NCTC National Conference
Posted on 04/07/2011 @ 04:35 PM
The National Community Tax Coalition (NCTC) will be hosting its 8th National Conference June 7-9 in Chicago, IL! The Conference, titled Mapping the Future, is the premiere conference for the community tax preparation and asset building field. More than 600 attendees are expected to come together to learn, network and celebrate as a field.
As you may have guessed from the title, this year’s Conference will focus on the future. It’s no secret our field is at a critical point. As a community, it is important that we come together to decide where we are headed and how we get there. Every decision NCTC has made in planning this event has been made with that singular goal in mind.
We realize this is a lofty goal, but we’re not alone. In addition to more than 50 workshop presenters, we have secured several keynote speakers to help guide us. On Day 1 for example, Gary Rivlin, author of Broke USA, will address conference attendees.
As always, the Conference remains the best place to get the practical knowledge you need to take your organization to the next level. By learning from a healthy mix of practitioners, policy experts, researchers, and other innovative leaders, the opportunities to make your organization more effective are virtually endless. Whether you are new to the field or a distinguished veteran, attendees have constantly walked away amazed at how much they’ve learned in such a short time.
This year’s conference will also offer several new features. First, with your feedback from previous conferences in mind, we’ve expanded the Conference to three days. The extra day allows you to attend more workshop sessions, hear more speakers and take even more knowledge home with you.
Second, this will be the inaugural year for the NCTC Awards program. We’ll be recognizing an innovative affiliate and an outstanding partner at the evening reception.
We’ll also be hosting a technology lounge, in which invited guests will be available to discuss and demonstrate how they are using technology to improve tax preparation and asset building initiatives.
I hope you will join us in Chicago to plan for the future of our field. It is an excellent opportunity to learn to improve your program and serve your clients at a higher level!
Jackie Lynn Coleman
Senior Director, NCTC
P.S. You can learn all about our Conference at the Mapping the Future website!
Toward Broadly-Shared Prosperity
By Steve Crawford, Senior Fellow on 04/07/2011 @ 11:30 AM
Welcome to Toward Broadly-Shared Prosperity, a new blog series aimed at helping economic and social policy professionals better understand the broader context in which they labor – the “big-picture” and its relevance for their work. More specifically, the goal is to help connect the dots between strategies for economic development and poverty reduction. I plan to write new installments in the series twice a month and to focus on a specific theme over the course of several postings. The first three themes will be entrepreneurship, human capital and innovation.
When it comes to promoting prosperity, mainstream policymakers tend to focus on expanding the pie, advocates for the poor on better distributing it. In fact, both approaches are vital. Growth that benefits only those who are already prosperous means that those with the greatest need, including children who had no say in their circumstances, fail to advance.
Sure, some upward and downward mobility takes place, but increased inequality also makes “equal opportunity” more problematic. Even prosperous Americans have reasons to be concerned about that, given the implications for the social fabric. Moreover, there is some evidence that widespread poverty itself inhibits a city’s or region’s growth at all levels, undermining its image and fostering outflows of talent and capital.
Although regional growth may not lift all boats, it surely helps. It puts upward pressure on wages, increases government’s resources, and creates a more favorable political climate for initiatives designed to assist the poor. Yet, many advocates for the poor downplay the importance of economic development, and some support policies that discourage it, fearing the diversion of resources from their priorities or the dilution of their constituents’ political clout.
Similarly, economic developers tend to neglect the shared part of “more broadly-shared” prosperity. Focused on keeping existing firms and launching or attracting new ones, they hope that trickle-down works but regard poverty reduction as someone else’s job. Many of them even view workforce development as foreign – as a social program aimed at helping the disadvantaged rather than growing the economy. As one wag put it: “economic developers are from Mars, workforce developers from Venus.”
To some extent, the economic development and business communities should focus on growing the economy, and others on ensuring that everyone benefits. Yet, it is important that these different groups’ strategies be compatible. Ideally, investments and policies in a whole host of related areas – from infrastructure and housing to economic development and job training to work supports and taxes– would be understood, developed and assessed in terms of their contribution to broadly-shared prosperity.
“Realists” will object that that’s highly unlikely. For one thing, we lack any consensus on a definition of broadly-shared prosperity, much less on how to measure it. Moreover, powerful interests within and outside the relevant agencies will resist major revisions of their goals. I agree, but think we can still make progress toward an integrated framework for analyzing key issues. In fact, one already exists. It is called the competitiveness triangle.
The Competitiveness Triangle
Good mainstream policymakers understand that economic growth hinges on their jurisdiction becoming more productive and competitive. Enhanced competitiveness enables more exports, which generate additional jobs and higher incomes. Competitiveness experts often focus on three components of what some call the competitiveness triangle:
But it is not only mainstream thinkers and practitioners who focus on these; so too do the more creative researchers and advocates in the poverty reduction community. Take CFED. It champions innovation in several ways, promotes entrepreneurship as a path out of poverty and sponsors initiatives that facilitate saving for postsecondary education. Indeed, the entire asset-building approach to expanding economic opportunity suggests interesting parallels with more mainstream approaches.
In future postings, this blog series will examine the competitiveness triangle through the screen of poverty reduction. The first few postings will focus on entrepreneurship, with special attention to the tensions between gazelle-targeting and the promotion of self-employment among the unemployed and poor. A set of postings on human capital will acknowledge the conventional analysis of the problems of college access, completion and affordability, but emphasize the power of matched savings to improve educational attainment. A third mini-series will acknowledge the importance of investing in innovation, but suggest policies for helping those on the losing end of creative destruction to remain economically productive and secure.
I have no illusions of doing full justice to the complexities of these topics, and encourage comments from readers. It would be wonderful if this blog became less an expression of my views and more of a mutual exchange of ideas, information and insights.
Innovating to Meet Our Customers' Needs
Posted on 04/06/2011 @ 02:30 PM
Guest Blogger Tracy Fischman, Executive Director at AccountAbility Minnesota, described last week how asset-building opportunities can be integrated into free tax assistance. AccountAbility Minnesota has been a partner in this effort with CFED’s Self Employment Tax Initiative (SETI). Minnesota Senator Al Franken visited recently to learn about their work and speak with tax preparers and clients.
In today’s blog post, Tracy shares some of her organization’s newest innovations.
AccountAbility Minnesota serves as an incubator for new and innovative approaches to address asset building for low-income communities during tax time. We are willing to try new approaches, within scope, in determining what savings tools work for our customers. We know, through experience and data, that saving is key to economic mobility. Research shows that the unbanked are much more likely to open a bank account when they have money available.
We launched our financial services and products in 2006, when we began offering Express Refund Loans – a low-cost alternative to pricey Refund Anticipation Loans (RALs). We built in a savings component by coupling the loans with free savings accounts, available regardless of credit or banking history. In 2007, Financial Planning Association of Minnesota volunteers began to offer one-on-one financial counseling to our customers. In 2010, we introduced a benefits screening tool at some of our tax clinics to help customers identify public supports they may be eligible for.
