From the Woodstock Institute President: An Empty-nester’s Hopes For All Children to Have College Opportunities

By Dory Rand on 10/25/2012 @ 03:45 PM

Tags: Education, Children's Savings Accounts

EDITOR'S NOTE: This post originally appeared on the Woodstock Institute blog. Many thanks to Dory Rand for writing this thoughtful piece and allowing us to share it on our site.

All children deserve the opportunity to pursue their dreams of becoming a veterinarian, astronaut, teacher, or whatever they desire. Without an education, however, many of these dreams will remain unattainable, as will the economic mobility these careers provide. Knowing that there’s a plan in place and savings accumulating for college is a strong motivator for many children, but too few children have the security of a college nest egg.

My children’s experience is a testament to the power of college savings. Having an affordable, fixed-rate, long-term mortgage allowed me to also set aside money for my children’s college education. Despite ups and downs in the stock market and some losses in my kids’ college savings plans, significant savings accumulated because we started saving for their postsecondary education as soon as they were born. The savings were not sufficient to cover all of their college costs—they still need scholarships, grants, savings from summer jobs, and help from parents and grandparents—but they were large enough so that my kids never doubted that they would have the financial wherewithal to go to college.

At Woodstock, we’re working towards a future where all children could grow up with a savings account started at birth like my kids had. Research shows that children with a savings account in their name are six times more likely to attend college than children without such accounts, and that having financial and non-financial assets (such as equity in a house, vehicle or business) is positively correlated with attending and completing college. Controlling for other factors, including income, assets have a significant, positive effect both in terms of financial ability to attend college and in the aspirational impact on children and parents.

While the day that all children have savings accounts at birth is a ways off, there are steps we can take now to expand access to postsecondary education for more children. The Illinois Asset Building Group is urging that we take the following steps:

• The State Treasurer, who administers Illinois’ Bright Start 529 College Savings Plan, should provide a safe, conservative, default 529 investment plan for new applicants to simplify the process for families with little or no investment experience.
• The State Treasurer should accept Individual Taxpayer Identification Numbers (ITINs) in lieu of Social Security numbers for Bright Start account owner parents or guardians so that American children of immigrants can participate in the program. (UPDATE, 10/11: We are pleased that the Office of the State Treasurer has informed us that the Bright Start program recently started accepting ITINs in lieu of Social Security Numbers).
• The State of Illinois should create a college savings incentive program for children of noncustodial parents who owe child support arrears.
• The State of Illinois should eliminate requirements in the Temporary Assistance for Needy Families (TANF) program that disqualify applicants with more than $2,000 in assets or exempt education savings accounts from the asset limit so that parents of minor children who are in need of short-term cash assistance are not discouraged from, or penalized for, saving for their children’s postsecondary education. (Six states have already abolished TANF asset limits.)

I strongly support these policy recommendations and look forward to the day that all Illinois children can have savings accounts from birth that will help them to achieve their dreams.

To learn more about Illinois Asset Building Group, see its website and register for its conference November 15-16, 2012, in Champaign, Illinois.

Election Preview: Statehouses in the Balance

By Stefan Hankin, Guest Contributor on 10/24/2012 @ 01:00 PM

Tags: Assets & Opportunity Initiative

While the race for the White House and control of Congress have dominated the national headlines, equally important for the political landscape next year is the make-up of the nation’s statehouses and legislatures, which are also at stake this election.

In general, the state political map currently looks more red than blue or purple. Whether this state of affairs continues depends on whether a few big trends to watch for continue.

Republicans currently enjoy ‘single-party control’ in more states.

There are currently 34 states that are under single party control – meaning that the State House and Senate, as well as the Governor’s office, are all controlled by either Republicans or Democrats. Of these single party-controlled states, 21 are held by Republicans and 13 are held by Democrats. Nebraska is unique in that its legislature is unicameral and non-partisan. The remaining 15 states currently have some combination of Democratic/Republican control.

According to current projections by Ballotpedia, it is almost certain that five of these states will remain divided following the 2012 election cycle. The remaining undecided states are currently too close to accurately predict an outcome. In addition, there are two states, Washington and Arkansas, which are currently controlled at all three levels by Democrats that may shift into the split category in November. We will have to wait three weeks or so until the election outcomes have been determined to have a full picture of the landscape.

Among the 42 states holding races for state Senate, 20 are projected to stay or come under solid Republican control, while eight are solidly Democratic.

At the State Senate level, 42 states are holding elections this year. As can be seen on the map below, we can classify these states as solidly or leaning Democratic/Republican, or as toss-ups. Recent projections indicate that 20 of the 42 contested states fall into the solidly Republican category, eight into the solidly Democratic category, five lean Republican, three lean Democratic and only six are classified as true toss-ups: Nevada, Colorado, New Mexico, Minnesota, Arkansas and Maine. Of these six toss up states, four of the State Senates in these states are currently held by Democrats and two are held by Republicans.

At the State House level, 19 states are projected to remain in Republican hands, while 10 are solidly Democratic.

Moving to the State House level, the same 42 states are holding elections this year. Projections currently show that 19 states are solidly Republican, 10 are solidly Democratic, six Lean Republican and two Lean Democratic, with the five remaining states (Oregon, Colorado, Minnesota, Arkansas and Maine) classified as toss-ups. The State House elections being held in New Mexico are particularly interesting this year because Democrats currently control the House but current projections show that Republicans are likely to retake control. Of the states currently classified as toss ups, three have Republican-controlled Houses and one has a Democratically-controlled House. Oregon, the last toss-up state, is currently evenly split at the State House level.

Governors’ mansions are more likely to remain Democratic, among the seats up for election.

Finally, looking at the 12 gubernatorial seats being contested this year, the vast majority (9) are currently occupied by Democrats. According to Charlie Cook’s projections, six of these Democratically-held Governor’s positions are realistically in play for November: Missouri, West Virginia, Washington, New Hampshire, Montana and North Carolina. Of these states, three are firmly in the toss-up category with polls showing races that are within the margin of error. North Carolina may be the most realistic opportunity for Republicans to flip a seat, however, with Cook currently classifying this Democratically held seat as a Lean Republican race for 2012.

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Stefan Hankin is President of Washington-based polling firm, Lincoln Park Strategies.

Closing the Divide

By Alan Cantor, Guest Contributor on 10/24/2012 @ 10:45 AM

Tags: ALC 2012, Children's Savings Accounts, Individual Development Accounts, Innovation, Matched Savings

EDITOR'S NOTE: This post originally appeared last week on the Stanford Social Innovation Review blog. Many thanks to Alan for writing this thoughtful article, and to SSIR for featuring it so prominently on their site.

In this election year we’ve heard plenty about the 47 percent, the 1 percent, and the 99 percent. The expanding wealth gap has become a major election issue, as it should be. Decisions in the coming years about taxes, access to education, jobs, and workers’ rights are intertwined with reversing the growing wealth imbalance.

Undoubtedly the most effective approach to narrowing the wealth gap is political. But is there a role that individual donors can play? There certainly is, but it requires a break from traditional philanthropy.

Let’s imagine a wealthy donor—we’ll call her Mary—who wants very much to help kids from low-income backgrounds have educational opportunities.

Mary remembers her own scholarship to a prestigious university and how that paved the way for her successful career. She wants to give back. And, rather naturally, she puts in a call to the development department at her alma mater. The major gifts officer urges Mary to establish a $1 million endowment in her name at the university. That will spill off about $45,000 a year in scholarship funds, which will underwrite the cost of one student to attend the school each year.

While Mary likes the idea of having her name immortalized at the university she cares so much about, she also decides to consider other, less-traditional options. A million dollars is a lot of money. And helping one student at a time isn’t exactly going to scale, she realizes. She looks for ways to direct those funds to provide real opportunity for more young people.

