Newly-selected Steering Committee Will Help Shape the Direction of the Assets & Opportunity Network
By Jennifer Brooks on 01/02/2012 @ 01:45 PM
CFED is pleased to announce that 12 leaders in the asset-building field have been selected to serve two-year terms on the permanent Assets & Opportunity Network Steering Committee (NSC). This Steering Committee provides leaders in the assets field an opportunity to help shape the direction of a national movement-oriented network and a channel for voicing their needs, experiences and concerns. The NSC will provide ongoing advice on the structure, offerings and overall direction of the Assets & Opportunity Network.
The Interim NSC, which met throughout 2011 to shape the overall structure for the Network, identified six dimensions where “balance” among committee members was important.
- Level of experience—experienced leaders and newer entrants to the field
- Geography—regions of the country, as well as urban versus rural
- Population focus—focus on specific populations and focus on broader constituencies
- Statewide and local focus for advocacy and organizing
- Expertise in specific policy or programmatic areas
- Leverage—participation in other national networks
The process the Interim Committee developed aimed to be fair, transparent and result in a diverse and well-balanced NSC. It included nominations and voting by all Lead State and Lead Local Organizations, and a supplementary process whereby CFED identified gaps in diversity and filled a limited number of seats.
All Network Lead State and Lead Local Organizations were eligible to nominate themselves or others as candidates. Nineteen individuals indicated their interest in helping guide the direction of the Network and threw their hats in the ring.
Each Lead Organization was given one vote, which they could cast for their top 10 choices. To address the concern that some candidates would not be known to their peers, descriptions of candidates experience were shared with the ballot.
CFED tallied the votes and assessed the group for diversity. The top eight vote-getters were automatically selected as members. CFED identified four others to achieve balance.
The result is a 12-member Assets & Opportunity Network Steering Committee that reflects the diversity of experience, expertise and focus of the assets field.
Congratulations to the permanent Network Steering Committee members!
1. Christina Barsky (Rural Dynamics, Inc., Montana)
2. Brent Dillabaugh (Hawai`i Alliance for Community Based Economic Development)
3. Tamika S. Edwards (Southern Good Faith Fund, Arkansas)
4. Lisa Forti (Urban Strategies Council / Alameda County Community Asset Network, California)
5. Lucy Gorham (MDC, North Carolina)
6. Margaret Miley (The Midas Collaborative, Massachusetts)
7. Lucy Mullany (Illinois Asset Building Group)
8. Victor Ramirez (Center for Asset Building Opportunities/Citi Community Development, Los Angeles, California)
9. Kate Richey (Oklahoma Policy Institute)
10. David Rothstein (Policy Matters Ohio)
11. Diana Stone (Seattle-King County Asset Building Collaborative, Washington)
12. Kaye Schmitz (Florida Prosperity Partnership)
CFED Unveils North Pole Unbanked Rate
By Ethan Geiling on 12/24/2011 @ 10:00 AM
When people picture the North Pole, they think about elves, Santa Claus, reindeer and toy workshops. What they don’t think about is access to convenient, appropriately-priced financial products that help families save, build assets and climb the economic ladder. We want to change that.
And so, in one of the most anticipated moves of the year, CFED released the unbanked and underbanked rates for the North Pole yesterday.
The data show that 5.5% of households in North Pole, Alaska are unbanked and 17.0% of households are underbanked. Unbanked households do not have a checking or savings account, while underbanked households may have an account but primarily rely on alternative financial services. These numbers compare favorably to the national findings from the 2009 FDIC National Survey of Unbanked and Underbanked Households.
Although there is a tremendous amount of work being done across the country to help families access safe and affordable financial services, people often forget small, rural places like the North Pole. And unlike the North Pole, many of those small, rural areas – like Holmes County, MS – have some of the highest unbanked rates in the country. In fact, all of the top 100 unbanked cities/towns in the country have less than 4,000 households.
We don’t think it’s an overstatement to say that this new data will completely change how people think about financial access in the North Pole, and it’s absolutely just the beginning.
Building on the powerful momentum of this new data, CFED plans to introduce a groundbreaking new financial product next year. CFED Vice President Ida Rademacher said, “I don’t want to give anything away, but I’ll say this: elf savings accounts.”
Happy holidays from all of us at CFED!
New Financial Education Guide for VITA Programs
By Lauren Williams on 12/23/2011 @ 11:00 AM
Spend Some, Save Some: Making the Most of Your Tax Refund
The Earned Income Tax Credit (EITC) is one of the nation’s largest anti-poverty programs. The EITC reduces the tax burden on workers, supplements wages, helps low-income families build assets and reduces income inequality. Annually, the EITC helps 6.6 million Americans move out of poverty; half of these are children. In 2010, over 26 million workers received nearly $59 billion in EITC. The average credit was $2,100, but can be as much as $5,751, depending on the worker’s income, marital status and whether they have children.
Awareness is critical. Only four out of every five eligible taxpayers claim and receive the EITC. Ideally, all eligible taxpayers would claim their EITC. The IRS, Center on Budget and Policy Priorities (CBPP) and countless other nonprofit and community-based organizations have mounted campaigns to make sure that eligible taxpayers know they can claim this credit.
