By Sean Luechtefeld on 03/29/2012 @ 05:00 PM

Tags: Behavioral Economics, Financial Empowerment

In a brilliant display of nerd-dom, my friend, Jade, and I had a discussion at the dinner table the other night about the ways in which people make sense of their financial situations. Though perhaps geeky, it got me thinking about how service delivery should be informed by how people perceive their financial behavior.

Let me explain.

The conversation actually started in relation to our students. In addition to both working in the assets & opportunity field, Jade and I also teach at the University of Maryland. We were discussing some of the things that motivate our students. For example, when a student fails an exam, how do you encourage them to move forward and think about preparing well for the next exam, rather than dwelling on the last exam. The conclusion we came to is that students need to recognize that failing is something they did, but it isn’t who they are. In other words, they’re someone who struggled with an exam; they’re not an all-out failure. As another example, students who cheat – and get caught – ought to be told that they’re a student who made a bad decision, not that they themselves are cheaters. Unfortunately situations like these are just that: unfortunate situations. They do not define the entirety of one’s character.

This led Jade and I to think about the same logic applied to individuals and families who struggle financially. Indeed, we talk about the notion of financial literacy, suggesting that those who lack financial education are somehow illiterate. Of course, that’s not true, and in most cases, those who struggle with making on-time bill payments or who find it difficult to save are by no means incapable. They may struggle, but when it comes to managing resources, everyone is capable to some degree.

If you agree with this premise – and you may not – then doesn’t it make sense to ensure that people working to improve their financial futures can do so by encouraging them? Wouldn’t clients be better served by understanding that they are people who struggle with money, rather than financially illiterate or incapable? Research finds that the power of affirmation is undeniable; that when positioned to believe they are capable of making good financial decisions, even those with limited means can make strides toward financial stability. Of course, quite the opposite is also true; if someone believes they are destined to face financial hardship forever, then they no longer feel empowered to make well-informed financial decisions to begin with.

Of course, I readily admit that this is more a hypothesis than anything else. Nevertheless, it leads me to wonder: what would a behaviorally-informed research experiment that tests this hypothesis look like? Moreover, is there research that tests this hypothesis already? If you have answers to these questions – or want to play devil’s advocate – use the comments below.

By Kim Pate on 03/27/2012 @ 03:45 PM

Tags: Behavioral Economics, Entrepreneurship, Events

I’m not typically one for shameless self-promotion, but I’m really excited to share with you all information about an upcoming webinar that I am moderating. The webinar, co-presented with NeighborWorks America, is called “Applying Behavioral Economics for Improved Program Delivery and Greater Impact,” and it’s taking place on Tuesday, April 3 from 1 – 2 pm (Eastern).

As CFED’s Director of Entrepreneurship, I’m always working with partner organizations and folks working on-the-ground to identify ways to leverage tax time to the benefit of low-income entrepreneurs. What’s exciting about this webinar is that it explores that topic from the perspective of behavioral economics. It has also been designed to permit a more in-depth conversation than many webinars offer. The conversation will include CFED’s 2010 Innovator-in-Residence, Mindy Hernandez, and Foundation Communities’ Tax Services Manager Linda Paulson. The hour-long session will permit plenty of time for participants to jump in and ask questions, so I hope you’ll be able to join us.

You can find all of the details, including how to register, by visiting our Knowledge Center. Of course, if you have questions, you can also leave them below and we’ll be happy to answer them publicly. I hope to see you there!

By Johanna Barrero on 03/26/2012 @ 05:00 PM

Tags: Events, Individual Development Accounts

An Upcoming Webinar from the Assets for Independence (AFI) Resource Center

Wednesday, March 28, 2012 | 12:30 – 1:30 pm PST / 3:30 – 4:30 pm EST

Rural Individual Development Account (IDA) programs face unique challenges for program delivery. Reaching a population dispersed in a vast geographic area, and where financial and other services are often limited can make it harder for IDA programs to recruit and support savers. Yet rural areas are also rich in other resources, especially their vibrant communities – making rural settings fertile ground for program innovation.

This webinar will describe some of the issues IDA programs face in rural areas, and will share effective solutions that rural AFI grantees have implemented for program recruitment, financial education and more.

This hour-long webinar will cover issues and challenges facing rural IDA programs, innovative delivery systems for IDAs in rural settings, leveraging technology to expand outreach efforts and deliver financial education, and resources for strategic partnerships.

Presenters include:

• Angela Duran, AFI Regional Consultant (moderator)
• Karen Smith, Director of Outreach Services, Montana Credit Unions for Community Development
• Janet Topolsky, Co-Director, Community Strategies Group, Aspen Institute

Visit https://www1.gotomeeting.com/register/896750728 to register now!

The webinar is free to all interested participants. In advance of the webinar, please send any questions you would like our panelists to address during the session to Johanna Barrero at johanna.barrero@idaresources.org, or call 202.207.0117.

By Sean Luechtefeld on 03/23/2012 @ 11:30 AM

Tags: Bank On, Financial Empowerment, Recommended Reading

Yesterday, I came across a New York Times article that I re-posted to JoinBankOn.org about the challenges facing those without bank accounts. The article was largely unremarkable for those of us working in the financial access field; it chronicles 45-year-old San Francisco resident Joey Macias, who, after a dispute with a major financial institution, turns to fringe financial service providers to access his paychecks and keeps any leftover cash at home.