Mary decides to focus less on the end provider—the university—and focus more on the students and their families and communities.

One solution she comes up with: supporting early childhood programs. Instead of popping a million dollars into the endowment of her alma mater, Mary could give $100,000 a year for ten years to a high-quality nonprofit childcare center to provide scholarships for children from low-wealth families. Instead of the impact being deferred (as all endowment gifts are) and benefitting only one student at a time, as is the case at the university, her gift could enable dozens of children each year to get a quality learning experience at a critical point in their lives. And an annual gift of $100,000 would be a game-changer at nearly any childcare center. (By contrast, a million-dollar gift to a major university barely causes a ripple.)

Then Mary learns that there are now hundreds of organizations around the country providing matched savings accounts—as demonstrated by the more than 1,200 practitioners at last week’s biennial Assets Learning Conference in Washington, DC, sponsored by the Corporation for Enterprise Development (CFED). These programs encourage families with low incomes to save for education, or the purchase of a home, or a business—all assets that will help provide them with long-term economic traction. And each of these programs provides some sort of a match as an incentive to the families.

Mary learns that students with savings accounts are many times more likely to enter college—even if the total in the account is relatively small. Mary imagines the impact if, working through one of these organizations, she were use her million dollars to provide a $2,500 match to 400 students, thereby allowing a broad swath of kids from low-wealth families to attend college. (They may go to a community college, of course, and not an Ivy League school, so a little bit of investment will go a long way.)

And Mary finds out that there’s now there’s a new way for donors to contribute to matched savings programs through a project called the 1:1 Fund. Though still in its early stages, the 1:1 Fund plans to offer donors the chance to invest in the future of American kids in much the way Kiva has democratized investing in microfinance around the world.

Donors like Mary are drawn by nostalgia and convention to consider creating endowed funds at their universities and prep schools. But if they stop to think about it, they will realize that they can affect several hundred times more students from low-wealth families by giving to early childhood or matched savings programs. With the ever-widening wealth gap, we as a society need to break out of the traditional philanthropic mold. I’m hoping that in the coming years dozens, then hundreds, then tens of thousands of donors change course, jettison prestige, and opt for impact.

We’re Not Finished Yet. We Have Work To Do.

By Megan Kursik on 10/22/2012 @ 03:30 PM

Tags: ALC 2012

EDITOR'S NOTE: This post originally appeared on the CEDAM Blog. Special thanks to the CEDAM team for joining us in Washington, D.C. for the 2012 Assets Learning Conference!

A few weeks ago I attended the CFED Assets Learning Conference in Washington D.C. As usual, I came away with a multitude of new contacts and ideas sparked by sessions and the various people I met. I was filled with inspiration to get back to the office and put these new ideas (and new contacts) to use.

But perhaps the greatest inspiration came when I had the opportunity to hear Mayor of Newark Cory Booker as the featured speaker. The message Mayor Booker championed was a call to action, asking the 1,300+ conference participants to recognize that while the asset building field has inspired change and has accomplished significant outcomes in helping families to build financial stability, we have to keep pushing. “We are not finished yet…we have work to do.”

Mayor Booker defined our unfinished business as the full extension of real opportunity to all Americans. He asserted that while the nation’s “greatest natural resource has always been her people” far too many Americans are still “confined and imprisoned by limited opportunities.” To address this lack of opportunity, we can’t just expect people to work harder as individuals, but we must come together as a nation to create the social, cultural and economic environments that provide real opportunities for all Americans to learn, grow, earn, invest and reach self-sufficiency and financial stability.

Working in community development, I’m lucky to interact with individuals committed to expanding opportunity for their fellow Americans, especially those traditionally left out. However, I think that an important way we must heed words like those spoken by Mayor Booker is to not just nod in agreement, but to take a hard look at our own field and to evaluate our work based on real extension of opportunity and, therefore, real outcomes of individuals and families engaging with ourselves as practitioners to reach true stability. In what ways are we empowering people to reach self-sufficiency and independence and in what ways are we failing, by ensuring subsistence but not freedom from dependency?

Emerging out of the asset building field is the concept of financial empowerment. Financial empowerment leads people to real financial stability, which I think has been well defined by the New York City Office of Financial Empowerment (NYC OFE) in their recent “Supervitamin” reports as “overall economic security that can sustain an individual or family for months and years, not just days and weeks.” In these reports, NYC OFE argues that income, income supports and public benefits are “necessary but not sufficient for overall financial stability.” In addition to these more traditional forms of support, individuals and families must have opportunities to secure financial knowledge and access to quality financial tools in order to be capable of reaching financial stability.

Mayor Booker and the City of Newark, New York City and ten other cities across the U.S. are part of a national coalition promoting financial stability through the new field of municipal financial empowerment. These cities make up the Cities for Financial Empowerment (CFE) coalition and have been leading initiatives and programs that help people become truly financial capable. These cities are helping to extend opportunities for financial independence to all of their residents, most importantly residents often left out of the financial mainstream and the traditional programs that incent saving and asset building.

For example, while over half of the $400 billion per year spent by the federal government to incent wealth building via the tax code goes to the top 5% of American income earners, NYC’s SaveUSA account provides low income tax filers a savings match for saving a portion of their income tax refund for one year. Since 2008, low to moderate income NYC tax filers have saved $1.7 million in SaveUSA accounts and 81% of account holders save for one full year. Next, the startling statistic that fewer than 1 in 10 young adults from low income families earns a college degree by age 26 led the City and County of San Francisco to start Kindergarten to College (K2C), which automatically enrolls all kindergarteners in the public school district in a seeded college savings account. Through automatic, universal enrollment, K2C ensures that all kindergarteners have a dedicated college savings account and can see college as part of the path to achieving their dreams.

SaveUSA and K2C are just two of many municipal strategies currently helping people reach financial stability through efforts led by city governments. To learn more about municipal financial empowerment please check out the CFE Coalition website (www.cfecoalition.org). Also, the CFE coalition recently started the CFE Fund to provide funding opportunities to local governments to help them replicate successful municipal financial empowerment strategies. You can learn more about the CFE Fund and funding opportunities on their website. Another great resource for municipal financial empowerment is the CFED report, “Building Economic Security in America’s Cities: New Municipal Strategies for Asset Building and Financial Empowerment.”

So, if you need a little inspiration today, I know you’ll find it by watching Mayor Booker’s 2012 ALC Conference speech. If you’re from Michigan and you’re interested in municipal financial empowerment specifically, please send me a note to kursik@cedam.info or call me at 517-485-3588 (x1942). CEDAM hosts a network for local-level financial empowerment initiatives called Michigan Communities for Financial Empowerment (MCFE) – you can check out our website at www.michigancfe.org.

Matching the Promise

By Kori Hattemer on 10/19/2012 @ 11:30 AM

Tags: Assets & Opportunity Initiative, Children's Savings Accounts, Education, Financial Empowerment, Matched Savings

According to a recent study by EARN, 87% of parents believe that attaining a college degree is an important opportunity for their children, but 53% of them are very or extremely concerned about affording college. Other research indicates that among youth who expect to attend college, those who have a college savings account are four to six times more likely to actually attend. Yet many families who want to save for their children’s education may struggle to do so, especially low- and moderate-income families who are overwhelmed by competing financial needs and who may not have access to savings mechanisms.

More and more state and local governments are paying attention to this issue. Nationally, momentum is building in the public sector to incentivize and help families save for college. States and localities around the country are developing innovative college savings initiatives like the recently-announced Texas Match the Promise Foundation®, a state-sponsored nonprofit organization created by the legislature specifically to solicit and receive matching funds designated for higher education. The Texas Match the Promise Foundation will offer matching scholarships to up to 150 low- and moderate-income Texas students to help them save for college through the Texas Tuition Promise Fund®, Texas’ prepaid tuition plan that allows families to save for their children to attend college.

