Exciting Professional Opportunity in Dallas/Fort Worth Area
By Susan Hoff, Guest Contributor on 01/19/2012 @ 10:30 AM
United Way Metropolitan Dallas Seeks Director of Financial Stability/Asset Building
United Way of Metropolitan Dallas is seeking a dynamic professional to lead a community organizing and planning effort to develop a comprehensive community plan to address family financial stability and asset development. Work will include analyzing existing resources in Dallas and around the country, developing a plan for strengthening and scaling successful programs, and identifying effective programs in other communities and developing a plan to import them. The successful candidate will have expertise and a proven track record in community organizing and planning, excellent verbal and written communication and facilitation skills, and strong working knowledge of financial stability and asset building programs and services.
This position is comes with a competitive salary and benefits package. Interested applicants should forward their resume and cover letter to Susan Hoff, Senior Vice President for Community Impact, at email@example.com.
Why Communities of Color Should Care about Social Security Reform
By Sean Luechtefeld on 01/18/2012 @ 10:30 AM
The folks at Insight Center for Community Economic Development will host a webinar on Tuesday, January 31 at 1 pm EST titled “Why Communities of Color Should Care about Social Security Reform.” This webinar looks like it will be incredibly helpful for those working to help aging Americans, those with disabilities and the dependent survivors of those who die young.
According to the webinar announcement, this hour-long discussion will explore how Social Security reform has unique implications for African-American, Native American, Asian American and Latino communities. Furthermore, panelists will examine how the current political climate influences Social Security reform possibilities and provide recommendations for strengthening Social Security in a targeted, equitable way.
Assets and Child Development in Rural America
By Kirsten Kainz, Guest Contributor and Carl Rist on 01/17/2012 @ 01:00 PM
Last month's announcement of the latest Race to the Top grantees – this time a group of nine states that won awards under the first-ever Early Learning Challenge – points out the critical role that states play in early childhood development. In carrying out this role, state leaders and early childhood advocates should be aware of a new study that investigates the relationships among income, material hardship, assets and child outcomes for children living in rural communities in the U.S.
Using data from the Family Life Project (FLP), a prospective longitudinal study of child development in a rural section of the United States, researchers from the University of North Carolina at Chapel Hill sought to explore whether liquid (savings, investments), and non-liquid (home ownership, car ownership) assets would be associated with very young children’s cognitive and social development above and beyond variation in outcomes that could be explained by income poverty and hardship.
The researchers found that material hardship and non-liquid assets explain unique variation in very young children’s social and cognitive development beyond the effects of poverty. Moreover, the researchers concluded that models that estimate the relation between poverty and child outcomes without including measures of hardship and assets could be “underspecified.” In other words, if we want to understand the optimal development of young people, assets must be part of the equation.
The research is in press and will be available in a forthcoming issue of the Journal of Family and Economic Issues. Look for the article soon, and then use the Comments below to share your thoughts.
Kirsten Kainz is Deputy Director at the SERP Institute (Strategic Education Research Partnership). Carl Rist is CFED's Vice President for Programs.
New Resource: 2012 Tax Credit Outreach Community Tool Kit
By Lauren Williams on 01/13/2012 @ 03:30 PM
Out friends at the Center on Budget and Policy Priorities (CBPP) are pleased to announce the availability of the 2012 Tax Credit Outreach Campaign Kit, which highlights some of the work being done as part of our Self-Employment Tax Initiative (SETI). This resource is intended to provide community groups, social service agencies and employers with the materials and information needed to conduct community outreach efforts promoting the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC). Throughout the United States, millions of people are working hard to make life better for themselves and their families. With the jobs they hold, and the current difficult economic circumstances, many of them simply cannot earn enough to achieve their goals. However, this year eligible families can get as much as $5,751 from the EITC, and even more if they also qualify for the CTC. Claiming the credits can put an eligible worker on the path to securing better housing, pursuing higher education, obtaining dependable transportation, covering out-of-pocket health care costs, or paying for quality child care. In 2010, 27 million eligible families and individuals claimed EICs worth $59.7 billion, yet millions of dollars still went unclaimed. Outreach efforts are needed to inform eligible workers about the tax credits and how to get free tax filing assistance.
In addition to exploring six key elements of an effective Outreach Campaign, the Kit contains full-color posters, flyers, fact sheets, a full stock of outreach strategies and examples of where they are being used successfully, and a guide to finding even more information on the CBPP Tax Credit Outreach Campaign website.
You can request a free copy of the Kit at www.eitcoutreach.org/eitc-mailing-kit. If you have questions about the Kit or about CFED’s SETI strategies for helping entrepreneurs at tax time, leave a comment below.
An Overview of Asset-Building Research
By Ethan Geiling on 01/12/2012 @ 01:00 PM
Assets are tangible and intangible economic resources – a home, savings in a bank account, a college education – that can produce value for their owner. “Asset building” as a strategy to help families escape poverty emerged in the early 1990s, inspired by researcher Michael Sherraden’s assets-based approach to poverty alleviation articulated in Assets and the Poor. If you haven’t already, take a look at CFED founder Bob Friedman’s recent blog post about Michael Sherraden and Assets and the Poor.
