Our America is Healthy When All Residents Have Opportunity
By Sean Luechtefeld on 10/04/2012 @ 12:30 PM
EDITOR'S NOTE: This post originally appeared on the Better Life blog, a product of the Louisville Courier-Journal. You can read the original article here.
Last week I was in DC attending a conference which focused solely on helping the underserved and underprivileged gain the knowledge and develop tools to build assets. The Assets Learning Conference is hosted annually by the Corporation for Enterprise Development (CFED) an organization with a vision of a “more inclusive” economy. The whole focus of those who work in the field is this – assets are the difference between the haves and the have nots – not just income.
Unlike one of our presidential candidates who recently dismissed 47% of the American population, there is an entire movement to help all who desire work towards economic success. This candidate would say that 47% of our population does not desire economic success. This candidate would have you to think that everyone in the 47% desire to constantly struggle to feed their families, worry about paying the next bill, or even wonder how to get the medical treatment needed to save the life of a sick child.
On the other hand, thousands across the nation have dedicated their careers to this population. As a matter of fact, 12 cities were recognized at the conference for integrating financial empowerment into their social services delivery system. Cities for Financial Empowerment (CFE) is the nation’s first coalition of local governments dedicated to advancing financial empowerment across their communities. In some communities, the conversation begins with simple banking and savings accounts, grows to owning a home and moves to investing in the future. I am proud to say that our own city, Louisville, KY is one of the 12 cities of CFE!
Some policy makers and government servants recognize that it takes more than income to make ends meet. The economic and financial industries of our great America are complicated systems. Collateral is needed to securing funding for business loans. If you do not have assets, you do not have collateral. Many of the wealthiest people gained their wealth from past generations, passing down assets through inheritances and family gifts. If your family has not amassed wealth, then there will not be a “pass down” to future generations.
In my opinion the resounding, rhetorical phrase, “let’s take our country back” is a slap in the face. Take it back from whom? When did it leave? You ask the question.
Our Constitution’s Preamble reads “We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.” The Declaration of Independence states “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their creator with certain inalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.”
Although these words were crafted during a time when slavery and injustices were the laws of the land, I have to believe that God himself inspired these words for future generations, that God himself knew what was to come and the battles we would fight.
Yes, economic opportunity is for all. Not just 53% of the population, but for all.
Curbing Predatory Small Dollar Loans
By Jimmy Crowell on 10/04/2012 @ 11:00 AM
Payday loans don't solve a financial crisis, they create a new crisis every two weeks. That is the main message that Uriah King, with the Center for Responsible Lending, is trying to convey through his work with payday loan policy reform. The fact is that payday loans are not short-term loans, they end up sinking people further and further into debt. In the U.S., a payday loan will leave a person indebted for an average of 212 days over the course of a year. Payday loan advocates insist that these loans are a needed service for people experiencing an unexpected financial setback. The harsh reality is that most people turn to payday loans to pay for regular expenses like mortgage payments, utility bills and food. This only creates a a cycle of incurring more and more debt to pay for exorbitant interest rates. Unfortunately, due to this cycle, a payday loan borrower is more likely to pay overdraft fees, lose their bank account, default on their credit card and file for bankruptcy.
These stark realities have inspired community advocates across the country to lobby their legislatures to become part of a cohort of 17 states (and Washington D.C.) that have abolished 400% payday loans and capped interest rates at around 36%. The Montana Community Foundation successfully campaigned for payday loan policy reform with a meager budget of $500,000. Through their strong partnerships with organizations like AARP and Rural Dynamics, Montana Community Foundation were able to inform and mobilize Montanans to vote for payday loan reform. With an impressive 72% of voters supporting the policy reform, Montana Community Foundations estimate that Montanans are saving $32 million in payday loan interest fees every year. That is an amazing return on a $500,000 investment!
The Center for Economic Integrity also launched successful campaigns for payday loan policy reform in Ohio and Arizona. They too were able to mobilize strong coalitions with a modest budget to defeat highly paid lobbyists for payday lenders. The Center for Economic Integrity attributes a lot of their success to their concerted effort to raise awareness of the predatory nature of payday loans through local media outlets. Hopefully, more state leaders will step forward to champion payday loan reform. There is still a lot of work to do to protect Americans from predatory lenders but replicable campaigns can be launched to hold predatory lenders accountable and protect Americans from losing their hard earned income to draconian interest rates.
Live Blog: First Presidential Debate
By Sean Luechtefeld on 10/03/2012 @ 09:00 PM
Sean Luechtefeld (10:33 pm): You know, this was a lot of fun! So much fun, in fact, that we should do it again. We'll see you back here next Thursday, October 11 at 9 pm EDT for the first and only Vice Presidential Debate. Meanwhile, continue the conversation on our Facebook page and via Twitter, and remember that you don't get to complain about the outcome of the November 6 election if you don't get out and vote!
Kim Pate (10:32 pm): One role of government is to provide ladders of opportunity, create jobs by supporting the self-employed, small businesses and community revitalization.
Sean Luechtefeld (10:31 pm): Governor Romney: "What kind of America do you want to have for yourself and your children?" That really is the question, isn't it?
Anne Kim (10:30 pm): With only a few minutes left to go, the ultimate "winners" of this debate (and the election) are supposed to be the American people. This debate notwithstanding, let's hope that's the case come November 7.
Sean Luechtefeld (10:28 pm): President Obama: We need to let go of some of what the most extreme parts of our parties want us to do and do what we know is right. Yes! Whether Democrat or Republican, there's real work to be done - to expand economic opportunity and more. But, we need to work together. In today's political climate, we can't put party over people.
Sean Luechtefeld (10:25 pm): C-SPAN (where I'm watching the debate) will be taking calls from the public at 10:30. I'm tempted to call in...what should I ask?
Jeremie Greer (10:22 pm): Glad we are talking about student loans; they could be the next major debt crisis (after foreclosure crisis, which we still haven't talked about...).