Making sure that affordable tax assistance is available to these families is equally important. The IRS, numerous foundations and community organizations also support programs that provide free tax assistance to low- and moderate-income families. Volunteer Income Tax Assistance (VITA) programs, for instance, offer a valuable service to working Americans by helping them keep more of their hard earned money, especially if they quality for the EITC.
An important element of many successful EITC campaigns is connecting workers to asset-building opportunities. Financial education, asset-building tools, safe financial products, credit repair resources, and more can help families use their returns to build assets.
To that end, CFED has partnered with Bank of the West to create a new Financial Education Guide for taxpayers receiving assistance at VITA programs. This, free, easy-to-read guide (available in English and Spanish) walks clients through some important things to consider when they receive their refunds to helps them make the most of the money they expect to receive. This guide and the included Savings Plan Worksheet can help taxpayers:
- Recognize the value of using the tax moment to contribute to their short- and long-term savings goals
- Make decisions about how to use their refunds for spending on “must-haves,” saving for the future and spend on “nice-to-haves”
- Get connected to resources like U.S. Savings Bonds, College Savings Accounts, additional tax credits like the Saver’s Credit, Individual Development Account programs and Bank On campaigns
Click here to download the Financial Education Guide to print and share with taxpayers at your VITA sites!
Stroke-of-a-pen State Policies to Increase Financial Security and Win Political Points
By Jennifer Brooks on 12/21/2011 @ 02:00 PM
Although the country emerged from official recession more than two years ago, states continue to face budget shortfalls. High unemployment continues to both decrease tax revenue and increase demand for services. By law, most states must balance their budgets. The options they have for closing the gaps are to increase revenue, decrease spending or both.
The choices state policymakers are forced to make are undeniably painful – and in some cases, shortsighted. State policymakers should take a balanced approach to closing state budget gaps that includes raising revenue by eliminating ineffective tax expenditures, as well as careful spending cuts.
It is critical that existing programs and policies that provide financial security and opportunity for vulnerable families be protected. At the same time, policymakers can and should be laying the groundwork for future state economic prosperity. While there is clearly no appetite for new state spending in this environment, states’ hands are not tied. There are a host of cost-neutral policies that expand economic opportunity and that are also political winners.
Last month, CFED released a new report that identifies two dozen approaches states can take to help people achieve financial security without putting additional strain on states’ bottom lines.
These “stroke of a pen” ideas, as we call them, are more often a matter of shifts in approach or tweaks in existing programs, rather than large-scale policy changes. But, taken together, they can make an important difference for families struggling to stay afloat and save for a more prosperous future.
In developing the list of 24 stroke-of-a-pen policy ideas, we considered whether each policy was meaningful, moveable and manageable:
- Is the policy meaningful? While there is often a correlation between a policy’s cost and its impact (consider, for example, the nearly $59 billion-federal Earned Income Tax Credit, which lifts roughly four million people out of poverty each year), there are many meaningful policy changes that cost little or nothing, but which can protect vulnerable families, bring federal dollars into a local community or lay the groundwork for future investment.
- Is the policy moveable? In this climate, the “moveabilty” of a policy is determined, first and foremost, by its cost. However, we also considered other factors, including whether there was political will and interest by policymakers in the idea, whether there was limited political opposition to the policy, and the policy mechanism necessary to make the change (for example, an administrative policy change is often easier to make than a legislative one).
- Is the policy manageable? Advocates sometimes come up with “great ideas” to solve social problems that are easier said than done. In assessing each policy, we also considered the feasibility of implementing the policy – acknowledging that feasibility will vary from state to state depending on a range of factors.
Example: Prize-Linked Savings
One example of a stroke-of-a-pen policy that has gained a lot of attention recently is prize-linked savings.
Prize-linked savings (PLS) programs give savings accountholders the opportunity to win prizes when they make deposits. In these programs, financial institutions offer consumers a savings product with a low minimum balance requirement; accountholders make monthly deposits, which qualify them for monthly and/or annual drawings. The possibility of a prize encourages greater savings. Unlike gambling, however, no one loses from participation in a PLS program. Prize-linked savings programs focus on the entertainment value and fun of winning prizes, but without risking any principle and with the knowledge that one is building an asset. Not everyone “wins” one of the prizes, but everyone comes out ahead with increased savings.
To make PLS programs possible, states need to ensure that banking and gaming regulations don’t prevent financial institutions from holding private lotteries. Ten states currently allow financial institutions to offer PLS programs. Four others – Arkansas, Iowa, Mississippi and New Mexico -- introduced legislation in 2011. This is definitely one stroke-of-a-pen idea to watch!
The Connection Between Family Wealth and Educational Attainment
By Sean Luechtefeld on 12/20/2011 @ 09:30 AM
A young person’s success in going to and graduating from college depends, at least in part, on the wealth of their family. This information has long been known, and for years has served as the rationale behind CFED’s Asset Building for Children (ABC) work.