The essential insight from Sharraden’s work was that assets can matter economically, socially and psychologically in ways that income alone does not. More recent research has reinforced this insight: that income –by itself – is necessary, but not sufficient, to allow families to escape poverty, achieve financial stability and move up the economic ladder.
CFED’s Policy & Research team created a short fact sheet that provides an overview of research on assets and their effect on financial stability and economic opportunity. Many research studies have shown that:
- Assets create a financial buffer to weather emergencies
- Assets can promote success in the labor market
- Assets can promote long-term thinking, planning and psychological well-being
- Assets can promote economic mobility for single mothers
- Assets can enhance the well-being and life chances of children
- Assets can increase the likelihood of going to and succeeding in college
The asset-building field is constantly expanding. To keep up to date on everything that’s happening, CFED posts the latest research papers and reports in our Assets Research Library. Resources are organized across four topics: Savings & Financial Security, Affordable Housing & Homeownership, Entrepreneurship and Economic Development.
Some examples of recent additions to the Assets Research Library:
- Financially Fragile Households: Evidence and Implications (The George Washington University School of Business, Princeton University, Harvard Business School, March 2011) This paper examined households’ financial fragility by looking at their capacity to come up with $2,000 in 30 days. Almost half of Americans report that they are incapable of coming-up with the funds necessary to deal with an ordinary financial shock.
- Private Transfers, Race, and Wealth (The Urban Institute, August 2011) This study examined how private transfers – including financial support received and given from extended families and friends, as well as large gifts and inheritances – explains racial and ethnic disparities in wealth. African Americans and Hispanics receive less in private transfers than non-Hispanic whites.
- Accounting for the Role of Habit in Regular Saving (The Ohio State University, May 2011) This study explored the relationship between savings habit development and IDA programs. The study found that habit strength increased over time during participation in an IDA program, and savings habits reduced the stress of financially difficult situations.
The Biggest State Policy Changes of 2011
By Ethan Geiling on 01/11/2012 @ 10:45 AM
2011 was an eventful state policy year, to say the least! As states struggled with budget deficits, advocates worked to defend policies and programs from cuts. In addition, however, there were also a number of significant victories. Below are highlights of some of the most significant state policy changes of 2011.
- State Earned Income Tax Credit: One of the most exciting 2011 policy changes happened in Connecticut, where advocates successfully passed a fully-refundable state EITC at 30% of the federal credit (see page 6 of our Assets & Opportunity Scorecard Resource Guide to read the story behind this change). Illinois doubled its state EITC from 5% of the federal credit to 10%. Unfortunately, Michigan reduced its EITC from 20% to 6% of the federal credit. Wisconsin also reduced its EITC for families with two or more children.
- Asset Limits in Public Benefit Programs: The biggest and most highly-publicized asset limit change happened in Michigan; the state unfortunately reinstated the asset test in the Supplemental Nutrition Assistance Program (SNAP), limiting assistance to people with less than $5,000 in liquid assets and $15,000 in vehicle value. On the positive side, Nebraska raised its SNAP asset limits to $25,000 in liquid assets with all non-liquid assets excluded. Unfortunately, Michigan may have started a nasty trend that is continuing into 2012. Pennsylvania recently announced that it plans to reinstate the asset test in SNAP, and Colorado legislators are considering reinstating the Medicaid asset test.
- State Individual Development Account Programs: Alabama created a state IDA program, although the program didn’t receive funding. A handful of states — including Georgia, Massachusetts, Mississippi, and Texas — introduced legislation to create state IDA programs or to restore funding that had been previously slashed. Unfortunately, both Minnesota and Louisiana have eliminated state IDA funding for fiscal year 2012. In Minnesota, this cut meant the loss of approximately $250,000, and in Louisiana, it meant the loss of $1.3 million in state IDA funding.
- Financial Education: Massachusetts launched a statewide Office of Financial Education to coordinate and enhance financial education delivery across the state (see page 6 of our Assets & Opportunity Scorecard Resource Guide for the story behind financial education in Massachusetts).
- 529 College Savings Plans: West Virginia launched a robust matching grant program featuring up to a $500 annual match for low-income families. North Dakota implemented a $100 matching grant incentive for newborns. However, on the downside Minnesota completely eliminated its matching plan. Three states minimized major barriers to saving by adjusting their plans’ minimum deposit and fee rules. Both Alabama and Rhode Island removed minimum deposit requirements from their plans. Indiana introduced a no-fee savings plan to benefit low-income residents.
- Job Quality Standards: Eight states raised the minimum wage for workers beginning in 2012: Arizona, Colorado, Florida, Montana, Ohio, Oregon, Vermont and Washington. These increases range from 28 to 37 cents per hour. Washington is the first state to set its minimum wage about $9 per hour.
- Prize-Linked Savings: Although it’s a relatively new policy, prize-linked savings saw considerable action in 2011 (see our State Stroke-of-a-Pen guide for more information about prize-linked savings). Washington, Nebraska and North Carolina passed legislation in 2011 that allows certain financial institutions to offer prize-linked savings programs. Four other states – Arkansas, Iowa, Mississippi and New Mexico introduced legislation to allow PLS programs in 2011, but the bills did not pass.
Can’t wait to see what’s in store for 2012!