While this story is all too familiar, what did strike me was the comment made by Anne Stuhldreher (longtime CFED friend and Senior Policy Fellow at New America Foundation), who was interviewed for the story. Anne’s argument is that financial institutions have a lot to learn from check cashers and other predatory lending outlets. First and foremost, “they’re convenient,” Anne says.

This got me thinking: what if your local Wells Fargo or Bank of America branch operated like a payday lender? To be sure, their fees shouldn’t be like those of the fringe financial service providers, and the terms and conditions of lending would need to be presented using transparent, easy-to-understand language. But, given those assumptions, what if?

For starters, payday lenders and check cashing outlets are everywhere, especially in low-income neighborhoods. The sheer number of outlets alone is a convenience that can really benefit a good portion of the population. In my community, for example, the national bank I use only has two branches within a 20-mile radius. Having more branches closer to home would be beneficial, especially for individuals who lack access to a car or who don’t live along good public transportation routes. Furthermore, as Anne points out, many of these outlets are open 24 hours a day. If banks and credit unions had 24-hour outlets, people could access their money before or after work without being forced to skip lunch breaks or take time off.

In addition to the convenience factor, banks might be in the position to offer check cashing services similar to those offered by payday lenders, but at much lower rates. The Times article indicates that major financial institutions are already providing credit to payday lenders; simply cutting out the middle person and offering those services directly to consumers would mitigate the cost to the consumer and the risk to the institution.

Ultimately, it might not be the perfect system; a zero percent unbanked rate is unlikely any time in the near future. But, payday lenders and check cashing outlets offer a valuable service, albeit one that is far too costly, especially for those most likely to use them. If these same services were offered with lower (or no) costs, it would be a win-win for consumers and service providers alike. Banks and credit unions seem ideally positioned to offer such products.

By Johanna Barrero on 03/22/2012 @ 12:00 PM

Tags: Events, Individual Development Accounts

Did your organization recently get its first Assets for Independence (AFI) grant – or are you the new IDA manager for an established AFI program? If so, you are cordially invited to participate in a conference call designed specifically for new AFI program managers and staff.

This friendly, informal conversation will give you a chance to ask questions and share ideas or concerns about getting started with your AFI program. No question is too large or small!

Your input will be solicited in advance to guide the agenda, so that each call is geared toward the areas of most interest to the group. The calls will be very interactive, so you’ll have plenty of opportunity to ask questions. You’ll also learn about tools and resources that you can put to use right away. Each call will be facilitated by AFI coaches with many years of experience in the field.

The next series of calls will be offered on two dates:

• Monday, March 26: 12:00 – 1:00 pm Pacific / 3:00 – 4:00 pm Eastern
• Tuesday, March 27: 12:00 – 1:00 pm Pacific / 3:00 – 4:00 pm Eastern

Advanced registration is required, which you can access here. When registering, you'll be asked to select your preferred date and to indicate any topics you'd like to see covered during the call. Once you register, dial-in instructions will be sent to you via email.

By Lauren Williams on 03/21/2012 @ 12:30 PM

Tags: Events, Housing and Homeownership

On Monday, March 19, CFED President Andrea Levere and Director of Affordable Housing Initiatives, Rick Haughey, participated in a Cooperative Development Foundation (CDF) event exploring connections between cooperative housing and affordable housing for seniors in rural America. This day-long forum included speakers from federal agencies, nonprofit national intermediaries like CFED, social ventures, national research organizations and even local practitioners. The presenters were experts on the affordable housing needs of seniors, affordable housing needs of rural communities, and issues and opportunities particular to manufactured housing as a source of affordable homeownership.

The day’s agenda wove a compelling story of the critical housing needs of an aging rural population and the opportunities that abound for leveraging cooperative manufactured housing communities to fill that need. Manufactured housing can be incredibly more affordable, more energy efficient, and more quickly constructed than site-built housing, and when placed in a cooperatively-owned manufactured home community, offers homeowners an opportunity to build wealth plus perpetual security of land tenure and consistently affordable housing costs of which they have full control. The human capital flight or “brain drain” of young, more highly-educated individuals from rural areas to more urban locations is a core driver behind rural areas’ increasingly older populations. Though the aging of our rural regions is a well-known trend, the continuum of housing choices for seniors in rural places has not quite caught up to their shifting needs and still features several gaps.

This event offered up cooperatives as a solution that helps members age in place and build wealth while preserving community interest, particularly in rural areas and particularly for seniors in need of affordable housing alternatives. Attendees were reminded of the value of cooperatives by USDA Rural Development Rural Business and Cooperative Programs administrator Judy Canales, whose department supports cooperatives with grants and technical assistance. We were also reminded of the resilience, success and the overall soundness of the cooperative model by Terry Simonette of NCB Capital Impact, who has financed hundreds of cooperative building loans, all of which are still operating successfully today (and none of which are in default) in spite of the recent economic crisis.