Yet the full extent to which family wealth influences educational attainment is something the assets field continues to grapple with. While a good deal of research is out there to support these claims, emerging evidence suggests that we have yet to understand just how intimately linked educational attainment and family wealth really are.
This is the main contention put forth in a recent report released by Pew Charitable Trusts’ Economic Mobility Project. The report, Housing Wealth and Higher Education, reveals just how important assets can be in propelling the children of low- and moderate-income parents toward a college diploma.
While I can’t do justice to 40 pages of robust research findings in a few short paragraphs, I’ll at least share a few important (and chilling) data points from the report:
- During the housing boom – a time when families were experiencing historically large increases in overall wealth – enrollment at four-year public accredited universities increased nearly 25 percent.
- For every $10,000 increase in home equity, the likelihood of enrolling in college increased six percent.
- Whereas college enrollment among families who earned more than $70,000 per year was relatively unchanged pre- and post-housing boom, enrollment increased significantly among families earning less than $70,000 annually, suggesting that low- and moderate-income children are especially likely to benefit from efforts to help families build assets.
Unfortunately, a great deal of opposition to CSAs has punctuated the federal policy landscape. But, that can be changed if we all have the right tools needed to craft an eloquent defense. Reports like this one are just what we need in our toolkits, and we are immensely thankful to the Economic Mobility Project for sharing this tool with us.
Innovative Idea Champion Patricia Johnson Authors Op-Ed
By Patricia Johnson, Guest Contributor on 12/19/2011 @ 11:30 AM
I’m hopeful the Occupy moment will evolve into a less grungy, more strategic political movement to lessen economic disparities in the United States. A more realistic vision is that it could unite the 99% to work together on solutions that don’t require negotiation with the 1%, or even Congress.
I’ve got a suggestion that doesn’t cost much, doesn’t need a government agency to run it, and could help reinvigorate our cities: hire teenagers.
Nationally, youth unemployment hovers around 20 percent. In neighborhoods where low-income African-American and Latino youth are the majority, unemployment approaches 40 percent for people under 24 years of age.
I teach at Game Theory Academy, a nonprofit I founded to make economic education more relevant, and accessible to marginalized youth. In our classroom conversations, we discuss topics such as how the economy works, how students can act in their own best interest, and the opportunity costs of doing nothing, rather than working or pursuing education. Students often ask me, “Hey, Trish, can you find me a job?”
Among students at Game Theory Academy, a shocking 63 percent report not having any kind of part-time job. When I was 15, I got a job at a local real-estate office answering phones. I worked at a copy shop the summer before college. But it’s not the 90s anymore, and businesses don’t hire teens the way they used to.
The receptionist answering the phones at the local real estate office is easily twice the age I was when I did that job. I've never seen a teen at the register at the copy shop near my office. Adults need those jobs too, but could they use some support from an eager teen?
The U.S. Small Business Administration reports that small businesses generated 64 percent of all jobs created in the last 15 years. If they are the engine for growth, then small businesses are in the best position to take the lead on ending youth unemployment.
Back of the envelope: if a local, small business hires one teenager for ten hours per week at ten bucks an hour, the cost is about $100 per week, plus some supervision expenses. Assuming 50 weeks of work in the year, that costs $5,000 and change.
Oakland, where I am based, is home to 25,000 youth ages 15 to 19, and at least 10,000 small businesses. If each of those businesses hired one job-seeking teenager, we could make a huge dent in that 40 percent youth unemployment number. Do the math in any city, and it’ll add up.
What impact will this have?
Youth are local spenders. They ride the bus. They buy snacks and go to movies. If our young workforce spends in Oakland and nearby cities, that’s estimated to be close to $500 in annual sales tax revenue per youth – or $6 million total. Imagine the effect if cities in every state joined this call to action.
A majority of juvenile crimes are property crimes. Teens who earn money have less incentive to steal and deal drugs. A paycheck shifts the risk-reward ratio. They are too busy. They have money in their pockets and a sense of opportunity.
Teens who work are more likely to find and sustain jobs as they age into adulthood. Studies show that unemployment as a youth leads to a lifetime of lower wages. It also lowers life expectancy. Give youth jobs now, and they will have higher lifetime earning potential - and the habit of employment and better health. Once you’ve had a job, you want another one.
Dust off an apron or a clipboard and invest $5,000 in our nation’s youth, and in your own business. They might surprise you with the value they add.
Patricia Johnson is the founder of Game Theory Academy. The Inclusive Economy thanks her for sending us this recent op-ed.
Turn Foreclosure Frustration Into Action
By Sean Luechtefeld on 12/16/2011 @ 11:00 AM
Late last week, my colleague and CFED Founder Bob Friedman recommended an article from A Capital Idea, a publication of the Center for Community Capital at the University of North Carolina, Chapel Hill.
The opinion piece, written by Roberto Quercia, Director of the UNC CCC, argues that responsible lending – clearly absent on Wall Street leading up to the foreclosure crisis – need to be a keystone of responsible mortgage lending practices. “It is not complicated,” Quercia suggests. “It takes only the right mortgage product, appropriately underwritten, originated and serviced, backed by a well-functioning secondary market and responsible oversight. Is that too much to ask?”
