CFED Research Release Highlights Twin Cities' Financial Insecurity
By Sean Luechtefeld on 10/18/2011 @ 11:30 AM
New data released today by CFED's Research Team reveals enormous disparities along racial lines in how people are faring in the Twin Cities during the economic downturn, particularly in the areas of homeownership, savings and overall income.
CFED’s Asset & Opportunity profiles for the Twin Cities were released at a St. Paul forum featuring state and local elected officials and national experts, including Mayor Chris Coleman, State Rep. Morrie Lanning, St. Paul City Council Member Melvin Carter, Minneapolis City Council Member John Quincy and Commerce Commissioner Michael Rothman. Our very own Jennifer Brooks, Director of State & Local Policy, was on-hand to speak at the event as well.
“We hope these profiles and the forum today fuel an ongoing conversation about income and asset poverty in the Twin Cities and statewide, “ said Brooks. “It is clear that many families are suffering. But we have found ample evidence that local leaders, working in partnership with non‐profits, have the power to create highly effective programs that help families build wealth and save for the future.”
CFED's Asset & Opportunity profiles provide a comprehensive look at the financial stability and economic resiliency of families in general, and those released today take a close look at Minneapolis and Hennepin County and at St. Paul and Ramsey County. They offer the most comprehensive data available on the economic challenges facing households in the metro area in comparison with state and national figures. Among the key findings in Minneapolis & St. Paul:
- While more than 63 percent of whites own homes in the Twin Cities, just 23 percent of blacks in Minneapolis and 26.4 percent in St. Paul are home owners. This is attributed, in part, to high home costs. The average national home cost is 3.7 times greater than median income, but is 5 times greater in Minneapolis and 4.5 times greater in St. Paul.
- Low incomes and lack of assets are having a profound effect on the ability of Twin City residents to save for the future and build financial security. Fully 63 percent of black Twin City residents, compared with approximately 25 percent of whites, are living in “asset poverty,” meaning they do not have enough assets to live at the poverty level ($22,314 for a family of four) for three months if they lose their main source of income. The overall rate for people of color living in asset poverty was also quite high (57 percent in Minneapolis and 52 percent in St. Paul).
- While median income for whites was nearly identical to the national rate of $52,175, the medium income for black households was just $21,747 in Minneapolis and $26,031 in St. Paul.
“These data paint a troubling portrait of the recession’s impact on the Twin City’s most vulnerable families. Our region’s economy cannot prosper with so many residents lacking the income and assets to achieve financial security,” said Ron Elwood, supervising attorney for the Legal Services Advocacy Project, which hosted the forum along with CFED and Greater Twin Cities United Way.
At the forum, policy makers presented their reactions to the data and discussed current programs and future plans aimed at expanding financial security and opportunity. A panel of local experts also provided information about efforts currently underway that are helping struggling Twin City residents build wealth by connecting them to safe and affordable financial products and services, and increasing their access to income‐boosting benefits and tax credits.
“These innovative programs are making a significant difference for families in our area. But they need to reach more people. Local, state and national leaders working with those of us in the non‐profit sector have an opportunity to identify and support strategies that can help people achieve greater financial security,” said Andrea Ferstan, director of income strategies for Greater Twin Cities United Way.
CFED has been working with cities across the country to expand access to mainstream banking, financial education and income and asset‐building opportunities, as well as help families protect the assets they have so they can become more financially stable. The organization is assisting Twin City officials to help bring about similar changes in the metropolitan area and throughout the state. To read the Minneapolis Asset & Opportunity Profile click here; to read the St. Paul Asset & Opportunity Profile, click here.
The Asset & Opportunity Profiles were made possible with support from Northwest Area Foundation.
In Case You Missed It - October 17 Edition
By Sean Luechtefeld on 10/17/2011 @ 12:15 PM
We really like to use ‘In Case You Missed It’ to point your attention toward interesting reads throughout the assets blogosphere. Lately, we’ve had so much content from CFEDers and a slew of partners that we just couldn’t get this list together. Luckily, it’s back – your weekly links from around the asset-building cyberworld. Enjoy!
Bill Scher at the Campaign for America’s Future includes in his blog this morning a number of helpful links for those of you following the Occupy movement. Question for our readers: what can we make of the Occupy movement? Is it working? What’s next? Use the comments section below to get the conversation started.
Gearing Up for Children’s Savings
According to the New America Foundation’s Ladder blog, the DOE announced on September 30 that 42 of the 66 new GEAR UP grants include within them children’s savings and financial education programs. That’s great news, more about which you can read here.
Not New, But Still Gets My Blood Boiling
I’m clearly not the only one outraged by the Heritage Center’s report that poverty in America is a myth (evidence for which Heritage finds in the fact that “poor people” have "luxuries" like a refrigerator). Thankfully, Mercedes Diane Griffin Forbes of the DC Examiner shuts it down with her eloquent commentary on what poverty really means in the US. Check out her response here.
Have something to share that we missed? Leave a comment below!
CSAs Featured on TV’s Entourage
By Sean Luechtefeld on 10/14/2011 @ 09:45 AM
Last month, Bhagwan Chowdhry, Professor at UCLA’s Anderson School of Management, was featured in an episode of the popular HBO series, Entourage. In the episode, Professor Chowdhry is being interviewed by a journalist on his real-life children’s savings initiative, called Financial Access at Birth (FAB).
