setting a default plan. How can we get people to eat right? Make it easier by designing an intuitive food ‘plate’ instead of a food pyramid. How can you make sure you get to the gym? Pay the extra money for an on-site locker so you do not have to remember your work-out clothes. These may seem like different types of interventions, but they have one thing in common: they make it easier for us to take the actions we want to take.
For the most part, the BETA Project team shies away from designing something that’s hard to use. When we want people to take an action, we make it simple. But sometimes we want to make it hard to take an action. One of our designs for Cleveland Housing Network (CHN) called for exactly that.
Late Fees & Mental Accounting
A few weeks ago, we discussed how we diagnosed problems at CHN. As part of our diagnosis, we found that some CHN residents didn’t seem overly worried about having to pay the late fee. Many lumped the $25 late fee into the rent payment.
When you think about it, this is odd. Though $25 isn’t a huge amount of money, it’s not pocket change, either, especially for the low-income households that CHN services. You would get angry if you received a $25 fine for a parking ticket or for returning a library book late. Why weren’t residents reacting to a fine for a late rent payment?
Behavioral economists call this phenomenon mental accounting. For an example, compare the following two passages:
Imagine that you are about to purchase a jacket for $125 and a calculator for $15. The calculator salesman informs you that the calculator you wish to buy is on sale for $10 at the other branch of the store, located 20 minutes away. Would you make the trip to the other store?
Imagine that you are about to purchase a jacket for $15 and a calculator for $125. The calculator salesman informs you that the calculator you wish to buy is on sale for $120 at the other branch of the store, located 20 minutes’ drive away. Would you make the trip to the other store?
To an economist, both passages are asking the same thing – would you be willing to spend 20 minutes to save $5? But people are much more willing to make the drive if they read the first passage. We tend to think about savings in relative terms. Reducing the price of a $15 calculator to $10 seems like a great bargain, while reducing the price of a $125 calculator to $120 seems trivial.
When we think about a $25 fine for a parking ticket, we’re comparing it to a “fine” of $0 (i.e., not being charged a fine at all). But CHN residents have to pay their late fee simultaneously with their rent, so they’re comparing something like $500 (the median rent) to $525 ($500 plus the $25 fine). Just like in the jacket and calculator problem, they think about the fine in relative terms, instead of absolute terms. $25 represents only 4% of their rent, so the fine seems relatively small.
The BETA Project Design
Because metal accounting was making the late fee seem small relative to the price of rent, we wanted to try to reframe the decision and disconnect it from the rent payment process. We couldn’t arrange for the late fee to be billed separately from paying rent, but we could try to isolate the process of making the decision to pay the rent late.
We did this by creating a late fee waiver. Residents were issued a one-time waiver, which they could use to cancel a late fee. This changes the decision process by adding another step. Rather than thinking, “Should I pay my rent today? It’s just $25 if I pay late,” residents now first have to decide whether they want to use the late fee waiver or not. This is a subtle, but important, difference. Rather than deciding whether to pay late and thereby increase the cost of rent payment from $500 to $525, the decision is now whether to spend $25 or use the waiver.
An interesting wrinkle is that we wanted the waiver to reframe the decision that people made, but we didn’t necessarily want them to use the waiver. The waiver had two potential effects. First, as discussed above, it could reframe the decision to make residents less willing to pay their rent late. But it also had a potential negative effect—it reduced the penalty of late payment, thereby reducing the disincentive.
This put us in an unusual position: we wanted to make a form that people would not want to use. So, we made it harder for residents to use the waiver.
How did we make the waivers harder to use?
To make the waiver harder to use, the BETA Project team had to make sure it both felt harder to use and actually was harder to use. We did this in several ways:
- First, we tried to induce the concept of scarcity. The waiver could only be used once, and we tried to frame it as something for residents to use in an emergency, when they really needed it. We hoped that most residents would save it until it expired.
- Second, we introduced several hassle factors in order to make it difficult to use. Even small hassles make it unlikely that something is used. We added big hassles—most notably, we required residents to come into the CHN offices with their waiver in order to activate it. They could not use it over the phone or over the internet, even though CHN administrators could have easily verified its one-time use.
Third, we incorporated several small design tweaks that made the waiver seem more difficult to use than it actually was. For example, each waiver had a unique serial number (even though it was unnecessary, since CHN could track who used it using tenant ID numbers). We also required a signature to use it.
Finally, we incorporated a small, but important phrase: “You choose when to use it.” We hoped that this would induce a feeling of autonomy and power over the rent payment process.