Lauren Williams (10:18 pm): Both candidates indicate that too many college grads are in too much debt. Here's the reality: college isn't accessible. But, it doesn't have to be that way. Children's Savings Accounts help close the aspiration gap, and can put higher ed within reach.
Sean Luechtefeld (10:17 pm): So many commenters! Thanks for sticking with us, folks.
Kasey Wiedrich (10:10 pm): Consequesnces of medical debt: 39% of people did not go see a doctor when they had a medical condition (New Demos research presented at the Assets Learning Conference in the Applied Research Forum. View the full presentation here).
Sean Luechtefeld (10:07 pm): Governor Romney: "we need private markets to solve the problem." Yup, but we also need public policy. And, while we're at it, community practice, too!
Sean Luechtefeld (10:04 pm): Finally, someone is talking about the struggles for the self-employed. Entrepreneurship isn't just good for the economy; for a lot of folks, it's the surest way out of asset poverty and into the mainstream.
Kristin Lawton (10:01 pm): Sean, the health care issue is an assets issue. People without health care are financially vulnerable - they could be one medical emergency away from losing it all.
Anne Kim (9:58 pm): If there is any silver lining to the financial crisis, it is the creation of the Consumer Financial Protection Bureau. No other agency is better poised to protect Americans' wealth. (EDITOR'S NOTE: Check out CFPB Director Richard Cordray at the ALC!)
Sean Luechtefeld (9:57 pm): Now we're moving onto health care. I think it's an important topic, but it makes me worry that we won't circle back to those who are financially vulnerable.
Sean Luechtefeld (9:52 pm): Is this debate changing anyone's mind?
Anne Kim (9:51 pm): Why do all debates around health care devolve into a contest over "Medi-scare"? No question health care is fundamental to economic security (check out CFED's Scorecard on this topic), but policy makers need to realize that Americans know there's no free lunch. We can handle an honest debate over the trade-offs we're all facing.
Lauren Williams (9:46 pm): Don't forget candidates for the ponies! Ponies need help building assets, too. Just ask @assetpony.
Sean Luechtefeld (9:45 pm): We keep hearing about the $716 billion. What would happen if we put that money into something other than Medicare? Like, something that created longer-term financial stability for the "forgotten 40 percent?"
Katherine Lucas McKay (9:42 pm): Social Security and Medicare, great. But what about investing in opportunity for today's children and their future, not just today's retirees? (by the way...CSAs work!)
Kim Pate (9:41 pm via Twitter): Taxes are important to both #candidates in this #debate, follow @cfednews for ways tax reform can support lower and middle income Americans.
Jeremie Greer (9:39 pm): Forty minutes into the debate and no talk about the foreclosure crisis? Huh?!?
Sean Luechtefeld (9:37 pm): Obama says governors are creative, but not so creative to overhaul public programs in a productive way. We'd disagree, and in fact, some of the most innovative work to create financial security are happening at the state and local levels. Anyone see Cory Booker at the ALC?
Anne Kim (9:33 pm): The red versus blue ties are a nice touch. Although we're not yet hearing much new, the contrast between the candidates' visions couldn't be more clear than the contrast between their neckwear!
Jeremie Greer (9:32 pm): There are a ton of ways to cut the deficit. Cutting programs that support the most vulnernable populations is not the way to do it.
Katherine Lucas McKay (9:30 pm): When talking about deficit reduction, the crucial question we need to ask is whether the program is so critical that we can't live without it? You can't answer that question without thinking about the people the programs are intended to serve. Neither candidate has addressed economic vulnerability yet tonight.
Sean Luechtefeld (9:27 pm): Psst...Jim! No need to move on. The economy is a topic we care about, and I'm pretty sure we aren't alone.
Ida Rademacher (9:25 pm): Neither candidate is using this opportuinty to appeal to the American people; they are in policy wonk-ville. Tons of data, but no effort to be accessible to the public.
Sean Luechtefeld (9:24 pm): "Math, common sense and our history all prove..." ZING! from President Obama.
Jeremie Greer (9:23 pm): It's refreshing to hear a balanced approach to deficit reduction that inlcudes revenue and spending.
Anne Kim (9:21 pm): Both candidates are focusing their appeals on what they would do for America's middle class, and each has named his litany of the principal hurdles to future middle class success.
But conspicuously missing so far is any mention of the 40 percent loss in wealth by all Americans as a result of the recession. Regardless of who wins in November, our work is cut out for us: we need to elevate household financial security to the top of the next Administration's agenda.
Sean Luechtefeld (9:19 pm): We absolutely agree that there needs to be deficit reduction. But, to be clear, there are a ton of things we can do to create a more inclusive economy that don't cost much and are both moveable (politically) and manageable (administratively). Read our recommendations in our Federal Stroke-of-a-Pen guide.
Sean Luechtefeld (9:17 pm): Neither candidate seems to be answering questions directly. Or, in the case of Romney, the opportunity to ask a question goes missed. Let's step it up, gents.
Kristin Lawton (9:15 pm): Romney wants to lower tax burdens for the middle class. Us too! So, how?
Jeremie Greer (9:13 pm): Both candidates are highlighting education as the linchpin for economic recovery.
Katherine Lucas McKay (9:12 pm): Governor Romney is right that new businesses are starting at rates that are a generational low. Big question: How can policies do more to support people who take the plunge and start business?
Sean Luechtefeld (9:07 pm): Both candidates talk about how the "top down" approach doesn't work. More importantly, we believe the "upside down" approach doesn't work. As is, of America's $400 billion in asset-building programs (most of which are delivered through the tax code), the majority of benefits go to those in the highest socioeconomic brackets. In fact, for those in the lowest 60% when it comes to income, the average federal benefit is only $5 per year. For more about how we fix these policies to make them "rightside-up," download Upside Down.
Sean Luechtefeld (9:05 pm): The candidates, along with moderator Jim Lehrer, have taken the stage. Remember, no noisy distractions allowed!