Too much to ask? We would say no. That simple? Well, probably not. Certainly, with all of those pieces of the puzzle in place, homeowners would feel much more certain about their financial futures. The question, then, becomes how we manage to identify the organizations and develop the products needed to implement such a strategy. That, I believe, is a much more difficult task than Quercia makes it seem.
Nevertheless, Quercia’s piece is thought-provoking and raises a point that I think we can all agree with – that this most recent wave of foreclosures should spur all of us to action. And, regardless of how simple the solution is, a solution is certainly necessary. So, check out Quercia’s opinion piece and share your ideas for how we can ‘turn foreclosure frustration into action.’
Twenty Years Ago
By Bob Friedman on 12/15/2011 @ 08:45 AM
Twenty years ago, Michael Sherraden’s seminal work, Assets and the Poor: A New American Welfare Policy, appeared. It changed my life, and more importantly, the lives of tens of thousands, soon to be millions or tens of millions, of low-income people and their advocates, around the world.
Actually, I had met Michael a few months before. Rona Feit, who lead CFED’s Self-Employment Investment Demonstration (SEID), which proved that some welfare moms could escape poverty and dependency through self-employment, came into my office and said, “There’s someone here you should meet.” And so she introduced me to Michael Sherraden and his ideas. Michael told me that the work we had been doing on self-employment that first decade of CFED’s existence, was in fact, asset building. I never thought of it that way, though as soon as he said that, I was reminded of the SEID participant in Iowa, who established two more video rental businesses in addition to her first one so that she could sell them to finance her son’s education.
As Michael left, he gave me the final three (policy) chapters of Assets and the Poor, to read. But I was already sold. In truth, I was looking for other avenues to economic independence beyond self-employment, as well as a simple, powerful, practical tool to that end. I had spent most of the 80’s writing The Safety Net as Ladder: Transfer Payments and Economic Development. I had convinced myself that the income maintenance system could also serve as a ladder – if the disincentives to work, saving, education and self-employment were removed and the payments made available for economic independence. But I also realized that reforming an incomplete, complex, insufficient safety net transformed would be rickety ladder. Individual Development Accounts (IDAs), seemed to me to be exactly the simple, flexible, powerful idea I had been looking for.
It has been my and CFED’s great honor to work with Michael and the Center for Social Development, and all the individuals and institutions who found inspiration and education in Michael’s ideas, throughout the last two decades. First we worked together to popularize the idea; I will never forget Jack Kemp, then HUD Secretary, carrying around his earmarked copy of Assets and the Poor and waving it around during his speeches in the early 90s. We worried that it would all be talk and no action. So, together, and with the support of a dozen leading foundations, we created the American Dream Demonstration, which proved, with more than 2,300 poor Americans, that, given a savings match and financial education, low-income and even very poor people, would save, go to college, buy homes, start businesses and move toward economic independence. In fact, participants at half the poverty line – less than $10,000 for a family of 4 – saved about as much and at 2-3 times the rate as folks at twice the poverty line, because, as they explained to us, this was the price of stability and hope. At the beginning of ADD, there were three nascent IDA programs in the country; by the end there were hundreds, as well as Federal and state legislation.
Michael did chide me that he had never intended IDAs as a time-limited intervention (as the demonstration required) and reminded me he had recommended that IDAs begin “as early as birth.” Together, and along with other national organizations like New America, Aspen Institute’s Initiative on Financial Security, Kansas’ School for Social Welfare, and the backing of another dozen national foundations, we launched the Saving for Education, Entrepreneurship and Downpayments (SEED) Initiative, which would prove that low-income and poor children of all ages, given the opportunity, would save for their futures.
Now too, we see savings and matched savings programs spreading throughout the world, to developed and developing countries alike, building on rich historical foundations. Groups like Child and Youth Savings International and Financial Assets at Birth, are proposing child accounts for every child of the world.
In the US, the next three years are the time to take the revolution that Michael Sherraden started with Assets and the Poor, and turn it into the foundation for the Save and Invest Economy that President Obama has called for, and that we will need to turn this time of debt and economic decay into a time of opportunity and prosperity.
Thank you, Michael, for inspiring and leading us.
The impact of Assets and the Poor from Michael Sherraden, courtsey of the Washington University in St. Louis.
The Most Unbanked Places in America
By Ethan Geiling on 12/14/2011 @ 04:00 PM
A large number of Americans do not have or use traditional mainstream financial products, like checking or savings accounts.
An estimated 9 million American households are unbanked, meaning they do not have a checking or savings account. An additional 21 million households are underbanked, meaning they may have an account but instead rely on alternative financial services.
In November, CFED and partners released new data on the number of unbanked and underbanked households in every census tract, city/place, and county in the country. This is the first time data of this nature has ever been released. Click here to see a fact sheet on the most unbanked places in America.
The rate of unbanked and underbanked households varies significantly by location. In many cities – like Los Altos, CA – virtually every household has and fully uses a checking or savings account. However, in other cities – like East St. Louis, IL – more than half of households are either unbanked or underbanked.