According to the episode, a clip from which you can watch here, FAB would open a $100 savings account for every child at birth. Of course, as Chowdhry notes in the episode, getting funders on board is no easy task. Still, FAB is a FAB-ulous idea, given that recent research shows that children who have a savings account at seven times more likely to complete college.
As the engineer and mastermind behind FAB, Chowdhry was also featured in a Fox Business interview on the initiative, explaining how financial access is critical to bringing all Americans into the economic mainstream and how saving from birth can be a necessary step to achieving that goal. You can watch the Fox Business interview here.
You can imagine how excited we were when we saw children’s savings initiatives featured in popular media, and if you caught the episode of Entourage, we’re sure you were excited, too. Can you think of any other instances when financial access was highlighted in popular media? If so, use the comments section below to send them our way!
Nonprofit Loan Fund Launches Product for Photo Voltaic Systems on Homes
By Kim Pate on 10/13/2011 @ 12:15 PM
EDITOR'S NOTE: The following is a press release that was issued by the Council for Native Hawaiian Advancement.
Honolulu, Hawaii – The Council for Native Hawaiian Advancement (CNHA) Board of Directors took action this summer to approve the expansion of its solar water loan product to install photo voltaic (PV) systems on Hawaiian homes.
“Over the last 2 years, we’ve assisted close to 200 families to install solar water systems to cut utility costs,” said Rosalee Puaoi, CNHA Loan Fund Manager. “It’s a natural next step to help families go to the next level of further reducing monthly costs by installing PV on their homes.”
Solar water panels strictly heat water, which represents between 25% and 40% of a household utility bill. PV solar panels go further, by converting solar energy to electricity, reducing household energy costs even more.
CNHA’s solar water program provides capital of up to $6,500 and, with the expansion of the product, will provide up to $15,000 to install photo voltaic solar panels.
“It’s really one of the best investments a homeowner can make,” said Lilia Kapuniai, CNHA Vice President. “The savings each month gives families a relief and an increase in disposable income.”
The PV product is structured to have $172 monthly payments, either entirely or mostly covered by the utility cost savings generated by the panels. On top of that, homeowners are able to claim up to 65% of the cost of the system, worth thousands of dollars.
“Back in 2008 and 2009, community leaders consistently told us families were struggling in the recession and identified solar as a meaningful way to increase their monthly disposable income immediately,” Kapuniai continued. “It’s just one tool that we can give families to weather the down economy – it’s not a question of 'if' families can afford to make this type of home improvement, the data is clear, our community cannot afford to not make these improvements.”
CNHA hopes that families take advantage of not only the obvious cost saving that is generated from installing photovoltaic systems, but also the long term impacts of not relying on fossil fuels to power Hawaii. CNHA is a national network of Native Hawaiian organizations, providing a strong voice on public policy, operating a community loan fund, delivering capacity building and leadership development services, and promoting philanthropy to cultural practitioners through its Hawaiian Way Fund.
For more information visit www.hawaiiancouncil.org or www.hawaiianwayfund.org.
Prize-Linked Savings Report and Event
By Sean Luechtefeld on 10/12/2011 @ 01:00 PM
Here’s the latest announcement from our friends at D2D Fund about their new prize-linked savings report and upcoming prize-linked savings Summit on November 18.
Please take a look at our newest prize-linked savings (PLS) publication, "Prize-Linked Savings And Financially Vulnerable Americans: Insights from a Five-State Study," which details the results of the first-ever panel survey of 1,300 low-to-moderate income American households’ demand and preferences for PLS.
“In my prior work, I focused on the question of how we get money into the hands of low-income individuals and households. At D2D, I was able to think instead about how to help low-income households actually save more of that income,” said the report’s lead author, Heidi Boyd. “A prize-linked savings product can motivate individuals to increase their participation in the formal banking sector and therefore enable them to save more of their income.”
This report is part of a series of papers written and published by D2D that delve deeper into the cutting-edge PLS innovation. Look for the next paper in a few weeks which focuses on the continued success and ongoing innovation around Save to Win in Michigan.
Don't forget that on November 18, 2011, D2D will be hosting a PLS Summit – participants will join an engaging discussion of implementers, academics, entrepreneurs, funders, and policy makers while hearing about the latest research, innovation, and scale models for PLS. To register, click here.
New Kauffman Foundation Publication on the Untapped Potential of Women Entrepreneurs
By Lauren Stebbins on 10/11/2011 @ 12:30 PM
EDITOR'S NOTE: The following was an eblast sent by the Ewing Marion Kauffman Foundation publicizing their new publication "Overcoming the Gender Gap: Women Entrepreneurs as Economic Drivers."
Women who are capable of starting growth companies that serve global markets may be the nation's secret weapon for achieving sustained economic growth.
Research shows that startup companies -- particularly high-growth startups -- are the most fruitful source of new U.S. jobs and offer the economy's best hope for recovery. However, despite the fact that about 46 percent of the workforce and more than 50 percent of college students are female, and that women have risen to top positions in corporate and university hierarchies, they represent only about 35 percent of startup business owners. Their firms also tend to experience less growth and prosperity than do firms started by men.