Also, we aim stay on top of predatory products that low-income consumers are purchasing at tax time and offer low-cost, safe alternatives. With the help of our colleagues, we keep our finger on the pulse of our customers’ behavior and changes in the field. As our readers likely know, one such change is within the RAL market. Due to the IRS’ removal of the debt indicator, which we used as a tool to determine if a portion or all of a customers’ Federal refund will be garnished, we discontinued offering our Express Refund Loans this tax season. We are hopeful that predatory RALs will be eliminated, and given the bad publicity and possible court case related to RALs this year, perhaps this will be the case. Yet our collective work in finding ways to meet the needs of low-and moderate-income consumers is perhaps more critical now than ever.
This year, we are piloting the following services and products at our tax clinics. In doing so, we continue to learn what tools are helpful and what obstacles exist for our customers to start on, or move further along, the path of saving and asset building.
- Low-cost prepaid debit cards: Partnering with a local community bank we offer low-cost prepaid debit cards to our customers – regardless of their credit or banking history. Taxpayers who open a card at one of our tax clinics are able to upload their refund onto the card to receive it faster. We continue to offer savings accounts through this bank and other financial institutions, too.
- Saver’s Credit and retirement product pilot: We were one of two organizations nationally chosen to partner with the National Community Tax Coalition (NCTC) and Abt Associates to participate in a research pilot project designed to increase the use of the Saver’s Credit. The Saver’s Credit is a nonrefundable credit of up to $2,000 for taxpayers contributing to a retirement account. As a part of the study, we offer a retirement product at one of our tax clinics, and seek to understand whether or not eligibility for a tax credit can initiate retirement saving at tax time. We have also partnered with another large employer in Minnesota who is promoting free tax assistance, the Saver’s Credit and their own retirement product to their employees. Our customers are participating in a survey and focus groups around the credit as well.
- Benefits screening: With the recent recession, we’ve seen more individuals qualifying for our services for the first time, which means they may also qualify for public benefits for the first time. At three of our tax sites, we are piloting an opt-out screening during the intake process for customers, automatically offering to screen for public benefit they may be eligible for. We offer the services on an opt-in basis at four other tax sites.
More to learn about the savings behavior of our customers
Throughout the season we have seen changes in the demand for savings products. Our linkage to savings accounts – regardless of banking or credit history – is essential, but as a standalone product not sufficient to move people up the financial security ladder.
Following tax season we will reflect upon and analyze our results. It has been a tax season of learning that has left us with questions to be answered.
We also have new information about the savings experiences, behavior and interest of our customers through a comprehensive evaluation of our financial services program. This evaluation will be finalized in the coming months, and is designed to help us better understand how to meet the needs of our customers. The evaluation includes a quantitative review of data of nearly 1,000 of our customers who have opened savings accounts through our program since 2006, as well as a qualitative exploration of customer needs through focus groups and surveys. The final report will be available in May, and we will present the results at a number of local and national conferences and forums, including the NCTC conference in Chicago this June.
As we wrap up and reflect upon the tax season, we will take what we’ve learned in the tax clinics, through our evaluation, and from our colleagues in the field as we continue to innovate to meet our customers where they are on their path to saving and growing assets.
Labor Unions and Economic Opportunity
Posted on 04/06/2011 @ 01:15 PM
Since the 1930s, strong labor unions, both in the private and public sectors, have played an integral role in enabling hard-working Americans to obtain a piece of the American Dream. It is no secret that labor union membership increases wages for both unionized workers and non-unionized workers, affecting the latter through raising the prevailing wage for a particular industry or geographical area. It is less well known that union membership is important for asset development, as well.
Labor union members are significantly more likely to own their homes than their non-unionized peers. This is important in a society where, even after the bursting of the housing bubble, most of the wealth of middle and working class Americans can be found in their homes. Labor unions have also fought hard for years to secure high-quality benefits packages for their members, such as first-rate health insurance and defined benefit pensions. Access to adequate health care and a retirement without the fear of falling into poverty are important assets. Furthermore, labor unions exert a powerful influence on the non-unionized labor market in terms of benefit packages. Much like their effect on prevailing wages, labor unions increase the quality of benefits packages even for workers that are not unionized. It is easy to see the positive effect of unions on both wages and asset development.
In light of the evidence that union membership enables everyday Americans to live decent and successful lives, the recent trend of states stripping public workers of their collective bargaining rights in an effort to balance their budgets on the backs of hard-working Americans is deeply disturbing. At the time of this writing, the only thing standing between Wisconsin’s state government enacting a law that essentially destroys the labor unions of teachers, firefighters and other vital public employees is a temporary restraining order issued by a Madison Circuit Court Judge. Ohio, New Jersey and Indiana are also attempting to adopt measures that drastically weaken the collective bargaining right of public workers.
The good news is that Americans stood up and protested for the rights of people who teach our children and keep our families safe. It is obvious that most Americans believe in the power of labor unions to better the lives of all working people. The bad news is, in this age of 24-hour news cycles and bifurcated media outlets, it is anybody’s guess how long Americans will be willing to advocate for labor unions. It is possible that this issue could get lost in the shuffle of the new political outrage of the moment and the rigors of everyday life.
The last time the United States faced budget shortfalls of this magnitude was during the Great Depression. Instead of stripping workers of what little rights they had in the early ‘30s, the federal government stepped in and upheld the collective bargaining rights of those fortunate enough to be employed. Did the economy fall apart under the weight of skyrocketing wages and exorbitant benefits packages? No. In fact, the opposite occurred. The United States clawed its way out of a Depression and, during the post-World War II era, experienced some of the most robust economic growth the world has ever seen.
Eighty years ago, the United States had the foresight to see the potential for labor unions to build assets and allow the hard-working Americans on whose labor this country was built a piece of the American Dream. That strategy worked. Labor union membership has been proven to improve the lives of all workers through wage increases and asset development. The troubling attacks on unions in recent months are disconcerting for someone who cares deeply about the well-being of Americans whose hard work allows our society to function. If labor unions become a thing of the past, a crucial vehicle for asset development for average Americans will disappear with them.
Jason Gray is a Master of Public Policy candidate at the Heller School for Social Policy and Management at Brandeis University with an expected graduation date in May 2011. Through his concentration in poverty alleviation, Jason has focused his work on asset development and the intersection of the private, public and nonprofit sectors. Before attending the Heller School, Jason worked as an account manager for the Corporate Executive Board, a best-practices research firm in Arlington, VA.