The Texas Match the Promise Foundation® is currently accepting applications from Texas residents who:

• Are in grades six to nine.
• Have a family income of $75,000 or less.
• Enroll or are already enrolled in the Texas Tuition Promise Fund®.
• Contribute a minimum of $100 to their Promise Fund.
• Submit an essay about the career they are interested in and why.

Up to 150 selected students will receive a Matching Scholarship of up to $500 to match the amount the family or individual has contributed to the Tuition Fund. The top five applicants will receive a one-time $2,000 Promise Scholarship. Students can re-apply for the Matching Scholarship in the future, but may only receive the Promise Scholarship once.

Initiatives like the Texas Match the Promise Foundation are expanding economic opportunity by empowering low- and moderate-income families to save money that will help their kids gain access to higher education and achieve a college degree. State policies have the potential to broaden the impact of matched savings accounts and provide more opportunities to low- and moderate-income families to invest in their kids’ futures. Fifteen states currently incent savings for some families through matching grant programs or tax credits, as outlined in CFED’s Assets & Opportunity Scorecard.

The public sector has an important role to play in encouraging savings for higher education – and a growing number of governments are capitalizing on this opportunity. We applaud the good work done in Texas and other states, and will continue to work with other state and local governments to develop similarly innovative policies and initiatives that help kids and families save for brighter futures.

Webinar on Latest Policy Developments

By Ethan Geiling on 10/18/2012 @ 02:00 PM

Tags: Assets & Opportunity Initiative

Earlier this week, CFED released new data on the strength of state policies that help families create financial security and opportunity. This Scorecard data captures recent policy changes that occurred in the 2012 state legislative session, or for which data became available after fall 2011.

On the day of the launch, we held a webinar exclusively for members of the Assets & Opportunity Network. During the webinar, Jennifer Brooks and I discussed the new data, including trends and policy highlights from the 2012 legislative session.

The chart below shows policy adoption nationally. As you can see, for more than half of the policies we look at in the Scorecard, over three-quarters of states have at least some policy on the books (orange bars), which is quite a notable achievement. However, when we look at how strong these policies are (blue bars), it’s clear there is substantial room for improvement. You can get more analysis like this by listening to a recording of the webinar.

During the webinar, pollster Stefan Hankin from Lincoln Park Strategies also provided commentary on the impact that gubernatorial and state house races will have on policy prospects for 2013. He talked about which states will switch control and what that means for how to advance a policy agenda. The map below shows the states with single party control post-election, and as you can see, most states will be republican-controlled.

To get more analysis, listen to a recording of the webinar or download the powerpoint.

A Conversation with Savers: IDA Saver Tiara from Trinity University

By Veronica Weis on 10/17/2012 @ 06:30 PM

Tags: ALC 2012, Children's Savings Accounts

EDITOR'S NOTE: This is the last post in a three part series featuring profiles of the participants who spoke with Martha Kanter, Under Secretary of Education, in a Conversations with Savers at the 2012 Assets Learning Conference this September in Washington, D.C. The first two profiles can be read here and here.

Tiara is a sophomore at Trinity University and the first in her family to go to college. She attended Maya Angelou Charter School in Washington, D.C. which, up until recently, sponsored an IDA program to save for post-secondary education. She’s an alum of that program.

Because her parents never went to college, she grew up without the notion of higher education as a pathway to future success. She credits the IDA program intervention as making a big difference. As Tiara put it, "my parents had no idea about college. So, it was good to have someone there to say this is what you need and this is how you do it."

Here are some highlights from the Q&A session:

Martha Kanter: "Tell us about when you started saving and why?"

I was never a saver. When I started high school they gave us internships and took $5 out of every check and put it aside for us. My 12th grade year, we had Future Focus applications and resumes that we prepared for college. At the end of the year, someone came and told us about the money that we’d saved. So, I put that in my account.

Martha Kanter: “What can we do to encourage more young people to get serious about college and plan for it?”

Enforce education more and more. I’m in a program now where I go to schools and help kids. Most of them don’t know people where they’re from that go to college. So, I teach them about college, education and savings.

Martha Kanter: "What got in the way of saving for college?"

Well, as far as outside situations, nothing got in my way of going to college. The account helped pay for books and other expenses. Having that extra money was the biggest problem.

Martha Kanter: “What advice would you have for parents for their kids to get to a high success level?”

I think parents need to get involved and stay involved. I knew too many people from high school who had parents that weren't there. Either they were working early or working late.

Martha Kanter: “Where do you see yourself in five years?”

I want to give back to my community as a school counselor or a therapist. I want to be one of those.

Martha Kanter: “How do we create a new social network or what would support you as a network?”

Make sure kids stay in the school system. That’s where I learned about college. My younger siblings are there most of the time. So, have more activities and programs in the schools.

Martha Kanter: "How are you covering the costs of education?"

I have loans, of course, and a scholarship from my high school and another one coming.

She ended with a suggestion for IDA advocates around the country: "Keep enforcing savings because without the IDA program I don’t know what I’d do to pay for school or books."

Drawing Focus to "Rightside Up" Policies

By Jason Zahorchak, Guest Contributor on 10/17/2012 @ 01:30 PM

Tags: ALC 2012, Federal Policy

At the Opening Plenary of the CFED 2012 Assets Learning Conference, CFED President Andrea Levere offered seven “planks” comprising the vision for a new American capitalism. CFED’s Sean Luechtefeld has live-blogged on the planks here, but I want to draw focus to Plank #4: To build "rightside up" policy to fix our current version that "rewards the rich, misses the middle and penalizes the poor.” Levere took the specifics of this plank a step further, exhorting the audience not just to leave this heavy lifting to Congress but to tap into the clear willingness at the state and city level to craft this kind of policy.

Levere’s introduction led into a set of plenary addresses that celebrated a number of successes and pointed toward major challenges left to confront, but also to a greater extent in a number of years of these plenaries emphasized the hard, critical work being done at all levels of government to make our country a land of greater opportunity. Richard Cordray, Director of the Consumer Financial Protection Bureau (CFPB), followed Levere and underscored the anti-discrimination policies his organization has helmed to protect economically vulnerable consumers. At the lunchtime awards plenary, an organization with which the CFPB works, Cities for Financial Empowerment (CFE), was handed this year’s Assets and Opportunity Award, for an individual or organization that has significantly advanced the asset building field in the United States. CFE is the nation’s first partnership of local governments dedicated to advancing financial empowerment, with 12 member cities so far. Presenting the award was former Mayor of Nashville and CFED Board member Bill Purcell, who said, "All politics is local. Today, we affirm the importance of the local government role."

In 2008, Levere reminded the audience, this award was given to the Ford Foundation, and in 2010, Citi took home the prize. For the first time, she noted, this award recognizes the critical role the public sector plays in this battle. With the asset-building movement starting within the nonprofit sector, Levere’s words bring to mind the role of this sector in society, which is thought about in a number of ways. A solution to the market failures that other sectors have not agreed to take on. An imprimatur of trust when especially important for a given product or service. A reinforcement of the social safety net that helps define a healthy, modern society. The same can now be said about the public and private sectors when it comes to key asset building initiatives. Indeed, with near-weekly headlines about the legal work the CFPB is doing to protect consumers, with the CFE continuing to expand membership and deepen impact, and with firms such as Citi and Wells Fargo investing in asset-building initiatives for their customers, there is a palpable sense that the ‘state of the field’ these two decades in is that the movement has truly arrived in all sectors, with all players deeply invested. Given the current momentum, we can only guess what accomplishments the next two decades will hold.

