Why Do Half of Households Pay No Federal Income Tax?
By Michelle Nguyen on 04/20/2012 @ 06:00 PM
The conclusion of tax week mostly brings the nation a collective sigh of relief, but it is also a good time to dispel common myths about our federal tax system.
An oft-cited statistic is that 51 percent of households paid no federal income tax in 2009, and this figure is sometimes used as evidence that low- and moderate-income families do not pay enough taxes. If we take a closer look though, we can unpack this statistic for a better understanding of the real story.
The Center on Budget and Policy Priorities (CBPP) helps us do this in a recently updated report. While it is true that 51 percent of households paid no federal income tax in 2009 and that that number dropped to 46 percent in 2011, what does it mean that nearly half the country does not pay federal income tax?
Right off the bat, it is important to understand that these figures refer only to the federal income tax and NOT all federal taxes. Other significant types of federal taxes are unaccounted for in those figures, such as the payroll tax. When calculating the percent of households who do not pay any federal income tax or payroll tax in 2009, the numbers come out to only 17 percent, which is a huge drop from 51 percent. During normal economic times, this figure decreases to 14 percent, for reasons I explain below. Furthermore, these percentages do not even include state and local taxes that households pay, which brings to mind a blog post that fellow CFEDer Ethan Geiling wrote about regressive state tax systems and the disproportionate tax burden that the poorest 20% pay relative to wealthiest 1%. This data can also be found in the 2012 Assets & Opportunity Scorecard.
Moreover, the percentage of households that don’t pay federal income taxes drops to about 40 percent in normal economic times. The 51 percent and 46 percent figures are simply an indication that, during a recession, there are more households with low or no income. Moreover, these numbers reflect policy changes at the time that relieved a family’s tax burden during the economic downturn, such as the “Making Work Pay” tax credit, and these temporary tax measures have since expired.
I hope this post helps shed some light on an often misunderstood issue. For more information about who these households are and the full CBPP report, read it here.
"It is Little by Little Before the Bird Builds its Nest": My Pathway to Asset Building
By Inemesit Imoh on 04/20/2012 @ 12:30 PM
Two years ago, when I saw a job opening at CFED, the decision apply was an easy one. As the daughter of Nigerian immigrants, I have first-hand understanding of the value of asset building. My parents both came to this country with virtually no money at all. My father likes to remind me that he arrived with just $125 to his name; in fact, he keeps the receipt for his $125 traveler’s check framed on the wall of our home in South Carolina. Even after they married each other, and had three lovely children if I do say so myself, my parents had a difficult time getting by. They faced many of the same barriers as other low-income and immigrant families, from working low-wage jobs to lack of access to safe and affordable financial products.
Today, my parents live comfortably as members of the American middle class. They are proud homeowners and have high-skill jobs, but our family endured more than 15 years of poverty to get here. When I ask them how they were able to achieve so much, they remind me of the values they have drilled into me for my entire life:
- Higher Education: My parents, since day one of their arrival in the States, knew that in order for them to move up the economic ladder, they had to earn college degrees. College degrees increased their earning potential and access to higher-wage jobs that offered benefits. Even when money was tight, education was their top priority and they never lost sight of that.
- Savings: My parents owned credit cards but refused to rely on them. They knew that nearly every dollar they earned had to go to food, housing and school and preferred that their discretionary income went to savings instead of credit card repayments. Their savings, sometimes rather small, helped them weather bouts of unemployment, pay for unexpected bills and cover emergencies before they became financial crises.
Asset building is a relatively new term, coined by Professor Michael Sherraden in 1991, but the concept is well understood and appreciated across the globe. My parents themselves think of asset building as simply “investing in the future.” Regardless of what one may call it, asset building is a universal concept and in my case, it was passed down through the generations. My parents understood and valued the importance of asset building because that message was passed on to them from their own families. My paternal grandfather was educated up to fourth grade, but he always encouraged his children to pursue higher education for that was “the education of the future.” My maternal grandmother never went to school and spent most of her adult life working in the community farm, but she always taught her children the value of saving what little money you earned “…in case of emergencies.”
That’s why I came to CFED to work as the Federal Policy Associate. I wanted to work to with legislators, regulators and agency officials to expand asset-building policies and programs for all Americans, so that my family’s success story is one that all families can achieve.
Webinar: New Toolkit for Developing Partnerships Between Domestic Violence Agencies and Asset-Building Organizations
By Lauren Stebbins on 04/19/2012 @ 10:30 AM
Tuesday, May 1, 2012, 2:00-3:30 P.M. (E.D.T)
to be repeated on Thursday, May 17, 2012, 2:00-3:30 P.M. (E.D.T)
Together, the Family and Youth Services Bureau, Division of Family Violence Prevention and the Office of Community Services, Assets for Independence Program (AFI) announce a new toolkit to help increase the number of partnerships between domestic violence and asset-building agencies. This toolkit will train both communities about the financial needs of domestic violence survivors and how best to tailor asset-building services to meet those needs.
The toolkit has been developed to provide step-by-step guidance to bring partnerships with asset building specialist and domestic violence advocates from concept to reality.
Economic dependence and lack of economic options are the main reasons that victims stay with or return to an abusive partner. Over the past several years, domestic violence (DV) agencies and asset-building organizations have begun working together to build the economic capacity of survivors.