Not Just a Textbook
By Bill Schweke on 04/05/2011 @ 03:45 PM
Progressive policymakers and advocates have been pining for a book that maps the “high road” to a more democratic America for some time. American Society: How It Really Works, authored by University of Wisconsin Professors Erik Olin Wright and Joel Rogers, meets this need. Designed to be a critical introduction to sociology, political science, public policy and social problems classes, the book also succeeds in being an entrée to the major policy controversies of our time. Encyclopedic in its scope, the textbook addresses 18 topics ranging from persistent poverty to gender inequality, from the environment to taxes. Framed by a clearly stated set of progressive values, the book is grounded in current facts and stats, as well as tightly argued. It treats the major barriers to progressive reform, including media concentration, lobbying by vested interests, escalating electoral campaign spending, the decline of unions, racism, militarism and the national security state. Especially compelling are the chapters on “The Capitalist Market: How It Is Supposed to Work” and “The Capitalist Market: How it Actually Works.” If you are searching for a book that makes an intelligent case for alternative ways to view U.S. society and to “close off the low road and pave the high,” this is the book for you. Warning: The book is not padded but is 494 pages long, divided into 23 largely stand-alone chapters. Also, it considers only national reform options (not state and local), discusses wealth inequities briefly but thoughtfully and advocates reforms in business subsidies but says little explicitly about asset building or protection policies. The book is published by W.W. Norton Books.
McDermott Calls for End to Poverty
By Carol Wayman on 04/04/2011 @ 11:00 AM
WASHINGTON, DC – Congressman Jim McDermott (D-WA), a senior member of the House Ways and Means Committee, delivered the keynote speech today at the Center for American Progress conference, “Measuring Our Progress in Reducing U.S. Poverty.” In addition to challenging recent Republican proposals that would further hurt those living in poverty, Congressman McDermott unveiled the outline for legislation he intends to introduce to end poverty in America, which includes:
“First, we need to support work to employ the millions of people who want to work and to address unmet needs in the community. Second, we need to provide work support for those still unable to make ends meet. And third, we need to invest in children and young people to improve their entire lives, which will pay dividends to all of us over time..."
“....We need to guarantee a floor beneath which children will NOT fall, shielding them from market forces they did nothing to create, sparing them hardship they did nothing to deserve.”
What's Wrong with Microfinance?
By Bill Schweke on 04/01/2011 @ 10:15 AM
Practical Action, based in Great Britain, is the successor organization to E. F. Schumacher’s baby, the Intermediate Technology Group. It is also the publisher of a provocatively titled book that seeks to ask the big, tough questions regarding the successes and failures of microenterprise strategies in developing countries. Edited by Thomas Dichter and Malcolm Harper, who have decades of experience with the subject, What’s Wrong with Microenterprise is not meant to be a hatchet job. On the contrary, the 20-plus authors believe in microenterprise, but do not want to give it a free ride in terms of criticism.
The book identifies a number of worrisome issues: the dangers of micro-debt for poor borrowers, a growing need for more micro-savings, the difficulties of using group lending processes, the lack of good independent studies, the importance of other small firm support, the conflicting histories of the industrialization and innovation in the West, and more. For example, in developed economies, credit and new financial products evolved throughout their economic history – they were not the original spark.
Moreover, I was surprised by the lack of solid impact data on micro-firms. And I was taken by the book’s advocacy of livelihood finance, a more comprehensive approach to meeting the developing world’s needs for savings, credit, insurance, infrastructure finance and so forth. Shore Bank founders also contributed an interesting cross-national article on microfinance in the U.S. and the developing world.
What’s the bottom line? Microenterprise is not a panacea, but it has an important role to play, especially in the empowerment of women.
Why Kids Savings Accounts Have A Chance in 2011
Posted on 03/31/2011 @ 12:00 PM
Today's blog post comes to us from David L. Kirp. David is a professor at the Goldman School of Public Policy, University of California at Berkeley, and author of Kids First: Five Big Ideas for Transforming Children’s Lives and America’s Future (PublicAffairs 2011). He served on the 2008 Presidential Transition Team.
It’s been a long winter for kids’ issues in Washington, and I’m not talking about the weather. The needs of children, like those of other have-less groups, have taken a back seat to the incessant demand for budget cuts. Thus far, the impact on children has been relatively modest—several modest initiatives to promote literacy are the main victims—but more draconian initiatives lurk. If hard-line Republicans have their way, the budget for Head Start, the signature preschool program for poor children, will be chopped in half. And while the President continues to promote what he calls a bipartisan agenda in k-12 education reforms, he has found few takers on the GOP side of the aisle.
Still, there’s a case to be made that child development accounts (variously called “baby bonds,” “child savings accounts” and “asset-building accounts”) could be one of the few kids policy ideas that gets a decent hearing. While Democrats have the proposal because it improves the life chances of poor children, some Republicans appreciate that it also prepares a new generation of money-conscious capitalists. Both sides have it right: that’s why it has been backed both by Chuck Schumer, the quintessentially liberal New York senator, and Rick Santorum, the arch-conservative ex-Pennsylvania senator and 2012 presidential hopeful.
This isn’t just smart politics—it’s also smart politics of the heart. As I assert in my new book, Kids First: Five Big Ideas for Transforming Children’s Lives and America’s Future (PublicAffairs, 2011), the child development account is a linchpin in a cradle-to-college agenda that has the potential to change children’s lives.
Readers of this blog are likely familiar with how the kids’ savings account works. As outlined in the ASPIRE Act, regularly introduced in recent years, the plan is for the federal government to fund a $500 stakeholder account for every infant, $1000 for families with below-median incomes. Washington would match—on a one-to-one basis, up to $500 a year—contributions made by the less well-off families. When the trust fund matures, and the child reaches age eighteen, the accumulated funds could go toward higher education or a first home, or else could be socked away for retirement. The price tag of $38 billion over the course of a decade is a big lift, but not necessarily an insurmountable one.
The stakeholder account is a quintessential asset-building approach: a dollar invested today will nearly double in eighteen years. What’s ultimately more important is the fact that owning something of value can change the dynamics of a family and, consequently, the lives of children.
Money in the bank, the research shows, prompts parents to save more and to think more carefully about their children’s future. The account obliges them to play an active part in deciding how to invest the funds, for they are drawn out of self-interest into the world of finance. Evaluations of congressionally-funded pilot projects show that parents’ aspirations for their kids escalate when the savings account is opened. Parents are kids’ prime educators, and their expectations for their children’s future are tied to their assets.
More assets mean higher parental expectations; and in turn, parental expectations have an effect on their youngsters’ grades as well as how they cogitate about the opportunities that might realistically lie ahead. “When assets are present the concept becomes a meaningful schema…people begin to think in terms of assets. Assets are the future,” Washington University professor Michael Sherraden points out in his landmark book, Assets for the Poor.