Live Blog: Second Presidential Debate

By Sean Luechtefeld on 10/16/2012 @ 09:00 PM

Sean Luechtefeld (10:39 pm): The debate ran long, but it was well worth hanging in there. Thanks for following along with us. Leave us your final thoughts on how you think the candidates did in the Comments below.

Jeremie Greer (10:36 pm): I don't mean to sound like a broken record, but can we talk about how we are going to address the housing crisis? Three debates and zero discussion. And it's not like there aren't solutions.

Lauren Williams (10:32 pm): I'm not confident that it's possible to be both the most competitive and also have a level playing field. But, a level playing field matters domestically. If we cultivate a level playing field here, we'll excel abroad. The linchpin: financial access.

Sean Luechtefeld (10:29 pm): We circled back to entrepreneurship, only to shift back to a rather anemic conversation about competition with China. Let's worry about international competitiveness after we've identified strategies to ensure financial stability for folks within our borders.

Katherine Lucas McKay (10:27 pm via Twitter): Time to talk about education? #bringingitback #assets

Kim Pate (10:25 pm): Community colleges are important centers of entrepreneurship education. Moreover, they are affordable sources of higher education. I'm glad they've finally entered the conversation.

Sean Luechtefeld (10:16 pm): I thought members of the studio audience weren't supposed to applaud?

Katherine Lucas McKay (10:09 pm): So many of CFED's partners have done interesting and innovative work to help Latino immigrants enter the financial mainstream. Mission Asset Fund is one such example.

Kristin Lawton (10:06 pm): Kim's point is a good one: the question for immigrants (and for all of us, really) is about access. Financial inclusion begins with access.

Kim Pate (10:02 pm): One of the central issues with immigration is the financial barriers that exist to naturalization. Organizations like CASA de Maryland and Citi are making incredible strides in removing these barriers.

Jeremie Greer (9:59 pm): Governor Romney is right to mention food stamps. Unfortunately, real barriers exist in our efforts to make food stamps effective. For one, ending asset limits for food stamp recipients would help them grow their assets without threating their benefits. Click here for more.

Kim Pate (9:57 pm): Food stamps? Oh, SNAP!

Sean Luechtefeld (9:54 pm): The distinction between these candidates couldn't be clearer. The question, then, is which will do more for struggling American households come January 2013. Both have good ideas, but we have to make sure that it's lower- and middle-income families who continue to occupy center stage.

Kristin Lawton (9:50 pm): Unfortunately, it's not sufficient to suggest that stopping outsourcing will strengthen our jobs numbers. Sure, it'll help, but what we need is a comprehensive investment strategy in microbusinesses.

Katherine Lucas McKay (9:47 pm via Twitter): So what about improving paid parental leave? That's a major barrier for women's careers. (topical: children are our greatest #assets!)

Kasey Wiedrich (9:46 pm): With regard to access to health insurance, check out Scorecard data. Unfortunately, the newest data shows that there were several states that substantially reduced benefits. In 2011, both Nevada and Pennsylvania ended state-funding for programs that had expanded public health insurance eligibility to adults with incomes up to 200%. Montana, while making it easier for parents to enroll in Medicaid, reduced its dental benefits for adults in Medicaid to now cover only emergency services. Illinois took similar action and limited adult dental benefits to emergency services.

Kasey Wiedrich (9:42 pm): Wondering if your state offers paid medical and family leave? Check out our latest Assets & Opportunity Scorecard data.

Sean Luechtefeld (9:36 pm): Both candidates have come in barrels loaded, guns blazing. How do you think Candy Crowley is doing as moderator? Use the Comments below to let us know!

Katherine Lucas McKay (9:34 pm): Governor Romney cites the importance of reforming worker training programs. We agree, and while we may not have all the answers, here's an idea: integrate entrepreneurship!

Katherine Lucas McKay (9:33 pm via Twitter): In 2008 election, 2009 & 2010 budgets, Pres. Obama supported expanding tax incentives for savings to lower-income families. What about now?

Asset Pony (9:32 pm via Twitter): Middle class pony herds are not as concerned with cap gains taxes as they are with #CTC #EITC #AOTC #debates

Jeremie Greer (9:30 pm): I'm thankful for such great questions to dig in on crtically important tax credits for working families. But it's not just about lowering taxes for the middle class; it's about creating a wholly new - and more inclusive - tax code. As we say, the current system is completely Upside Down.

Katherine Lucas McKay (9:28 pm): American families as a whole have lost an entire generation of wealth - a 40% reduction since the start of the Great Recession. Maybe tax policy should focus on that issue rather than simply bottom-line rates.

Ethan Geiling (9:25 pm): Shout out to the Child Tax Credit! Did you know that four states offer the CTC? Check out our latest data on the strength of state policies from the Assets & Opportunity Scorecard.

Jeremie Greer (9:22 pm): This discussion of energy makes me think about the importance of energy efficiency to the residents of manufactured homes. Check out our I'M HOME resource guide on the topic here.

Sean Luechtefeld (9:20 pm): All of this discussion about energy independence is important, but what both candidates are missing is the potential for lower energy costs to be a source of assets for moderate-income households. Let's expand this conversation beyond who has been more consistent on coal.

Katherine Lucas McKay (9:18 pm via Twitter): 15 minutes in and nothing yet on economic mobility. Jobs are not the only ingredient in the recipe for prosperity. #savings #opportunity

Kim Pate (9:14 pm): Is having a car an asset? We tend to think about the "big three": savings, education and homeownership. But, there's much to be said about the power of a vehicle to build assets for American families. Check out a presentation on this topic from last month's Assets Learning Conference.

Sean Luechtefeld (9:11 pm): It's only taken three debates, but we finally have conversation about the middle class on the national stage. Perhaps the "forgotten 47 percent" hasn't been entirely forgotten.

Kim Pate (9:08 pm): Both candidates are right on in their assessment of the need for jobs, but neither mention how self-employment can be a strategy for job creation. It's not just about improving the economy, it's about creating short-team financial security in the meantime.

Jeremie Greer (9:05 pm): While we're on the topic of Children's Savings Accounts, let me plug "A Foot in the Door," a new video that chronicles the Kindergarten to College initiative in San Francisco. You can get the 17-minute video for free by visiting www.afootinthedoor.info.

Sean Luechtefeld (9:04 pm): Right off the bat, we're talking about employment. Romney says we have to make it easier for kids to afford college. Children's Savings Accounts, anyone?

Katherine Lucas McKay (9:02 pm): Romney's got quite a nice tie. Good of them to drop in on CFED! Maybe this means we'll get some economic mobility talk?

Sean Luechtefeld (9:01 pm): We're getting ready to start, complete with cut-outs of our candidates!

New Scorecard Data on the Strength of State Policies

By Jennifer Brooks and Ethan Geiling on 10/16/2012 @ 12:00 PM

This morning, CFED released new data on the strength of state policies that help families create financial security and opportunity. This data captures policy changes that occurred in the 2012 state legislative session, or for which data became available after fall 2011.

You can check out which states were the winners and losers using the interactive map. The map shows net policy gains and losses across the country, and also describes the changes in each state. You can also read an analysis of recent changes for each policy.

Overall, compared to a year ago, we did not see dramatic changes in the strength of state policies since 2011. States like Vermont, New York and Oregon still have some of the strongest policies in the country, while states like Alabama, Nevada and Mississippi have some of the weakest. The table on the right shows a ranking of the states by the overall strength of policies. One important take-away, however, is that only 10 states have adopted even half of the policy elements they could to help families build and protect assets.

This afternoon from 3:00 to 4:00 PM Eastern, we’re hosting a webinar providing additional analysis of where we saw changes, as well as commentary on how the upcoming elections could shape opportunities to push an assets agenda in 2013. This webinar is available exclusively to members of the Assets & Opportunity Network. (It’s not too late to join the Network – you can sign up for free here!)