In this session you will hear from AFI programs and DV agencies in the field that have developed different models for partnering (in Kentucky and in El Paso, TX), and learn from toolkit authors about the valuable guidance and resources that the toolkit offers. More detailed information on presenters and resource materials will be forwarded prior to the webinar to all who have registered.
Top Five Reasons to Register for ALC 2012
By Sean Luechtefeld on 04/18/2012 @ 05:00 PM
You should have seen in your inbox earlier today an announcement that the 2012 Assets Learning Conference website is now live (if you didn’t, you need to sign up for the CFED mailing list today!), which means you can now register for this year’s Conference. Of course, I realize you won’t just register because I told you to, so I put together an entirely subjective list of the top five reasons to register for the 2012 Assets Learning Conference today:
5. September is the perfect time of year to be in DC.
Were you to come in January, we might have 49 feet of snow. Were you to come in July it would be 105 degrees with 100% humidity. In September, highs average around 77 and lows average around 60.
4. We’re offering four Plenary Sessions & over 40 Concurrent Sessions.
That’s right – over 40 sessions! Whether you’re using housing as a platform for asset building, or if IDA programs in rural areas is more your cup of tea, there’s something for everyone. Throughout the summer, we’ll be releasing sessions and announcing the exciting speakers we have planned for the event.
3. Capitol Hill Visits are back.
Fall 2008 was the first time we brought the Conference to Washington, a decision based on the need for Conference-goers to converse with lawmakers on Capitol Hill. The Hill visits have been an integral part of the ALC experience ever since, and this year will be no different.
2. Conference Institutes are the perfect opportunities to go in-depth within your subfield.
In addition to the sessions being offered (see #4 above), we’re offering four full- or half-day Conference Institutes on September 19. These Institutes offer the educational depth of a seminar, all rolled into the already unique ALC experience.
1. The ALC remains the premier gathering of the assets & opportunity field.
Which Conference brings together a larger or more cross-cutting sector of the assets & opportunity field? If you figure out the answer to that one, let me know. (In the meantime, I’m not holding my breath.) Education, networking, and the opportunity to glean best practices that you can translate into meaningful change in your work all make the ALC the go-to event of the year.
If that’s not convincing, I don’t know what is, so go to www.assetsconference.org today to register!
Aging Out of Manufactured Housing Communities?
By Rick Haughey on 04/18/2012 @ 01:00 PM
At the annual Manufactured Housing Institute (MHI) Congress & Expo in Las Vegas from April 10 - 12, for which ROC USA® was a platinum sponsor, manufactured housing producers, lenders, community owners and other key industry leaders convened to learn, network and develop new ideas about housing in today’s economy. The agenda featured a particularly engaging session about older adults and their desires for aging in place in manufactured housing communities.
Mike Sullivan, CEO of Lifestyle Services, Inc., discussed how representatives from assisted living facilities often report that older adults leaving manufactured housing communities are a big part of their business. Vacancy losses caused by older residents’ deaths and dependency issues create a real problem for manufactured housing community owners. Lifestyle Services, Inc. helps older Americans stay in their homes longer by providing innovative age-in-place technology solutions for assisted care.
According to Jacquie Lauder, of Aging Dimensions, studies show that older adults want to stay in their communities as they age and ultimately die in their homes, yet only two percent of older adults do so. Most are forced to move to some kind of assisted living facility or hospital due to declining health, loss of mobility, or deteriorating physical and mental function.
So, how do you keep residents healthy and provide the right amenities to allow them to age in place in their communities? Smart community owners should listen to their older residents to determine what amenities will allow them to stay in their communities as long as possible. Steven Lefler, also with Lifestyle Services Inc., shared new information with the audience about some of his company’s emerging technology—the CloseBy Network—that can enable children of aging parents to check in on their parents remotely through a variety of in-home cameras and motion detectors that can notify the children of potential problems. Older adults can also remotely report their vital signs to their doctors through this technology system.
Minimizing housing costs is another concern for aging populations on fixed incomes, and energy efficient, net-zero energy homes—those with no energy consumption and zero carbon emissions—can reduce or eliminate utility expenses altogether. Additionally, focus groups have revealed that aging adults, like many others, want to spend plenty of time with family and friends; so communities that make space available for those interactions—like playgrounds for residents with grandchildren, dog parks for those with pets, and other shared spaces—become infinitely more appealing to older adults seeking to age in place. By providing manufactured home community residents with amenities like these, community owners can ensure that their aging residents are happier, safer and healthier.
Want to learn more about aging in place in manufactured housing communities? Presenters at the Cooperative Development’s event held last month on “Helping Rural Seniors Age in Place, Build Wealth, and Preserve Community Interest” explained why cooperatively-owned manufactured home communities are an ideal environment for aging adults interested in preserving wealth and aging in place. Check out our blog post on this event. Or, take a look at this research study by Andree Tremoulet of the Institute on Aging on manufactured home communities as naturally occurring retirement communities.
Let’s Celebrate Tax Day with EITC Data
By Michelle Nguyen on 04/17/2012 @ 04:30 PM
Happy tax day, everybody! Depending on your current tax filing status, today’s tax filing deadline may fill you with relief or panic. While I’m fortunate enough to have already filed, tax day also reminds me of interesting data from the Brookings Institution about the Earned Income Tax Credit (EITC), which is one of the largest and most effective wage support programs for low- and moderate-income families.