"Overcoming the Gender Gap: Women Entrepreneurs as Economic Drivers," a new paper released today from the Kauffman Foundation, explores the reasons behind lower business startup rates among women and proposes actions that would help to realize the promise of female entrepreneurs in escalating the economy.
For more information and to view the entrepreneurship gender gap infographic, click here.
CFED’s Pate to Keynote Oregon Microenterprise Network Conference
By Sean Luechtefeld on 10/10/2011 @ 12:15 PM
On Thursday, CFED Vice President for External Relations Kim Pate will deliver the keynote address to the Oregon Microenterprise Network (OMEN) Summit on Entrepreneurship in Portland. To learn more about the Conference or to register, click here.
Kim’s keynote will focus on the federal policy landscape facing the asset-building field, especially in 2012 leading up to the presidential election. Kim will also share the innovative work being done by local SETI partners, discuss CFED’s Assets & Opportunity Scorecard, and explore how states are doing in terms of asset building, particularly in Oregon and in neighboring states.
Will you be attending OMEN’s Summit on Entrepreneurship? Be sure to drop by and say ‘hi’ to Kim when you’re there!
CFEDers to Headline Pathways to Prosperity Conference
By Sean Luechtefeld on 10/10/2011 @ 10:30 AM
The 2011 Pathways to Prosperity Conference will take place next week, October 17-18, at the Sheraton Imperial Hotel in Durham, NC. The event, which aims share innovations in research and policy and identify improved strategies for wealth creation and poverty alleviation, will feature several presentations from members of the CFED team. Among those presentations,
- Stephanie Halligan will present as part of “Asset Building for Children: Strategies for Developing a Successful Children’s Savings Account or IDA Program for Youth” on Monday, October 17 from 1:20 – 2:50 pm.
- Ida Rademacher will present as part of “Upside Down: How Federal and State Budgets Invest in Asset Building” on Monday, October 17 from 3:00 – 4:30 pm.
- Lisa Buckley and Carl Rist will present as part of “New Municipal Strategies in Asset-Building and Financial Empowerment” on Tuesday, October 18 from 8:45 – 10:15 am.
- Rick Haughey will present as part of “Bringing it All Home: Building the Future of Affordable Housing with Manufactured Housing” on Tuesday, October 18 from 10:30 am – 12:00 noon.
- Carol Wayman will present as part of “112th Congress and Asset Building: What to Expect, Hope for and Fear” on Tuesday, October 18 from 1:45 – 3:15 pm.
- Carl Rist will present as part of “Assets & Opportunity in NC: A Look at Household Wealth in NC and the Strength of NC Policies Focused on Family Financial Security” on Tuesday, October 18 from 3:30 to 5:00 pm.
We hope you’ll be able to join us for these and a bevy of other exciting sessions! For more information about Pathways to Prosperity or to register, visit the conference website today!
CFED’s Rademacher Testifies Before U.S. Senate
By Sean Luechtefeld on 10/07/2011 @ 12:30 PM
On Tuesday, CFED Vice President for Policy & Research Ida Rademacher testified before the Senate Committee on Banking, Housing and Urban Affairs. The hearing during which Ida testified, titled “Consumer Protection and Middle Class Wealth Building in an Age of Growing Household Debt,” took place in front of the Senate Subcommittee on Financial Institutions and Consumer Protections. Click here to download the full text (PDF) of Ida's testimony.
During her testimony, Ida illustrated for members of the subcommittee the current landscape facing middle- and low-income American households for their ability to generate wealth and presented to the Subcommittee CFED’s household financial security framework. Then, Ida described a range of policy proposals that members of Congress could pursue to change the upside down nature of America’s federal asset-building agenda.
Despite spending $400 billion a year to encourage Americans to save for retirement, go to college or buy a house, Ida argues, these subsidies are primarily accessible only to those Americans who find themselves in the highest tax brackets. Whereas this population already enjoys the means to pursue these opportunities, low- and moderate-income families who need these subsidies the most typically find themselves unable to access them. In crafting this argument, Ida cited the data highlighted in CFED’s Upside Down report, co-authored with the Annie E. Casey Foundation and available for download here.
To be sure, Ida’s role in the testimony was not to criticize these spending programs for the sake of pointing out the imperfections in current assets spending. Rather, these criticisms point to an important opportunity facing the federal government: by spending only a fraction of what is currently being spent, the federal assets agenda can more effectively extend programs that help low- and moderate-income Americans build wealth by making subsidies accessible to the populations who need them the most.
For more information about what these policy priorities look like, download Upside Down. Also, be sure to use the comments section below to leave and questions or thoughts for Ida or the rest of the team here at CFED.
We Recommend ‘Mission: Innovation'
By Lauren Stebbins on 10/06/2011 @ 12:15 PM
Around here, we’re always looking for new and interesting resources relating to innovations in our field. Earlier this week we came across ‘Mission: Innovation,’ the newest blog from The Chronicle of Philanthropy.
Okay, so perhaps we’re a little biased because CFED President Andrea Levere is one of the featured innovators. But, more importantly, we really like that they have featured innovators. It’s a really fun way of highlighting nonprofits (in our field and in others) that approach their work from unique and changing perspectives. Like the Chronicle itself, it’s premised on the idea that collaboration leads to more robust ideas that we can all benefit from.