From Saver to Homeowner: IDA Success Stories Part 6
By Bank of the West on 10/03/2012 @ 02:45 PM
To help families achieve the goal of homeowner¬ship, Bank of the West has partnered with CFED to match the money that low-income individuals saving for a down payment and to support the nonprofits that provide financial education to these savers. This is the six story in a six-part series featuring Individual Development Account (IDA) program graduates from across the country. This story comes from the IDA program at Interfaith Housing Services in Hutchinson, KS.
Bill and Julie’s Story
Julie and Bill took life day-by-day and often lived paycheck-to-paycheck – Julie by working at a local gas station and Bill at a manufacturing company.
Supporting a family of eight and renting a substandard house with energy bills that were difficult to afford, Julie and Bill were trying to find a way to get ahead. They enrolled immediately after hearing about the Individual Development Account (IDA) program at Interfaith Housing Services (IHS). In financial education classes, they learned valuable lessons on the difference between needs and wants (for both them and their children). “Help with setting our budget and automatically depositing money into our savings each month made a huge difference for us,” says Julie. They saved every month for their own home, attended a first-time homebuyer course and participated in homebuyer counseling with IHS IDA program staff to learn all they could about credit, mortgages, and maintaining a home.
Excited about building a better future for their family, Julie and Bill reached their savings goal in just one year. After repairing their credit, saving enough money and finding the right home, they were finally ready to close on a house.
Having realized their goal of home-ownership, Bill and Julie continue to live on a clearly defined monthly and are saving for home renovations to create additional space for their family.
Join Us Tonight as We Blog the First Presidential Debate
By Sean Luechtefeld on 10/03/2012 @ 11:00 AM
Planning to watch the first presidential debate this evening between President Obama and Governor Romney? Us too! Join my colleagues and me as we live blog the event and provide commentary on what each candidate’s stance on the economy means for the assets field.
Tonight at 9 pm EDT, visit our blog homepage as experts from across CFED initiatives weigh in on what the debates – and the election generally – mean for our field in the coming years. In addition to our observations, we hope you’ll participate, too. You can click on the Comments link below to leave your observations or ask us questions.
We hope you’ll join us and add your voice to the conversation this evening from 9 – 10:30 pm EDT. For more information, check your local listings.
Affordable Housing as an Asset-Building Platform
By Lauren Williams on 10/03/2012 @ 10:00 AM
At the 2012 ALC, I had the pleasure of attending a session called “Affordable Housing as an Asset-Building Platform.”
During this unique session, Kris Krehmeyer, Margery Spinney and Michael Mirra encouraged the audience to think more broadly about asset building as it relates to affordable housing. Each of these speakers firmly believes that asset building can and should be embedded across affordable housing’s entire spectrum, not just as an outcome of homeownership.
Michael Mirra from Takoma Housing Authority (THA) highlighted several reasons for which public housing authorities (and ostensibly, affordable housing developers) can and should be allies – if not leaders – in the endeavor to help low- and moderate-income families reach financial security and build wealth. For instance, housing authorities already have relationships with the families that we want to reach with asset-building programs; most authorities develop, own and manage large properties that house hundreds of families. The value of this principle was exemplified by all of the presenters on this panel, whose projects demonstrate the value of housing developments as systems within which asset-building programs can be embedded.
For instance, Kris Krehmeyer’s Beyond Housing in St. Louis works across several different systems serving the needs of low- and moderate-income families that intersect in critical ways with affordable housing. Beyond Housing learned that the Normandy school district in St. Louis was under threat of becoming unaccredited, more than half of the children entering kindergarten were unprepared on their first day of school and the annual mobility rate in the school system was 57%, which represents the number of children who move in or out of the district during the school year.
Having recognized the interconnectedness of these outcomes, Beyond Housing encouraged the school system to talk to other stakeholders in the community to figure out how to enhance students’ sense of stability in order to help students succeed in school. They facilitated conversations between pre-kindergarten care programs and the school system, so that care providers could acquire an understanding of the basic minimum preparedness standards for students entering kindergarten – a conversation that, surprisingly, had never happened before.
During Michael Mirra’s remarks, he reminded us that these kinds of initiatives are most successful and effective if they focus on communities that identify themselves in a positive way and if those communities are part of the visual landscape. Beyond Housing’s work in Normandy has embraced both of these concepts: they are building the first bank ever to enter the community on the bottom floor of a forty-two unit senior community located directly across the street from a grocery store –the first to enter the neighborhood in over 47 years. What’s next? Beyond Housing is now exploring transit-oriented development solutions to bring light-rail to the community, offering two-for-one matched savings accounts for children in the Normandy school district and ultimately making universal savings accounts accessible as well.
Margery Spinney from Cornerstone offered a different way to think about housing as an asset-building platform, reminding us that many low- and moderate-income renters have the same aspirations as homeowners: they want to build wealth, feel secure in their homes and make a contribution that enables them to feel like part of the community. For these families, renter equity is one alternative to homeownership. Rents are approximately half of what they would be at market rate. Residents – most of whom are too low-income to leverage Habitat for Humanity, individual development accounts and similar strategies – accumulate credits that translate into equity by participating in the management of the community, paying their rent on time and attending monthly association meetings. Residents can ultimately withdraw their equity and take loans against them during their residency.
Cornerstone wants to facilitate the replication of this approach beyond Cincinnati by launching the Renter Equity Bank, a CDFI that will partner with and provide guidance to other organizations interested in implementing renter equity programs across the country.
After describing some of the tenets behind THA’s engagement in strategies to embed financial security and wealth building strategies in their housing system, Michael explained many of the ways they’ve put these core concepts into practice. While many public housing authorities think of themselves in limited terms – as managers of rental assistance programs or landlords – they really need to be more comprehensive. THA views the families they work with not just as tenants or homeowners, but as parents, students, wage-earners and asset builders. When THA learned that nearly half of Washington’s students were not taking advantage of the state’s promise to offer to make college tuition affordable to any student who earns acceptance to a state educational institution, they leveraged their access to families to ensure that every child signs up for this program. After the first year that THA made a push to enroll more students in the program, they increased enrollment by nearly 30%. After the second year, all students were enrolled. More recently, THA has begun developing a Hope VI mixed-income neighborhood – Salashan – after tearing down a 200-acre public housing development. At Salashan, they’ve increased the community’s density by 70%, designated 25% of homeownership units for families making less than 60% of area median income and offered matched savings accounts for all children moving into the community.