During the webinar, Jennifer Brooks and Ethan Geiling from CFED will discuss the new data, including trends and policy highlights from the 2012 legislative session. In addition, pollster Stefan Hankin, from Lincoln Park Strategies will provide commentary on the impact that gubernatorial and state house races will have on policy prospects for 2013.

Net Gains and Losses on Policy Priorities

Reflections on CFED’s 2012 I’M HOME Retreat

By Susan Bond on 10/15/2012 @ 03:30 PM

Tags: Events, Housing and Homeownership

EDITOR'S NOTE: This post originally appeared on the Next Step Blog. Special thanks to Susan Bond and her team for joining us in Portsmouth, New Hampshire for the 2012 I'M HOME Retreat!

Next Step is back from Portsmouth, New Hampshire and CFED’s I’M HOME Retreat, held on October 3-5, 2012. The event was full of presentations, panel discussions and break-out groups that spoke to the success and opportunity, as well as the challenges, for nonprofits and other organizations using factory-built housing as part of an asset-building strategy.

We began the retreat with a full morning of training on Wednesday with current and prospective Next Step Network Members.

Then during lunch, Network Members joined ROC USA’s CTAPs for a joint training session and a celebration of the first Next Step Home in a ROC community in Red Lodge, Montana. ROC USA and Next Step leverage their networks to work together in addressing development and manufactured housing community preservation using factory-built housing. ROC USA helps residents of manufactured home communities convert their communities to cooperative ownership, which gives residents control over rent costs and helps foster leadership and community.

In the afternoon, everyone visited two manufactured home communities of the 100 that have been converted to cooperative ownership thanks to the New Hampshire Community Loan Fund. The New Hampshire Loan company has been transforming communities to cooperative ownership since its launch in 1983. We met with several community volunteers and cooperative members that presented their work in bridging local government policies and resources to meet the needs of community members. One example was a faulty water infrastructure that caused the residents $30,000 extra in water bills each year. The government helped to provide grant money to help fix the pipes. Another great example was the president of one cooperative who used his community connections to convince a large number of residents to participate in a retrofit program to increase the energy efficiency of their homes.

At the conference we all shared victories throughout the last year. Each organization accomplished major goals, whether through policy, building new homes or granting cooperative ownership. By sharing a common goal, each of our groups become one part of the puzzle that helps paint the bigger picture for communities we serve. Later that evening during dinner at Portsmouth Gas Light Co., CFED presented Lois Parris the Annual Leadership Award as an individual that has worked tirelessly to advance this common goal. Lois is the President of the National Manufactured Home Owners Association (NMHOA), which promotes, represents, preserves, and enhances the rights and interests of manufactured homeowners throughout the United States.

Next Step ended the retreat with our partners and Network Members at the Portsmouth Brewery Thursday evening. It was immensely gratifying to connect (over a delicious meal) with so many outstanding individuals from organizations that make the work we’re doing possible. By working together on a national scale and sharing this work at the I’M HOME Retreat, our partnerships were solidified in a way that reinforced our passion and interconnectedness, giving us an opportunity to brainstorm and pave a new path toward future aims for the next year.

A Foot in the Door

By Sean Luechtefeld on 10/12/2012 @ 03:30 PM

Tags: ALC 2012, Children's Savings Accounts, Financial Empowerment

At last month’s Assets Learning Conference (ALC), we debuted “A Foot in the Door,” a short film chronicling San Francisco’s Kindergarten to College Universal Children’s Savings Account (CSA) program. We’re happy to announce that the 17-minute video can now be obtained on DVD for free by visiting www.afootinthedoor.info.

“A Foot in the Door” – produced by CFED, Citi Community Development and the San Francisco Office of Financial Empowerment – features interviews from leaders in the CSA field, including our very own Andrea Levere. The film was developed especially for policy advocates, government agencies, nonprofit service providers and a host of others to help make the case for importance of universal CSA programs as a method for helping children build assets at a young age to ensure their full participation in higher education and the financial mainstream.

If you saw the video during the ALC, you already know how powerful “A Foot in the Door” is in promoting the important work being done in San Francisco and across the country in the CSA space. For these audiences, we hope you’ll order your free copy to share with your friends and colleagues. If you missed the film premiere during the Conference, you now have the opportunity to get your free copy. Simply visit www.afootinthedoor.info and click the “Order a Copy” link in the navigation menu.

CFED would like to extend its gratitude to its partner organizations who made “A Foot in the Door” possible, including Citi Community Development, the San Francisco Office of Financial Empowerment, GroundSpark and Citizen Film.

Live Blog: Vice Presidential Debate

By Sean Luechtefeld on 10/11/2012 @ 09:00 PM

Tags: Events

Sean Luechtefeld (10:34 pm): Martha Raddatz sums it up best: no matter what, go vote. We'll see y'all back here next week on Tuesday night for the second presidential debate.

Kristin Lawton (10:30 pm): All the forgotten 40 percent (47 percent?) wants is a fair shake. Both candidates genuinely care. But we've got to identify the right way forward to ensure financial security for everyone. As President Bartlet would say, "What's next?"

Sean Luechtefeld (10:27 pm): Two million children could get kicked off early education programs? Sounds like a reason to support children's savings programs.

Sean Luechtefeld (10:22 pm): We're so quick to lament negativity during election cycles, but many would argue that negativity is actually good because it requires the attacker to marshal higher-quality evidence. That's the real takeaway here, folks: we need to make sure that the ways we justify policies - regardless of ideological bend - are thoughtful and thorough.

Sean Luechtefeld (10:18 pm): This question about the role of religion is an interesting one. Though often a target of criticism, faith-based organizations do some of the most innovative work to end poverty and bring all Americans into the financial mainstream. Take, for example, our colleagues at Catholic Charities USA. They're sounding the call for comprehensive anti-poverty programs. Did you join us for the Poverty Summit?

Jeremie Greer (10:11 pm): When the troops come home, they'll need support to build wealth and achieve financial secirity. Guest Contributor June Olsen's April blog post highlights the importance of supporting higher education oppotunities to veterans.

Sean Luechtefeld (10:06 pm): Look, I'm not saying Afghanistan isn't important, but assets matter, too. Here's why.

Lebaron Sims (10:03 pm via Twitter): The discussion on #jobs and #smallbiz was too brief. Where is the jobs plan, especially for the poor and long-term unemployed? #vpdebate

Lebaron Sims (10:00 pm via Twitter): We need to make healthcare #affordable. Let's hear how we're actually going to make that happen. #vpdebate

Jeremie Greer (9:56 pm): Details don't matter? The details matter when we are talking about tax credits and deductions. Let's not touch credits that affect low- and moderate-income familes like the Saver's Credit, Erned Income Tax Credit and the Child Tax Credit

Anne Kim (9:53 pm): A few tidbits from the Assets & Opportunity Scorecard as context:
  - Median net wealth in Ohio, Rep. Ryan's home state: $60,963
  - Median net wealth in Delaware, VP Biden's home state: $163,148
  - Median net worth, US: $70,600

Jeremie Greer (9:51 pm): As one example of a way to support self-employed small business owners and low-income entrepreneurs, we can improve their access to money-saving tax credits like EITC and CTC. Read more in our VITA Value Proposition.

Sean Luechtefeld (9:48 pm): It only took 49 minutes for someone to talk about small business. Fact is, self-employment comprises the majority of small businesses, and small businesses are now responsible for all net jobs that are created in the US. Ways we can help these businesses prosper can be read in our Self-Employment Tax Initiative report.

Jeremie Greer (9:47 pm): Both candidates are quick to talk about what the middle class can look forward to in retirement. What scares me, though, is that so few people have the money (or the assets) they need to retire.