Growing the Next Generation of Leaders in Microfinance
By Lauren Stebbins on 01/10/2012 @ 10:00 AM
The Campus Microfinance Alliance (CMA), an alliance of 12 university and college campus-based microfinance institutions, has created a pipeline program to develop young leaders in the field of microfinance field. CMA’s new internship program Lend for America helps proven young leaders start campus-based microfinance institutions (MFIs) that create new businesses and new jobs.
After a competitive application process, extraordinary young leaders will take part in an intensive 9-week summer program and receive year-round support that will prepare them to launch their own community organizations. Participants first gain experience working over the summer with one of three leading campus MFIs – Capital Good Fund, Community Empowerment Fund and The Intersect Fund. Their work will include hands-on experience with designing and delivering financial products and building mentor relationships with student peers. Specifically, participants will work full-time toward learning objectives, such as how to fundraise the first $1,500, build a management information system, recruit student staff, and build credibility in the local community. Lend for America participants will also conduct site visits to established MFIs for a deeper look into the operations of larger scale microfinance organizations.
“Our mission is to empower the next generation of social entrepreneurs to build strong businesses and communities through innovative microfinance,” says Vanessa Carter, Director of CMA. “We offer resources and tools to students to create nonprofit organizations in the communities outside their university. These are student-powered organizations that offer equitable financial products to local community members such as microloans, savings accounts, and training and coaching services.”
The 2012 summer program will kick off with a launch training co-hosted by the Aspen Institute. This three-day meeting is an opportunity for students to meet each other and complete a crash course in U.S. microfinance. Prior to the launch, selected students are required to read the Alliance Start Up Kit, a free online resource with a robust curriculum and resources to start an MFI. All travel expenses are covered and students receive a stipend of $2,500 for the summer.
Early selection applications are due January 30 and regular selection applications are due February 28. For more information, join the virtual information session on Friday, January 20 at 2:00 pm EST. The information session provides an opportunity to ask questions about the program and hear from students who have started Campus MFIs. Click here to sign up for the session.
Lend for America is administered in partnership with FIELD (Fund for Innovation, Effectiveness, Learning and Dissemination) at the Aspen Institute and is financially supported by the Charles Stewart Mott Foundation.
ALC 2012: Ideas Into Action
By Sean Luechtefeld on 01/09/2012 @ 11:30 AM
As you may have seen in Thursday’s newsletter, plans are beginning to take shape for the 2012 Assets Learning Conference (ALC). Drawing on the success of the 2010 ALC, we’re hoping to bring you the best Conference experience yet!
First, let’s talk logistics. The 2012 ALC will take place once again at the Washington Marriott Wardman Park Hotel here in our nation’s capital. The dates for the Conference are September 19-21 and the Conference website, along with information on how to register, will be available soon.
Now, let’s chat about what you’d like see at the ALC this year. The Conference theme, Ideas Into Action, is designed to get at the heart of the ALC’s mission – to advance innovative yet proven products, services, systems and policies that make financial security a reality for millions of Americans. With this in mind, what topics would you like to discuss with us in September? What features would you bring to the ALC if you were in charge of planning it? If you’ve been in the past, what elements of the Conference could be made even better in 2012?
We’re hoping that this will be our most engaging event yet, but we don’t want to wait until September for that engagement to take shape. So, use the Comments below and start a discussion about your ideal ALC!
Aaaand We’re Back!
By Sean Luechtefeld on 01/06/2012 @ 10:45 AM
Happy New Year!
You may have noticed that things have been quiet around The Inclusive Economy. Last week, our offices were closed so we could rest up for what we hope will be CFED’s best year yet. This week, we’ve been getting back into the swing of things, and next week, we’re going full throttle.
As you reset your routines, I hope you’ll consider adding blogging for The Inclusive Economy to your to-do list. It’s a great way to get informed about what’s going on in the field, provide a valuable service to others in the community and get visibility for yourself or for your organization. If you’re interested, shoot us an email.
In the coming days, you can look forward to a recap of some important state policy changes that took place over the course of 2011; the release of our newest resource, “Why Assets Matter;” and the latest about CFED’s 2012 Assets Learning Conference. In the meantime, here’s what you may have missed while you were (hopefully) over-indulging during the holiday season:
- A guest post from Innovative Idea Champion Patricia Johnson on youth job creation
- My commentary on Pew’s new study connecting family wealth and educational attainment
- Jenn Brooks’s analysis on prize-linked savings as a ‘stroke-of-a-pen’ policy opportunity
- An announcement from Lauren Williams about CFED’s new financial education guide for VITA programs
- And, just for fun, Ethan Geiling’s release of unbanked data for the North Pole :)
Check out those blog posts now. Then, use the Comments below to let us know what you want to see discussed on The Inclusive Economy in 2012!
Upcoming Webinar: Innovations in Paying Down Debt
By Sean Luechtefeld on 01/05/2012 @ 08:00 AM
My colleague, Lauren Stebbins, sent me this announcement about a webinar she is planning with our friends at NeighborWorks America. Use the RSVP image below to register for the January 17 event today!
Please join us from 1 -2 pm EST on January 17 for a discussion of the Borrow Less Tomorrow (BoLT) Program, a behavioral approach to helping low- and middle-income individuals and families pay down expensive debt. Using principles of behavioral economics, the BoLT Program helps consumers devise a repayment schedule and incorporates the use of peer support and reminders so that consumers both successfully pay down their debt and improve their credit scores. Developed by Innovations for Poverty Action (IPA), the BoLT Program has been implemented through several organizations including Encore Capital Group. Presenters will discuss the implementation and results of the program.