These speakers shared some sage advice - informed by their expertise in the affordable housing field - for the asset-building field. In particular, Kris stressed the need to link asset building to community building because poverty lives in place and will take hold in place. Helping individuals build wealth is one challenge, but at what point do we bring place into the asset building equation? When people do well, they’re likely to leave and move on to places where others have invested heavily to make bring opportunity to life. We need to build up communities so that people want to stay and invest in the places where they build their individual wealth. Kris also reminds us that while evidence-based work and impact measurement is important, but we need to be mindful of the humanity of these strategies.
Eliminating Asset Tests Session at ALC 2012
By Ethan Geiling on 10/02/2012 @ 05:00 PM
Of the 65 Concurrent Sessions at the ALC, one of the ones I was most looking forward to had to do with one of my favorite policy topics: asset tests in public benefit programs.
Asset limits are a problem because they force applicants and recipients to “spend down” personal reserves in order to get any government help. These reserves are precisely the kind of personal safety net that can keep families from falling deeper into poverty and help them move to financial security and opportunity. Inconsistencies in the treatment of assets mean confusion and a patchwork of complex rules with no overarching logic. And most importantly, asset tests send a signal that the poor should not save.
During the session, I provided an overview of the state of asset limits in the country. Rachel Black from the New America Foundation then discussed new research on the impact of eliminating asset tests. Finally, Aubrey Mancuso and Ross Yednock, two state advocates, shared their experiences advocating for asset limits change, including key messages and strategy tips for other advocates.
During the session, I also handed out a preview of CFED’s updated Scorecard Resource Guide on Asset Limits (which won’t officially be released until later this month). The Resource Guide shows what’s changed over the past year.
From Saver to Homeowner: IDA Success Stories Part 5
By Bank of the West on 10/02/2012 @ 11:00 AM
To help families achieve the goal of homeowner¬ship, Bank of the West has partnered with CFED to match the money that low-income individuals saving for a down payment and to support the nonprofits that provide financial education to these savers. This is the fifth story in a six-part series featuring Individual Development Account (IDA) program graduates from across the country. This story comes from the IDA program at Community HousingWorks in Escondido, CA.
As part of a third-generation family from Poway, California, Crystal Lucca dreamed of owning a home locally. After starting a family at the age of 17, owning a home “seemed impossible.” The Lucca family of five was barely making ends meet and living paycheck to paycheck. Crystal saw a picture-perfect home in her future, but didn’t know how to get there.
While living at a Community HousingWorks’ (CHW) affordable housing community, Crystal saw a flyer for the Individual Development Account (IDA) program that gave her hope. She signed up for the program, excited about the challenges and possibilities that awaited her.
The Lucca family soon began making changes and sacrifices that would bring them closer to buying a home. After attending a Financial Fitness class as part of the program, Crystal says, “We changed our lifestyle to be conscious of money and how it ties into future goals.” The family made small changes that led to big savings, such as planning meals, cutting out financial services fees, and lowering the cable bill. In addition, Crystal raised her credit score by nearly 100 points using the tools from the class.
Crystal feels that “having moral and financial support in the program gave us a step up.” An experienced CHW financial coach encouraged the Luccas to take the steps needed to achieve their homeownership goal. After saving $2,000 and receiving a match for a down payment, Crystal and her family moved into their first home in time for Thanksgiving.
After spending years dreaming of her own home, she has now realized her dreams. “Becoming a homeowner in Poway is like a dream come true,” says Crystal. “The IDA program is perfect for so many out there who are dreaming of homeownership but need that extra support to bridge the gap between a dream and reality”
Winning Strategies for State Asset Policy Change in a Time of Budget Shortfalls
By Jennifer Brooks on 10/01/2012 @ 01:15 PM
Faced with budget shortfalls and continued high unemployment, federal, state and local policymakers are focused on trimming spending and creating jobs. Anti-poverty advocates want to protect funding to address immediate needs. Assets advocates (who may also care about those same programs) want to protect spending on assets, but are also still looking for the “big win” that would require new spending on asset-building incentives.
“Winning Strategies for State Asset Policy Change in a Time of Budget Shortfalls” was an ALC session that explored three concrete strategies to win on in the current environment.
Robb Gray, from the Center on Budget and Policy Priorities, started off the session talking about how state assets coalitions can build alliances with “revenue coalitions” that have emerged in the past few years to protect spending on the poor in the face of budget shortfalls. Amy Saltzman, from The Hatcher Group, focused on the need to frame your issues in ways that policymakers and the media can “hear.” I then focused on ensuring that your policy agenda has some items that are achievable now - while teeing up bigger investments for down the road. I also shared a couple concrete policy ideas that you may want to consider for your own agenda. Our last speaker was Robin McKinney, from Maryland CASH, who shared her coalition’s recent policy successes deploying some of these strategies.
Income Taxes: Check the Box for College Savings
EDITOR'S NOTE: This post originally appeared on Washington Monthly's College Guide on Friday. To read the original story, click here.
As a federal taxpayer, you’ve no doubt noticed the $3 “check-off” for the Presidential Election Campaign Fund-and you probably skipped it. In 2011, just 6.4 percent of American taxpayers “checked the box.”
Originally created in the 1970s to support public financing for presidential campaigns, the Fund now seems increasingly anachronistic and insignificant. After the Supreme Court opened the floodgates to unlimited campaign spending in its Citizens United decision, private political spending has skyrocketed. Neither President Barack Obama nor Republican challenger Mitt Romney has opted for public financing, and this year’s presidential race is expected to cost an all-time high of $2.5 billion, says the Center for Responsive Politics.
But while the presidential campaign fund may have lost its relevance, the $3 check-off remains an effective, easy way to raise money for a dedicated purpose. It’s simple to administer. It captures people at a time when they have to interact with government anyway. And it provides taxpayers with something rare-a chance to choose where their tax money goes.