So, when you’ve got the chance, check out Mission: Innovation – we think you’ll like it!
ROC USA's Bradley Named Ashoka Fellow
By Sean Luechtefeld on 10/05/2011 @ 01:30 PM
EDITOR'S NOTE: The following is a re-publish of a press release, sent by our friends at Ashoka, which mentions ROC USA founder and CFED partner Paul Bradley. Congrats, Paul, on being recognized as an Ashoka fellow for the incredible work you do!
CONCORD, NH – Paul Bradley, president and founder of ROC USA, LLC, and the architect of a nationally acclaimed affordable-housing strategy, has been named an Ashoka Fellow, a juried Fellowship of leading social entrepreneurs from more than 60 countries.
Bradley was recently elected to an Ashoka Fellowship for his innovative approach to creating financial security, engaging citizens and improving home values for families living in manufacturedhome communities, sometimes called mobile home parks.
'We had been paying attention to Paul’s work for some time,' said Amy Clark, director of Ashoka’s Fellow selection process in the US. 'He possesses the vision and passion of leading social entrepreneurs, and he has backed it up with market transforming results in an often-overlooked but very important affordable-housing sector.'
Selection of Fellows is an international process based on five criteria: A new solution or approach to a social problem, creativity, entrepreneurial quality, the idea’s social impact, and the nominee’s ethical fiber.
Bradley started working in the field in 1988 when he joined the nonprofit New Hampshire Community Loan Fund to work on a project started four years earlier. The Community Loan Fund was helping homeowners purchase their mobile home parks as cooperatives, an alternative to renting the land from a third-party landlord. Cooperatives are democratic corporations formed by the homeowners to own the community on the one member/one vote rule.
Today, there are 98 such cooperatives, known as resident-owned communities, that contain 5,500 homes in New Hampshire.
In rural areas of the United States, 26 percent of homes owned by people with low incomes are manufactured homes. Many are located in parks where homeowners lack many of the essential financial benefits of homeownership. Because the landlord can decide, at any time, to close the park and use the land for a different purpose, their homes are at risk.
Homeowners can face excessive rent increases, poor-quality maintenance and infrastructure (like water, sewer and road) failures with few protections. 'Homeowners want basic security and control over costs in their community, resident ownership delivers both,'says Bradley.
In New Hampshire, Bradley helped 60 co-ops buy their communities and pioneered conventional mortgage loans in resident-owned communities, creating a program which earned the Community Loan Fund the Wachovia NEXT Award, the highest honor in the field of community development lending, in 2009. Now, some of New Hampshire’s resident-owned communities are the only communities in the country where homeowners can get conventional mortgage loans instead of the more-expensive personal property loans typically used in the industry.
Someone asked the ranking Fannie Mae vice president on the spot why Fannie started financing homes in co-ops, and he said, ‘Because of Paul,’ states Juliana Eades, president of the NH Community Loan Fund. 'I am really happy to see how far Paul has taken this . . . and will take this,‛ she said.
Bradley’s work has led directly to higher home-sales prices, faster home sales, and lower monthly site fees in New Hampshire’s resident-owned communities, as compared with investor-owned communities.
The strength of these results and Bradley’s passionate national leadership led to the opportunity to found ROC USA, LLC in 2008, the country’s only national organization focused taking this market transformation strategy nationwide. ROC USA is affiliated with nine nonprofits in the U.S., which provide training and technical assistance to both established and aspiring resident-owned communities, and provides acquisition financing for co-ops through its subsidiary, ROC USA Capital.
'Paul’s signature is on each of the market innovations in this industry and his vision, paired with his incomparable capacity to execute, has literally reshaped the field of manufactured housing into a nationally recognized strategy,' remarked Andrea Levere, president of CFED and ROC USA’s board chair.
Bradley is a life-long resident of the Concord area, having grown up in Penacook and graduated from Merrimack Valley High School in 1982. He earned his B.A. in Economics from the Whittemore School of Business and Economics at UNH in 1986. In 2007, he completed 'Achieving Excellence in Community Development,' an executive education program jointly offered by the John F. Kennedy School of Government at Harvard University and NeighborWorks® America.
Bradley lives in Epsom with Martha, his wife of 21 years, and their two daughters Lila and Jane.
Financial Literacy Seminar Series
By Sean Luechtefeld on 10/05/2011 @ 01:00 PM
EDITOR’S NOTE: This is an email announcement about a financial literacy seminar series that may be of interest to some of our readers.
The Federal Reserve Board and the Business School at George Washington University are happy to announce a new seminar series on financial literacy. The goal of the seminar series is to present and discuss cutting-edge research on financial literacy and to bring academics, practitioners, policy makers and others in the DC area together. We are working hard to put together six great seminars this fall and hope to attract people from a wide range of backgrounds.
Olivia Mitchell will present in first seminar on Friday, October 7th. Dr. Mitchell is the International Foundation of Employee Benefit Plans Professor at the Wharton School and her work is probably familiar to anyone who found their way to our email list. The seminar will be in the Kendall Auditorium, in Duquès Hall, at the George Washington University School of Business (GWSB), 2201 G Street NW. The seminar will start at promptly at 3:30pm and will end at 5pm. In addition to a presentation by Dr. Mitchell, we will have a panel of distinguished public policy experts to discuss key issues on financial literacy. Finally, a reception from 5pm to 6 pm will give attendees and the speakers a chance to talk informally and meet each other.