Perhaps the most well-known tax credit, the EITC supplements the earnings of working people by reducing their tax burdens, and if the EITC is greater than the amount of taxes owed, the taxpayer receives a refund. For more information on research about the EITC, see this research brief that CFED created in 2010.
The data from the Brookings Institution is fascinating and extensive, especially for organizations who are interested in providing voluntary income tax assistance (VITA) sites for their city. With a few clicks, the data can help answer questions such as:
- The percentage of total returns receiving the EITC
- The average EITC dollar amount claimed
- The percentage of Refund Anticipation Loans and Checks requested
For a list of all data in the database, see here.
Because the data drills down to geographies as granular as the zip code- and city-level, interested users can see data for their city and benchmark that against similar locales. Brookings also provides an interactive map for folks to visualize the data. And while the data is only as recent as 2008, it is recent enough to still provide some important baseline information about the EITC claims in your city.
University of Kansas Assets and Education Research Symposium
By Johanna Barrero on 04/17/2012 @ 12:30 PM
Last month the University of Kansas at Lawrence hosted the Assets and Education Research Symposium, which brought together researchers, key funders and practitioners in the asset building for children field.
The goal of the symposium was to present the latest research on assets and children’s educational outcomes. Sixteen researchers shared their findings and discussed the multiple factors affecting children’s educational attainment. From external ones such as family’s socio-economic status and asset level to psychological factors including parental educational expectations, children’s identity and sense of possibilities for their future. Following are a few highlights from some of the presentations.
The Effect of Assets on Educational Attainment
A couple of research papers showed a positive effect of access to savings vehicles (regular savings accounts and educational Individual Development Accounts, IDAs) on savings and educational outcomes for children and young adults. For instance, a ten year impact study of educational IDAs in Oklahoma presented by Michal Grinstein-Weiss from the University of North Carolina showed that participants in the study who received an IDA had an increase in educational attainment. This increase was more significant for males in the study, who were more likely to complete a college degree compared to other males in the study who did not receive an IDA.
Research by Vernon Loke from Eastern Washington University looked at families’ ability to accumulate assets over time as having a positive effect on educational outcomes for children. This has important implications for asset building programs and policies as it calls for the need to design strategies that help families save but also move up the economic ladder over time, while building a financial cushion that will allow them to cope with inevitable income fluctuations and interruptions.
Researcher William Elliot from the University of Kansas presented on the role of race and income in the cost burden of post-secondary education. His study looks at recent changes in financial aid policies that encourage moderate-income and minority students to take on more of the burden of their post-secondary education. While there is evidence that having college savings is an effective way of reducing a student’s burden, such savings are more common among higher income and non-minority students. An important recommendation from this study is the need to make more financial aid available to minority students at two and four year colleges. It also confirms the need to promote college savings among minority and low income students from an early age.
The Role of Parental Expectations and Identity
In addition to the effect of assets on educational attainment, several papers presented at the symposium looked at the role of parental and children educational expectations in shaping children’s perception of what is possible for their future.
Research by Youngmi Kim from Virginia Commonwealth University explored the impact of parental expectations and family savings as well as other indicators of financial stability on children’s educational attainment. The study revealed great disparity between parental educational expectations and children’s academic outcomes by race and ethnicity with White and Asian parents showing higher educational expectations for their children compared to African American, Native American and Hispanic parents. It also showed how economic security measured by indicators such as having health insurance coverage and other financial assets increased parental educational expectations for their children.
In addition to parental expectations, researcher Daphna Oyserman from the University of Michigan looked at children’s expectations and perception of the future as having an important effect on their educational outcomes. Socio- economic factors play a key role in how students view themselves and their possibilities for their future. They can shape a child’s identity and sense of belonging and the way they perceive the possibility and importance of pursuing a higher education. Based on their perception of what is possible and attainable for them, children gauge the difficulty of this pursuit and decide whether it is a worthwhile effort.
Many more interesting findings and ideas where shared during the symposium, all with important program and policy implications for the asset building field. The research papers will be published in a special issue of the Economics and Education Review. You can find more information on the Assets and Education Research Symposium here.
Last Minute Tax Filers Can Still be Savers
By Katherine Lucas McKay on 04/16/2012 @ 12:00 PM
Millions of workers will spend today and tomorrow doing their taxes in preparation of the April 17 filing deadline (because April 15 fell on a Sunday, the deadline has been extended). Predictably, many late filers are those who owe money. No one enjoys paying additional taxes and penalties to the IRS, but for many lower-income families it is especially difficult.
This year, the Bonds Make It Easy campaign is running a sweepstakes to take the sting out of Tax Day and encourage savings. Bonds Make It Easy is a campaign run by the D2D Fund that promotes tax-time purchase of U.S. Savings Bonds. We’ve written about the D2D Fund’s work to encourage lower-income families to save many times before and CFED is a member of the D2D-led Savings Bonds Working Group.
Bonds Make It Easy isgiving away a $300 gift card to one lucky winner who files taxes between April 11 and May 2. To enter, click the link above or visit www.bondsmakeiteasy.org and click on the “Win $300” button. Then, use the free software to prepare your taxes and buy a Savings Bond before you file. That automatically enters you in the sweepstakes.
Anyone who is receiving a refund can use the Split Refund form to buy U.S. Savings Bonds. But many people don’t realize that they can still buy bonds at tax time even if they are not receiving a refund. This is the only way consumers can still buy paper bonds; except at tax time, all U.S. Savings Bonds are now electronic. Bonds Make It Easy has more information.