Many of us regard kids as little hedonists who think only about the pleasures of the moment, yet with the right kind of encouragement they morph into little Puritans. In Sherraden’s evaluation of child development accounts, 1,171 elementary, middle and high school students who were offered a dollar-for-dollar match accumulated more than $1.7 million over three years. That amounts to $1518, nearly $50 a month, for each of the youngsters, with half of the money coming from their own savings and the rest from family members. The fact of having an account boosted their self-esteem and made them more money-smart.
The fourth graders who received accounts were more likely to mention savings as one way to finance college—pretty savvy for a bunch of ten-year-olds—and they scored significantly higher on a financial literacy test. That stands to reason, since with their own savings account to attend to they had something to be literate about.
Will the stakeholder account turn poor families into savers? What happens in Maine, where every newborn now receives a $500 trust fund as a kick-start for higher education, will yield additional useful information. An ongoing random-assignment study in Oklahoma will go a long way toward determining whether the child savings account is as sensible a public investment as it appears to be.
Important as asset-building is, it’s not enough. Voters know this. Polls commissioned by the Corporation for Enterprise Development show that they understand that the incentive will encourage families to save more, that children’s ambitions will expand and they’ll become more knowledgeable about money. But these voters also understand that good early education is necessary to improve opportunities for youngsters unprepared for school and more financial aid is essential to increase higher education enrollments.
Experts in the field know this as well. A universal child development account “is not a complete and sufficient solution for positive child development and educational attainment,” Michael Sherraden and his colleagues conclude, a caution to the overzealous. “We do think, however, that asset accumulation is a key pathway for individuals, families, and communities to formulate goals and reach their potential.”
Still, the baby bond belongs in the same company as other potential game changers—strong support for parents, high quality early education, good schools linked to their communities, and the helping hand of a mentor—that I go to bat for in Kids First. It coincides with the Golden Rule standard for public policy: Every child deserves what’s good enough for a child you love.
Does legislation patterned after the ASPIRE Act stand a chance in 2011? If—and admittedly it’s a huge “if”—the GOP is to be more than the party of “no,” then the child development account could be their signature kids’ issue because it fits their market-driven philosophy. In a generally bleak policy landscape that’s a ray of hope.
Ideas, Innovation and Implementation
By Anne Li on 03/30/2011 @ 11:00 AM
Over the years, CFED has found sympathetic resonance with partners in the credit union movement, based on a shared interest in building the assets and financial security of individuals and families. Over the past year, we teamed up with Filene i3 (Ideas, Innovation, Implementation), which is committed to strengthening the credit union industry through the development of new products, services and business models.
Denise Gabel, Chief Innovaton Officer of the Filene Research Institute and CFED Innovative Idea Engineer, met with Kim Pate, CFED’s Vice President for External Relations, and Anne Li, CFED’s Program Director for Innovation, more than a year ago to brainstorm how to work together to promote innovation. From that conversation came an invitation from Denise for innovation@cfed to propose five consumer-focused financial solutions that needed labs for testing. The fruits of the creative efforts of five Filene i3 teams are described, together with other innovations, in a new report authored by Gabel titled Key Findings: Blueprints for Innovation.
- CFED Innovative Idea Champion Diane Browning worked with an i3 team to look at Retirement Bonds. While many of today’s headlines focus on financial problems such as credit card debt and mortgage foreclosures, the next looming issue could easily be caused by a lack of planning for retirement. Low- to moderate-income individuals and those who work for small businesses are likely to be particularly hard hit.
- Kim Pate worked with two i3 teams. Savings Exchange: The current structure of retirement incentives within the U.S. tax code does little to help those who have the fewest resources. The majority of the nation’s $367 billion in asset incentives helps households earning more than $80,000 a year (for more, read CFED’s report, Upside Down). While the 60% of American taxpayers making less than $38,000 share less than three percent of these benefits, the top one percent of households – whose average income exceeds $1.25 million – receives more than 45% of the subsidies.
- The Signal: Simply living to full life expectancy will disable an estimated 65 – 75% of Americans, who will need help managing benefits and understanding asset growth limits so their benefits stay intact. Given the complexities of disability benefits, consumers have to go to multiple websites and agencies to determine their benefit levels and asset limits. It is confusing, time-consuming and frustrating – and the margin for error is great.
- CFED’s Savings & Financial Security Program Director Leigh Tivol and Innovative Idea Champion Rimmy Malhotra worked with a team on Goalmine(TM) College Savings. For the first time in generations, young adults in the United States are no longer attaining post-secondary education at a higher rate than their parents. For students in low-income households, the challenge of obtaining a college degree is especially difficult. Families making less than $20,000 per year face an average cost burden of at least 44% of their annual incomes for four-year public universities, even after factoring in grant aid.
- CFED Senior Program Manager for Applied Research Kasey Wiedrich worked with a team on MI-COOP. For over 17 million Americans, the path to the American dream includes a manufactured home. With an average cost in 2009 of roughly $63,000, today’s manufactured housing offers an affordable entry into home ownership. This low price, relative to a site-built home, underscores how manufactured housing can help more families build assets and achieve affordable housing. Sadly, there are a number of obstacles in obtaining traditional financing on a manufactured home, specifically when the borrower is unable to afford a significant downpayment.
You can read about the innovations, from problem to solution, as well as the work of the other Filene i3 teams in Key Findings: Blueprints for Innovation by Denise Gabel. The publication is available for free download for a limited time only through the special innovation@cfed link, found here.
Plan, Prepare and Take Home Bigger Refunds...
Posted on 03/28/2011 @ 01:00 PM
Take Home Refunds Seven Times as Large: The Campaign for Working Families VITA Site Helps Self-Employed Clients Follow Through on Intentions to Prepare for Tax Day
A project with the Campaign for Working Families of Philadelphia.
Program background: The Campaign for Working Families (CWF) is a partnership that promotes increased resources for low-wage working families by providing free filing of the federal Earned Income Tax Credit (EITC) and connecting Philadelphia residents to other tax credits, work supports and asset-building resources.
The goal of our project was to help self-employed clients receive the refunds they earned by increasing their preparation for tax day by having their paperwork and receipts in order.
Behavioral insight: Preparing for tax time is a hassle and the short-term stress may eclipse the longer-term reward of a potential refund. Rationally, if we believe something is important, we should simply follow through on our intended plans. In a strict cost-benefit analysis, the hours it may take to collect tax information is surely worth the possible cash reward. But in reality, it is easy to let the present costs of hassle and stress eclipse future rewards.
CWF hoped the information and persuasive messages conveyed during orientation would motivate people to overcome the perceived stress of tax preparation and actually gather and organize the necessary tax information. But this was not happening. We hypothesized that the hassle of preparation might pose a significant barrier, and that people needed reminders and a sense of accountability to follow through on their intentions to prepare.
To make the reminders as powerful as possible, we wanted to leverage the following behavioral insights:
- Commitment and consistency: Telling others that we intend to behave in a certain way helps us keep our word. We like to appear consistent to ourselves and others, so we find it important that our actions and beliefs align, or at least appear to align. In fact, some early behavioral theorists considered the desire to be consistent as a central motivating human behavior. (Festinger, 1957; Heider, 1946; & Newcomb, 1953).