Not all the seminars will be this 'star-studded' but the format will be similar. The seminars will be from 3:30-5:00pm with a reception 5:00pm. Our current dates (the rest are on Tuesdays) are October 18, November 1, November 15, November 29 and December 13.
Since this is a brand new seminar series and we are still trying to optimize out logistics, it would help us to know if you plan to attend the Oct 7th seminar. (This is not a commitment, but it would help us plan.) If it helps, you planning, we will make a recording of the seminar, probably not in real-time, but it will be available on our to-be-created website. More details to follow.
Please direct any questions, comments or suggestions to our series email.
Ecotrust’s 20th Anniversary
By Lauren Stebbins on 10/04/2011 @ 04:15 PM
EDITOR'S NOTE: The following are highlights from CFED Founder and Board Chair Bob Friedman on EcoTrust's 20th Anniversary Celebration last month.
I had a fantastic time celebrating Ecotrust’s 20th Anniversary Celebration these last four days, and thought you might be interested in some of the highlights (though I doubt that I can do them justice).
Ecotrust chose to celebrate by inviting bioregional leaders, mostly indigenous people, from around the world to discuss Resilience Regions and explore what they might do together, and then to party with great regional food, wine and Storm Large.
The people, in their global diversity, starred, among them:
- President Anote Tong of the Pacific atoll nation of Kurabati, erect of carriage and spirit, like Mandela and Obama, explained how climate change is not a theoretical matter in his country: the average elevation of the nation is 2 meters and will be underwater in 30 years. He already has to find new homes for 10,000 of the 100,000.
- Cecil Paul, elder of the Haisla First Nation of British Columbia, stood at the end of President Tong’s public address, and, moved, dedicated himself to making Kuribati’s cause his. Cecil led the Haisla to work with Ecotrust 20 years ago to save the Kitlope – the largest intact piece of temperate rainforest left in the world – which the Haisla now steward, with the BC government. Despite being taken from his family in early childhood to a residential school where he was abused and becoming an alcoholic for many years, Cecil is now the most generous, wise and soulful of human beings.
- Leitanthem Meitei, the third generation of his family to lead the fight for the rights of his people in Manipur, India, who has already been imprisoned for several years. At age 14, he told his grandfather he wanted to join the guerilla fighters. His grandfather asked him what the range of an AK-47 was? He answered, “100 meters, maybe 200-400.” Then his grandfather handed him a pen, asked what it’s range was, and then said the choice was his.
- Dr. Tero Mustonen works with indigenous communities in the Arctic, sang the oldest song of their culture while noting that, like for the Kurabatis, there is nothing prospective at climate change – the permafrost is melting beneath them.
- Peter Yu and Paul Lane, aboriginal leaders in Northern Australia, bonded with the Melanesians in their common fight for rights, ownership of land, and the future of peoples whose ancestral memory extends 50,000 years.
- So many more – Buzz Hollings, the ecologist who first published on ecological breakdown and the need to build resilience in 1973.
- All the folks at Ecotrust, Ecotrust Canada and the new Ecotrust Australia – from Spencer Beebe, President on, including Ian Gill, Bettina von Hagen, Astrid Scholtz, and Board members Cam Healy (founder, Kettle Chips), Kat Taylor (Chair, OnePacific Bank etc.), Mary Houghton.
Ecotrust has bet its future more than once – when Spencer et. al. decided to buy and redevelop the Natural Capital Center; again when, after the first 10 years, Ecotrust decided conservation-based development “in the rainforests of home,” wouldn’t result in a sufficient scale of change and chose to dedicate itself to creating the conservation economy in Salmon Nation, totally reorganized, went through 2-3 different presidents, then generated new sectoral initiatives and triple-bottom line investment funds in food and farms, fisheries, forests, etc. Though I didn’t realize until late, I think Ecotrust just re-invented itself again, creating a new network of global bioregional initiatives and services.
The Idea of Ecotrust – that economy, ecology and equity are inherently linked, and we can fashion “triple-E” solutions, has only grown stronger, even if huge questions remain on what is possible, how to understand it, and whether the needed changes can come in time. I came away more certain than ever that economic, environmental and social breakdown are linked, and so must our responses.
The Saturday night party was superb. I must say that the highlight for me was Storm Large, who I had never heard of before, but brought down the house. Kat Taylor had taken Storm in when she was homeless and working on her first album, and asked her to perform. She pierced the family-friendly provision which Ecotrust thought they had to put in with a version of Cole Porter’s Under My Skin, the likes of which we’d never heard before. She closed her set with 8 Miles Wide, at which Spencer wondered whether Ecotrust would collapse on the back of a song. I replied, “but what a way to go.”
(At the end, Spencer asked me if I would agree to go back on the Board, and I said yes.)