If you, your friends and family, or the families you serve have procrastinated on filing taxes this year, entering the Bonds Make It Easy sweepstakes for savers might make tax time a little more fun. Celebrate getting those taxes done by saving some money!
Expanding Economic Opportunity by Offering College Funding for Veterans
By June Olsen, Guest Contributor on 04/13/2012 @ 01:30 PM
In his paper, “Education and Economic Growth in Historical Perspective,” David Mitch paraphrases the 1776 writing of Adam Smith in Wealth of Nations: “The proportion between the annual produce of a nation and the number of people who are to consume that produce depends on ‘the skill, dexterity, and judgment with which its labour is generally applied.’” This “skill, dexterity and judgment” has been re-named “labor force quality” by recent analysts of economic productivity in the United States. Studies have found that many factors influence labor force quality in the U.S., but one of the most important factors has been the years of schooling completed by the workforce. Education leads to greater economic productivity, and opportunities today are more widespread as ever with accredited online universities becoming ever more important.
But unemployment does not. GIBill.com says: “The Bureau of Labor Statistics reports that the unemployment rate for veterans who served anytime between September 2001 and the present was 10.9 percent in April of 2011, compared to 8.5 percent for the civilian population.” Before veterans can be part of any economic growth in this country, they must have jobs. The GI Bill was signed into law in 1944 so that veterans could be reintegrated into society and become part of the workforce. The first step toward that end was to provide access to education for a group of people who, at the time, at best had high school diplomas.
A high school diploma (and not a GED) are now required for recruitment into the military, and soldiers do receive on-the-job training, some of which can later be applied to civilian work. But all this is not enough for veterans to be competitive in the job market. The website Today’s GI Bill gives veterans reasons to pursue higher education: “Today, more jobs than ever require a two- or four-year college degree. More education means more choices and career opportunities. It is estimated that, by 2014, 90 percent of the fastest-growing careers will require some higher education. Every bit of education you get after high school increases the chances you’ll earn good pay.”
But if education is going to translate into economic growth, it is not enough simply to get veterans into school. Studies conducted over decades have shown that increasing the number of years of schooling does not increase economic growth unless the level of cognitive skills among the students also increases. “In other words, it is not enough simply to spend more time in school; something has to be learned there,” says educationnext.org.
Veterans face more challenges than many groups when it comes to increasing cognitive skills. For one thing, they may not be well-prepared for college, and they may lack confidence in their academic ability. Then there are the adjustment issues, such as the PTSD of one veteran described in “From the Battlefield to the Classroom,” an article about increased veteran enrollment at Georgia State: “The sudden movement of a classmate during an exam would trigger his fight or flight response. And then there were the headaches, panic attacks and sleepless nights that made studying for exams or writing papers nearly impossible.”
Georgia State and other schools have an increasing network of resources to help veteran students with everything from finances to finding a support group, thus helping them adjust, and helping them to learn and increase those cognitive skills. And schools like Lackawanna Community College make a special effort to help veterans focus their course work to get useful degrees.
Education does increase economic productivity, and helping veterans not only go to school but learn there and find jobs will increase the economic productivity of our nation.
June Olsen recently graduated with a degree in educational psychology. She currently works as a writer on all things education and is always interested in connecting with bloggers online.
National Association for Welfare Research and Statistics: Call for Papers
By Leigh Tivol on 04/13/2012 @ 10:00 AM
CONTRIBUTOR'S NOTE: I received the following Call for Papers and thought it might be useful to some of our readers. I hope you'll consider submitting your research and participating in the NAWRS Conference.
National Association for Welfare Research and Statistics and National Association of State TANF Administrators
Call for Papers and Participation: Using Research to Improve Program Effectiveness
Deadline for Submissions: April 30, 2012
The National Association for Welfare Research and Statistics (NAWRS) Annual Workshop and the National Association of State TANF Administrators (NASTA) will hold its 52nd Annual Workshop at the Renaissance Harborplace Hotel in Baltimore, Maryland, August 19-22, 2012. The conference will bring together policymakers, administrators, researchers and practitioners concerned with the well-being of vulnerable populations.
Conference description: This year's joint NAWRS and NASTA conference is focused on how states and localities might generate and use research to improve program effectiveness. This year, the program committee is calling on the research and practice communities to share: (1) findings from research studies that provide evidence about what works and what doesn't in serving disadvantaged populations, (2) tools for conducting research studies that document program effectiveness, and (3) innovative or promising practice in TANF service delivery. We are interested in a broad range of public and child welfare programs including Temporary Assistance to Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP), Unemployment Insurance (UI), workforce development, foster care, community health and disability programs (SSI, SSDI).
New to the program is a Research Academy. The academy is a "hands on" workshop designed to teach state and local researchers strategies for conducting rigorous random assignment evaluations using existing data. Researchers will learn to conduct a low cost study to test program effectiveness.
Presentation Formats and Submission Requirements:
Given the partnership between NAWRS and NASTA, we are designing a program to meet the needs of both program administrators/practitioners and researchers. This year, there are four different types of submissions-(1) Research-based presentations, (2) Panel presentations, (3) Promising practice presentations, and (4) Roundtable presentations. Submissions should include the following:
Title: Title of the proposal (indicate whether the submission is a panel, single paper, promising practice presentation, or a roundtable session)
Author(s): Contact information for the presenting author and all other authors
Presentation abstracts and required text: Insert an abstract of no more than 500 words. Indicate from the following what type of presentation format you are proposing. Submission requirements vary based on type of presentation.