What if this money went toward something more Americans would get excited about-such as helping kids save for college?
Instead of the Presidential Election Campaign Fund, taxpayers should get the option of sending $3 to a new fund-one dedicated to providing a dollar-for-dollar match for young people saving for college. In particular, this new fund could help support special “children’s savings accounts” increasingly being created nationwide to help lower-and middle-income children save for college.
Under these programs, children typically receive an initial deposit in an account and a 1:1 match of savings they contribute, up to a specified maximum (e.g., $500). In the pioneering Kindergarten to College program in San Francisco, every kindergartener in the city gets $50 to “seed” their savings account ($100 for those on free or reduced lunches), followed by additional incentives to save. Research finds that children with savings are not only more likely to expect to go to college, they are also six times more likely to attend than kids without savings.
A college savings match fund—in which children and their families would contribute up to $500 and the $3 contribution from tax returns would generate matching funds—could ease a major source of financial anxiety for today’s families. According to Pew, 71 percent of Americans say it’s harder to pay for college today than it was a generation ago; 75 percent say college is now too expensive for most Americans to afford. Meanwhile, a global economy demands that young people go to college if they are to succeed in the middle class, let alone compete against their peers in China, India and other aggressively developing countries.
Even a relatively low participation rate in a college savings check-off could generate significant revenues. Despite last year’s low participation, the Presidential Election Campaign Fund collected nearly $40 million. If participation levels reach what they did in the early 1970s-young savers could benefit to the tune of hundreds of millions of dollars.
Without doubt, American families could use help to keep up with soaring college costs. Many states now offer 529 college savings plans, which provide an implicit savings match through tax preferred growth of savings and, in some cases, tax deductions for contributions. These accounts, however, work best for middle- and higher-income households, while a college savings match could provide equal benefit to low- and moderate-income households as well.
While two-thirds of parents are actively saving for college, a survey by Fidelity Investments finds most parents are also far behind in their ability to save enough to meet costs. According to Fidelity, the typical family is on track to meet just 30 percent of the expected cost of college.
Helping students save for college could also reduce the growing burden of student debt. The Federal Reserve Bank of New York says the average student debt burden in the first quarter of 2012 was $24,301, while the overall balance owed by students was a whopping $902 billion. Indeed, a survey by the think-tank Demos found that 13 percent of households whose credit card balances included college costs reported leaving school to address these debts.
Perhaps most importantly, letting taxpayers check the box for college savings would bypass the partisan paralysis that has stalled Washington’s efforts to help students and their families. Instead of watching Congress squabble over support college students deserve, let Americans act on their own. Many states already do this by sponsoring check-off programs on state tax returns to benefit veterans or seniors or to fund disease research.
While a match for college savings can’t erase the growing burden of college costs and debt, it can help put children on the path toward saving earlier, saving more, and raising their college-going aspirations. With the help of this new fund, every child in America might someday have a savings account to help ensure a brighter future-and all for just $3 per taxpayer.
Anne Kim and Carl Rist collaborated on this piece. Kim is a senior policy strategist at CFED, a Washington-DC based non-profit, and senior fellow at the Progressive Policy Institute. Rist is the executive director of the 1:1 Fund, an organization that promotes savings and educational opportunities for low-income students.
Taking Risks and Advancing Innovation
By Jason Zahorchak, Guest Contributor on 09/28/2012 @ 03:00 PM
The session, “Asset Funders Network Dialog with Funders: Taking Risks and Advancing Innovation,” moderated by Amanda Feinstein of the Walter and Elise Haas Fund and featuring Brandee McHale of the Citi Foundation, K. Sujata of the Chicago Foundation for Women, and Tamitha Walker-McKinnis of the Kresge Foundation, promised to offer a “candid dialog” about learnings from both successes and failures.
The conversation did not disappoint. At one point, it shifted to a discussion of the right role for funders to play in order to encourage innovation but also select for and cultivate those ideas that will actually have impact. Ms. McHale was quick to offer that she was well aware that foundations can – and do – inhibit innovation. If I were an innovator, she said, I think I would be saying “get out of the way, funders!” on a regular basis. She stressed that Citi Foundation prides itself on its ‘No Micromanagement’ mantra, and the other funders on the panel agreed that their foundations take strong steps to ensure that they strike the right balance of guidance and autonomy.
I get the sense, however, that the funders seated in the front of the room for this session are those at the forefront of best practices in their industry. I have worked at several nonprofit organizations in more traditional fields in which funders expected us to take a very carefully predefined path, and grew very suspicious when we came back to them requesting the ability to change our game plan because of new avenues we had identified along the way that were likely to be more fruitful. I wonder how many organizations in the very experimental asset-building space face even stronger constraints from traditional funders not willing to let an experiment play out and shift along the way, or not willing to find a better blend of risk and reward in their portfolios that would allow them to select truly innovative projects in the first place. I worry that the best aspect of being a smaller, more innovative research organization – the ability to be nimble and let the question evolve along the way – is being taken away by large, traditional funders used to doing things in a certain manner and under ever increasing pressure to drive results.
There is no easy solution. But we have a warning sign to heed: the analogous situation that has already been occurring in the scientific research community for a number of years. RO1 grants, the largest rewarded for research funding from the National Institutes of Health, are getting harder and harder to win for the smaller labs seeking answers to less “safe” questions (see here, here and here). As a result, labs with more conservative research agendas – and especially the means to produce preliminary data to prove they are already on track to find a concrete answer – have an easier time continuing to answer questions much like the ones before, rather than the potentially transformational questions that might take our knowledge to the next level. My hope is that all of the important funders in the asset-building field have recognized their responsibility to identify the right risk appetite and touch to make sure we are truly exploring the transformational possibilities.