CAMEO: The State Microenterprise Referral Partnership Model Data Snapshot
By Lauren Williams on 10/04/2011 @ 12:00 PM
In 2010, with SETI’s support, CAMEO’s California Self-Employment Tax Initiative program awarded grants to six microenterprise development organizations in the state committed to delivering free, comprehensive business tax and planning assistance. This initiative was developed as a three year demonstration project, ending in 2009, but was continued through 2011 with support from CFED and Citi. All six partners operate their own Volunteer Income Tax Assistance (VITA) sites where, after preparing returns for self-employed filers, they distributed outreach and informational materials referring clients to the microenterprise development services they offer and gathered data to better understand the low-income self-employed market in California. The State Microenterprise Referral Partnership Model Data Snapshot provides a quick look into the clients served by and organizations participating in the California Self-Employment Tax Initiative work during the 2011 tax season.
What’s next for SETI in California?
While the California Self-Employment Tax Initiative—grant funding and technical assistance passed through CAMEO—has come to a close this year, SETI will still work in the state of California with two key partners during the 2011 tax year. First, the East Bay Asian Local Development Corporation (EBALDC), located in Oakland, CA, was one of the twelve pilot sites participating in the Schedule C VITA Pilot this year and will continue to participate in the pilot and offer Schedule C tax assistance for the coming tax year as well.
Also, we recently began a partnership with Mission Economic Development Agency (MEDA), which operates four Volunteer Income Tax Assistance (VITA) sites in San Francisco—including self-employment tax assistance—in addition to offering workshops and one-on-one counseling on homeownership, foreclosure, financial education, workforce development and business development. This year, SETI and MEDA will work together to bundle essential financial education, financial products, business development and workforce development services through the gateway of free tax preparation. We will collect research on best practices in tax preparation and integrated service delivery to inform the design of an integrated service delivery pilot to be launched with the 2012 tax season at MEDA, and this integrated service delivery approach will be shared with all VITA sites in San Francisco. As part of this partnership, SETI will also create and implement an impact evaluation plan that identifies key outcome measures and indicators of success for this integrated service delivery approach.
Engaging Community Colleges in Small Business Development: StartZone
Community colleges have long been an important local resource for economic development. A key part of this is the academic, workforce and career development training that all community colleges offer. Beyond this, many community colleges are a resource for small businesses, offering training and guidance, often through a Small Business Development Center.
In King County, Washington, Highline Community College has taken a new approach to providing support to small businesses that uses the tax preparation process as a way to reach self-employed entrepreneurs. In particular, during the 2011 tax season, StartZone provided free tax assistance to small business owners using volunteers from the community and accounting students from the community college. Other partners included the Washington Community Alliance for Self Help (Washington CASH), Seattle Housing Authority, United Way of King County and Key Bank.
Key results from this effort during the 2011 tax season include:
- StartZone prepared 60 tax returns for self-employed filers between February 1 and April 15, 2011, a 20% compared to the previous tax season.
- More than 85% of the self-employed tax filers served at StartZone earned less than $40,000 in Adjusted Gross Income (AGI) in 2010.
- About 32% of the self-employed filers served at StartZone qualified for the EITC (average refund amount was $2,090). In addition, 45% of the self-employed filers received the $400 Make Work Pay tax credit, while another 15% received an average of $1,075 in the form of a Child Tax Credit.
- About half of the business owners they served were committed to and focused on growing their businesses; the other half were earning self-employment income from ventures pursued alongside full or part-time employment.
Michigan reinstates its asset test in SNAP, bucking national trend
By Ethan Geiling on 09/30/2011 @ 11:00 AM
Michigan recently introduced a new policy that will reinstate the asset test in the Supplemental Nutrition Assistance Program (SNAP), limiting benefits to people with few or no assets. Beginning October 1, SNAP applicants and recipients will be limited to $5,000 in liquid assets and $15,000 in vehicles.
Over 114 organizations signed a letter to Governor Rick Snyder asking that he suspend the policy.
“Safety net policies like the Food Assistance Program should help families overcome temporary difficult economic times -- asset tests do the opposite,” said Assets & Opportunity member Ross Yednock, director of the Asset Building Policy Project at the Community Economic Development Association of Michigan (CEDAM).
“Instead of creating opportunities to save and achieve lasting financial security, asset limit tests force families to forfeit their long-term savings and economic self-sufficiency in order to receive short-term, yet vital, assistance. It is public policy that is as short-sighted as it is economically unsound," Yednock said.
Not only does the decision hurt poor families in Michigan, it doesn’t make sense from a financial standpoint. Money to pay for SNAP benefits comes from the federal government – not the state of Michigan. Michigan only pays for the administrative portion of the SNAP program, which will actually increase under the new rule change, since the state will now have to verify the assets of the 1.9 million people receiving SNAP benefits. Our friends at New America wrote a scathing blog post detailing the change.
Michigan is bucking a national trend of states eliminating the SNAP asset test. According to forthcoming research from CFED’s Assets & Opportunity Scorecard, 39 states have eliminated the asset test in SNAP as of October 2011; 16 of these states eliminated the asset test in the past two years.
For more information about SNAP asset limits, see our Resource Guide on the topic.
Book Review: After the Great Recession
By Bill Schweke on 09/29/2011 @ 10:30 AM
Journalist Don Peck has just written one of the most important books yet published on the Great Recession. Entitled “Pinched: How the Great Recession has Narrowed our Futures and What We Can Do About It,” the book does not delve into what caused the Recession, unlike the zillion other books currently published. Rather, Peck wrestles with how the Recession is affecting Americans today and how it is already reshaping our future. Indeed, Peck argues that the biggest effects are still to occur.