- Jonathan Zinman, Associate Professor of Economics, Dartmouth College
- Christopher Trepel, Senior Vice President, Corporate Affairs and Chief Scientific Officer, Encore Capital Group
- Brian Enneking, Vice President, Consumer Marketing, Encore Capital Group
This webinar will be moderated by Genevieve Melford, Director of Research, CFED. Presentations will be followed by a Q&A session.
Click here to register now!
Did you know you can listen through your computer? Connect your speakers or a headset to your computer.
For more information, contact Lauren Stebbins.
About NeighborWorks America
NeighborWorks America creates opportunities for people to improve their lives and strengthen their communities by providing access to homeownership and to safe and affordable rental housing. In the last five years, NeighborWorks organizations have generated $20 billion in reinvestment in these communities. NeighborWorks America is the nation’s leading trainer of community development and affordable housing professionals.
Newly-selected Steering Committee Will Help Shape the Direction of the Assets & Opportunity Network
By Jennifer Brooks on 01/02/2012 @ 01:45 PM
CFED is pleased to announce that 12 leaders in the asset-building field have been selected to serve two-year terms on the permanent Assets & Opportunity Network Steering Committee (NSC). This Steering Committee provides leaders in the assets field an opportunity to help shape the direction of a national movement-oriented network and a channel for voicing their needs, experiences and concerns. The NSC will provide ongoing advice on the structure, offerings and overall direction of the Assets & Opportunity Network.
The Interim NSC, which met throughout 2011 to shape the overall structure for the Network, identified six dimensions where “balance” among committee members was important.
- Level of experience—experienced leaders and newer entrants to the field
- Geography—regions of the country, as well as urban versus rural
- Population focus—focus on specific populations and focus on broader constituencies
- Statewide and local focus for advocacy and organizing
- Expertise in specific policy or programmatic areas
- Leverage—participation in other national networks
The process the Interim Committee developed aimed to be fair, transparent and result in a diverse and well-balanced NSC. It included nominations and voting by all Lead State and Lead Local Organizations, and a supplementary process whereby CFED identified gaps in diversity and filled a limited number of seats.
All Network Lead State and Lead Local Organizations were eligible to nominate themselves or others as candidates. Nineteen individuals indicated their interest in helping guide the direction of the Network and threw their hats in the ring.
Each Lead Organization was given one vote, which they could cast for their top 10 choices. To address the concern that some candidates would not be known to their peers, descriptions of candidates experience were shared with the ballot.
CFED tallied the votes and assessed the group for diversity. The top eight vote-getters were automatically selected as members. CFED identified four others to achieve balance.
The result is a 12-member Assets & Opportunity Network Steering Committee that reflects the diversity of experience, expertise and focus of the assets field.
Congratulations to the permanent Network Steering Committee members!
1. Christina Barsky (Rural Dynamics, Inc., Montana)
2. Brent Dillabaugh (Hawai`i Alliance for Community Based Economic Development)
3. Tamika S. Edwards (Southern Good Faith Fund, Arkansas)
4. Lisa Forti (Urban Strategies Council / Alameda County Community Asset Network, California)
5. Lucy Gorham (MDC, North Carolina)
6. Margaret Miley (The Midas Collaborative, Massachusetts)
7. Lucy Mullany (Illinois Asset Building Group)
8. Victor Ramirez (Center for Asset Building Opportunities/Citi Community Development, Los Angeles, California)
9. Kate Richey (Oklahoma Policy Institute)
10. David Rothstein (Policy Matters Ohio)
11. Diana Stone (Seattle-King County Asset Building Collaborative, Washington)
12. Kaye Schmitz (Florida Prosperity Partnership)
CFED Unveils North Pole Unbanked Rate
By Ethan Geiling on 12/24/2011 @ 10:00 AM
When people picture the North Pole, they think about elves, Santa Claus, reindeer and toy workshops. What they don’t think about is access to convenient, appropriately-priced financial products that help families save, build assets and climb the economic ladder. We want to change that.
And so, in one of the most anticipated moves of the year, CFED released the unbanked and underbanked rates for the North Pole yesterday.
The data show that 5.5% of households in North Pole, Alaska are unbanked and 17.0% of households are underbanked. Unbanked households do not have a checking or savings account, while underbanked households may have an account but primarily rely on alternative financial services. These numbers compare favorably to the national findings from the 2009 FDIC National Survey of Unbanked and Underbanked Households.
Although there is a tremendous amount of work being done across the country to help families access safe and affordable financial services, people often forget small, rural places like the North Pole. And unlike the North Pole, many of those small, rural areas – like Holmes County, MS – have some of the highest unbanked rates in the country. In fact, all of the top 100 unbanked cities/towns in the country have less than 4,000 households.
We don’t think it’s an overstatement to say that this new data will completely change how people think about financial access in the North Pole, and it’s absolutely just the beginning.
Building on the powerful momentum of this new data, CFED plans to introduce a groundbreaking new financial product next year. CFED Vice President Ida Rademacher said, “I don’t want to give anything away, but I’ll say this: elf savings accounts.”