The rate of being unbanked and underbanked varies by factors like income, race and ethnicity, educational attainment, age and citizenship. So it’s not surprising that there are so few unbanked and underbanked households in Los Altos, where more than three quarters of households have an income above $75,000 and more than 80% have college degrees. Compare this to the highly-unbanked East St. Louis, where the vast majority of households have incomes below $30,000, only about 10% have a college degree and 97.3% of households are Black or African-American. Black, Hispanic and Native American households are at much greater risk of being unbanked than White or Asian households.
Where are the all-time most unbanked places in America? Many of them are very small and rural towns. Of the top 100 unbanked “places” (cities, towns, or census designated places with more than 250 households), 36 are in Texas, 17 are in Mississippi and 10 are in Arizona. All of these places have less than 4,000 households. According to our estimates, Starr County, TX is the most unbanked county in the country -- 32.7% of households are unbanked and 28.2% of households are underbanked. Starr County is a small county of less than 15,000 households located on the U.S.–Mexico border.
The top 10 counties with the highest rates of unbanked households are all in Texas, Mississippi, Louisiana and South Dakota. Of counties with more than 100,000 households, Hidalgo County, TX has the highest proportion of unbanked households (21.6%), closely followed by Bronx County, NY (20.8%). Miami-Dade County, FL (14.4%) and Philadelphia County, PA (14.3%) also made the top 10 list.
Of large cities with more than 100,000 households, Miami and Detroit have the highest rates of unbanked households in the country – approximately 1 in 5 households are unbanked. In Miami, an additional 21.3% of households are underbanked and in Detroit, an additional 29.3% of households are underbanked. Five of the top 10 most unbanked large cities are in the south.
Although many of the most unbanked “places” in America are small and rural towns, the most unbanked census tracts are urban. Of 63,900 census tracts in the country, the tract with the highest unbanked rate is located in Savannah, GA; 42.4% of households in this tract are unbanked and 35.3% are underbanked. Compare this to the city of Savannah where 13.1% are unbanked and the Savannah metro area where 8.3% are unbanked. The second most unbanked tract in the U.S. is located in Cleveland, OH at 42.3% unbanked. Of the top 100 most unbanked census tracts in the country, 7 are in El Paso, TX, 6 are in Cleveland, OH and 5 are in Los Angeles, CA.
When you use the joinbankon.org interactive map to drill down to the census tract level within cities, much more detailed patterns begin to emerge. Looking at the Chicago metropolitan area, you can see that most of the neighborhoods downtown and on the north side are a lighter purple, indicating lower rates of unbanked. However, the south and west sides of Chicago, which have much higher poverty rates, are also much more unbanked, as indicated by the darker purple.
Even within neighborhoods unbanked rates can vary greatly from block to block. For example, the image below shows a detailed map of a neighborhood on the near north side of Chicago. Only 0.5% of households are unbanked and 7.4% of households are underbanked in the “gold coast” neighborhood, one of the wealthiest areas in the country. Just a few blocks away, near the former infamous Cabrini-Green housing projects, 21.2% of households are unbanked and 28.2% of households are underbanked.
The takeaway is that there are a significant number of households across the country that don’t use checking or savings accounts. These households would substantially benefit from accounts or other responsible financial products that meet their needs. A bank or credit union account can be the first step in saving, planning for the future, building credit and climbing the economic ladder.
Unfortunately, many financial institutions have turned their backs on low-income consumers, assuming there is no profit to be made. The growing number of Bank On programs across the country are helping to reach out to financially underserved consumers through locally-led coalitions. Prepaid cards and other financial products have also started to gain traction among the underbanked.
Hopefully this new in-depth data will help financial institutions, community organizations, government agencies, policymakers and other stakeholders better serve the unbanked and underbanked population.
Click here to access the unbanked data tool.
NCTC Announces Free Use of NCTC Online University
By Sean Luechtefeld on 12/14/2011 @ 02:00 PM
The National Community Tax Coalition (NCTC) is proud to announce that its NCTC Online University has added additional courses and will be available for FREE this tax season - starting right now!
NCTC Online University is a free web-based volunteer training platform that simplifies and standardizes training curriculum for the community tax preparation and asset building field. The Online University offers volunteers the option to take the 60- to 90-minute training courses on their own time. Self-paced courses provide a more thorough and individualized learning experience. For the upcoming tax season, the NCTC Online University will offer 6 volunteer training courses, including:
- Credit Report Educator 2.0
- Budget Planner 2.0
- FAFSA Coach 2.0
- Savings Coach
- Saver’s Credit at Tax Time
- Volunteering in the VITA World
The Online University eases the training burden on your organization by requiring fewer in-person trainings and less physical space. Volunteers receive a certificate of completion and come to your organization’s orientations and in-person trainings with the foundational knowledge to hit the ground running.
EDITOR'S NOTE: Special thanks to Dan Fair at NCTC for passing this information along!