Peck’s main thesis is that major deflations and inflations put a stamp on a society. This one, without intelligent responses on our part, is likely to produce even greater inequalities in wealth and income, a reduction of men employed in the workforce, increased bread-winning roles for women, more tensions about race issues and immigration, later marriages and parenthood, the economic weakening of cities without unique and competitive assets, potentially ineffective political leadership, a protracted recovery and more.
Some in the workforce find themselves in “occupational ghettoes” where it is hard to find and step onto the next rung to upward mobility. Working poverty will likely become even more common. And, moderate-income families are starting to resemble inner-city households, rather than the middle class – joblessness, family conflict, drug and alcohol abuse, divorce and single-parenting all characterize these Americans.
Unlike the Great Depression, this economic era may drive us apart, culturally and politically, as well as reinforce current trends toward widening economic segregation. It could even encourage mass radical movements. At this point, these are more likely to be of the right-wing populist sort than of the leftist social movements sort. But, who knows? Mass apathy and weakened links of solidarity may be much more likely, given present trends.
The book’s final chapter offers humbly a manifesto for action. Advance short-term economic stimulus by government, Peck argues, while making plans for significant federal deficit reduction during the medium-term. Public subsidies should be provided for businesses to hire the long-term jobless. Make bigger investments in public works. Explore the development and application of regulatory reforms which would speed the process of R&D through commercialization. We must get a handle on health care costs. The wealthy should be taxed at a higher rate. Career academies should be established in order to smooth the transition from secondary schools to a job. Another experiment: wage insurance to “top up” the salaries of those persons who took a job that paid less than their previous employment.
Peck regards our present situation as dire, not desperate. Avoiding the latter danger is a function mainly of our coming together again as a people that are committed to each other. The proposed programs just listed would help immensely, but even more important is timely cultural change.
Titling Manufactured Homes: Opting In vs. Opting Out
By Lauren Williams on 09/28/2011 @ 03:00 PM
More than 17 million people in the U.S. live in 6.8 million manufactured homes. Nearly half of those homes—2.9 million—are placed in land-lease manufactured home communities. We estimate that those homes, and possibly more, are titled as personal property if located in states that require the homeowner own the land beneath their home for it to be titled as real estate. Despite the fact that nearly all manufactured homes are never actually moved after installation, they are often titled as personal property rather than real property. A home’s classification as real or personal property significantly affects its asset-building potential, largely due to tax and financing implications. An alternative system that automatically titles manufactured homes as real estate could immediately enable owners of manufactured homes to enjoy the same rights as owners of site-built homes, take advantage of consumer protections for homeowners and receive access to better financing options.
Titling Manufactured Homes as Personal Property Puts Homeowners at a Disadvantage
Titling manufactured homes as personal property prevents owners from obtaining mainstream mortgage financing and from receiving the same consumer protections and opportunity to build wealth enjoyed by owners of site-built homes. In addition, when a home is classified as personal property, the homeowner may have difficulty reselling it because many lenders are not willing to finance a “used” manufactured home, which—because of personal property titling—is essentially a depreciating asset. When manufactured homes are titled as real property, homeowners receive better protections for their heirs; enjoy more equitable safeguards upon default; qualify for homestead exemptions; become subject to equitable taxation relative to site-built homeowners; and obtain access to conventional mortgage products, a more vibrant resale market, real estate agents, appraisers and title insurance agents.
Drafting a Uniform Manufactured Housing Titling Law
Since 2009, I’M HOME partners including NCLC and MHOAA have been involved in the Uniform Law Commission (ULC) process to draft model state legislation regarding titling of manufactured homes—this draft act is called the “Manufactured Housing Act.” The ULC provides states with non-partisan, well-conceived and well-drafted legislation that bring clarity and stability to critical areas of state statutory law. Typically, a committee studies a subject to recommend whether drafting should be undertaken and then drafts a specific uniform or model law for consideration by the full commission—the “Manufactured Housing Act” has been both researched and drafted. On July 11, the ULC convened for the first formal presentation of the draft bill on manufactured home titling to the larger commission.
Opting in vs. Opting out
While there are many nuanced legal considerations that must be addressed within a manufactured housing titling law, one core mechanism is the manner by which a home’s title is determined. The existing legal systems in most states require that owners of manufactured homes opt-in in order to title their homes as real property and enjoy the same rights, protections and access to financing as other homeowners. CFED, our partners and the drafting committee of the Uniform Law Commission agree: the system that would provide the optimal outcomes for owners of manufactured homes—in terms of ease, clarity, immediate consumer protection and access to asset building through homeownership—is the opt-out system. Behavioral economists like Richard Thaler have brought the concept of “opt-in vs. opt-out” to the forefront through studies on organ donation. Thaler posits that one effective way to reduce the deficit between organs donated versus organs needed for transplant is to implement a system where citizens are presumed to be consenting donors unless they act to register their unwillingness. In most American states, the organ donation system is the opposite—donors must register to indicate consent. According to Thaler, many Americans say they want to be organ donors, they just never get around to acting on those intentions. Put simply, it’s a hassle.