- Research-based presentations. Submit a proposal for a single paper presentation that summarizes results from a study. The program committee will assign the paper to the appropriate panel. Include a brief description of the paper including the purpose of the paper/study, methodology, findings, and relevance to the conference theme.
- Panel presentations. Panel sessions will include three or four topic-related research presentations (15 minutes each) and 30-45 minutes for formal discussant and audience questions. We strongly encourage you to submit a panel session.Follow the guidelines for research-based presentations submitting information for each paper. Also include a brief paragraph describing the purpose and goals of the session.
- Promising practice presentations. This year, we are encouraging state and local practitioners to submit proposals describing innovative and/or promising programs that others might learn from. For these sessions, we will assign a researcher as discussant to talk about how these programs might be evaluated. Discussions will focus on potential research design (for both impact and implementation), measurable outcomes, and other evaluation advice. For the submission, briefly describe goals of the program, core program components, outcome measures, and relevance to the field.
- Roundtable proposals. Roundtable sessions provide face to face exposure to those interested in the same projects and concepts. Roundtables can be organized for individual projects or broader topics. Roundtable proposals may fall into two categories:
- Participants wanting more information on a topic. NAWRS/NASTA is soliciting proposals indicating specific topics on roundtables that the conference planning committee might organize. For these proposals, include the roundtable topic and what you hope to learn from the session.
- Participants wanting to share expertise. Individuals may include a roundtable proposal that they are willing to organize. These proposals should include the primary topic, individuals to be included in the roundtable, and potential questions addressed. Proposals should also include the basic format of the session (e.g., thought questions with open dialogue, short presentations and discussion).
Bibliographic or reference information is not required with your abstract.
Proposals and queries should be submitted on the NAWRS proposal submission page at http://nawrs.org/proposals/. Questions about the 2012 conference should be directed to Vince Kilduff at firstname.lastname@example.org or 410.767.7187. For the information on the conference, see www.nawrs.org.
Why Bank On Programs Need Financial Institutions
By Michelle Nguyen on 04/11/2012 @ 11:30 AM
Last week, CFED released a report called Partnerships You Can Bank On: Sustainable Financial Institution Engagement in Bank On Programs, which, for the first time, investigates the sustainability of Bank On programs from the perspective of the financial institution.
Before we get into what that means, let’s step back a second. To unpack that sentence, we need to know what Bank On programs are, why they are important and why financial institutions are integral to these programs.
With approximately 8% unbanked households and another 18% classified as underbanked, there are about 30 million American households that are financially underserved. (Side note: Data on the number of un- and underbanked households at the city/county/metro level can be accessed through a new online data tool at JoinBankOn.org.) Financial access initiatives aimed at connecting unbanked consumers to mainstream banking products have proliferated in recent years, and Bank On programs have become the fastest growing strategy to address concerns about the number of households operating outside the financial mainstream. These are voluntary, public/private partnerships between local or state government, financial institutions, and community-based organizations, and the goal is to provide low-income un- and underbanked people with low-cost starter or “second chance” bank accounts and access to financial education.
Bank On programs are almost primarily locally based and operated, though, in recent years, several state and regional programs have formed. While local government and nonprofits provide marketing for the campaign, offer financial education, and connect unbanked consumers to the program, participating financial institutions agree to create affordable, mainstream checking accounts for unbanked consumers in their communities. However, a key assumption underlying the Bank On model is that financial institutions can serve these consumers in a way that is sustainable to their business operations. This assumption is critical to the success and longevity of the Bank On approach.
As more municipalities and states start Bank On programs, some facets of the model that have been key to its strong local appeal – local innovation and decision-making authority – are also becoming challenges to further scale and sustainability. In particular, as the volume of requests to develop unique, customized products and data tracking reports for multiple local markets increases, and as funding requests continue to mount, it is becoming increasingly challenging for national and regional financial institutions to negotiate, coordinate and manage their participation in Bank On.
The report explains in more detail about specific challenges that financial institutions face in terms of product design and program requests, along with the value of participating in the program. To read the full report, click here.
New Lead Organizations in the Assets & Opportunity Network
By Jennifer Brooks on 04/09/2012 @ 02:30 PM
Responding to increasing interest in the Assets & Opportunity Network, CFED opened a Round II Request for Letters of Interest in February, inviting organizations in states and local areas not already served by Lead Organizations to apply to participate in the Assets & Opportunity Network in that role.
We’re excited to announce that 10 new Lead State and Local Organizations will be joining the A&O Network – five local and five state. These organizations will join the 51 other Lead State and Local Organizations in the A&O Network. To learn more about these organizations, including latest news and updates, visit the A&O Network website.
The 10 new Lead Organizations are:
New Lead State Organizations
- Indiana: The Indiana Institute for Working Families, a program of the Indiana Community Action Association
- Iowa: Iowans for Social and Economic Development
- Minnesota: Legal Services Advocacy Project
- South Carolina: South Carolina Association of Community Action Partnerships
- West Virginia: Kanawha Institute for Social Research & Action, Inc.
New Lead Local Organizations
- Delaware County, PA: PathWays PA/Delaware County Asset Development Collaborative
- Eastern Idaho: Partners for Prosperity
- Kalamazoo, MI: Kalamazoo Poverty Reduction Initiative
- Philadelphia, PA: Women's Opportunities Resource Center
- San Francisco, CA: The Mission Asset Fund
In the next several months, CFED will be working with each of these organizations to build their own microsites under the Assets & Opportunity web portal to use for coalition-building, advocacy and to connect with peers.