Were we successful? We’ll be reporting on the outcomes of the BETA experiments before the end of the year, but here’s something to think about: over the four months of the BETA project, 70 waivers were used out of the 373 that were issued. That’s 19%, which means that 81% of CHN residents were not taking up “free money.”
Next BETA Project Post: Simple Plan-Making Strategies
Our next post on the BETA Project will discuss how to create an effective plan—and stick to it. This post and other helpful insights from the BETA Project are available on CFED’s Behavioral Economics blog and BETA Project website.
New Event: Integration & Innovation Webinar
By Sean Luechtefeld on 09/30/2013 @ 04:30 PM
EDITOR’S NOTE: The Bank of America Charitable Foundation sent this invitation to their upcoming webinar, which highlights CFED’s portfolio of work that integrates asset-building into social service delivery systems. We hope you can join our very own Kate Griffin on October 10!
As part of our ongoing efforts to help support community leaders addressing a wide range of pressing issues and to strengthen the nonprofit sector as a whole, the Bank of America Charitable Foundation offers a free monthly webinar to nonprofit leaders. Our goal is to feature subject matter experts who can address issues that are brought to our attention by our nonprofit partners. Since September 2009, we have hosted over 50 webinars with a total attendance of more than 15,000 nonprofit leaders like you.
Thursday, October 10, 2-3 pm EDT
Integration and Innovation: Lessons from Organizations Integrating Asset Building into Social Services
Kate Griffin, Senior Program Manager, CFED; Kira Zylstra, Department Director, Individual and Family Stabilization Services, Solid Ground; Fran Rosebush, Senior Manager, United Way Greater Houston THRIVE; Colleen Arons, Enterprise Marketing, Bank of America
Whether it’s helping a family to re-gain stable housing, find and retain employment, or manage their way out of today’s crisis, social service agencies know that the family’s ability to manage their finances is an important factor in their success. This webinar will introduce how social services agencies are helping families to build assets – through effective financial education, strengthening credit scores, saving for emergencies, investing in homes and jobs, and other strategies. We will discuss concepts outlined in the recent publication, “Integration and Innovation: Lessons from Organizations Integrating Asset Building into Social Services.”
Presentation will be delivered through online webinar and conference call. Upon registering, you will receive a reply email with the link to the webinar as well as the bridgeline information. NOTE: First-time participants should ensure that their network is compatible with WebEx.
All participants are required to register through the attached link: http://www.cybergrants.com/boa/webinar. Upon registering, the organization will receive a confirmation email as well as the link to the webinar and the bridgeline. If you have previously registered for a Bank of America Nonprofit Impact Series webinar, you can click on the link, login, go to the bottom and click ‘register for the webinar.’ Registration will be accepted up until Wednesday, October 9.
We thank you for your continued commitment to improving our community.
Asset-Building News Roundup - September 27, 2013
By Veronica Weis on 09/27/2013 @ 02:00 PM
The Collaborative, which heads Lead State Organization the North Carolina Assets Alliance, will host the 2013 Pathways to Prosperity Conference next month in North Carolina. The Conference will examine innovations in research, practice, and policies to successfully integrate asset-building services in communities.
We're hosting a webinar on October 10, CFED: Integration and Innovation: Lessons from Organizations Integrating Asset Building into Social Services, that will introduce how social services agencies are helping families to build assets – through effective financial education, strengthening credit scores, saving for emergencies, investing in homes and jobs and other strategies.
A Washington Post article highlighted one of our favorite statistics: How $50 makes kids seven times more likely to attend college.
The Robert Reich documentary on income inequality in America officially launches today! For an interesting review of the film, click here.
From the Assets & Opportunity Network
The Illinois Asset Building Group is offering a webinar next month that will feature advocates from Hawaii and Illinois who led successful campaigns to eliminate the TANF asset test in their respective states this past year. They will share: effective messaging, advocating to the Governor’s office, departments, and legislators, responding to opposition and other lessons learned.
The Coalition for a Prosperous Mississippi shared a piece published in the Huffington Post, Mississippians Report Financial Challenges to Consumer Protection Bureau.
New Learning Opportunity for Organizations Interested in Asset-Building Integration
By Kori Hattemer on 09/26/2013 @ 03:30 PM
Do you provide affordable housing options to low- and moderate-income families? Do you often ask yourself how you can help your clients follow a monthly budget so they don’t fall behind on their utility bills?
Are you helping unemployed individuals build the skills they need to find and succeed in their next job? Do you ask yourself how you can help these clients open safe, affordable bank accounts so they don’t lose a big portion of their next paycheck to expensive check cashers?