Video Highlights: Opportunity Nation
By Sean Luechtefeld on 12/13/2011 @ 12:30 PM
A couple weeks ago, the kind folks at Opportunity Nation provided us with the video of the session CFED President Andrea Levere facilitated at their November 4 Summit. Click the video below to watch the session.
Have questions or feedback for Andrea? Use the comments section below and I’ll send ‘em her way!
New Report on Municipal Financial Empowerment
By Mitchell Kent, Guest Contributor on 12/13/2011 @ 10:00 AM
EDITOR’S NOTE: Mitchell Kent is Director of Legislative Policy and Special Counsel for the New York City Department of Consumer Affairs (DCA). DCA’s Office of Financial Empowerment was profiled in CFED’s 2011 report, Building Economic Security in America’s Cities: New Municipal Strategies for Asset Building and Financial Empowerment, and was a key collaborator on the report, along with other members of the Cities for Financial Empowerment coalition.
New York City’s Department of Consumer Affairs just released a report about its work embedding financial empowerment initiatives within core City social service programs. The new Report, Municipal Financial Empowerment: A Supervitamin for Public Programs, is exciting because it offers cities and states a way of enhancing existing programming during difficult economic times. The Report, the first in a series on the role of financial empowerment in public programs, focuses on professional, one-on-one financial counseling. It shows how New York built its network of privately-funded Financial Empowerment Centers and how financial counseling may make traditional social service programs achieve better and longer-lasting outcomes.
The City’s Department of Consumer Affairs has been working closely with nonprofit organizations across New York City to run this initiative. A Wall Street Journal article about the approach, City Now Offering Financial Counsel, ran on December 7th. The article featured a Financial Empowerment Center client, Margarita Mora, who was “too embarrassed by the foreclosure proceedings against her to seek help.” Because of the integration of financial counseling in the City’s foreclosure prevention efforts, a judge led Ms. Mora to a financial counselor at a Financial Empowerment Center run by Credit Where Credit is Due.
The Bloomberg administration is set to expand this initiative next month, putting $2.4 million behind the Centers, which previously were paid for by private funds donated to the nonprofit Mayor's Fund. The four-year trial included 16 financial counselors, reached more than 13,000 New Yorkers and helped pay down $6.3 million in personal debt.
Click here to see the Department of Consumer Affairs report.
Rep. Chu (D-CA) Introduces Entrepreneurship Legislation
By Sean Luechtefeld on 12/12/2011 @ 02:45 PM
Federal legislation based on CFED’s Self-Employment Tax Initiative (SETI)
Last week, Representative Judy Chu of Los Angeles introduced the Entrepreneur Startup Growth Act, a bill designed to provide low-income self-employed people with tax support and business development. CFED is thrilled to support this legislation as it is based on our Self-Employment Tax Initiative, which you can read more about here.
Click below to watch the video of Rep. Chu’s address on the legislation, and then read the press release from Rep. Chu’s office below. As always, we appreciate your support in bringing business development assistance to low- and moderate-income entrepreneurs!
Rep. Chu Introduces Bill to Drive Economic Opportunity for Entrepreneurs
Young startup companies, our nation’s real job creators, would benefit from the Entrepreneur Startup Growth Act
WASHINGTON – On Tuesday, Rep. Judy Chu, D-Calif., introduced a bill to provide low-income start-up companies with financial and business assistance. The Entrepreneur Startup Growth Act provides self-employed individuals with tax support and business development.
"Economists point to young developing businesses as the key drivers of economic growth. On average each year about one third of the jobs created in this country are a result of new startup businesses. These entrepreneurs take risks and make it on their own," Chu said. "The most critical time of the year for these new owners is tax season as they learn how to comply with the different tax standards for businesses. The Entrepreneur Startup Growth Act turns this tough time into an opportunity by offering affordable business tax assistance in conjunction with business development services so these companies can continue to grow and create jobs."
The Entrepreneur Startup Growth Act builds on the Self-Employment Tax Initiative launched by CFED, a nonprofit economic opportunity organization. The legislation creates a grant program that would offer free business tax preparation services to low-income self-employed individuals who file a schedule C tax return. This will help their businesses grows and it promotes asset-building for low-income households.
"This program will help entrepreneurs save money and ensure that they access all the tax credits for which they are eligible,” continued Chu. “By building their economic security and helping them grow their business we drive American job growth.”
9.8 million self-employed individuals – nearly two-thirds of all self-employed people – are operating business startups: unincorporated businesses less than five years old that are still in their developing stages and feature just one employee, the business owner himself. Startups in their first year of existence create an average of 3 million jobs per year. Nearly all net job creation since 1980 has occurred in small business startups less than five years old.
Upcoming Event: 'Ready, Set, Save'
By Johanna Barrero on 12/12/2011 @ 09:30 AM
Ready, Set, Save: Assessing IDA Participants' Readiness (part of the "Tools for Success" webinar series for AFI Grantees)
Join us this Wednesday, December 14 from 1:00 – 2:00 pm EST for a webinar that will offer strategies to help determine whether prospective applicants are ready for an IDA program. We’ll also explore ideas for helping current savers make steady progress toward purchasing their assets. The webinar will include examples from real-world IDA practitioners who have improved program performance by targeting their outreach and enrollment efforts and monitoring participants to ensure they are on track to achieve their savings goals.