Background on the A&O Network: The Assets & Opportunity Network is a national movement-oriented group of advocates, practitioners, policymakers, and others nationwide working to expand the reach and deepen the impact of asset-based strategies. Network members are on the frontlines of state and local policy advocacy, coalition-building and service delivery.
The purpose of this Network is to serve as both a learning community and advocacy community—to connect members to ideas, tools and people that can both enhance their capacity to effectively deliver asset-related services, as well as to enhance their capacity to advocate for policies that will bring the opportunity to learn, earn, save, invest and protect to millions more Americans.
Press Conference on Entrepreneur Startup Growth Act
By Sean Luechtefeld on 04/09/2012 @ 11:30 AM
Last week, Representative Judy Chu (D-CA), author of the Entrepreneur Startup Growth Act (HR 3571), held a press conference in Los Angeles highlighting the “important benefits” of CFED’s Self-Employment Tax Initiative.
The event brought together Rep. Chu and her staff with Claudia Viek, CEO of CAMEO, and Kerry Doi, President and CEO of the Pacific Asian Consortium in Employment. These leaders have been pivotal in promoting our belief that tax time is an essential gateway to helping self-employed people formalize their business and take advantage of money-saving tax credits. As we noted when Rep. Chu introduced the legislation in December, HR 3571 recognizes this potential by offering free Schedule C tax preparation services to low-income self-employed individuals.
Rep. Chu (D-CA) at Press Conference at PACE in Los Angeles
Related Blog Post
CFED Presenting at Grassroots & Groundwork Conference
By Ethan Geiling on 04/06/2012 @ 11:00 AM
CFED, in partnership with Rural Dynamics Inc. and Lakota Funds, will be presenting at the fifth national Grassroots & Groundwork conference, from June 6-8 in Prior Lake, Minnesota. The conference is devoted to showcasing innovative models and tools organizations across the country are using to help low-income people build sustainable prosperity. This year’s conference, centered around the theme “Working Together to Reduce Poverty and Build Prosperity,” will bring together upwards of 450 people from nonprofits, government agencies, educational organizations, anti-poverty programs and funding agencies.
Our 70-minute breakout session will highlight emerging collaborative public policy work and invite participants to take part in a movement for collaborative impact. Specifically, it will highlight the Assets and Opportunity Network, a national movement-oriented collaboration of state, local and tribal coalitions, as well as general members working to expand the reach and deepen the impact of strategies to help families become financially secure and build assets for the future. Session participants will discuss opportunities to build effective policy advocacy strategies in collaboration with others locally, in the region, and across the nation.
To find out more about our presentation and the conference, visit www.grassrootsandgroundwork.org.
New Hampshire's 100th Resident-Owned Community
By Craig Welch, Guest Contributor on 04/05/2012 @ 10:30 AM
EDITOR'S NOTE: Today's Guest Contributor is Craig Welch. Craig is Vice President for Housing at the New Hampshire Community Loan Fund. The Inclusive Economy thanks Craig for his contribution and congratulates New Hampshire Community Loan Fund on their 100th resident-owned community.
People from more than 5,600 New Hampshire households, most of them low-income, have created affordable housing for themselves.
Quite an accomplishment, wouldn’t you say?
The strategy they’ve used takes courage, faith in the future and faith in themselves. But it results in housing that is stable and safe, and that helps them save money and build assets. It also results in improved neighborhoods and greater civic participation. And it generates property tax dollars for each of the 64 towns and cities where it is located.
They’re called resident-owned manufactured-housing communities, and earlier this month, a community in Derry became New Hampshire’s 100th.
New Hampshire’s first resident-owned community was created in Meredith in 1984. The elderly owners of a 13-home trailer park needed to sell it because they couldn’t keep up with the maintenance. At the time, real estate prices near Lake Winnipesaukee were sky-high as land was snapped up for condos and vacation homes. Long-time residents knew exactly what would happen if the park was sold.
“Most of us just figured we’d be thrown out, so we were looking for solutions – moving, buying something else, renting somewhere, just hanging in and hoping for the best,” one resident told a reporter.
A couple of residents looked into buying the park themselves, but they didn’t have the personal credit, or downpayment, for a loan. Remembering there’s strength in numbers, they organized the other residents into a cooperative and approached the banks as a group.
The banks still weren’t persuaded. Three said they wouldn’t lend to a cooperative. Two said that even as a cooperative, the families didn’t have sufficient credit. Then there was the group’s total lack of management experience, low incomes, and a leaky septic system that needed costly repairs. Few lenders thought that a newly formed group of volunteers could manage such an enterprise without bankrupting it.
But over the past 27 years, they’ve proven otherwise.
The Meredith group had been assisted by a graduate student who needed a community development project to complete her Master’s degree. Her professors connected her with a brand-new organization, the New Hampshire Community Loan Fund. The Community Loan Fund connected with the Sisters of Mercy, who wanted to put the money in their retirement fund to use for a good purpose. This project was the perfect fit.
The Meredith families had the purpose. The Sisters had the money. And the Community Loan Fund figured out how to get the deal done.
It would be 2½ years before the next park in New Hampshire converted to resident ownership, but then the idea concept exploded. Thirty-five parks converted in the next 10 years, and 46 in the decade after that.