Happy holidays from all of us at CFED!
New Financial Education Guide for VITA Programs
By Lauren Williams on 12/23/2011 @ 11:00 AM
Spend Some, Save Some: Making the Most of Your Tax Refund
The Earned Income Tax Credit (EITC) is one of the nation’s largest anti-poverty programs. The EITC reduces the tax burden on workers, supplements wages, helps low-income families build assets and reduces income inequality. Annually, the EITC helps 6.6 million Americans move out of poverty; half of these are children. In 2010, over 26 million workers received nearly $59 billion in EITC. The average credit was $2,100, but can be as much as $5,751, depending on the worker’s income, marital status and whether they have children.
Awareness is critical. Only four out of every five eligible taxpayers claim and receive the EITC. Ideally, all eligible taxpayers would claim their EITC. The IRS, Center on Budget and Policy Priorities (CBPP) and countless other nonprofit and community-based organizations have mounted campaigns to make sure that eligible taxpayers know they can claim this credit.
Making sure that affordable tax assistance is available to these families is equally important. The IRS, numerous foundations and community organizations also support programs that provide free tax assistance to low- and moderate-income families. Volunteer Income Tax Assistance (VITA) programs, for instance, offer a valuable service to working Americans by helping them keep more of their hard earned money, especially if they quality for the EITC.
An important element of many successful EITC campaigns is connecting workers to asset-building opportunities. Financial education, asset-building tools, safe financial products, credit repair resources, and more can help families use their returns to build assets.
To that end, CFED has partnered with Bank of the West to create a new Financial Education Guide for taxpayers receiving assistance at VITA programs. This, free, easy-to-read guide (available in English and Spanish) walks clients through some important things to consider when they receive their refunds to helps them make the most of the money they expect to receive. This guide and the included Savings Plan Worksheet can help taxpayers:
- Recognize the value of using the tax moment to contribute to their short- and long-term savings goals
- Make decisions about how to use their refunds for spending on “must-haves,” saving for the future and spend on “nice-to-haves”
- Get connected to resources like U.S. Savings Bonds, College Savings Accounts, additional tax credits like the Saver’s Credit, Individual Development Account programs and Bank On campaigns
Click here to download the Financial Education Guide to print and share with taxpayers at your VITA sites!
Stroke-of-a-pen State Policies to Increase Financial Security and Win Political Points
By Jennifer Brooks on 12/21/2011 @ 02:00 PM
Although the country emerged from official recession more than two years ago, states continue to face budget shortfalls. High unemployment continues to both decrease tax revenue and increase demand for services. By law, most states must balance their budgets. The options they have for closing the gaps are to increase revenue, decrease spending or both.
The choices state policymakers are forced to make are undeniably painful – and in some cases, shortsighted. State policymakers should take a balanced approach to closing state budget gaps that includes raising revenue by eliminating ineffective tax expenditures, as well as careful spending cuts.
It is critical that existing programs and policies that provide financial security and opportunity for vulnerable families be protected. At the same time, policymakers can and should be laying the groundwork for future state economic prosperity. While there is clearly no appetite for new state spending in this environment, states’ hands are not tied. There are a host of cost-neutral policies that expand economic opportunity and that are also political winners.
Last month, CFED released a new report that identifies two dozen approaches states can take to help people achieve financial security without putting additional strain on states’ bottom lines.
These “stroke of a pen” ideas, as we call them, are more often a matter of shifts in approach or tweaks in existing programs, rather than large-scale policy changes. But, taken together, they can make an important difference for families struggling to stay afloat and save for a more prosperous future.
In developing the list of 24 stroke-of-a-pen policy ideas, we considered whether each policy was meaningful, moveable and manageable:
- Is the policy meaningful? While there is often a correlation between a policy’s cost and its impact (consider, for example, the nearly $59 billion-federal Earned Income Tax Credit, which lifts roughly four million people out of poverty each year), there are many meaningful policy changes that cost little or nothing, but which can protect vulnerable families, bring federal dollars into a local community or lay the groundwork for future investment.
- Is the policy moveable? In this climate, the “moveabilty” of a policy is determined, first and foremost, by its cost. However, we also considered other factors, including whether there was political will and interest by policymakers in the idea, whether there was limited political opposition to the policy, and the policy mechanism necessary to make the change (for example, an administrative policy change is often easier to make than a legislative one).
- Is the policy manageable? Advocates sometimes come up with “great ideas” to solve social problems that are easier said than done. In assessing each policy, we also considered the feasibility of implementing the policy – acknowledging that feasibility will vary from state to state depending on a range of factors.
Example: Prize-Linked Savings
One example of a stroke-of-a-pen policy that has gained a lot of attention recently is prize-linked savings.
Prize-linked savings (PLS) programs give savings accountholders the opportunity to win prizes when they make deposits. In these programs, financial institutions offer consumers a savings product with a low minimum balance requirement; accountholders make monthly deposits, which qualify them for monthly and/or annual drawings. The possibility of a prize encourages greater savings. Unlike gambling, however, no one loses from participation in a PLS program. Prize-linked savings programs focus on the entertainment value and fun of winning prizes, but without risking any principle and with the knowledge that one is building an asset. Not everyone “wins” one of the prizes, but everyone comes out ahead with increased savings.