Stacey Epperson of Next Step, Mike Sloss of ROC USA, Rick Haughey of CFED, and Charlotte Thompson of the Foundation for Rural Housing in Wisconsin all recommended another logical but often overlooked twist to the cooperative solution to rural seniors’ affordable housing needs—manufactured housing. At the crux of the I’M HOME initiative is our aim to ensure that this type of housing performs as an asset-building tool like any other homeownership opportunity, and cooperative ownership of the land beneath manufactured homes in a community affords homeowners both the freedom and control to determine the future of what is often their greatest asset—their home. In a planned manufactured home community in Wisconsin developed by the Foundation for Rural Housing, a group of seniors was able to select a central location near critical services, form a cooperative and secure grant funds to purchase the land, and purchase homes with universal design. Many audience members expressed interest in taking the model one step further, and asked about the opportunity to leverage the central location of this community of seniors to develop a set of support services—like home health care provision—with other local cooperatives.

The day included many more compelling speakers and presentations, and it was especially encouraging to see so many influential partners lifting up cooperative models for manufactured housing community ownership as a solution to the challenges that face rural seniors and so many other Americans

The whole event was recorded, and should be made available on the CDF website soon.

By Stephanie Halligan on 03/20/2012 @ 12:00 PM

Tags: Individual Development Accounts

CFED is pleased to announce the release of the new and improved IDAnetwork listserv!

Are you a practitioner, policymaker, or advocate and would like to stay up to date with the ideas and conversations happening in the Individual Development Account (IDA) field? Join the IDAnetwork listserv today! As a member of the IDAnetwork listserv, you can exchange information and ideas with fellow providers about how to best structure IDA initiatives and policies that enable low-income families and individuals to save, build wealth, and contribute to the nation's continued economic growth.

IDAnetwork listserv members are now able to browse past listserv activity with the IDAnetwork Private Archives. Once logged in, members are able to search in any past listserv threads for key terms related to IDA programs, such as “Asset Limits,” “TANF,” or “Funding.”

For more information and to join the listserv, please visit the IDAnetwork List Information page.

Posted on 03/19/2012 @ 02:30 PM

Tags: Events, Individual Development Accounts

Wednesday, March 21, 3:30-4:30 p.m. EDT / 12:30-1:30 p.m. PDT

An upcoming webinar from the Assets for Independence Resource Center

We’ve all heard the phrase “there’s strength in numbers” – and many IDA programs have taken it to heart. Across the country, many programs have created IDA networks or collaborative partnerships in order to work more efficiently. In these models, a group of IDA providers work together to deliver services and share essential responsibilities such as account monitoring, reporting, fundraising and more.

This webinar will describe how AFI grantees have built strong networks, share lessons on the power of joining forces, and offer ideas for IDA providers interested in joining an existing network or starting a new one.

This hour-long webinar will cover:

• Reasons for creating or joining a network
• Establishing effective partnerships within a network
• Establishing policies and procedures for IDA network projects
• Providing training to sub-grantees
• Allocating funding based on program performance
• Leveraging resources and serving special populations

Presenters:

• Denise DeVaan, Senior Consultant, ICF International (moderator)
• Heidi Henderson, Regional IDA Coordinator, OHLSA, A community Action Agency
• Ed Khashadourian, President and CEO, Opportunity to Assets
• Mary O’Doherty, Economic Empowerment Project Director, Kentucky Domestic Violence Association
• Gosia Tomaszewska, Asset Development Program Director, The Midas Collaborative

Click here to register now! The webinar is free to all interested participants. In advance of the webinar, please send any questions you would like our panelists to address during the session to Johanna Barrero, or call 202.207.0117.

By Lauren Williams on 03/16/2012 @ 09:45 AM

Tags: Events, Housing and Homeownership, Rural

A Role for Energy-Efficient Manufactured Housing Cooperatives

Monday, March 19, 2012, 9:30 AM – 4:30 PM
National Press Club
529 14th St. NW
Washington, DC 20045

On Monday, March 19, CFED President Andrea Levere and Director of Affordable Housing Initiatives Rick Haughey will participate in a Cooperative Development Foundation (CDF) event exploring connections between cooperative housing and affordable housing for seniors in rural America. CDF has been supporting cooperative enterprise around the world for over 65 years, engaging in educational programming, public outreach activities and management of grant and loan funds. Since the inception of I’M HOME, CFED has partnered with organizations interested in addressing the ownership and financing of manufactured housing communities. We have done so because we recognize that homeowners in land-lease communities face particular challenges in their efforts to attain economic security and build assets. In particular, our partnership with ROC USA® is poised to take cooperative resident-ownership of manufactured home communities to scale as a strategy for preserving communities and protecting homeowners’ land tenure.

Manufactured homes are a popular lifestyle option for older Americans: the median age of owners of manufactured homes is 52 and nearly half of all owners are over the age of 55. An estimated 43% of all owners of manufactured homes own their homes but rent the land beneath them—many of those are seniors. The 50,000 manufactured home communities in the US present special challenges to homeowners seeking to build wealth and achieve financial security.

Some land-lease communities are maintained well by owners who treat the homeowners fairly, but others are rundown and exhibit failing infrastructure and unfair practices. Even in the best communities, however, homeowners can’t plan for the future because they never know when rents might be raised, the community might be sold to another owner, or turned into a strip mall or high-end subdivision. In many states, land owners can sell the community to another owner, or even evict the homeowners and use the land for something else, on short notice, and homeowners have few rights. This undermines homeowners’ ability to build equity, and makes financing even harder to come by.