Similarly, converting a manufactured home title from personal to real property is a hassle too. About three-quarters of the states have statutes that set forth a procedure to convert manufactured homes from personal property to real property; however, the process is often irrational, inconsistent and sometimes poorly framed. Many states do not permit homes on leased land to be converted, and those that do often require the permission of the landowner, particular types of financing and long-term lease terms. Other state statutes are unclear about the implications of conversion, often specifying that the home will be taxed as real property without clarifying whether the home is subject to treatment as real property for other purposes, like foreclosure. Many conversion laws also require homes to meet onerous foundation requirements or set procedures that are simply too complex for homeowners to handle on their own, requiring them to hire an attorney. The lack of uniformity in state laws also increases transaction costs for homeowners and prevents many from completing a title conversion and enjoying the increased security and asset-building potential of owning real property.
Opt-out policies for organ donation minimize the hassle of registering; an automatic, opt-out system for titling manufactured homes as real property would do the same for homeowners. In countries with opt-out organ donation policies—like Austria—consent rates are close to 100%, while in Germany’s opt-in system only 12% give consent. We estimate that half of the 6.8 million manufactured homes in the United States are not titled as real property, even though having those homes titled as real property would most likely be in the best interest of the homeowner.
Beyond helping manufactured homeowners, the treatment of manufactured homes as real estate, even those on leased land, is appropriate and consistent with other law: Many commercial buildings are not owned by the same entity that owns the land and the buildings are generally classified as real property. In parts of the country homes are often built on leased land and classified as real property. Similarly, community land trust homes sit on land leased, not owned, by the homeowner, and often homes in such situations are classified as real property.
Webinar Highlights: Changing Financial Behaviors of First-Year College Students
By Stephanie Halligan on 09/28/2011 @ 11:00 AM
On Wednesday, September 14, the Take Charge America Institute at the University of Arizona hosted a webinar to highlight their latest findings from Wave 2 of the Arizona Pathways to Life Success for University Students (APLUS) study. With support from the National Endowment for Financial Education (NEFE) and the Citi Foundation, the institute launched APLUS in 2007 as a landmark longitudinal study exploring the elements of financial capability: how young adults develop financial knowledge, attitudes, beliefs and behaviors and how that development impacts life success as adults.
The Wave 2 analysis re-surveyed the original 1,508 university participants three years after the baseline study and, most notably, in the midst of a still-struggling U.S. economy.
- Financial Socialization: Parents play a key role during a student’s college career, and help their young adult children become financially capable adults. Parents’ influence is 1.5 times greater than that of financial education and more than twice that of friends.
- Cumulative education: Ongoing financial education is critical to better outcomes. Researchers documented a “snowball effect,” with earlier financial education exponentially increasing the likelihood of later financial education, including informal learning.
- Followers, Drifters & Pathfinders: Participants in the study cluster into three groups by financial management style, including (a) followers: those who mostly accept what their parents say is best, (b) pathfinders: those actively building a self-chosen style of financial management, and (c) drifters: those who don’t follow their parents’ style but have no individual approach. Not surprisingly, Pathfinders have significantly greater financial capability: they know more about personal finance, have more positive financial attitudes, and make better financial decisions.
While further research is needed to test the quantitative impact of financial education on responsible financial decision-making, the APLUS study breaks new ground as a longitudinal analysis of changes in financial behavior. The findings presented in Wave 2 highlight the need to provide financial education for both parents and their children, and the importance of administering financial education early and often to kids and young adults. For these reasons, financial education is a critical component of CFED’s Asset Building for Children work. Financial education, especially when provided in tandem with a savings account, gives children and young adults a tangible opportunity to develop and test their financial decisions.
For more information on Asset Building for Children, please visit our Asset Building for Children page.
Expanding VITA: The Final Report
By Lauren Williams on 09/27/2011 @ 10:45 AM
In 2010, CFED’s Self-Employment Tax Initiative (SETI), the National Community Tax Coalition (NCTC) and the IRS Stakeholder Partnerships, Education and Communication (IRS-SPEC) teams partnered to develop a pilot initiative testing the efficacy of expanding the parameters of Volunteer Income Tax Assistance (VITA) programs to include broader Schedule C preparation. SETI, NCTC and IRS-SPEC determined a set of expanded Schedule C parameters for implementation of the pilot, selected twelve VITA programs with experience preparing Schedule C returns and worked with those sites to develop training materials, certification tests and other tools for the pilot’s implementation. During the 2011 tax season, the Schedule C Pilot local partners—a group of twelve community-based tax assistance providers—delivered free tax assistance to low-income self-employed filers, in addition to their wage-earning clients. They collected data throughout the process in order to demonstrate the feasibility of bringing robust Schedule C parameters into scope for all VITA programs. The Schedule C VITA Pilot Final Report documents the results of the Tax Year 2010 Schedule C VITA Pilot.
Several of the Schedule C VITA Pilot sites are also AFI grantees, so the Pilot was recently featured in an article in the AFI IDA Resources Update published on September 8, “Self-Employment Tax Centers Help Self-Employed and Small Businesses Prepare Taxes.”
What’s next for the Schedule C VITA Pilot?
The Pilot will continue through the 2011 tax year, and all the partners involved are working steadily to revisit and clarify the pilot parameters and develop new trainings, certification tests, data collection tools and intake materials. The pilot will expand to include at least four more sites, to be determined through an application process run by NCTC.
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