For example, in one study people were called and asked to predict what they would say if asked to spend a few hours volunteering for the American Cancer Society. Most people wanted to appear charitable, and many predicted they would agree to help. This small commitment device produced a 700 percent increase in volunteers when representatives from the American Cancer Society came to their door asking for volunteers a few days later. (Sherman, 1980).
Our desire to be consistent can be especially effective when faced with written evidence of a commitment in our own handwriting. As the well-known behavioral theorist Robert Cialdini explains, “There is something magical about writing things down.”
- Planning or "implementation intentions": There is evidence that implementation intentions can also help people follow through and accomplish a desired goal. (Gollwitzer, 1993). An implementation intention spells out the when, where and how of what one will do to reach a goal. For example, asking people to create a “voting plan” (What time will you vote? How will you get to the voting station?) significantly increased voter turnout in comparison to simply asking if someone would vote and encouraging the person to do so. (Nickerson & Rogers, 2010). Detailing the steps needed to implement our goals helps us follow through on our intentions.
- Channel Factors: Making things easy makes a difference. Research tells us that adjusting small nuances in our situation can have a surprising impact on our ability to close the gap between our intentions and actions. In a well-known study by Leventhal, Singer and Jones (1965), college seniors were given persuasive messages about the value of an inoculation against tetanus. While the messages were effective at changing the students’ beliefs and attitudes, few actually took the step of getting a tetanus shot. Other students received the same messages but were also given a map of the campus with the infirmary circled and urged to think about a particular time and route they would take to the infirmary. This small adjustment led to a significant increase in the percentage of students who actually got their inoculation.
Intervention: Building on the behavioral findings described above, the CWF project sought to improve self-employed tax assistance clients’ level of tax preparedness by asking then to formulate a tax preparation plan (implementation intentions), write it down for the CWF staff to see (commitment) and then sending the preparation steps back to the clients (consistency) along with another copy of the preparation worksheet (ease or channel factor).
Every self-employed tax client at CWF must complete an orientation before the tax session. We varied the orientations between treatment and non-treatment sessions. Every other orientation was a treatment or a control session, which takes advantage of the fact that a client’s selection of one class over the next is largely random.
At the close of the treatment pre-tax orientation, the group was asked to complete a form detailing their three next steps in preparing for their tax appointment. One of the steps had to be completion of a tax preparation worksheet handed out by CWF.
This form would later be used as their appointment reminder. A few days after orientation, clients received this sheet in the mail with their appointment date, an extra tax prep worksheet, and a list of preparation next steps written in their own hand. The control group went through the same orientation but did not go through the next steps exercise. They received a reminder letter in the mail with only their appointment time.
Experimental Design, Sample Size = 41 clients
The treatment seemed to significantly impact clients’ tax refund amount. The treatment group had refunds that were significantly larger (in fact, seven times larger) than those in the control group: $1,837 for the treatment group compared to $241 in the control group. Note that because a taxpayer’s EITC amount is correlated with final tax refund, our comparison is based on their tax refund without the EITC.
This is a large effect, and we wanted to be confident that it was not the result of different populations in the treatment and control groups. That is, was there something about the treatment group that made them more likely to receive higher refunds? In statistical analyses, we found the two groups to be randomly distributed and similar. Each group had similar EITC refunds, W-2 incomes and business incomes.
Discussion: These findings may be very powerful, with the potential to increase refunds—and therefore incomes—for thousands of self-employed people. More broadly, behaviorally-informed reminders may help people follow through on a variety of high-stress, high-hassle goals like creating a budget or completing complex forms like the FAFSA. More research is needed before we can be confident that these results are replicable with a self-employed or even more general population. This is especially true given the study’s relatively small sample size. Because the intervention had such an unusually large effect, this is an especially exciting area for further exploration.
Montana's First Resident-Owned Community
By Lauren Williams on 03/25/2011 @ 12:00 PM
NeighborWorks® Montana helped the homeowners of a 32-home community in Kalispell become the state’s first resident-owned community in August. ROC USATM Capital provided senior position financing totaling $852,000.
John Sinrud, a former legislator and current Government Affairs Director for Northwest Montana Association of REALTORS®, was elected as the co-op’s founding president. With vivid memories of recent community closures in Bozeman and Whitefish, and the resulting loss of people’s homes, Sinrud says he “and a lot of people were immediately supportive of the idea of cooperative ownership.”
“As homeowners alone, we could not have done this without the support of NeighborWorks Montana and ROC USATM Capital,” reports Mr. Sinrud. “We could never have gone to a private bank with this – we didn’t have the downpayment, nor as a new business did we have the credit rating to make this happen.”
NeighborWorks Montana is the ROC USATM Network CTAP in “Big Sky” country. “We’re delighted to have assisted the homeowners to make this happen. It was a good deal for both the homeowners and the seller, as it passes on the seller’s legacy of providing a safe and affordable place to the people who live there,” stated Sheila Rice.
The seller, George Everett, a long-time local REALTOR® who also served in the Legislature, noted, “I was happy to see them buy it; I have come to know and like the homeowners, they’re hard-working and decent people and I wanted to provide them an opportunity.”
Assets & Opportunity Policy Update
By Jennifer Brooks on 03/25/2011 @ 11:15 AM
The following is the Assets & Opportunity Policy Update, which was sent out to our partners earlier this month. If you would like more information, please email email@example.com.
- Automatic IRA: On February 9, the Illinois Senate introduced SB 1844, the Illinois Automatic IRA Act. A companion bill, HB 1672, was introduced on February 22, and has been assigned to the State Government Administration Committee. Assets & Opportunity partner, the Shriver Center drafted the bill and will be lobbying Illinois policymakers for support. If passed, the bill would allow employees who do not currently have an employer-sponsored retirement plan to deposit wages into an IRA trust fund administered by the State Treasurer's office.
- State EITC: SB 360 was introduced on February 15 in the Montana Senate. The bill would provide a state Earned Income Tax Credit (EITC) of 20% of the federal EITC for working families. Advocates across the state, including Assets & Opportunity partner Rural Dynamics, actively supported the bill. On March 11, legislators amended the bill to provide a State EITC of 10% of the federal credit. The bill, however, was tabled after a vote on party lines.
- State EITC: The North Carolina House introduced HB93 on February 16, which would eliminate the refundability of the state’s EITC. North Carolina’s state EITC is 5% of the federal credit. HB93 was referred to the House Finance Committee. Advocates across the state have been holding press conferences and events to protest the bill. Click here to read an op-ed article about the bill and the importance of the EITC to working families.
- State 529 Plan: The Texas Senate introduced SB 517 on February 28, and referred it to the Senate Finance Committee. If passed, the bill would allow unclaimed property funds to be used to support the Texas Save and Match Program. HB 1001, the companion bill, was also introduced and referred to the Appropriations Committee.