Cooperative resident-ownership of manufactured home communities provides an ideal solution to almost all of those challenges. At Monday’s event, CFED’s Rick Haughey will participate in a panel alongside other key I’M HOME partners—Mike Sloss, Managing Director of ROC USA Capital and Stacey Epperson, President & CEO of Next Step—about manufactured housing as a new option for cooperative housing. Andrea Levere will deliver a luncheon keynote address, with remarks on the importance of affordable housing. Other long-time I’M HOME partners, NCB Capital Impact and Housing Assistance Council will be featured at this event as well.

Interested in attending? You can register online here.

By Ethan Geiling on 03/15/2012 @ 01:30 PM

Tags: Assets & Opportunity Initiative, EITC

There has been a lot of state policy action across the country. Below are the latest updates from some of CFED’s Assets & Opportunity Scorecard policy priorities:

• College Savings Victory: To help Missouri families save money for higher education, the state has partnered with the 529 College Savings Plan Program to start a matching grant program. Families with incomes below $74,999 are eligible for a dollar for dollar match up to $500 per year. $500,000 in matching grants will be available through the grant program over the next four years. Missouri joins 12 other states that currently provide incentives for making deposits into 529 college savings plans.
• Momentum Building to Curb Predatory Short-Term Lending: According to the National Conference of State Legislators, 21 states have pending legislation related to payday and small dollar lending. At the federal level, 250 advocates signed a letter urging federal regulators to end the predatory practice of bank payday lending.
• Tax Credits for Working Families: Threats - Kansas and Oklahoma are proposing to eliminate or significantly reduce state tax credits for working families, including the states’ Earned Income Tax Credits (EITCs), which are set at 17% and 5% of the federal credit, respectively. Advocates in North Carolina are fighting to extend their state EITC, rather than letting it expire after tax year 2012. Victories and opportunities - Virginia passed legislation strengthening its EITC by incorporating the federal EITC expansions adopted in the American Recovery and Reinvestment Act into the state version of the credit for tax year 2012. A number of states – including Michigan, Maryland, New Jersey, Iowa and Utah – are considering increasing their state EITCs. Click here for a more comprehensive update from taxcreditsforworkingfamilies.org.
• Asset Limits in TANF: The Hawaii legislature is considering a number of bills that would raise or eliminate asset limits in public assistance programs. SB 2178 would increase the asset limit in Temporary Assistance for Needy Families (TANF) from $5,000 to $15,000; SB 2936 would eliminate the asset limit in TANF; and HB 2685 would raise the asset limit in certain public assistance programs to $10,000. To date, five states – Ohio, Virginia, Maryland, Louisiana and Alabama – have taken the positive step of eliminating the asset test in TANF.
• Financial Education in Schools: New data from the Council for Economic Education shows mixed results over the past two years. As of 2011, 46 states require school districts to include personal financial in their curriculum standards – up from 46 states in 2009. However, only five states require student testing of personal finance concepts - down from nine states in 2009. Research shows that college students from states that require a mandatory financial education course as a condition of high school graduation are more likely to create and adhere to a budget and less likely to engage in risky credit behaviors.

By Ethan Geiling on 03/14/2012 @ 11:00 AM

Tags: Assets & Opportunity Initiative, Economic Inclusion, Federal Policy

Today, David Rothstein from Policy Matters Ohio is testifying to the Senate Banking Committee in a hearing entitled “Examining Issues in the Prepaid Card Market.” Policy Matters Ohio is a Lead State Organization in the Assets & Opportunity Network, and Rothstein is a member of the A&O Network Steering Committee.

The other witnesses testifying are:

• Lauren Saunders, Managing Attorney, National Consumer Law Center
• Daniel R. Henry, Chief Executive Officer, NetSpend Holdings, Inc.
• Rick Fischer, Partner, Morrison & Foerster
• Jennifer Tescher, President and CEO, Center for Financial Services Innovation

In Ohio, unemployed workers have two options for receiving their unemployment compensation: direct deposit into a transaction account or through a prepaid card. Rothstein will talk about his experience with ReliaCard – the prepaid card unemployed workers in Ohio can use to receive benefits. Forty-one states allow workers to receive unemployment compensation through a prepaid card.

Rothstein’s testimony is based on three premises:

1. Low- and moderate-income families need and deserve full transparency and disclosure of fees associated with prepaid debit cards. Many consumers receiving benefits through a prepaid card don’t understand the fees associated with the card, which often leads to unpleasant surprises. Rothstein recommends a standardized box on contracts for prepaid cards that clearly displays fees and costs.
2. Prepaid debit cards, particularly cards with public benefits and tax returns loaded on to them, should not have features that add high fees such as overdraft charges and balance inquiry. Although ReliaCard is not riddled with fees, the fees on cards in other states can be much worse. These fees should be minimized or eliminated.
3. The prepaid debit card market should not be a replacement but rather a complement to other financial products that build and manage assets for working families. For example, most prepaid cards do not have linked savings accounts or other tools that help families build assets. Without a safe place to save and invest, it is more difficult for families to build assets and climb the economic ladder.

Click here to read Rothstein’s full testimony.

By Sean Luechtefeld on 03/13/2012 @ 11:30 AM

Tags: Entrepreneurship, Recommended Reading

As you may remember, CFED Founder Bob Friedman spoke earlier this year at the Big Ideas for Job Creation Forum, after the ideas presented in his paper on tax benefits for entrepreneurs were named as one of the top five job creation strategies by the Institute for Research on Labor and Employment at UC Berkeley.