Presenters will include:
- Ingrid Holguin, IDA Program Manager at Opportunity Fund in San Jose, California
- Mindy Maupin, Asset Builders Program Coordinator at Southern Good Faith Fund in Helena-West Helena, Arkansas
- Johanna Barrero, Program Manager, Savings & Financial Security, CFED (moderator)
Click here to register now!
The webinar is free to all interested participants. In advance of the webinar, please send any questions you would like our panelists to address during the session to Johanna Barrero at email@example.com or call 202.207.0117.
Resources from Webinar on Northern Plains
By Ethan Geiling on 12/06/2011 @ 04:18 PM
On December 6, CFED and the Northern Plains Initiative held a webinar on the strength of state policies in Montana, North Dakota, South Dakota and Wyoming.
The webinar covered four topics:
1. How residents are faring in the Northern Plains
2. New Scorecard data on the strength of state policies
3. Policy opportunities in the Northern Plains
4. Two dozen low-cost, politically viable stroke-of-a-pen policy ideas.
A recording of the webinar and the PowerPoint presentation are available online.
Beyond Credit Score: FICO and Credit Bureaus Get Personal
By Chelsea Prescotti, Guest Contributor on 12/06/2011 @ 02:30 PM
For over half a century now, credit scores generated by credit bureaus and analytics companies, most notably the Fair Isaac Corporation (FICO), have been the gold standard in determining whether consumers are “creditworthy.” Although credit scores have historically served to give lenders an accurate risk-assessment of perspective borrowers, in our age of personal data, more information is now being used in determining potential outcomes in other, disparate areas—for example, the likelihood that you will take your prescription medications.
The New York Times reported earlier this year on FICO’s latest foray into personal data. According to an NYT article, FICO’s newest invention, the Medication Adherence Score, compiles publically available data in order to give doctors and insurance companies an assessment of the probability that any given patient will take their prescription medications as instructed by their clinician.
Interestingly enough, the factors used in determining the Medication Adherence Score are various and not necessarily related to health. For example, individuals who have lived in one home and have had a steady job for a long period of time are more likely to take their medications as prescribed. Being female is a risk factor, considering that women are more likely to take their medications incorrectly. Those who live by themselves or who are unmarried are also more likely to skip or not refill prescriptions.
The purported idea behind the Medication Adherence Score is to help doctors and insurance companies target at-risk patients with email and phone reminders. While this may seem benign, the fact that these scores are calculated without patient consent raises eyebrows. As a consumer, you may be wondering what the broader implications of scores that use personal data could be. The Wall Street Journal raises this concern as it describes how credit scores are used in various disparate settings.
In addition to FICO’s latest innovation, the big three credit reporting agencies are likewise mining personal data for purposes that extend beyond mere creditworthiness. Experian, for example, uses credit information to estimate a consumer’s income. Credit card companies now use this service, called Income Insight, to deny or extend consumers credit. Equifax offers its Ability to Pay Index and Discretionary Spending Index, which estimate how much extra money consumers may have to spend.
While the credit bureaus assure consumers that crunching new numbers will be a boon to consumers, since lending agencies and the like will have a more whole picture of the consumer beyond the limited picture that a credit report draws, it may be too early to tell. A recurring problem for consumers has occurred when employers begin using these analytics for hiring decisions, even though research demonstrates that credit history is not a good indicator of job performance.
Reducing consumers to different numbers and scores may be a questionable practice, one that consumer adviser Gary Gentry criticizes. As quoted in the WSJ article, Gentry notes, "People make character judgments about you based on that FICO credit score that may or may not be accurate. It's not the real world. It's just a computer program."
As a consumer, what do you think about the extended use of credit reports and personal data?
Chelsea Prescotti is a consultant for www.creditscore.net. The Inclusive Economy thanks Chelsea for her thoughtful contribution!
CFED, NPI to Host Assets & Opportunity Webinar Tomorrow
By Sean Luechtefeld on 12/05/2011 @ 02:45 PM
Tomorrow, we’re joining forces with Rural Dynamics, Inc.’s Northern Plains Institute to host a webinar titled “Developing an Assets & Opportunity Policy Agenda.” Here’s the invitation that our friends at NPI sent out. We hope you’ll consider joining us!
Join us Tuesday, December 6 at 1:00 MST for an in-depth conversation with national experts from the Corporation for Enterprise Development (CFED) on strategies to move assets and opportunity policy forward in 2012.
On this call we will have the chance to learn about what newly released data tells us about asset building policies on the national and regional level, how we can use this data to impact change in our rural Northern Plains region, and what opportunities exist for 'easy wins' by acting on low-hanging-fruit action items. This is a chance to have an intimate conversation about next steps; taking research to action.
View the Household Financial Security Framework to gain a better perspective of how policy recommendations are categorized and organized.