The Refund to Savings Initiative
Posted on 03/23/2011 @ 02:30 PM
The Refund to Savings Initiative: Can tax-time be the catalyst that saves our national savings rate?
As has been frequently noted, Americans are poor savers and we have been getting worse over time. Our low savings rate and tendency to prioritize spending in the present over spending in the future makes us vulnerable to financial crises. Recent research reveals that 47% of Americans report they couldn’t raise $2,000 within 30 days for an emergency expense, such as a major car repair or medical bill (or just paying the rent in the event of a job loss).
However, amidst all of the dreary statistics on our lack of savings shines one very encouraging number: the average IRS tax refund was nearly $3,000 in 2008. This represents more than a month’s take-home pay for the median income earner. So the question for the pro-savings crowd is: How do we turn this annual windfall into a savings opportunity to boost financial security all year long (and maybe for future years too, through long-term education and retirement savings)?
Researchers at the University of North Carolina, led by Michal Grinstein-Weiss, and Duke University, led by behavioral economist Dan Ariely, have teamed up with Intuit Corporation, makers of TurboTax, to answer this question. The team is using principles of behavioral economics to design and test savings prompts and incentives that will be embedded into TurboTax’s online tax preparation software. The prompts are simple and provide both non-financial and financial incentives, such as priming participants to think about a specific savings goal (e.g. a home renovation project or a child’s education) just before asking if they would be interested in saving any part of their refund if given an easy way to do it. An example of a financial incentive prompt is asking if they would be willing to direct a portion of their refund to a savings account during the filing process if offered a match on the money.
The study centers on three primary questions:
- What are the best ways to persuade people to save their refunds?
- What are the best vehicles or products for tax-time savings?
- Can and should we encourage people to increase their withholdings so they have larger refunds to save in the future?
After testing numerous prompts in 2011 and 2012, the team plans to “go live” in 2013 with an intervention that will employ the most successful prompts and incentives and offer tax filers the chance to actually save part of their refunds, automatically directed into an existing or new account, all with the click of a button. Capping off America Saves Week, the team hosted a meeting in February at the University of North Carolina with leaders in the field, top policy makers, world renowned researchers, key foundation representative and government representatives to gain more insight on how this project could fill gaps in the field. Participants were very enthused at the potential reach of this initiative and the chance to bring research, business, policy, and community practitioners together. The research from this initiative will answer critical questions for the field:
- Which types of prompts/incentives motivate the most people to save?
- Do certain prompts/incentives work better with particular demographic groups?
- What are the most cost-effective and scalable options for encouraging people to save?
This information, expected in 2013, will have important implications for research, products, and policies aimed at increasing the savings and assets of households in the U.S., especially low- and moderate-income households who are the most vulnerable to economic shocks.
Participant organizations in the February 25 meeting:
- The Alleghany Foundation
- Annie E. Casey Foundation
- Bureau of the Public Debt, U.S. Department of Treasury
- Center for Community Capital, University of North Carolina
- Center for Economic Progress
- Center for Financial Services Innovation
- D2D Fund
- Duke University, Center for Behavioral Economics
- Ford Foundation
- Internal Revenue Service, U.S. Department of Treasury
- Intuit Financial Freedom Foundation
- Intuit, Inc.
- New America Foundation
- North Carolina Department of State Treasurer
- Office of Domestic Finance, U.S. Department of Treasury
- University of North Carolina School of Social Work
- Z. Smith Reynolds Foundation
Integrating Asset Building Opportunities
Posted on 03/22/2011 @ 01:00 PM
Our guest blogger today is Tracy Fischman, executive director at AccountAbility Minnesota. This highly innovative organization has been a partner with CFED’s Self-Employment Tax Initiative (SETI). As this year’s April 18th tax deadline draws near, certain for-profit tax preparers are marketing “refund anticipation loans” or similar products which are overpriced and inappropriate for most people, so Tracy’s information is particularly timely.
AccountAbility Minnesota was founded in 1971 by a group of justice-minded accountants who believe that a person’s ability to access quality tax preparation and financial services should not rely solely upon one’s ability to pay. Enlisting the help of hundreds of volunteers, the organization offers free tax preparation and financial services at 13 sites in the Twin Cities that enable low- and moderate-income individuals and families to maximize the opportunity that tax time provides. (Customers can use our online clinic finder to find a list of locations, schedules, and eligibility.)
In 2010, we helped 11,000 taxpayers received $21 million in refunds. We also trained 15 organizations throughout Minnesota who in turn helped another 9,000 taxpayers receive an additional $14 million in refunds. At AccountAbility Minnesota, we recognize that it is expensive to be poor. The customers we serve – whose average income is $13,400 – too often have to spend their money just to access it. And tax time is no different. As such, we’ve adopted strategies to promote economic security through the tax preparation process. With tax credits designed to significantly boost incomes of low-wage earners, tax time provides a unique moment to begin or continue a conversation about saving. It also offers an essential alternative, by way of education and services offered, to paid preparers and fringe – often predatory – financial products they offer, like the Refund Anticipation Loan.
The money-moment that tax time provides
AccountAbility Minnesota is uniquely positioned to reach underserved families and communities with financial education and information about saving, money management, developing and keeping a budget, planning and more. Tax time is a prime time to educate and offer services that can put people on a path towards financial security – empowering them to make informed and effective decisions that reflect their individual circumstances. Over the years, AccountAbility Minnesota has innovated and partnered with other organizations and financial institutions to expand its financial services, offering non-predatory services and products that promote savings and asset development. Our financial services include free savings accounts, low-cost prepaid debit cards, free credit reports, financial planning and benefits screening.
Update on Refund Anticipation Loan market
As previously referenced, may low-income taxpayers are targeted by paid preparers offering costly products that promise fast refunds. In recent years, the most common product has been the Refund Anticipation Loan (RAL). RALs are short-term, high-interest loans secured by a taxpayer’s expected tax refund. According to the National Consumer Law Center, 8.4 million persons in the U.S. spent an estimated $738 million in RAL fees in 2008. This year the IRS has terminated access to its debt indicator – a tool used by tax preparers and related financial institutions that offered information about whether a taxpayer will receive their federal refund and therefore was used to determine whether to underwrite a RAL. Thus H&R Block is not providing RALs this year but Jackson Hewitt and Liberty Tax Services (and possibly others) are still offering the product. We were excited to see that the FDIC has recently notified both Jackson Hewitt and Liberty Tax Service that their RALs are “unsafe and unsound.” As the RAL market shifts, other products are popping up in its place, such as the Refund Anticipation Check (RAC). A RAC is a temporary bank account that is opened to allow for direct deposit, and taxpayers’ refunds are then uploaded onto a prepaid debit card or they are issued a paper check. In 2008, about 12 million taxpayers received a RAC at a cost of $360 million. With information provided by our partners studying this market, we are keeping an eye on RALs, what the FDIC’s recent notice will mean, and what products are popping up in its place. We will continue to innovate, offering financial services and products that meet the financial needs of our customers.