Kristin Lawton (9:45 pm): One place where Raddatz falls short is in asking the candidates for a simple answer. As Andrea Levere always says - and as all of us at CFED can attest - complicated problems require complicated solutions.

Jeremie Greer (9:42 pm): Speaking of weathering the storm, I hope another debate does not go by without a serious discussion about how we address the forclosure crisis. See one solution from CFED in our report, Weathering the Storm.

Kristin Lawton (9:40 pm): Finally, a nod to emergency savings. Folks across this country aren't able to weather a financial emergency because there's no nest egg or safety net in place. Let's focus on how to reverse that trend.

Sean Luechtefeld (9:38 pm): Food for thought: is health care an asset? What do you think? Discuss below.

Anne Kim (9:35 pm): Since "facts" are being called into question tonight, check out the truth about the real state of American households in CFED's Assets & Opportunity Scorecard.

Kristin Lawton (9:30 pm): According to recent research from Pew, voters' prioritiess are the economy first, jobs second and health care third. I'm relieved that we're starting to focus there. Learn more here.

Anne Kim (9:29 pm): The moment we've been waiting for - a debate on the "47 percent." Buckle up, everyone.

Kristin Lawton (9:25 pm): Biden hits the nail on the head when he argues that our tax policies make it easy for the rich and impossible for lower-income families. As Bob Friedman always says, our current tax policies reward the rich, miss the middle and penalize the poor. Read more in Upside Down.

Sean Luechtefeld (9:21 pm): To Andy's comment below, I would say that there are certainly problems in our political system. But, it's also dangerous to believe that we can't affect change in a broken system. Instead, we simply need to be more diligent. And, there are ways.

Sean Luechtefeld (9:18 pm): I'm ready to confirm my earlier suspicion: Raddatz is doing a great job moderating. Stark contrast to the last debate, indeed.

Sean Luechtefeld (9:11 pm): Vice President Biden says that when there are crises, the US comes together as a unified body. We believe this shouldn't just apply to international emergencies, though. Millions of Americans are living in or on the brink of crisis; when will we come together to stand together domestically?

Kristin Lawton (9:06 pm): Not to leave Ryan out, it looks like his biggest fan is giving him some motivation tonight. From Twitter: "Great pep talk from one of my most trusted advisors. pic.twitter.com/liskM5a5"

Sean Luechtefeld (9:03 pm): Fun fact: Centre College in Danville, Kentucky is the alma mater of CFED Receptionist Zach Ford!

Sean Luechtefeld (9:02 pm): I'm pretty sure Martha Raddatz will do a great job moderating tonight's debate.

Sean Luechtefeld (8:58 pm): Gearing up! The debate will start in two minutes. Make sure you use the Comments below to throw in your feedback, and let us know how you think Biden and Ryan are doing when it comes to promoting a comprehensive assets agenda.

Kristin Lawton (8:56 pm): Even Vice President Biden is Tweeting: "Barack and I are in this because we'll never stop fighting for you. You’ll see that tonight. -Joe"

Katherine Lucas McKay (8:38 pm via Twitter): I'm sad to be missing tonight's VP debate. Biden led the Middle Class Task Force which focused on savings and economic mobility for years

A Conversation with Savers: Rising Up to Give Back

By Veronica Weis on 10/11/2012 @ 05:00 PM

Tags: ALC 2012, Children's Savings Accounts

EDITOR'S NOTE: This is the second post in a three part series featuring profiles of the participants who spoke with Martha Kanter, Under Secretary of Education, in a Conversations with Savers at the 2012 Assets Learning Conference this September in Washington, D.C. The first profile of La Terra Cole can be read here.

Jennifer Jones, who attends a KIPP school in Washington, D.C., and plans to become a math teacher after college, is an inspiring example of how powerful savings and education can be in the development of a low-income child's life.

As a participant in the Partnership for College Completion, her matched savings for education have helped her make college a real possibility. She’s now on track to be her class valedictorian and hopes to grow up to be a Fifth grade math teacher. This is a valuable goal given that, as Under Secretary Martha Kanter points out, “we need 1.6 million teachers over the next decade.”

Martha Kanter: Tell us about when you started saving and why?

I started last year after I heard about the program. It wasn’t a formal introduction just a general explanation. As I told my Mom about it, she had no idea and neither did I, so we sat down with my counselor. After that, my Mom started saving in the 11th grade for me and also for brother.

I knew from about when I was nine that I wanted to go to college. My Mom is a single parent of two who started college but didn’t finish. She went back and is hopefully graduating this year.

As I was growing up, I watched her struggle with two children. I love her with all of my heart. She said that the best way to avoid struggling is a college education. The account helped to set aside money but I knew since I was young what I wanted.

Martha Kanter: What got in the way of saving for college?

I guess the biggest thing I struggled with growing up was my Mom having a steady job. She not knowing how to save herself meant she couldn’t teach me how. If we start at a younger age, hopefully the next generation will grow up to be better savers. We need to get kids on a path to college earlier on. Take it back to KIPP, to fifth grade, and teach kids, “you can get an education here and be better.”

Push education on kids.

Martha Kanter: Where do you see yourself in five years?

Well, I graduate this year. So, hopefully graduating from college and entering the work field. My heart is set on being a math teacher, 5th grade specifically. Hopefully, get a Masters and then a PhD then open up my own school and daycare. That’s where my heart is right now.

Martha Kanter: What advice would you have for parents? What do you need from parents to get to the success level that you’re at now and contribute?

Parents need the ability to save and know about having a college education so they can teach their children how to do those things. It has to start in the home with the parents. If they don’t know how, then the child will really struggle with learning how to do that.

Martha Kanter: What would you tell your students in the future?

I want them to know that I’m always there. I grew up with teachers at KIPP who always were there when we needed them. From 6am-7 or 8pm, they were there working with students. I appreciated that support at school and at home. I want them to know that if your parents are not always there for you, I will be.

Martha Kanter: How can we create a new social network to support you?

I think it’s a balance between the school, the home and the community. The school supporting the child with an education and letting them know they can be someone. At home having a steady source of support. Most kids are between those two places so both have to be balanced and supportive. I mention the community because you have to get involved to know who’s there. Help those who need help if you’re strong. Be able to step out and ask for help when you need somebody.

Martha Kanter: How are you covering the costs of education?

I had a scholarship from KIPP. In middle school, I was named KIPPster of the year. I’m currently working on a Quest Bridge application and Coca-Cola Foundation. Every scholarship I see, I’m applying for it.

And for all of the asset-building advocates out there, she wanted to share a message: “I do want to say that you’re all doing a good job. I appreciate the push. Knowing you’re there supporting and helping us.”

Friedman: "Our Asset Policies ‘Reward the Rich, Miss the Middle, Penalize the Poor'"

By Bob Friedman on 10/11/2012 @ 11:00 AM

Tags: ALC 2012, Federal Policy

EDITOR'S NOTE: This post originally appeared on the OK Policy Blog, a project of the Oklahoma Policy Institute. Special thanks to David Blatt and his team for joining us in DC for the 2012 Assets Learning Conference!

Last week, I attended CFED’s 2012 Assets Learning Conference, a biannual national gathering of practitioners, researchers, and advocates working to promote economic opportunity and fight poverty for low- and moderate-income Americans through savings, investment and ownership. Following the conference, I sat down with Bob Friedman, CFED’s founder, Board Chair and General Counsel, to discuss the state of the asset building field.

David Blatt: You’ve been active in this field a long time. What do you see as the biggest changes in the area of asset-building today compared to 15 or 20 years ago.