In 27 years, not one of these communities has failed. Not one has been sold back to an outside company or investor.
Through the years, trailers evolved into mobile homes, which became today’s not-so-mobile manufactured homes. Today’s manufactured homes are built in factories to federal standards, are set on pads and foundations that are built to last, and cost very little to live in. These quality homes have become an important source of housing for young families, downsizing seniors and families with low incomes.
In many rural communities where rental apartments are scarce, manufactured homes are the best, and often the only, affordable housing.
Although some resident cooperatives buy their communities to avoid displacement, as did the Meredith residents, most want control the fees they pay to rent their lots (most residents in manufactured housing parks own their homes, but rent the land beneath them). Some also want to repair aging roads, electric or water systems.
The residents of Foxy Terrace Cooperative in Derry worked for five years, through false starts and disappointments, to buy their community. It was worth it, says president Russell Brooks.
Now, the residents will pay rent to themselves. “We can actually put the money into making it a better community … a community everybody wants to be proud to live in,” Brooks said.
That pride is on display at co-ops’ community cleanup days, and in their community gardens. Committees plan dances, cookouts, night sledding and pumpkin-carvings. Others look in regularly on elderly neighbors to be sure they’re cared for.
When Medvil Cooperative in Goffstown counted the number of volunteer hours its members had contributed in 2010, the answer was stunning: 50,000.
The largest of the resident-owned communities are multi-million-dollar enterprises, but they are run democratically by elected boards of directors and annual member meetings. Several graduates of the Community Loan Fund’s “boot camp” for new co-ops and/or annual leadership training have since been elected or appointed to serve in their town’s government.
One hundred co-ops isn’t just an achievement for the proud residents of these parks – it offers a lesson to all of us:
When people have the right tools (fair loans, training and technical assistance) at the right time, they can take control of their lives and change the course of their lives. Land renters become owners. Residents become leaders. And neighborhoods become communities, in the best senses of the word.
Vote for CFED to present at CFSI’s 7th Annual Underbanked Financial Services Forum!
By Michelle Nguyen on 04/04/2012 @ 01:00 PM
We need your help! In February, I submitted a proposal to lead and moderate a roundtable session at CFSI’s 7th Annual Underbanked Financial Services Forum in San Francisco from June 13-15. Roundtable sessions are informal discussions focused on a specific underbanked topic, and I proposed a session to discuss engaging financial institutions in Bank On programs, largely informed by a new CFED report called Partnerships You Can Bank On: Sustainable Financial Institution Engagement in Bank On Programs.
The proposed session would explore a key assumption underlying the Bank On model that financial institutions are able to serve un- and underbanked consumers in a way that is sustainable to their business operations. To the extent that financial access initiatives, like Bank On, need participation from private markets, we have much to learn about engaging financial institutions to serve this market sustainably.
Here’s where we need your help. CFSI is putting the proposed roundtable sessions to a public vote and, for each of four themed tracks, will select and brand the winning session as “Voter’s Choice.” CFSI will then select 8-12 proposals from the remaining entries as additional roundtable discussions. For information about all the proposed sessions, click here.
Vote for CFED’s session here (within the “Embrace Inclusion” track)! Voting comes to a close at midnight on April 13, so please spread the word. Thanks, and we appreciate the support!
Is Financial Education in Schools on the Decline?
By Ethan Geiling on 04/04/2012 @ 11:00 AM
States can help promote financial capability among children and youth by requiring that financial education be taught and tested in the classroom. Across the country, states have adopted a range of financial education policies, of varying strength and impact. States can: 1) require schools districts to include personal financial in curriculum standards; 2) require content standards to be implemented; 3) require districts to offer courses in personal finance; 4) require students to take a personal finance course; and 5) test student knowledge of personal finance concepts.
New data from the Council for Economic Education, however, shows that school-based financial education has plateaued and may even be on the decline.
Five states currently require school districts to test students on basic personal finance concepts in order to graduate from high school - the gold standard in state financial education policy. Unfortunately, this is down from nine states that required testing three years ago. Since 2009 six states (KY, MO, OH, OR, UT, WV) dropped the testing requirement and two states (KS and TN) added the requirement.
The number of states requiring students to take a personal finance course has been steadily rising over the past decade – from one state in 1998 to 13 states in 2009. But the number of states held steady from 2009 to 2011, with three states (AR, MD, OK) dropping the requirement and three states (MO, NC, WV) adding the requirement.
The number of states requiring a high school course in personal finance to be offered, which had also been rising over the past decade, declined from 15 states in 2009 to 14 states in 2011. Between 2009 and 2011, four states dropped the requirement (AR, MD, NM, OK) and three states added the requirement (MO, NC, WV).
The good news is that two more states include personal finance in state curriculum standards and two more states require standards to be implemented.
Overall, this downward trend in state financial education policy is worrisome, especially in light of the recent economic downturn. The ability to make informed judgments and effective decisions about money management can be as important a determinant of an individual’s long-term financial security as his or her income, health and education. From understanding the meaning of one’s credit score to possessing the necessary skills to balance a checkbook, financial capability is essential to a family’s ability to build and protect assets. As the subprime mortgage crisis and proliferation of predatory short-term loan products attests, the ability to discern between safe and dangerous financial products is especially important to low- and moderate-income families who often lack sufficient savings to weather an unforeseen loss.