Recapping the Applied Research Forum
By Lebaron Sims on 09/28/2012 @ 11:00 AM
The Applied Research Forum started with a bang Thursday morning as conference attendees gathered in Washington 4 for the Research Forum Kickoff. Ida Rademacher, Chief Program Officer at CFED, led off with a brief overview of the Forum’s origin and history, introducing the Forum’s sponsors and setting the stage for the presentations to come. The Forum’s purpose, as stated by Ida: to “combine stories and data to move policy practice forward.”
Following the introduction, Keith Ernst (FDIC) briefly presented the most salient findings from the FDIC’s National Survey of Unbanked and Underbanked Households, released just last week. According to the survey data, 8.2% of American households remain unbanked, while 20% of households are underbanked. Three in ten households lack access to savings accounts. The data also show a significant disparity based on race and ethnicity, with 21.4% of African-American and 20.1% of Hispanic households identified as unbanked. The data also show that 30% of all unbanked households are family households headed by single women.
Following Mr. Ernst’s presentation, the panel discussion began, with Sarah Rosen Wartell (President, Urban Institute) serving as moderator and asking probing and engaging questions of our three panelists. Ray Boshara (Federal Reserve Bank of St. Louis) gave a thorough rundown of the household balance sheet, and its effect on net wealth and the wealth gap. One intriguing statistic: $1 of income typically creates $5 in wealth for White families, while the same $1 of income creates only $0.70 in wealth for Black families. As Mr. Boshara stated, “Financial access is the sine qua non of the...balance sheet,” and in order to ensure increased social mobility, the access issue must first be addressed. Cliff Rosenthal (CFPB) then broke down the CFPB’s research agenda for the coming years, which will address many of the questions regarding access that have been plaguing researchers and practitioners in the asset building field. Mr. Rosenthal also highlighted five primary themes driving the CFPB’s work in the asset building field:
- Innovation – not just promising and safe, but affordable as well
- Data (or: “Data, data, data!” – his words) – what do we know, and what’s working
- Collaboration – add value to field by working with other federal agencies
- Access – what are patterns, problems, and paths for at-risk individuals
- Scale – what is and what can be brought to scale?
Lastly, J. Michael Collins (Center for Financial Security, UW - Madison) focused on the challenges facing researchers specifically. Because the field has limited revenue or funding streams for applied research, the challenge is finding projects that move multiple funders across sectors and disciplines to action. Mr. Collins also stressed the need to make research accessible, answering tomorrow’s questions rather than yesterday’s. As Mr. Collins stated, the “struggle for researchers is to figure out the ‘So what?’.... The ‘So what?’ test is important.”
With such a great panel and an audience of engaged practitioners and researchers, it was almost a guarantee the session would go well, but the Kickoff exceeded expectations. A big thank you to Sarah Rosen Wartell, Ray Boshara, Cliff Rosenthal and J. Michael Collins for sharing their time and insight!
From Saver to Homeowner: IDA Success Stories Part 4
By Bank of the West on 09/27/2012 @ 12:45 PM
To help families achieve the goal of homeowner¬ship, Bank of the West has partnered with CFED to match the money that low-income individuals saving for a down payment and to support the nonprofits that provide financial education to these savers. This is the fourth story in a six-part series featuring Individual Development Account (IDA) program graduates from across the country. This story comes from ECDC African Community Center in Las Vegas, NV.
The Perez-Zafra Family’s Story
The Perez-Zafra family is experiencing the American dream. Political refugees from Cuba, Maria and Julio came to the United States on April 13, 2010 with their children Melani and Arnol.
Julio, a college graduate with an engineering degree, soon found a job at a hotel and casino in Las Vegas as a utility porter. Maria worked as a housekeeper and Julio was promoted in January 2011 to Equipment Maintenance Manager. Despite success in their jobs, Maria and Julio were challenged by lack of financial knowledge and bank accounts. They discovered the Individual Development Account (IDA) program at the African Community Center.
With the information they received and help from the IDA staff, the family opened a bank account. While they saved to purchase their home, Maria and Julio received financial literacy instruction and training on managing a home mortgage. The family learned that their income had become too high for eligibility for home subsidy programs, but that did not stop them from saving. With IDA funds matching their personal savings, Maria and Julio had a total of $8,000 to put down on their new home. After the IDA program, Maria and Julio started saving for retirement, and they continue to budget for vacation, emergency funds and their daughter’s college education.
Opening the door to his home, Julio proclaimed with excitement and joy, “I am an American!” Julio added, “We achieved this in less than two years’ time, can you believe it? Only in America,” says Julio, “can such a thing be true.”
The Confluence of the Anti-Poverty and Asset-Building Fields
By Sean Luechtefeld on 09/27/2012 @ 11:00 AM
One thing that has always troubled me working in the asset-building field is the apparent disconnect between people working in asset building versus those working in the “anti-poverty” field.
To be sure, the anti-poverty field is broader than asset building, and it includes a great deal of innovative work that stretches beyond the promotion and expansion of economic opportunity. Professionals in the anti-poverty field, for example, are leading the charge against hunger and homelessness for children and families. This work is a critical component of our work to end poverty in America within our lifetime.
However, since last week’s Poverty Summit, I’ve been reflecting on how that field and our field interact. It turns out, as the Society for St. Vincent de Paul points out, “we’re all in this together.” Indeed, if we are to believe the argument that asset building is the “supervitamin” that makes anti-poverty programs work more effectively, then “anti-poverty” and “asset building” are different sides of the same coin.
This recognition, though not uniquely mine, is important because it points us to the need to build stronger partnerships across this artificially created bridge.
Enter the second national Poverty Summit. Leveraging the power of the Assets Learning Conference, the Poverty Summit convened 200+ leaders in the anti-poverty field to sound the call for an expanded and more intense dialogue about how we can combat poverty. The Poverty Summit featured a number of programs, like the Neighborhood Revitalization Initiative, that are founded on the belief that partnerships between diverse organizations in both the public and nonprofit sectors are key to combatting poverty.
In many ways, the Poverty Summit served as just the beginning of what will be an ongoing conversation. I’m sure that in the coming weeks and months, participants will be asking themselves the same question that has taken me in the days since: what are the critical components needed for a plan to end poverty? This isn’t just a question for the anti-poverty field; it’s a question for all of us.