Bob Friedman: First of all, it’s so much bigger. We did our first conference 16 years ago, which was an IDA (Individual Development Account) learning conference and there were 150 people. We just finished this conference, where we had 1,200-plus. Today we see so many more programs, people, policies across the field. Even the classes of assets we talk about has expanded. It was always homes, businesses and education. Now it’s citizenship, assistive technology for people with disabilities, emergency savings as well. Also, we now cover a larger spectrum of financial security – learn, earn, save, invest, protect. The innovation is burgeoning.

DB: Where have you seen the most exciting progress in the area of asset-building?

BF: It’s spread among all states. The Assets & Opportunity Scorecard that we issued this past January, there’s a long list of policies there and every year more states are filling those out. I think one of the limitations has been that with the 2008 recession and the decline in state finances, things that cost money have not grown and sometimes have been cut back. But in general, whether it’s policy, practice, research, we have data now about what works and what doesn’t that we could only dream about even a few years ago.

DB: Obviously the Great Recession took a huge toll on the wealth and savings of families, especially of low-income families. What do you see as the lasting impact of the recession on the movement to expand economic opportunity?

BF: It’s taken a huge hit. The current estimate is that people lost $7 trillion in asset value, mostly in housing but not exclusively. People of color were hit especially hard. That’s sobering to all of us. I think there are some very interesting ideas now that Ray Boshara and Jacob Hacker and others are talking about. Maybe there’s a new role for social insurance, new types of insurance for when the markets falls.

The other side of that is that at some point there’s got to be a buy-in opportunity as housing values fall. At some point they’re going to start going up again. I hope that on top of this huge and tragic loss in wealth that we at least take advantage of the possibility to regain some of this and get some new folks into housing and allow them to rise up the economic ladder.

DB: You’ve been especially vocal in focusing attention on the ‘upside-down asset budget’ at the national level. Can you describe what’s wrong with national asset-building policies, and how we reverse the situation?

BF: Sure. Generally we’ve dealt with poverty and unemployment though safety net programs, which not only don’t build wealth but actively penalize low-income and unemployed people from building wealth by imposing asset limits on eligibility. On the other hand, we use the tax system and tax preferences to build the economic ladder. And it’s just mind boggling in its regressivity. We spend half a trillion dollars a year or more through tax incentives – home mortgage deduction, preferential capital gains, and others. As our Upside Down report detailed, more than a third of those benefits, 37 percent, accrue to the richest 1 percent, 55 percent accrue to the top 5 percent, and just 5 percent are spread among the bottom 60 percent. People making over $1 million a year get over $96,000 in annual subsidy; people in the bottom quintile get five bucks. We are rewarding the rich, missing the middle, and penalizing the poor. And it’s cumulative. Over ten years, that’s five trillion dollars. That’s been redistribution towards the wealthiest from the poor.

But it is an opportunity looking ahead because you could reduce this overall budget, you could cut it in half or more and generate two, three trillion dollars in savings. That would go a long way towards closing the budget gap. Then if we could put in place a refundable saver’s tax credit of $500 available to everybody, but particularly targeted for the 60 percent who are currently left out, I really think that could change the face of economic opportunity and growth in this country. If we can renew savings, spread that ‘hope in concrete form,’ I think we’ll see a lot of new businesses, new jobs, lots more people going to college and gaining new chances for economic opportunity.

I think the tax reform we’re going to see as part of deficit reduction provides the chance to change the system. Even the Republicans are talking about curbing tax incentives because we’re spending more money on tax incentives now than we’re collecting in income taxes. That can’t continue, we’re gonna have to curb them, and this is the opportunity.

Call for Papers: Emergency Savings Project

By Sean Luechtefeld on 10/10/2012 @ 01:45 PM

Tags: Financial Empowerment

The Center for Financial Security (CFS) at the University of Wisconsin - Madison is launching the Emergency Savings Project with the support of the Charles Stewart Mott Foundation. This effort will document innovative ways to address emergency or ‘contingency’ savings issues with financial strategies designed to help low-income households to meet immediate non-recurring expenses. The goal of the call for concept proposals is to generate a broad set of ideas for strategies that can serve to expand emergency savings mechanisms, vehicles, policy, public or nonprofit programs, or new financial products.

Given the bevy of cutting-edge savings research being conducted by our partner organizations, I figured that the CFS Call for Papers might be on interest to many of our readers. You can download the Call here, and leave questions and comments below if you're planning to submit!

Highlights from Understanding Prepaid Cards

By Lebaron Sims on 10/10/2012 @ 12:30 PM

Tags: ALC 2012, Economic Inclusion

The prepaid card industry is largely new, and has only recently begun to be seen as a viable instrument in the asset building field. As the field is still emerging, it has become popular among low-income consumers, prompting a need for additional research on its use and effectiveness as an alternative to traditional financial instruments. The popularity of the topic was evident upon walking into Washington 3 for the 2012 ALC’s Understanding Prepaid Cards and Improving their Role in Improving Consumer Outcomes session. Though the session got off to a bit of a late start, moderator Dan Quan (CFPB) kept things moving without missing a beat, and even allowed for a robust and thought-provoking audience discussion after the presentations. Though the discussion was indeed lively, the true focus of the session, and what made the session truly worth attending, was the research.

Stephanie Wilshusen (Federal Reserve Bank of Philadelphia) led off with an overview of her paper, Consumers’ Use of Prepaid Cards: A Transaction-Based Analysis (released just last month, by the Philadelphia Fed’s Payment Cards Center). Using the most recent data from the Federal Reserve Payments Study, Ms. Wilshusen and her co-authors’ findings on the dissemination and use of prepaid cards are truly remarkable. The analysis, which looked at 15 separate card programs grouped by type and enrollment method, shows that prepaid card use is most prevalent at fast food locations, grocery stores, and gas stations, with dollar value of purchases staying relatively consistent across the various prepaid card types. In addition, cards with direct deposit vary greatly in usage life and intensity from those without the feature. Retail cards with a direct deposit feature demonstrated an increase in usage life of over 300 days compared to those without – a remarkable amount of variation. Lastly, the research showed that cards with regularly scheduled value loads are active for longer periods, and have more transactions and value loads.

Next up was Sarika Abbi (D2D Fund), whose paper, “Expanding Financial Access: Emergency Savings on a Prepaid Card” features findings from the “Rainy Day Reserve” intervention. The Rainy Day Reserve is an emergency savings pocket designed to help low-income prepaid card consumers create and maintain a fund for use after experiencing an unexpected economic shock. Partnering with Plastyc Inc., a prepaid card company, D2D was able to implement the system, which was designed to meet three primary goals: to find and drive takeup, ensure the use of the service, and help consumers both maintain their savings for emergency purchases and rebuild their savings after use. Ease of use was also paramount, so the program was designed with limited barriers to entry (no minimum balance or deposit requirement) and features like pop-up reminders designed to influence user behavior. The results of the study show that these low barriers to access were the primary reason for using the service for 49% of users. The Rainy Day Reserve saw over $5.4 million in deposits through over 59,000 transactions, indicating both a demand for the service and a high volume of activity among users. The pop-up reminders also served as effective deterrents to anti-saving behaviors, with a third of respondents indicating that the message requiring a “yes/no” response before withdrawing money from their Reserve successfully deterred them from going through with the transaction. Though the intervention is ongoing, these preliminary results are inspiring. With over 4.4 million unbanked and underbanked households using general prepaid cards, introducing a savings component could be an effective means of both incenting responsible financial behavior and introducing underserved populations to more sophisticated financial instruments.