To make PLS programs possible, states need to ensure that banking and gaming regulations don’t prevent financial institutions from holding private lotteries. Ten states currently allow financial institutions to offer PLS programs. Four others – Arkansas, Iowa, Mississippi and New Mexico -- introduced legislation in 2011. This is definitely one stroke-of-a-pen idea to watch!
The Connection Between Family Wealth and Educational Attainment
By Sean Luechtefeld on 12/20/2011 @ 09:30 AM
A young person’s success in going to and graduating from college depends, at least in part, on the wealth of their family. This information has long been known, and for years has served as the rationale behind CFED’s Asset Building for Children (ABC) work.
Yet the full extent to which family wealth influences educational attainment is something the assets field continues to grapple with. While a good deal of research is out there to support these claims, emerging evidence suggests that we have yet to understand just how intimately linked educational attainment and family wealth really are.
This is the main contention put forth in a recent report released by Pew Charitable Trusts’ Economic Mobility Project. The report, Housing Wealth and Higher Education, reveals just how important assets can be in propelling the children of low- and moderate-income parents toward a college diploma.
While I can’t do justice to 40 pages of robust research findings in a few short paragraphs, I’ll at least share a few important (and chilling) data points from the report:
- During the housing boom – a time when families were experiencing historically large increases in overall wealth – enrollment at four-year public accredited universities increased nearly 25 percent.
- For every $10,000 increase in home equity, the likelihood of enrolling in college increased six percent.
- Whereas college enrollment among families who earned more than $70,000 per year was relatively unchanged pre- and post-housing boom, enrollment increased significantly among families earning less than $70,000 annually, suggesting that low- and moderate-income children are especially likely to benefit from efforts to help families build assets.
Unfortunately, a great deal of opposition to CSAs has punctuated the federal policy landscape. But, that can be changed if we all have the right tools needed to craft an eloquent defense. Reports like this one are just what we need in our toolkits, and we are immensely thankful to the Economic Mobility Project for sharing this tool with us.
Innovative Idea Champion Patricia Johnson Authors Op-Ed
By Patricia Johnson, Guest Contributor on 12/19/2011 @ 11:30 AM
I’m hopeful the Occupy moment will evolve into a less grungy, more strategic political movement to lessen economic disparities in the United States. A more realistic vision is that it could unite the 99% to work together on solutions that don’t require negotiation with the 1%, or even Congress.
I’ve got a suggestion that doesn’t cost much, doesn’t need a government agency to run it, and could help reinvigorate our cities: hire teenagers.
Nationally, youth unemployment hovers around 20 percent. In neighborhoods where low-income African-American and Latino youth are the majority, unemployment approaches 40 percent for people under 24 years of age.
I teach at Game Theory Academy, a nonprofit I founded to make economic education more relevant, and accessible to marginalized youth. In our classroom conversations, we discuss topics such as how the economy works, how students can act in their own best interest, and the opportunity costs of doing nothing, rather than working or pursuing education. Students often ask me, “Hey, Trish, can you find me a job?”
Among students at Game Theory Academy, a shocking 63 percent report not having any kind of part-time job. When I was 15, I got a job at a local real-estate office answering phones. I worked at a copy shop the summer before college. But it’s not the 90s anymore, and businesses don’t hire teens the way they used to.
The receptionist answering the phones at the local real estate office is easily twice the age I was when I did that job. I've never seen a teen at the register at the copy shop near my office. Adults need those jobs too, but could they use some support from an eager teen?
The U.S. Small Business Administration reports that small businesses generated 64 percent of all jobs created in the last 15 years. If they are the engine for growth, then small businesses are in the best position to take the lead on ending youth unemployment.
Back of the envelope: if a local, small business hires one teenager for ten hours per week at ten bucks an hour, the cost is about $100 per week, plus some supervision expenses. Assuming 50 weeks of work in the year, that costs $5,000 and change.
Oakland, where I am based, is home to 25,000 youth ages 15 to 19, and at least 10,000 small businesses. If each of those businesses hired one job-seeking teenager, we could make a huge dent in that 40 percent youth unemployment number. Do the math in any city, and it’ll add up.
What impact will this have?
Youth are local spenders. They ride the bus. They buy snacks and go to movies. If our young workforce spends in Oakland and nearby cities, that’s estimated to be close to $500 in annual sales tax revenue per youth – or $6 million total. Imagine the effect if cities in every state joined this call to action.
A majority of juvenile crimes are property crimes. Teens who earn money have less incentive to steal and deal drugs. A paycheck shifts the risk-reward ratio. They are too busy. They have money in their pockets and a sense of opportunity.
Teens who work are more likely to find and sustain jobs as they age into adulthood. Studies show that unemployment as a youth leads to a lifetime of lower wages. It also lowers life expectancy. Give youth jobs now, and they will have higher lifetime earning potential - and the habit of employment and better health. Once you’ve had a job, you want another one.
Dust off an apron or a clipboard and invest $5,000 in our nation’s youth, and in your own business. They might surprise you with the value they add.
Patricia Johnson is the founder of Game Theory Academy. The Inclusive Economy thanks her for sending us this recent op-ed.