In a future Blog, Tracy will describe some of AccountAbility’s latest innovations. Please let us know your thoughts and questions on Tracy’s message.
Federal Asset-Building Budget Inadequate, Counterproductive
By Carol Wayman on 03/21/2011 @ 04:00 PM
Last Tuesday marked the launch of the new Moment of Truth Project – an effort led by the Fiscal Commission Co-Chairs Erskine Bowles and Senator Alan Simpson that is designed to foster honest and candid discussion about the nation’s fiscal challenges, the difficult choices that must be made to solve them and the potential for bipartisan compromise that can move the debate forward and help set our country on a sustainable path.
During the event a number of Senators delivered enlightening and impassioned remarks about the need to tackle the daunting challenges of our national debt and deficit with every tool at our disposal, including the tax code. In his statement, Senator Crapo said “the [current] tax code couldn't be made less fair or more complex or make it harder to compete in the global world economy.”
Senator Crapo and his colleagues are completely accurate that “everything must be on the table to address our budget crisis.” Federal tax expenditures are larger than the entire budget. As the Executive Director of the National Commission on Fiscal Responsibility and Reform, Bruce Reed, said, “There are more holes than cheese in our national budget.”
In Saturday’s Washington Post, an article questioned the impact and continuation of the mortgage interest deduction. CFED is thrilled that tax expenditures are becoming less opaque and unquestioned.
Last fall, CFED and the Annie E. Casey Foundation published Upside Down: The $400 Billion Asset-Building Budget. The report, discussed in an editorial in The Hill, urges Congress to take a serious look at the more than $1.1 trillion in tax expenditures. While there are a number of reasons tax expenditures for asset-building are alarming, a few of the findings enumerated in Upside Down are particularly chilling. Among them:
- More than half the benefits went to the wealthiest 5% of taxpayers in fiscal year 2009, and largely missed the asset-poor majority in this country. The wealthiest Americans (those earning over $1 million annually) receive more than $95,000 in tax benefits while middle income families receive a few hundred dollars and poor families relying on public benefits actually face penalties for saving.
- Eight out of 10 of the wealthiest families saved approximately one-third of their household income in 2009, while a full one-third of low-income households earned too little to make ends meet, much less save for the future.
- About 80% of the value for mortgage and property tax deductions accrued to the top 20% of taxpayers. In fact, many homeowners don’t take the mortgage deduction because they do not earn enough income or incur enough of a tax liability to warrant itemizing their deductions.
Some would argue that higher-income households should receive more of a tax break because they face higher income tax rates and pay a larger proportion of all taxes. But this line of argument is flawed. The data show that top earners receive benefits from current asset policies at levels that exceed their tax liability. While the overall share of the tax bill for the top 1% of earners was 27.7% in 2005, their share of total benefits from asset policies that same year was over 45%. In addition, we have a progressive tax system, those that benefit more pay more. Existing tax expenditure policies undercut that goal.
Frankly, these findings speak volumes about the state of unfair and regressive tax expenditures. Many legislators own constituents could benefit from a recalibration of these expenditures. For example, in North Dakota, only 14% of tax filers take the mortgage interest deduction, the lowest percentage in the nation. They would be well-served by replacing the mortgage interest deduction with a standard housing credit.
In short, this upside-down set of subsidies would have a perverse enough effect on its own, but it compounds wealth disparities that have reached their highest level in generations, and that dwarf the income disparities that we are more accustomed to reading about. A critical evaluation of these subsidies must be part of the repair of our fiscal budget.
What's a Little Preparedness Worth?
Posted on 03/21/2011 @ 12:45 PM
The Campaign for Working Families (CWF) offers special tax preparation services for self-employed individuals and is also a partner in CFED’s Self Employment Tax Initiative. To encourage clients to come prepared for tax day, clients must complete a tax orientation before tax preparation with CWF.
But CWF staff noticed that despite the orientation, many clients came to their tax appointments with little or no preparation, a common challenge for VITA sites (and tax preparers) around the country. Because, really, who wants to prepare for tax day?
Specifically, clients at CWF very often did not have business receipts or itemized lists of business expenses. For self-employed individuals, failure to prepare for the tax season can have significant and expensive repercussions. Every piece of business expense documentation is tax-deductible, and therefore the more self-employed people are able to document, the more they are eligible to receive in tax deductions. CWF believed that the failure to prepare at tax time was costing their clients hundreds of dollars.
Before going into detail about our intervention, it's important to figure out if CWF's assumption is correct: does tax preparedness lead to greater returns?
It's a reasonable assumption, but nobody had actually tested it to see if it held up. I wanted to find out more.
It turns out it matters. A lot.
In a study with Foundation Communities in Austin Texas, tax preparers rated clients preparedness on a scale of 0 to 3 where 0 was not at all prepared and 3 was extremely prepared. We then analyzed the data to see if there was a correlation between refund amount and level of preparedness.
We found a very clear (and statistically significant) correlation: the more prepared a client was, the higher her refund. And we found this to be true when all other variables available (business type, business income) were accounted for.
Is it possible there is some unobservable difference between the people who come prepared and those who do not that might explain this refund amount difference? Absolutely. This makes it an interesting area for further research.
What might happen if we took similar people, randomized them, and then used some behavioral insights to motivate half to come prepared while the others received the standard information?
That is exactly what we did in Philadelphia. The results surprised everyone.
Check out the next blog post for details.
Open Doors to the Economy
By Bob Friedman on 03/18/2011 @ 12:30 PM
The policies in our history that have resulted in the most significant, widely shared and sustained increases in economic prosperity and opportunity have been policies that invested in the common genius of the American people – policies like universal education, the Homestead Acts, the creation of the 30-year fixed rate mortgage (by the Federal government) and the GI Bill. Though often containing elements that excluded people of color and women, these policies brought millions of low and moderate income Americans to the marketplace as educated workers, entrepreneurs, homeowners, savers and investors. The answer to our current economic woes – recession, unemployment, poverty, business stagnation – will come once again by opening the American economy to millions of working families.