Visit newly released Scorecard data for state-by-state performance and policy measures across five issue areas: Financial Assets & Income, Business & Jobs, Housing & Homeownership, Healthcare, and Education.
Download A Stroke of A Pen Guide, which presents 24 low-cost, politically-viable policy ideas to increase financial security and opportunity in tough times to see what is recommended nationally, and discern what might work regionally.
Register today for the next Mobilizing Rural Communities webinar on December 6, 2011 at 1pm Mountain by clicking here.
Vote Next Step as Your Fan Favorite!
By Lauren Williams on 12/05/2011 @ 02:15 PM
Vote for CFED's Partner, Next Step, as Fan Favorite in the McKinsey Video Contest
McKinsey on Society is holding a video contest for social innovators. Their goal is to “create a hub where we can highlight the incredible work taking place around the world and where changemakers can share new ideas and best practices. We want to create a platform that draws attention to these innovators, so that we can celebrate their hard work and have them take their place alongside the world’s most recognized voices in social innovation.”
The Next Step team entered a video into this competition and has a chance at being honored with interviews, online features and other media recognition if they win.
Please vote for Next Step's video as the Fan Favorite in McKinsey on Society's Social Innovation Video Project. Follow the link below and vote by tweeting, using the Twitter button under the video. Voting is open from November 30 to December 9, 2011. Thank you!
Vote and share the Next Step video here.
Highlights: Bank On Webinar
By Sean Luechtefeld on 12/05/2011 @ 10:00 AM
Yesterday, I had the honor of presenting on a webinar with some awesome colleagues, including Louisa Quittman (U.S. Department of the Treasury), Leigh Phillips (San Francisco Office of Financial Empowerment), Laura Fischer (National League of Cities) and Genevieve Melford (CFED). We had almost 300 attendees, many of whom provided thought-provoking questions that led to what I felt like was a fascinating conversation about the landscape of the financial access field.
If you weren’t able to listen in yesterday afternoon, that doesn’t mean you missed your only opportunity. The webinar was recorded, and the recording can be downloaded for your listening pleasure by clicking here. Included in the recording are not only the speakers’ remarks and the Q& A session, but also the PowerPoint and the demonstration of the new JoinBankOn.org.
Looking back, what stands out to me the most is how incredibly clear it is that the Bank On movement is exactly that – a movement. Laura mentioned how since she and her colleagues finished their first-ever Scan of the Bank On Field (which you can access here), nearly 20 new programs have started and at least a dozen more are in the works. That programs continue to coalesce from the ground up not only speaks to the recognition that financial access is no longer a conversation being had only on the fringes, but also that community-based, public-private partnerships really can be a force for good in helping bring all Americans into the mainstream economy.
Whether you listened to the webinar yesterday or you watch the recording in the coming days, I hope you’ll consider sending us feedback about this partnership by using the comments section below or by emailing firstname.lastname@example.org.
New Working Paper by New America Foundation
By Stephanie Halligan on 12/01/2011 @ 11:00 AM
Beyond Barriers: Designing Attractive Savings Accounts for Lower-Income Consumers
In the midst of the current economic recession, we have witnessed the emergence of many lower-cost savings products geared toward the low-income consumers. These "small-dollar savings accounts" help eliminate some of the many barriers to saving for these consumers, as seen in pilot programs across the country in recent years. Models include FDIC’s Model Safe Accounts – a template of account terms for banks across the country to follow, and SaveUSA – a program started through the NYC Office of Financial Empowerment offering low-income tax filers savings accounts and incentives to save a portion of their refund at tax time. Yet while accounts in these and other programs have helped remove economic barriers to account ownership, they do not necessarily make for an attractive consumer product.
In November, the Asset Building Program at New America Foundation released a working paper, "Beyond Barriers: Designing Attractive Savings Accounts for Lower-Income Consumers." This paper explores several promising ways to go beyond removing barriers to savings account ownership for lower-income consumers and investigates how small-dollar savings accounts can become more attractive for this targeted market to both acquire and maintain. Among the recommendations to increase uptake and use of low-income consumer products are:
- “Must-have” account basics, such as reduced costs, convenience and security
- Varying savings incentives that are tailored to a specific population’s needs and preferences
- Withdrawal restrictions and automatic deposit opportunities
- Financial counseling to support a consumer savings plan
Individual development accounts represent a subset of these recommendations, including reduced cost, protections, savings incentives, and financial education and support. Yet while IDAs helps support the longer-term savings aspirations of needy individuals and families, traditional IDA programs do not support a low-income consumer’s more immediate savings needs – like emergency savings. Unlike an industry-wide small-dollar savings account, IDA programs cannot yet serve lower-income populations at scale. The recommendations presented in this paper represent both a challenge and an opportunity to create a savings product that will meet the needs of target consumers across the country without over-burdening financial institutions. While further market research is needed to test the true impact these recommendations would have on account enrollment and participation, it is clear that consumer insight and preferences are key elements to designing a savings product for low-income consumers that is both effective and useful.
(Beyond Barriers: Designing Attractive Savings Accounts for Lower-Income Consumers page 10)
Currently reading page 27 of 53.