Last month, John Olson of the Federal Reserve Bank of Atlanta sat down with Bob to discuss in further detail some of the ideas. That interview has been podcast and is now available for download at the FRB-Atlanta website. There’s also a transcript of the interview there, where you can learn about the ideas presented, which are based on the work CFED has been doing to promote its Self-Employment Tax Initiative (SETI).

I encourage you to download the podcast or read the transcript, and if you have any questions for Bob, don’t hesitate to use the comments section below!

By Lauren Williams and Anne Li on 03/12/2012 @ 10:30 AM

Tags: Events, Housing and Homeownership

Credit Unions and Financing Manufactured Homes: Opportunities & Innovations, Thursday, April 5, 3:30 - 5:00 pm EDT / 12:30-2:00 pm PDT

Co-presented by I'M HOME, the National Federation of Community Development Credit Unions and Fair Mortgage Collaborative

Financing manufactured home purchases and refinances can be a viable and effective community development activity for credit unions. This webinar explains the characteristics of the low- and moderate-income market and highlights the successful and distinctive approaches taken by two community credit unions – BECU in Washington State and Self-Help Credit Union, a community development credit union based in North Carolina. Credit unions, finance professionals and MH stakeholders can learn about cutting-edge credit union innovations as well as findings from data analysis of almost $1.5 billion in MH loan data reported by I’M HOME’s Single Family Finance initiative.

Presenters include:

• Terri J. Fowlkes, Director, Community Development Investments, NFCDCU
• Susan Akins, Mortgage Product Development Manager, BECU
• Philip Swayzee, Senior Mortgage Lending Specialist, BECU
• Lewis Dancy, Assistant Director, Mortgage Lending, Self-Help Credit Union
• Howard Banker, Executive Director, Fair Mortgage Collaborative
• Anne Li (moderator), Program Director, Innovation, CFED

About the 2012 Manufactured Housing Webinar Series
Regardless of the economic landscape, affordable housing persists as a challenge in many communities across the country. Manufactured housing is a high-quality, affordable choice for many homeowners. I’M HOME and our partners work to assure that manufactured housing becomes a part of the national affordable housing strategy, which is a task that faces a range of challenges. Overcoming these challenges requires policy, legislative, financing, market and political actions at the federal, state and local levels. This webinar series is designed to inform key stakeholders about strategies for overcoming those challenges, lift up examples of successful strategies, and enhance communication among advocates, developers, stakeholders and public officials about how to make those strategies work.

Who Should Participate?
The 2012 Manufactured Housing Webinar Series is intended for affordable housing developers and advocates, state and local public officials, federal agency officials, financial institution professionals and other stakeholders interested in promoting quality, affordable housing options in their communities.

What You Will Learn?
The 2012 Manufactured Housing Webinar Series will provide practical information on the opportunities for manufactured housing as an affordable housing strategy and will delve into issues that affect legislative, regulatory and market-based strategies for doing so. The series will focus on the intersection of building a local, federal and state policy landscape and improved financing system that supports owners of manufactured housing and will highlight case studies that have successfully leveraged strong policies to help homeowners build assets.

The 2012 Manufactured Housing Webinar Series is free of charge, thanks to the generous support of our funders, including the Ford Foundation and Fannie Mae. Space is limited so we encourage you to register early. All webinars will be archived on our website if you are not able to join us.

By Johanna Barrero on 03/09/2012 @ 04:00 PM

Tags: Events, Individual Development Accounts

Tuesday, March 13, 12:30 – 1:30 p.m. PDT / 3:30 – 4:30 p.m. EDT

Want to know what to look for when approaching a bank or credit union as a partner for your Individual Development Account (IDA) program? Join us for this webinar and learn how to create strong partnerships (and strengthen existing ones) with financial institutions. We’ll also provide an overview of the Community Reinvestment Act, how it affects banks’ investment in the community, and how you can leverage it to develop effective IDA collaborations.

This hour-long webinar will include:

• Account features that are needed or desirable for IDA programs
• Internal processes that must be developed and in place in a financial institution to offer IDAs
• How to develop agreements and accountability systems to promote effective partnerships with financial institutions
• Unique features of bank and credit union partnerships with IDA programs

Presenters include:

• Lynette Bell, First Vice President of Community Development at SunTrust Bank
• Janet Hamer, Senior Community Development Manager, Federal Reserve Bank of Atlanta
• Brendan Wilbur, IDA Coordinator, Alternatives Federal Credit Union
• Amy Shir, AFI Regional Consultant (moderator)

Visit https://www1.gotomeeting.com/register/638096041 to register now!

The webinar is free to all interested participants. In advance of the webinar, please send any questions you would like our panelists to address during the session to Johanna Barrero at johanna.barrero@idaresources.org, or call 202-207-0117.

By Stephanie Halligan on 03/08/2012 @ 12:00 PM

Tags: Financial Empowerment

It’s March, which means it’s time for the annual National Financial Capability Challenge, sponsored by our colleagues at the U.S. Department of the Treasury and the U.S. Department of Education. The Challenge, which runs March 12 through April 13, 2012, is a free, voluntary, online series of financial questions for high school students to check their knowledge of earning, spending, saving, borrowing, risk protection, and more. The Challenge covers everything from understanding taxes and deductions on your paycheck to analyzing the long-term effects of leasing versus owning an asset.