Turn Foreclosure Frustration Into Action
By Sean Luechtefeld on 12/16/2011 @ 11:00 AM
Late last week, my colleague and CFED Founder Bob Friedman recommended an article from A Capital Idea, a publication of the Center for Community Capital at the University of North Carolina, Chapel Hill.
The opinion piece, written by Roberto Quercia, Director of the UNC CCC, argues that responsible lending – clearly absent on Wall Street leading up to the foreclosure crisis – need to be a keystone of responsible mortgage lending practices. “It is not complicated,” Quercia suggests. “It takes only the right mortgage product, appropriately underwritten, originated and serviced, backed by a well-functioning secondary market and responsible oversight. Is that too much to ask?”
Too much to ask? We would say no. That simple? Well, probably not. Certainly, with all of those pieces of the puzzle in place, homeowners would feel much more certain about their financial futures. The question, then, becomes how we manage to identify the organizations and develop the products needed to implement such a strategy. That, I believe, is a much more difficult task than Quercia makes it seem.
Nevertheless, Quercia’s piece is thought-provoking and raises a point that I think we can all agree with – that this most recent wave of foreclosures should spur all of us to action. And, regardless of how simple the solution is, a solution is certainly necessary. So, check out Quercia’s opinion piece and share your ideas for how we can ‘turn foreclosure frustration into action.’
Twenty Years Ago
By Bob Friedman on 12/15/2011 @ 08:45 AM
Twenty years ago, Michael Sherraden’s seminal work, Assets and the Poor: A New American Welfare Policy, appeared. It changed my life, and more importantly, the lives of tens of thousands, soon to be millions or tens of millions, of low-income people and their advocates, around the world.
Actually, I had met Michael a few months before. Rona Feit, who lead CFED’s Self-Employment Investment Demonstration (SEID), which proved that some welfare moms could escape poverty and dependency through self-employment, came into my office and said, “There’s someone here you should meet.” And so she introduced me to Michael Sherraden and his ideas. Michael told me that the work we had been doing on self-employment that first decade of CFED’s existence, was in fact, asset building. I never thought of it that way, though as soon as he said that, I was reminded of the SEID participant in Iowa, who established two more video rental businesses in addition to her first one so that she could sell them to finance her son’s education.
As Michael left, he gave me the final three (policy) chapters of Assets and the Poor, to read. But I was already sold. In truth, I was looking for other avenues to economic independence beyond self-employment, as well as a simple, powerful, practical tool to that end. I had spent most of the 80’s writing The Safety Net as Ladder: Transfer Payments and Economic Development. I had convinced myself that the income maintenance system could also serve as a ladder – if the disincentives to work, saving, education and self-employment were removed and the payments made available for economic independence. But I also realized that reforming an incomplete, complex, insufficient safety net transformed would be rickety ladder. Individual Development Accounts (IDAs), seemed to me to be exactly the simple, flexible, powerful idea I had been looking for.
It has been my and CFED’s great honor to work with Michael and the Center for Social Development, and all the individuals and institutions who found inspiration and education in Michael’s ideas, throughout the last two decades. First we worked together to popularize the idea; I will never forget Jack Kemp, then HUD Secretary, carrying around his earmarked copy of Assets and the Poor and waving it around during his speeches in the early 90s. We worried that it would all be talk and no action. So, together, and with the support of a dozen leading foundations, we created the American Dream Demonstration, which proved, with more than 2,300 poor Americans, that, given a savings match and financial education, low-income and even very poor people, would save, go to college, buy homes, start businesses and move toward economic independence. In fact, participants at half the poverty line – less than $10,000 for a family of 4 – saved about as much and at 2-3 times the rate as folks at twice the poverty line, because, as they explained to us, this was the price of stability and hope. At the beginning of ADD, there were three nascent IDA programs in the country; by the end there were hundreds, as well as Federal and state legislation.
Michael did chide me that he had never intended IDAs as a time-limited intervention (as the demonstration required) and reminded me he had recommended that IDAs begin “as early as birth.” Together, and along with other national organizations like New America, Aspen Institute’s Initiative on Financial Security, Kansas’ School for Social Welfare, and the backing of another dozen national foundations, we launched the Saving for Education, Entrepreneurship and Downpayments (SEED) Initiative, which would prove that low-income and poor children of all ages, given the opportunity, would save for their futures.
Now too, we see savings and matched savings programs spreading throughout the world, to developed and developing countries alike, building on rich historical foundations. Groups like Child and Youth Savings International and Financial Assets at Birth, are proposing child accounts for every child of the world.
In the US, the next three years are the time to take the revolution that Michael Sherraden started with Assets and the Poor, and turn it into the foundation for the Save and Invest Economy that President Obama has called for, and that we will need to turn this time of debt and economic decay into a time of opportunity and prosperity.
Thank you, Michael, for inspiring and leading us.
The impact of Assets and the Poor from Michael Sherraden, courtsey of the Washington University in St. Louis.
The Most Unbanked Places in America
By Ethan Geiling on 12/14/2011 @ 04:00 PM
A large number of Americans do not have or use traditional mainstream financial products, like checking or savings accounts.
An estimated 9 million American households are unbanked, meaning they do not have a checking or savings account. An additional 21 million households are underbanked, meaning they may have an account but instead rely on alternative financial services.