Too many – in fact, most – Americans have been sidelined by our economic and social policies. A majority of American families – and supermajorities of people of color, women, people with disabilities – lack the few thousand dollars they need to make college, business or homeownership seem possible. This asset poverty – so much deeper even than income poverty – is the real faultline of inequality, but, more importantly, opportunity, in this country. And it is the product of policy, not a reflection of individual merit (or lack thereof). The Homestead Acts, to which 25% of American households can trace their wealth, distributed land stolen from Native Americans. The creation of the 30 year mortgage which brought home ownership within the purview of the middle-class and became the major wealth-building opportunity of the 20th Century, was limited to new construction in the suburbs backed by restrictive covenants – effectively denying this opportunity to our African American and Latino fellow citizens. The Federal government spends $400 billion a year to encourage savings, higher education, business creation, homeownership and retirement security of individual families, largely through tax deductions and deferrals. These subsidies are upside down – more than half go to the wealthiest 5% of taxpayers (in fact, 45% goes to the top 1%) while less than 5% goes to the bottom 60% of earners. The top 1% get annual benefits of more than $95,000 while the poorest half get less than $5. No wonder that we are more unequal than at any time since just before the Great Depression. Now, like then, we must re-open the doors to the American economy to the productive might of common Americans.
We know from extensive research and grassroots programs, that, if given the opportunity, average and even very poor working families will save, pursue higher education, buy (and maintain) homes, start businesses and build economic futures for themselves and their families. The global and domestic experience with microenterprise proves the wisdom of providing poor and unemployed people to start businesses and create jobs and incomes for themselves. Rigorously evaluated demonstrations of matched savings programs for low-income working families have proved that given the incentive of a savings match, even very poor people (those living at half the poverty line) will save and move forward economically. Poor families who bought homes with savings from these programs were 1/3 as likely to lose their homes as wealthier families in receipt of predatory variable-rate mortgages. The challenge now is to make these paths available to the millions of American families who could traverse them, rather than just the hundreds of thousands who have proven their efficacy.
The sooner we unleash the economic power of working families of all colors, urban and rural, people with disabilities, the young and the old, the sooner we will emerge from the Great Recession. We therefore endorse:
- The Expansion of the Saver’s Credit and Auto IRA as President Obama has proposed, that would provide an annual savings match of $250-500 per family to 50 million low and moderate income families for college, home ownership and retirement savings.
- The establishment of a universal system of Child Accounts at birth so that every child born in the U.S. grows up knowing there is a nest egg if s/he wants to go to college, start a business or buy a home. (Recent research finds that a child who grows up in a family with savings is seven times as likely to attend and complete college as one who does not.)
- A New Entrepreneur Tax Credit which would reduce the tax barrier that faces the new self-employed so that people who create jobs for themselves pay no more in payroll taxes and penalties than folks who take jobs.
- Remove the penalties in our safety net programs that penalize low income families eligible for benefits for saving, working, starting businesses and pursuing their education.
Taken together, these initiatives would cost less than 3% of what we give to the wealthiest taxpayers and could easily be funded by capping some of those expensive, unfair and ineffective subsidies. And they would unleash the entrepreneurial energy and investment – the promise of millions of hard working American families to build their economic futures and ours.
CFED Launches New Blog
By Andrea Levere on 03/16/2011 @ 10:00 AM
Dear Friends of CFED,
On behalf of everyone at CFED, I am excited to share with you the launch of CFED’s newest blog, The Inclusive Economy.
The Inclusive Economy, housed here, is CFED’s online home for everything related to our efforts to expand economic opportunity for all Americans through the promotion of lifelong savings, affordable homeownership, small business ownership and access to affordable, quality education. We will be sharing with you news about upcoming events, updates from our partners in the field, educational resources for practitioners working across the nation, alerts about key policy agenda items and so much more.
CFED’s current blog efforts – the innovation@cfed blog, Ideas in Development and The Assets Moment – have all been rolled into one, comprehensive blog. In addition to blog posts from our energetic team of assets advocates, we’ll also be featuring posts from guest contributors. Given your work, we hope that you will consider contributing content for The Inclusive Economy. If you would like to suggest a topic or work with a member of our Communications Team about how to contribute, all you have to do is send a brief email to firstname.lastname@example.org.
I hope that you’ll consider visiting The Inclusive Economy, subscribing to the RSS feed, commenting on the many thought-provoking posts you’ll find here and contributing your own content to this effort. If you have any questions or suggestions, please do not hesitate to let us know!
Exciting Lessons from a Year of Behavioral Experimentation: A Look at What We Learned
By Genevieve Melford on 03/14/2011 @ 11:00 AM
Over the next few weeks we are thrilled to post early excerpts from a paper to be published this spring by 2010 Innovator-in-Residence, Mindy Hernandez.
For her Innovation Year, Mindy partnered with select asset-building organizations to create innovative projects. With each organization, Mindy walked through the programs' goals and processes to target critical leverage points, propose behaviorally-informed design changes and evaluate each intervention as rigorously as possible.
The soon-to-be-released white paper describes the surprising, exciting and potentially powerful lessons from her Innovation Year. The paper also includes helpful hints on how practitioners can design, implement and evaluate similar behavioral interventions in their own programs.
Upcoming blog: We learn the outcome of the Campaign for Working Families (CWF) study in which Mindy and CWF designed an intervention to help self-employed clients at the CWF tax site prepare for tax day with the hope that better preparation would lead to higher tax refunds.
- Does preparation really lead to bigger refunds for self-employed VITA clients?
- What works in getting self-employed clients to prepare? And what's that worth in dollars?
The results are exciting and surprising. Check out the next post for more details!
National Financial Capability Challenge
By Ethan Geiling on 03/11/2011 @ 02:15 PM
It’s that time of year again! No, I don’t mean Mardi Gras. I’m talking about the 2011 National Financial Capability Challenge, sponsored by the Department of Treasury. Each year, thousands of high school students across the country participate in the Challenge, which consists of a voluntary online exam, often coupled with financial capability lessons in the classroom. This year, the Challenge runs from March 7 to April 8. 76,892 students participated in the challenge last year, and 524 of these students earned a perfect score. Many of the concepts tested in the Challenge aren’t as basic as you may think. The Challenge covers everything from understanding taxes and deductions on your paycheck to analyzing the long-term effects of leasing vs. owning an asset. Take a look at this summary of all of the Core Competencies tested and a few sample questions.
Which states had the highest average scores in 2010? It’s actually not who you might expect. Idaho topped the list with an average score of 78.74%, closely followed by South Dakota, Wyoming, Oregon and Utah. Virginia had the highest student participation rate of all states; while Pennsylvania had the highest number of participating schools. You can see more state statistics from 2010 and take a look at how each state fared here. But the Challenge is about more than competition among the states. It’s about empowering young people with the skills and knowledge they need to succeed in an increasingly complicated global financial economy.
The National Financial Capability Challenge sends an important message to us: financial capability is not just for adults. If we really want to increase the long-term financial stability of families, we need to start teaching basic financial concepts – like budgeting, saving, using credit wisely, making smart investments, and understanding the costs and benefits of purchasing insurance – at an early age. The Challenge is just one of the many important steps the Obama administration has taken to promote financial capability among Americans. Recently, the Administration established the President’s Advisory Council on Financial Capability and also unveiled a new National Strategy for Financial Literacy to help coordinate public and private efforts around financial capability.
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