High school educators are encouraged to sign up for free at challenge.treas.gov to administer the Challenge to their students, and to help spread the word to other high school educators across the nation.

More about the challenge:

• It's quick. It takes only about 30 minutes to administer the Challenge online, but the lessons students will learn in preparing will last a lifetime.
• It's easy. Comprehensive lesson plans and sample questions are available in the online Educator Toolkit to help prepare students for the Challenge.
• It's rewarding. Educators and top-scoring students in each school will earn personalized award certificates and states with the highest participation will also be recognized.
• Any high school educator can do it. All high school educators, not just math and personal finance educators, from all types of school systems – public, private, parochial, and home schooling – are encouraged to register their students to participate. Youth group leaders who have a role in educating high school students are also welcome to participate. The website also provides tools you can use to easily spread the word about the Challenge.

The National Financial Capability Challenge is not only about recognition and a little friendly competition among the states; it’s about empowering young people with the skills and knowledge they need to succeed in an increasingly complicated global financial economy.

Financial security begins with knowledge, and sound financial habits are built at an early age. And what better place to start teaching these basic financial concepts than in the classroom?

For more information about the National Financial Capability Challenge, please visit the Challenge website.

By Sean Luechtefeld on 03/07/2012 @ 10:30 AM

Tags: Financial Empowerment

EDITOR'S NOTE: Last month, the General Accountability Office published the highlights from a financial capability forum held in October. Special thanks to Kevin Thompson at the Department of Labor for sending the report and the highlights below our way!

Forum participants discussed (1) needs and priorities in improving financial literacy; (2) roles and responsibilities of, and collaboration among, the government, nonprofit, and private sectors; (3) lessons learned from federal public health and nutrition literacy initiatives; and (4) GAO’s potential role in addressing financial literacy issues.

Forum participants included representatives of federal, state, and local government organizations; academic experts; nonprofit practitioners; and representatives from the private sector. Comments expressed during the proceedings do not necessarily represent the views of all participants, the organizations they represent, or GAO. Participants were given the opportunity to comment on a draft of this summary.

Highlights

• Focus on key populations. Participants discussed a number of areas that should be the most sustained focus of the nation’s financial literacy efforts in the coming years. Among other areas, efforts should target kindergarten through 12th grade education; the workplace; the preretirement years; and special populations that may be particularly vulnerable, including low-income communities, the Hispanic community, and older Americans. Materials should be tailored as appropriate to meet these populations’ characteristics and circumstances.
• Identify the most effective approaches and target efforts accordingly. More research is needed to identify the most effective approaches to improving financial knowledge and behavior. Targeting products appropriately, improving delivery mechanisms, and leveraging technology are also important.
• Enhance the role of employers in improving their employees’ financial literacy. Employers have a key role to play in improving the financial literacy of their employees—for example, by encouraging them to save for emergencies and retirement. Further, financial literacy stakeholders need to do more to persuade employers of the business benefits of supporting healthy financial behaviors by employees.
• Leverage the unique role of the federal government. The federal government has a unique role to play in promoting greater financial literacy. For example, the government can use its convening power and other tools to draw attention to the topic, take advantage of existing connections with certain populations, and make certain legal and regulatory changes to support greater financial literacy.
• Increase coordination and partnerships within and across levels of government and different sectors. Opportunities exist to further increase coordination and partnerships among entities involved in financial literacy. Such efforts could help federal, state, and local government agencies; private sector entities; and nonprofits conserve scarce resources and reduce any duplication of effort.
• Identify lessons from other initiatives designed to improve consumer behaviors. Financial literacy practitioners can learn from efforts in other fields, such as health and nutrition, that have sought to educate consumers and influence their behavior. Participants discussed similar challenges, such as the difficulty of influencing people to change their behaviors and the possibility of developing a financial literacy equivalent of the Department of Agriculture’s “MyPlate” nutrition graphic.

Participants also discussed ideas for GAO and the Comptroller General to support or raise awareness about financial literacy or partner with others to do so. Among other ideas, they said that GAO could help in efforts to identify the best programs and methods for improving financial literacy, develop a financial literacy initiative for GAO employees that could serve as a potential model for other government agencies, and identify opportunities for federal agencies to leverage existing distribution channels to provide additional financial education.

By Johanna Barrero on 03/05/2012 @ 11:00 AM

Tags: Events, Individual Development Accounts

Wednesday, March 7, 2012, 12:30 – 1:30 p.m. PST / 3:30 – 4:30 p.m. EST

Would you like to learn how potential partnerships can help improve your program outcomes? Want to know what kind of organizations and programs are considered natural partners for IDA programs? Join us to hear from IDA practitioners that have leveraged existing resources in their communities to improve their clients’ outcomes.

This hour-long webinar will include:

• Effective partnerships that can improve your program outcomes and your participants’ success rate
• Accountability systems that promote effective partnerships
• Statewide initiatives and programs that are considered natural partners for IDA programs
• Leveraging volunteers and other resources for your IDA program

Presenters include:

• Sharon Henderson, Vice-President of Strategic Initiatives, Prosperity Works
• Rebekah Barger, IDA Program Manager, NeighborWorks® Umpqua
• Johanna Barrero, AFI Resource Center (moderator)

Visit https://www1.gotomeeting.com/register/601767705 to register now!