In November, CFED and partners released new data on the number of unbanked and underbanked households in every census tract, city/place, and county in the country. This is the first time data of this nature has ever been released. Click here to see a fact sheet on the most unbanked places in America.
The rate of unbanked and underbanked households varies significantly by location. In many cities – like Los Altos, CA – virtually every household has and fully uses a checking or savings account. However, in other cities – like East St. Louis, IL – more than half of households are either unbanked or underbanked.
The rate of being unbanked and underbanked varies by factors like income, race and ethnicity, educational attainment, age and citizenship. So it’s not surprising that there are so few unbanked and underbanked households in Los Altos, where more than three quarters of households have an income above $75,000 and more than 80% have college degrees. Compare this to the highly-unbanked East St. Louis, where the vast majority of households have incomes below $30,000, only about 10% have a college degree and 97.3% of households are Black or African-American. Black, Hispanic and Native American households are at much greater risk of being unbanked than White or Asian households.
Where are the all-time most unbanked places in America? Many of them are very small and rural towns. Of the top 100 unbanked “places” (cities, towns, or census designated places with more than 250 households), 36 are in Texas, 17 are in Mississippi and 10 are in Arizona. All of these places have less than 4,000 households. According to our estimates, Starr County, TX is the most unbanked county in the country -- 32.7% of households are unbanked and 28.2% of households are underbanked. Starr County is a small county of less than 15,000 households located on the U.S.–Mexico border.
The top 10 counties with the highest rates of unbanked households are all in Texas, Mississippi, Louisiana and South Dakota. Of counties with more than 100,000 households, Hidalgo County, TX has the highest proportion of unbanked households (21.6%), closely followed by Bronx County, NY (20.8%). Miami-Dade County, FL (14.4%) and Philadelphia County, PA (14.3%) also made the top 10 list.
Of large cities with more than 100,000 households, Miami and Detroit have the highest rates of unbanked households in the country – approximately 1 in 5 households are unbanked. In Miami, an additional 21.3% of households are underbanked and in Detroit, an additional 29.3% of households are underbanked. Five of the top 10 most unbanked large cities are in the south.
Although many of the most unbanked “places” in America are small and rural towns, the most unbanked census tracts are urban. Of 63,900 census tracts in the country, the tract with the highest unbanked rate is located in Savannah, GA; 42.4% of households in this tract are unbanked and 35.3% are underbanked. Compare this to the city of Savannah where 13.1% are unbanked and the Savannah metro area where 8.3% are unbanked. The second most unbanked tract in the U.S. is located in Cleveland, OH at 42.3% unbanked. Of the top 100 most unbanked census tracts in the country, 7 are in El Paso, TX, 6 are in Cleveland, OH and 5 are in Los Angeles, CA.
When you use the joinbankon.org interactive map to drill down to the census tract level within cities, much more detailed patterns begin to emerge. Looking at the Chicago metropolitan area, you can see that most of the neighborhoods downtown and on the north side are a lighter purple, indicating lower rates of unbanked. However, the south and west sides of Chicago, which have much higher poverty rates, are also much more unbanked, as indicated by the darker purple.
Even within neighborhoods unbanked rates can vary greatly from block to block. For example, the image below shows a detailed map of a neighborhood on the near north side of Chicago. Only 0.5% of households are unbanked and 7.4% of households are underbanked in the “gold coast” neighborhood, one of the wealthiest areas in the country. Just a few blocks away, near the former infamous Cabrini-Green housing projects, 21.2% of households are unbanked and 28.2% of households are underbanked.
The takeaway is that there are a significant number of households across the country that don’t use checking or savings accounts. These households would substantially benefit from accounts or other responsible financial products that meet their needs. A bank or credit union account can be the first step in saving, planning for the future, building credit and climbing the economic ladder.
Unfortunately, many financial institutions have turned their backs on low-income consumers, assuming there is no profit to be made. The growing number of Bank On programs across the country are helping to reach out to financially underserved consumers through locally-led coalitions. Prepaid cards and other financial products have also started to gain traction among the underbanked.
Hopefully this new in-depth data will help financial institutions, community organizations, government agencies, policymakers and other stakeholders better serve the unbanked and underbanked population.
Click here to access the unbanked data tool.
NCTC Announces Free Use of NCTC Online University
By Sean Luechtefeld on 12/14/2011 @ 02:00 PM
The National Community Tax Coalition (NCTC) is proud to announce that its NCTC Online University has added additional courses and will be available for FREE this tax season - starting right now!
NCTC Online University is a free web-based volunteer training platform that simplifies and standardizes training curriculum for the community tax preparation and asset building field. The Online University offers volunteers the option to take the 60- to 90-minute training courses on their own time. Self-paced courses provide a more thorough and individualized learning experience. For the upcoming tax season, the NCTC Online University will offer 6 volunteer training courses, including:
- Credit Report Educator 2.0
- Budget Planner 2.0
- FAFSA Coach 2.0
- Savings Coach
- Saver’s Credit at Tax Time
- Volunteering in the VITA World
The Online University eases the training burden on your organization by requiring fewer in-person trainings and less physical space. Volunteers receive a certificate of completion and come to your organization’s orientations and in-person trainings with the foundational knowledge to hit the ground running.
EDITOR'S NOTE: Special thanks to Dan Fair at NCTC for passing this information along!
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