Romy Parzick (CFSI) closed out the presentations with a discussion on fee disclosures. With median number of fees charged on prepaid cards at 15.5, and with a surprisingly minimal level of overlap among these different types of fees, disclosure and transparency is a pressing issue for users, and must be rectified with prepaid cards are to become further incorporated into the financial mainstream. Ms. Parzick’s presentation and paper, “Thinking Inside The Box”, outlined a number of practical and demonstrable changes to current industry practices. All prepaid cardd companies have a list or box in which they disclose fees, but the format and locations of the box vary. Generally speaking, companies only disclose about 85% of all fees in this box, and only half disclose third-party fees (i.e., reload network) at all. The report offered five required policy recommendations to increase transparency:

• Simpler language (8th grade language or lower)
• Thoughtful design and formatting (larger type, no jargon or legalese)
• Balancing simplicity and comprehensiveness (the most commonly incurred fees should be included in box, but a full list should be readily available)
• Balancing pure disclosure and financial capability (encouraging positive use)
• Clear and consistent placement, with standard categories

With the CFPB now open for business, and with prepaid cards moving both into the mainstream and onto their radar, we may very well see these regulations put into place soon, particularly if the asset building industry embraces the model and helps to take it to scale. Of the many sessions I was fortunate enough to attend over the three days of the ALC, this was by far my favorite. The audience interaction was fantastic, the research was engaging, and the policy implications were exciting. I can’t think of a better way to close out my 2012 Assets Learning Conference!

A Conversation with Savers: From Foster Youth to Future Lawyer

By Veronica Weis on 10/09/2012 @ 11:00 AM

Tags: ALC 2012, Children's Savings Accounts

EDITOR'S NOTE: This is the first post in a three part series featuring profiles of the participants who spoke with Martha Kanter, Under Secretary of Education, in a Conversations with Savers at the 2012 Assets Learning Conference this September in Washington, D.C.

“I had no idea there were so many people who cared about my future.” - La Terra, former foster youth and future lawyer

La Terra Cole joined us from Mile High United Way in Denver, Colorado where she manages Bridging the Gap, a program that provides financial education and individual development account assistance for low-income youth. She grew up as a foster youth who after being emancipated at 17 went on to college and is now in her third year at Catholic University Law School.

La Terra first learned about money management while living in foster care. She could only go out and spend money if she put a dollar away here and there. She didn’t realize the power of savings until she was introduced to the SEED initiative in high school. With an individual development account, she was able to see college as a possibility and invest in her future.

“At that time I had a fast food job. CFED took on the role that a parent would have and thought about my future. It made all of the difference,” La Terra noted to Under Secretary Kanter.

Here are some highlights from the Q&A session:

Martha Kanter: “What can we do to encourage more young people to get serious about college and plan for it?”

The SEED initiative gave me money to manage. Don’t just teach money management, give them an account so young people can learn to invest in themselves. The account gave me a new way to think about the future. I wouldn’t have to be defined by poverty.

Martha Kanter: “Where do you see yourself in five years?”

Well, I’m going into my third year of law school so an employed attorney.

Martha Kanter: “What advice would you have for parents for their kids to get to a high success level?”

I grew up in foster care so the state was my parent. We need to build in a culture of college expectation and then enroll kids in programs like the one I participated in. Less than 3% of kids in foster care go on to complete a college degree so we need programs on a larger scale.

I was introduced to the SEED initiative as part of my independent living transition. We need to have someone for every foster child who is thinking about their future with a focus on education or some type of college.

Martha Kanter: “How do we create a new social network or what would support you as a network?”

Outside of additional collaboration with other participants in the program, a lot of young people don’t know there are rooms of people out there working hard to build a future for them. Expose young people to adults who are interested in these issues. Most adults around them aren’t expressing this type of concern.

Resources from the BETA Project Q&A Webinar

By Ethan Geiling on 10/08/2012 @ 03:36 PM

On Thursday, October 4, CFED and ideas42 hosted a Q&A webinar to explain the structure of the BETA Project, describe the ideal pilot program, provide tips for a successful application, and give participants the opportunity to ask questions. The powerpoint from the webinar, a recording of the webinar, and the Request for Proposals are all available online.

• PowerPoint from the webinar
• Recording of the webinar
• Request for proposals

Top Questions from the Webinar

Question: My organization serves fewer than 500 individuals. Should I still apply?

• Answer: We are not ruling out any projects on this basis. However, we will look favorably on large programs because higher numbers allow us to evaluate the interventions more accurately.

Question: My organization has a few different programs that might benefit from the BETA Project. Should I submit separate applications for each one?

• Answer: No, each organization should only submit one application. If you would like us to consider multiple programs, please try to explain all of the potential programs within the specified word limits. However, if you feel you need more room to fully explain the different programs, you can go over the word limits for questions 2, 3 and 4. You should also prioritize which program you believe is the best fit.

Question: I have a very complex program and we are trying to redesign an entire program. Is this ideal?

• Answer: The BETA Project is not meant to redesign an entire program. It is only meant to make small behavioral "tweaks" within existing programs or services. Keeping it simple allows us to isolate and understand the effects of the behavioral tweaks.

Question: I don't have any ideas for a good intervention and I don't really understand behavioral economics. Should I still apply?

• Answer: Yes! We are not expecting you to submit a fully thought-out intervention idea; we are more concerned with finding programs with great potential. The "BE 101" document may help give you a better sense of how Behavioral Economics relates to your program.

Background on the BETA Project

In early September, CFED, ideas42 and the Citi Foundation announced the launch of the Behavioral Economics Technical Assistance (BETA) Project. The goal of the BETA Project is to tackle tough social problems by designing and testing behavioral interventions on real world products, processes and/or services.

Three to five pilot organizations will be selected for the BETA Project through a competitive application process. Click here to read more about the project, selection criteria and timeline.

Click here to download the Request for Proposals. Proposals are due October 19.

The BETA Project is part of the Assets & Opportunity Network’s Intensive Learning Clusters - which are time-limited, thematically-based, small groups that learn from each other and outside experts to advance a learning agenda on specific topics or approaches.

Opportunities to participate in these Intensive Learning Clusters are limited exclusively to members of the Assets & Opportunity Network. Click here to join the Network!

Promising Pathways to Wealth-Building Financial Services

By Sean Luechtefeld on 10/08/2012 @ 10:30 AM

Tags: Events

EDITOR'S NOTE: CFED's Chief Program Officer, Ida Rademacher, will be speaking at the Federal Reserve Bank of St. Louis' event, October 25-26. Details of the event are provided below.

Thursday & Friday, October 25 & 26, 2012 | St. Louis, MO

The growing and dizzying array of financial-services providers, products and distribution channels often leave underbanked consumers and their advocates perplexed: Should they use traditional banks and credit unions? "Bank On" campaigns? Prepaid cards? Retailers (e.g., Walmart and Target)? Direct deposit? The internet? Cell phones and other mobile devices? Some combination thereof? How should they handle government benefits payments, which are increasingly electronic? And what about during tax time, when receiving a refund?

This financial access forum is designed to help communities and practitioners make informed choices about promising pathways for underbanked households to connect to wealth-building financial services. The ultimate goal is to help underbanked consumers build a healthy balance sheet.

Key questions to be explored:

1. What do we know about underbanked consumers?
2. What financial products exist to meet their needs?
3. Through what channels are these products distributed?

Participants will hear from some of the nation’s leading experts, industry representatives and on-the-ground providers of financial services focused on unbanked, underbanked and unhappily banked consumers. To facilitate discussion and share practical advice, a series of roundtables with local and national experts will also be offered on key forum topics. Finally, while not a policy forum, policy barriers and opportunities will also be captured and discussed.

A nominal cost of $100 per participant is required for attendance. Early registration is encouraged, and advance registration is required by Monday, Oct. 22, 2012.

Sponsored by the Federal Reserve Bank of St. Louis, Federal Reserve Bank of Kansas City, the U.S. Department of the Treasury, and Center for Financial Services Innovation.

Click here for the draft agenda.