Do you provide critical services to families in times of crisis? Do you wonder what you can do to help these families build an emergency savings account so they are more prepared for future financial crises?
If you answered yes to any of these questions, you should think about joining CFED’s newest Intensive Learning Cluster! Learning Clusters are designed to explore innovations and promising practices in close collaboration with other organizations around the country. In partnership with the Bank of America Charitable Foundation, our newest Learning Cluster is an eighteen-month collaboration between CFED and organizations providing services in the housing, workforce development and emergency assistance (critical needs) sectors. Participating in the Learning Cluster can help you incorporate asset-building strategies—such as getting your clients banked, helping people manage their credit or providing access to free tax preparation assistance—into your existing services.
Over the course of the Learning Cluster, members will participate in peer learning opportunities and collaborate with CFED and other experts in the field. If you are interested in participating, carefully review the Learning Cluster Request for Proposals and submit your project proposal to CFED no later than October 21, 2013. Organizations who are selected to participate in the Learning Cluster will receive an $8,000 stipend, a full scholarship for CFED’s 2014 Assets Learning Conference in Washington, DC, the opportunity to learn and problem-solve with other members of the Learning Cluster through virtual and in-person convenings, and technical assistance from asset-building experts.
If you have questions, send me an email at email@example.com.
Read this Now! The Art & Science of Reminders
Have you ever meant to do something so important or so forgettable that you created a reminder for yourself, only to find that you still failed to follow through? Maybe you wrote a note reminding yourself to pick up the dry cleaning on the way home from work, but you completely forgot after a busy day. Or maybe you wrote a phone number on your hand last night, but unfortunately (or fortunately) didn’t write down the name or the reason to call.
Reminders are helpful for overcoming prospective memory failures — failures that occur when people forget to do planned actions. But why do some reminders work, and some fail? We have found that when reminders fail, it is often for one of the following three reasons: (1) the wrong action was prompted, (2) the reminder was not specific or (3) the reminder came at the wrong time.
In diagnosing the behavioral bottlenecks for Accion Texas, the BETA Project team looked at Accion’s loan repayment process through the clients’ eyes. Taking this perspective allowed us to see that reminders may be helpful to encourage on-time payments as borrowers seemingly intended to pay, but failed to follow through. When designing reminders for Accion Texas, we made sure the reminders were actionable, specific and timely.
Prompting the Right Action
Accion Texas’ existing monthly statement emphasizes the importance of making a payment by the payment due date. However, most borrowers are enrolled in automatic payment withdrawals, and actually need to make sure that they make a deposit to have sufficient funds. Since it can take a couple of days to process payment deposit, they also need to make sure that any necessary funds are deposited well before the due date.
We were concerned that borrowers may not consciously realize how their Accion Texas loan payment process differs from many other monthly payments. As such, we designed our reminders to emphasize the action of making a deposit rather than making a payment.
To refocus borrowers on the action of making a deposit, we redesigned the monthly statement to include a Post-it note to help borrowers (1) create a detailed plan about when they will make the deposit before the withdrawal, and (2) commit to the plan. We also provided an emphatic “suggested deposit date” on the statement to help borrowers plan out when and how to make a deposit.
The email and text messages reinforced the statement and the Post-it note by explicitly directing borrowers to make sure they have enough funds in their account for the payment.
In each component of the design, our reminders didn’t simply tell the borrowers to “pay on time,” but were intended to elicit very specific behaviors.
When reminders are received is just as important as what the reminders say. Accion Texas borrowers need to ensure there are sufficient funds in their accounts before their due date when the withdrawal occurs. But because only the due date is made salient in the loan contract and monthly statements, a borrower may be wrongly anchored to the due date, when it is too late to take action.
Our email and text reminders were deliberately timed to be far enough before the due date to provide sufficient time to act, and sufficiently close to maintain the salience and urgency to make a deposit. The emails were sent ten days prior to a given borrower’s due date each month. The text reminders were sent three days prior to the due date. Both messages were sent in the morning so that borrowers could make a deposit during daytime business hours.
Without appropriate timing, even the best-worded reminder can fail.
Now that you’ve learned about the art of reminders, try making one to remind yourself to come back and check our next blog post!
Next BETA Project Post: Designing for Difficulty
All of us get fed up with the hassles in our lives. But sometimes, hassles can actually make our lives better. Our next post on the BETA Project will discuss the intentional design of hassles. This post and other helpful insights from the BETA Project are available on CFED’s Behavioral Economics blog and BETA Project website.
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