Evaluation in Action: Demonstrating Results, Measuring Impact and Informing Change in Financial Capability
By Deborah Visser and Daria Sheehan, Citi Foundation on 04/03/2012 @ 10:45 AM
EDITOR'S NOTE: To kick of financial education month, today's blog comes from Guest Contributors Deborah Visser and Daria Sheehan. Deborah is Director for Success Measures, Investments and Partnerships at NeighborWorks America, while Daria is Senior Program Officer at the Citi Foundation. Their post below describes some exciting evaluation measures, and CFED's VP for Policy & Research, Ida Rademacher, is honored to be presenting at the interim evaluation meeting today. We appreciate the work of Deborah, Daria and all of their colleagues at NeighborWorks America and the Citi Foundation for bringing the importance of financial education to the forefront of the national conversation.
The financial capability field is always looking for better, more rigorous ways to demonstrate results of financial coaching, financial education, housing, credit counseling and asset-building efforts on the lives of individuals and families. To address this need, the Citi Foundation joined a small group of funders and practitioners to collaborate with the Success Measures program (www.successmeasures.org) at NeighborWorks America to develop and field test a comprehensive set of financial capability outcome indicators and data collection instruments. We are excited by the prospect that these new tools will make it easier for practitioners to measure changes in low- and moderate-income consumers’ financial status, attitudes, behaviors, resilience and more. To encourage the financial capability sector to embed outcome measurement as a standard practice, The Success Measures Financial Capability Indicators and Tools are now available to the field free of charge.
What makes these tools distinct from other traditional measures that gauge the effectiveness of financial capability efforts is the inclusion of behavioral tools that address concrete things people do, as well as the strategies they employ to manage financial change over time. Data collected from The Success Measures Financial Capability Indicators and Tools can be tailored by community-based organizations to conduct structured conversations with clients on financial issues, inform changes in program design, and communicate results to a wide range of stakeholders. Financial capability funders, researchers and policymakers can analyze client data across multiple organizations working toward the same outcomes with the same set of shared, tested metrics to identify best practice, improve their understanding of factors that impact financial stability and promote innovation through public policy reform.
This collaborative field-building effort has already gained considerable traction. For example, the Youth Financial Empowerment (YFE) program in New York City has used the new tools to determine attitudes and behaviors regarding financial practices of youth in its program and is continuing to track changes over time. This will enable YFE to better help its clients cultivate a mindset about saving money that would support the transition from foster care to independence. In Oakland, the East Bay Asian Local Development Corporation (EBALDC) has been able to make use of the tools to help its clients begin to learn how to reduce their debt, while also beginning to accumulate savings.
To sustain the momentum of these and similar efforts, a two-year, $5 million grant from the Citi Foundation is supporting a scaling initiative aimed at delivering state-of-the-art financial education and coaching needed to enable families to build their savings, reduce debt and better manage their finances. As an important component of the initiative, 31 organizations are receiving training and technical assistance to use the Success Measures Financial Capability tools to conduct real-time evaluations of how the financial knowledge, attitudes and behaviors of their clients change over time.
We welcome your feedback on these new financial capability outcome evaluation tools and look forward to learning how practitioners are using them in their asset-building work. Check out the tools in the Citi-funded publication here: www.successmeasures.org/fctools.html.
Call for Research Papers: 2012 Assets Learning Conference
By Michelle Nguyen on 04/02/2012 @ 01:30 PM
I wanted to share an announcement about the Call for Research that CFED is disseminating for the 2012 Assets Learning Conference. I have copied parts of the Call for Research below, and you can see the full announcement here. We encourage you all to submit abstracts of your research! We are welcoming empirical, applied evaluation and policy research papers broadly related to asset building, financial inclusion and capability, household and consumer finances, and economic mobility issues. We will be accepting submissions until April 30, 2012. For any questions, please feel free to email me (email@example.com) or Kasey Wiedrich (firstname.lastname@example.org).
CFED, in partnership with the Federal Reserve Bank of St. Louis and the Center for Financial Security at the University of Wisconsin-Madison, invite you to submit research papers to be considered for inclusion in a research forum entitled “Ideas Into Action: An Applied Research Forum for the Assets Field.” The forum will be held as part of CFED’s 2012 Assets Learning Conference (ALC), September 19-21, 2012, in Washington, DC.
The Assets Learning Conference (ALC) is a nationally-recognized biennial event that brings together over 1,000 professionals from leading nonprofits, foundations, financial institutions, corporations, academia and government to learn about programs, products and policies that help low-income households and communities build wealth and financial security. The Research Forum will be a key feature of the ALC, structured to showcase important recent developments in academic and applied research, and to spark dialogue among researchers, policymakers, advocates and practitioners that draws out the implications of the research for their work.
If you would like your research to be considered for inclusion in the forum, please submit a detailed abstract (1,000 words) for consideration by April 30, 2012. Authors of papers accepted for the conference will be notified by June 1, 2012 and are expected to provide completed working papers or drafts on or before August 1, 2012. Authors selected for the research forum will receive complimentary registration ($700) to the ALC and travel support that covers the cost of airfare and accommodation.
This call for papers is partially supported by the Social Security Administration Financial Literacy Research Consortium and the Federal Reserve Bank of St. Louis.
“It’s What I Do, Not Who I Am”: A Behaviorally-Informed Hypothesis
By Sean Luechtefeld on 03/29/2012 @ 05:00 PM
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.
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