What I Stole at the ALC
By Blair Benjamin, Guest Contributor on 09/26/2012 @ 02:00 PM
There’s much I could say about the presentations I heard in the Financial Education Best Practices session at the Assets Learning Conference.
Tina Gray of Creighton University’s Financial Hope Collaborative and Syble Solomon from LifeWise Strategies are both clearly terrific trainers who make financial education fun and substantive. They have their own unique tricks and techniques for creating the ideal atmosphere, the conditions that will allow people to open their hearts and minds to the prospect of financial capability. There’s no simple recipe for it. You have to experiment and constantly work at creating those conditions to build trust and break down barriers.
As Cory Booker said in his keynote on Thursday, “Good politicians borrow, but great politicians steal” (a paraphrase of a famous line which he or someone in politics stole from T.S Eliot or Picasso or maybe Igor Stravinsky -- I’ve heard it attributed to all three -- about distinguishing good artists from great artists).
So here’s one more little thing I know I’ll bring home from the ALC, having shamelessly stolen it from Tina Gray: when her students start looking at their own credit reports, and the room is filled with the dread and anxiety of that painful exercise, she suddenly plays the theme from Jaws and much of that negative energy in the room disappears. What a brilliant touch. Next time one of my artist groups is about to open the envelopes with their credit reports, you can bet I’ll be ready to hit play on the Jaws theme, just as if I had thought of it myself.
I now realize this could be the mantra for what the ALC makes possible: Good asset builders borrow, and great asset builders steal.
Thanks to all the ALC participants who once again came with pockets full, ready to let others steal. Now go home and re-fill those pockets over the next two years. I’ll be robbing you again in 2014.
From Saver to Homeowner: IDA Success Stories Part 3
By Bank of the West on 09/26/2012 @ 10:30 AM
To help families achieve the goal of homeowner¬ship, Bank of the West has partnered with CFED to match the money that low-income individuals save for a down payment and support the nonprofits that provide important financial education. This is the third story in a six-part series featuring Individual Development Account (IDA) program graduates from across the country. This story comes from the IDA program at NAYA Family Center in Portland, OR.
When Natalie became a single mom in December 2010, she decided that homeownership would help her make a stable life for her three boys.
Natalie came to the NAYA Family Center’s Pathways Home homebuyer education program and began individual homeownership coaching. She talked with a lender who told her she needed about a year of renting on her own in order to create a rental history for herself and demonstrate that she could meet her financial obligations.
Natalie continued her work with NAYA Family Center and attended financial wellness workshops. Then she heard about the center’s Individual Development Account (IDA) Program. After a few months of working with her homeownership counselor and attending the financial wellness workshops, she felt ready to start saving. Natalie opened an IDA in May 2011.
Natalie continued her work with NAYA Family Center and attended financial wellness workshops in early 2011. At the same time, Natalie had heard about the center’s Individual Development Account (IDA) Program. After a few months of working with her homeownership counselor and attending the financial wellness workshops, she felt ready to start saving, and Natalie opened up an IDA in May 2011.
While building savings, she learned about the NAYA Family Center’s partnership with Proud Ground, an affordable homeownership organization. Proud Ground’s Community Land Trust model meant that the nonprofit owns the land and would lease it for a nominal fee to Natalie, who could make any modifications she wanted to her new house. In the future if Natalie chose to sell her home, she would sell it at a similarly affordable price to the next buyer, making the home affordable for generations to come.
After enrolling with Proud Ground, Natalie continued to save in her IDA for a year and worked with her financial wellness coach. She cleaned up errors on her credit report, paid off her debt and rented a home near her work to solidify her credit and rental history.
In January 2012, a year after she started the programs, Natalie started looking for a home and made an offer in February on the perfect house and location for her family. It was around the corner from her parents, who would help watch the boys after school, and there was plenty of room for her three boys—ages 16, 14, and 12—and their two dogs and five cats. By purchasing her home through Proud Ground, Natalie could access additional monies for home renovations. She moved into a beautiful home with a new roof, new exterior paint, some new windows and new appliances.
Natalie’s advice to other first-time homebuyers: “Be patient and organized. Keep all your financial documents together so it’s easy to access. Ask questions so that you understand what’s happening, and don’t be afraid to say that you don’t understand.”
Highlights from IDA Research Session
By Blair Benjamin, Guest Contributor on 09/25/2012 @ 10:45 AM
For an IDA wonk like me, no ALC would be complete without a deep dive into the latest academic research on participant outcomes in IDA programs. My friend and colleague Margaret Miley of The Midas Collaborative in Massachusetts moderated a fascinating panel, bringing a nice practitioner and policy angle to the discussion. The session was titled IDA Research: Recent Findings and Future Directions.
Michal Grinstein-Weiss of Washington University in St. Louis led off by taking us through her long-term research on the American Dream Demonstration IDA study that took place from 1998 to 2003. I had heard about the early results of that study, but I hadn’t heard of “Wave 4,” in which the researchers re-interviewed both the treatment group members (IDA account holders who had been randomly selected to receive an IDA from out of a larger pool of eligible applicants) and the control group members who were not selected for the IDA from the pool of those eligible and interested.
The bottom line was that the majority of these motivated people (both IDA savers and the control group) made big improvements over 10 years, even though the Wave 4 interviews were taking place in the wake of our severe financial crisis. In several areas (business ownership rates, educational attainment, retirement savings), the IDA treatment group did not statistically out-perform the control group, and one could hypothesize that since the control group members were a pretty motivated bunch, they might have found other supports for their aspirations even though the IDA account was not made available to them. However, there were indeed statistically significant improvements in home ownership rates and retention over 10 years for the IDA treatment group relative to the control group, and the researchers also observed a result that intrigued me: male participants in the IDA treatment group did experience large improvements in their educational attainment relative to male participants in the control group. The researchers did not have an explanation for that, but it was possible that the IDA intervention was particularly valuable for males pursuing post-secondary education. I’d love to understand more about gender differences in the context of IDA outcomes.