The webinar is free to all interested participants. In advance of the webinar, please send any questions you would like our panelists to address during the session to Johanna Barrero at johanna.barrero@idaresources.org, or call 202-207-0117.

By Bob Friedman on 03/05/2012 @ 09:30 AM

Tags: Entrepreneurship, Jobs

Republican leaders like Speaker Boehner have suggested that increasing tax rates on the wealthiest one percent of Americans would be a mistake, alleging that the top one percent are the preeminent job creators and entrepreneurs in our economy. In fact, it turns out that the top one percent create only about one percent of businesses and that the lion's share of new businesses are started by the remaining 99%, including middle- and low-income Americans, trying to create jobs for themselves.

What’s more, the primary source of investment in the 2-2½ million new businesses started each year (which are responsible for almost all net new jobs created each year) is personal savings and the savings of friends, family and associates – not the resources of the wealthiest one percent. There may be other reasons not to increase tax rates on the top one percent, but impact on job and business creation and investment are not among them. Let us look instead to the opportunities open to all our people, especially those who may have entrepreneurial capability and interest, but not the ability to invest in themselves and their families.

When one examines the best available data, it becomes clear that the wealthiest one percent are not particularly more likely to be active entrepreneurs deriving a substantial portion of their income from their ventures than the other 99 percentiles. In fact, according to the Office of Tax Analysis of the Treasury Department, millionaires make up only .5% to 1.4% of small business owners. Ninety-nine percent of small – and new – businesses are founded by the rest of us; we represent all income brackets, races and education levels and we come from all over the country.

New jobs, in fact, do not come primarily from small or large businesses, but instead, from new businesses under one year old. According to the Kauffman Foundation, over the last thirty years, it is these youngest firms that have created all net new jobs, adding an average of three million per year.

Over the last thirty years, the job contribution of new and young businesses has varied from highs of 3.6 million to lows of 2.2 million. For the last couple years, we have been at one of those lows in new business job creation, at a time when we can least afford it. No wonder the nation is asking how to create jobs and only beginning to look in the right direction for how to stimulate the formation and growth of new and young business.

When one looks at the nature of new business job creation, the first finding is that most startups are small indeed, often employing only the entrepreneur herself/himself in the first few years. Some two million Americans create jobs for themselves each year, many part-time. Some of these businesses are pioneering new edges of the economy (green burials for the aging, soon-to-be-dying baby boomers; indigenous beans; new digital domains and new services) while others offer more prosaic goods and services. In both cases, entrepreneurship is often driven by necessity. Nevertheless, it remains the difference between some income and employment and unemployment and poverty.

Twenty to thirty percent of the self-employed add employees, sooner or later. Three percent or so of business starts grow to some size, creating tens or hundreds or thousands of jobs, and in some cases, they build whole new industries. It is on these high-growth firms that the Kauffman Foundation, the President’s Start-Up Initiative and many business leaders are now focused. Indeed, the cultivation of seed and venture capital firms, incubators, expanded H-1 Visas and lower tax rates for new businesses are all worth pursuing.

But what of the other 97%? Should we ignore them? More to the point, if you had met Steve Jobs when he was a college drop-out from a blue-collar home with an interest in calligraphy and acid, would you have recognized him as the stand-out entrepreneur of our generation? Unlikely. So, if we really want to increase the yield of our economic garden, perhaps we should water all the plants.

How do we do that? For starters, the un- or underemployed American considering whether to start a business and create a job for herself should be encouraged through tax deferrals that could temporarily reduce business costs (for example, not having to pay both employer and employee shares of FICA). Likewise, would-be entrepreneurs should have greater access to the personal savings and savings of families, friends and associates from whence the overwhelming majority of all investment in new business starts comes. To facilitate this, we should make the existing Saver’s Credit refundable and available for new business creation as well as homeownership, college and retirement. We should also think critically about a two percent reduction in the Self-Employment Payroll Tax, which looks like it may be the beginning of a true Self-Employment Tax Credit. Finally, we should remove the penalties poor and unemployed families depending on some form of public assistance face when trying to create their own jobs. This includes asset limits in welfare, Social Security, Food Stamps, health insurance and more.

In short, it’s new and young, not small or large. It’s savings and equity, not debt. It’s tomorrow’s economy, not yesterday’s. It’s powered by all of us, not just the top 1%. And, perhaps most importantly, it’s with tax incentives for saving and entrepreneurship for all, not just for our wealthiest neighbors.

By Inemesit Imoh on 03/01/2012 @ 09:30 AM

Tags: Education, Federal Policy, Saver's Credit

“Education and lifelong learning will be critical for anyone trying to compete for the jobs of the future. That is why I will continue to make education a national mission. What one learns will have a big impact on what he or she earns: the unemployment rate for Americans with a college degree or more is only about half the national average, and the incomes of college graduates are twice as high as those without a high school diploma.” –President Barack Obama, February 13, 2012

President Obama’s recent education proposals, expressed in both the State of the Union address and the Fiscal Year 2013 Budget Request, emphasize the importance of producing more college graduates who are prepared to contribute to the high-wage, high-skill jobs of the future. As the administration has recognized, producing more college graduates begins with increasing the number of students attending college. Thus, the President is focusing on improving the quality of K-12 education and addressing the most significant hurdle that students face: Money.

According to the U.S. Census, the average total cost of attendance for undergraduate colleges and universities was $14,006 in 2007-2008. While many students are able to use federal, state and institutional grants and scholarships to cover some of their education costs, most students rely on loans. Among 2007-2008 bachelor’s degree recipients, about two-thirds graduated with student debt. Among these, 25% had borrowed $30,500 or more. What’s worse? The price tag for a college education continues to rise at rates that outpace inflation.

Students shouldn’t have to choose between tens of thousands of dollars in debt undermining their economic security and the long-term economic immobility they risk by not attending college due to insufficient funds. Lower-income students face this choice every time a tuition bill is due. Their college attendance and completion rates suffer significantly when their families lack savings and assets. Only 10% of students from low-income households graduate from college by their mid-twenties.

The President’s budget includes several proposals to improve college affordability, including making the American Opportunity Tax Credit permanent, sustaining the maximum Pell Grant award of $5,635 and a new Race to the Top initiative that would provide incentives for colleges to keep prices under control, double the number of work-study jobs and increase Perkins Loans by $7.5 billion. While it’s great the Administration is addressing some of the financial burdens that students face, this conversation is incomplete without addressing college savings and financial education for low-income students.

Many of these policies are helpful, but none of them are the silver bullet to college affordability. For instance, the Pell Grant—the need-based grant that low-income students receive from the federal government—has not kept pace with the growing cost of higher education. In 1988 the maximum Federal Pell grant covered 50% of public higher education costs but by 2009, it only covered 32%.

Promoting college savings is a critical missing element of the President’s education agenda. Studies demonstrate that youth savings is a consistent, significant and powerful predictor of college attendance. Young people that have a savings account are three to seven times more likely to attend college than children without an account. If the Administration and Congress want to increase college attendance rates, they should improve existing policies that help families save for education.

CFED recommends that policymakers advance three particular solutions that do just that; these policies expand, improve and integrate existing savings policies and account types to make them more accessible to low-income families:

• Expand the Saver’s Credit to match contributions to College Savings Accounts:
  The Saver’s Credit currently rewards low-income workers who contribute to retirement accounts with a nonrefundable tax credit capped at $250. Eligibility for Saver’s Credit should be expanded to those who contribute to 529 College Savings Accounts and Coverdell Education Savings Accounts. Currently, legislation has been introduced in the House of Representatives to extend the Saver’s Credit to 529 accounts only. CFED also recommends making the Saver’s Credit refundable so that it can actually benefit low-income households with children, many of whom do not have income tax liability.
• Exclusion of Education Savings Accounts from asset tests in public benefit programs:
  Asset limits, or caps on the maximum value of savings a household may have to be eligible for certain benefits programs, hurts many students who receive benefits or have family that receive benefits. CFED supports the asset limit reform because it would help low-income families save for a college education or other important assets like homeownership or simply having a strong liquid savings.
• Embedding basic bank accounts in school-based financial education:
  When provided in combination with a savings account, financial education gives both students and their families a tangible way to develop and test financial decisions and opportunities, like paying for college. According to our 2012 Scorecard, 44 states now include personal finance in their curriculum standards. Programs like the Partnership for College Completion (PCC), led by UNCF, KIPP and CFED, are innovative approaches to promoting college readiness though matched college savings accounts and financial education as a part of a rigorous K-12 education.

By Jennifer Brooks on 02/29/2012 @ 02:00 PM

Tags: Assets & Opportunity Initiative

At CFED, we weren’t surprised when we saw the New York Times map and related article about “the geography of public benefits”—not surprised that the percentage of people who rely on the social safety net is higher than many people think, nor that reliance on government help varies across the country.

In January, CFED released the 2012 Assets & Opportunity Scorecard, which found that 43% American households—equivalent to 127.5 million people—are “liquid asset poor.” These families do not have even a minimal financial cushion to protect them in the event of a job loss or other financial crisis. Without a “personal safety net,” it’s no wonder families are turning to a public one.

What are the programs and policies that make up our social safety net? The New York Times analysis includes Medicare, Medicaid, Social Security and Unemployment, the Earned Income Tax Credit, Supplemental Nutrition Assistance Program, and Temporary Assistance for Needy Families.

The sad fact is that as states have faced ongoing budget shortfalls, they have taken an axe to many of these programs or made it more difficult to access help. In this economy, policymakers should be making it easier—not harder—for families to get help bridging the gap, putting a meal on the table, or getting medical care.

And as essential as protecting the public safety net is, policymakers also need to be helping families build a personal safety net of their own. They can do this by supporting access to mainstream financial products, encouraging savings, and helping first-time homeowners, startup businesses and college students. In addition, policymakers cannot forget their duty to protect consumers in the financial marketplace from unscrupulous actors who would undermine financial security.

The point to remember is that even in tough budget times, policymakers' hands are not tied. CFED identified two dozen examples of low-cost, politically-viable policy ideas that can be adopted in this budget context and that lay the groundwork for future economic prosperity.

Ever mindful of the next election, policymakers should keep in mind who their constituents really are: as likely as not, they are among the “liquid asset poor” and counting on the social safety net for help. Adopting policies that help these constituents will be political winners.