Cäzilia Loibl of Ohio State University discussed a study that explored IDA program strategies aimed at increasing savings rates and participant retention. They found strong positive results from explicitly increasing the expectation about the frequency of deposits by account holders (from once a month to twice a month), which tended to increase the total monthly amount saved, and they found that reminder calls once each month a few days before the monthly due date for deposits was quite effective. This latter result shouldn’t come as a surprise to practitioners, but I was interested in the observation about frequency of deposits.
They also found some positive results on the regularity of deposits from introducing a lottery component each month (those making deposits in a particular month would be entered in a lottery to potentially win a much larger match in addition to their normal match).
The third presenter, Greg Mills of the Urban Institute, provided an overview of the upcoming randomized control study of savers participating in an Assets for Independence IDA program. It will be exciting to see if the results mirror what was observed in the studies of the American Dream Demonstration or if the maturing of the IDA field might lead to different outcomes this time around. I’ll have to look for Greg’s presentation at the next ALC in 2014 to see what the study is beginning to reveal.
ALC 2012 in the Twitterverse
By Aimee Chambers, Guest Contributor on 09/24/2012 @ 04:30 PM
I am so pleased to have attended the 2012 ALC. It was truly rejuvenating to attend now that I am working in an asset-building field. I now have my own point of reference for when people make that recurring comment - "I didn't even know this was a THING!" I am blessed to have come into my job knowing asset building is a "thing," but I sometimes find it difficult to convince others around me to see, and truly understand, the bigger picture. I am thankful to CFED for providing me with that foundation for my post-graduate career. It was just two short years ago that I was on the other side of the registration table. Congrats to my CFED family on another successful Conference. I can attest first-hand to the tireless effort and intense thought that is put into every aspect of the ALC experience.
One of the things that particularly strikes me as awesome at any CFED event is the ability to capture the event via social media. The Communications Team makes magic – and inspires others to partake! I, for one, do not use Twitter. However, at CFED events I find myself inspired and engaged. In addition to each of the other details to which CFED’s event planners pay close attention, CFED utilizes Twitter, live blogging and each of its social media outlets to create an additional layer, another community, a virtual life at its events. Meanwhile, the larger CFED community buys in in such a way that it is always useful, relevant and, most importantly, fun.
Those taking notes, live blogging and tweeting managed to capture the event in a completely different way than simply recording sessions. Here are just some of my Tweets, and my favorite Tweets from others.
- @ideasaction: 49 different #FICOscores and a 4th big #creditbureau emerging?!?!! #whoknew #creditbuilding is #assetbuilding, #alc2012
- @ideasaction: Challenging questions about #jobcreation: does data reflect how much we need to recover or show the new norm? #alc2012
- @LebaronSims: No offense to any of the other presenters, & I'ma let you finish, but #PrepaidCards was the best session of the past 2 days. #ALC2012
- @mwgrote: Only three more hours to figure out identity of @assetpony.
- @assetpony: @CoryBooker makes me want to pick up and move my pony stall to Newark. Anyone else? #alc2012
- @assetpony: "There is way more capacity in this country than there is opportunity." - Bob Friedman, CFED Founder & nicest man on earth #alc2012
If you did not participate in the ALC "twitterverse" this time around, I hope to see you logged on and tuned in at ALC 2014 - that's likely when I'll be happily making a virtual comeback. To CFED, thank you again for having me, it’s been really great to reflect on experiencing the conference from the role of planner, participant and virtual attendee. I'm looking forward to the challenge of figuring out a new role next time around!
The Winners of the American Dream Photo Challenge
By Veronica Weis on 09/24/2012 @ 11:30 AM
Last Friday, at the 2012 Assets Learning Conference, we finally announced the winners of the American Dream Photo Challenge. Simon Bowler, a father saving for his daughter's music lessons, won the grand prize of $500 toward his goal. Lakota Solar Enterprises and Lava Buckley each won $100 as a contribution to their savings goal. All of the finalists were displayed in a gallery during the conference. For those of you who missed them, here are the winning entries:
I participated in a CFED savings program in Los Angeles and have found the organization an invaluable help to reaching my goals. I have opened a savings account for my daughter, Nikita, who is 11 and is an avid piano player. It is my hope that with the savings I get from the CFED account I will be able to get her a teacher who can take her to the next musical level and on towards her dream of becoming a musician. Thank you CFED for helping this dream slowly become a reality.
We are Lakota Solar Enterprises, a Tribal Renewable Energy company! Our van’s transmission is in need of repairs. We rely on our van to carry out our projects, bringing solar air heaters to Native American families in need. The functionality of our van is vital to our work. $500 will be a huge help for us to safely transport systems to homes! Our solar heaters provide affordable heat sources to families living at life-or-death poverty rates, and help to reduce the dependency on polluting and destructive sources of energy. Make a difference; choose Lakota Solar Enterprises!
Lakota Solar Enterprises
I received a Bachelors in Business with hopes of running my own business. Over ten years later, I still work for other people. Although I am grateful for my work experience since it has taught me various aspects of running a business, but it is time for me to finally start my own company! I would love to have an embroidery jewelry design business to create jobs and art. I have the foundation to create embroidered necklace pieces but have been saving to launch my business full time. Fingers crossed that the dream will become reality!
Congratulations to the winners and a sincere thank you to everyone who participated in the photo contest and shared their wonderful entries. We hope you keep saving for your financial future!
Winding Down: Second National Poverty Summit
By Sean Luechtefeld on 09/22/2012 @ 03:45 PM
EDITOR'S NOTE: We're bringing you one more blog post, live from the Closing Plenary of the Second National Poverty Summit. We'll have more highlights and recaps of sessions from both the Assets Learning Conference and the Poverty Summit next week, so be sure to check back often and let us know if you want to use The Inclusive Economy to share your thoughts and ideas with our readers.
After four days of incredible sessions at the Assets Learning Conference and the Poverty Summit, we're winding down with yet another fantastic presentation from Washington Post columnist E. J. Dionne.
Dionne is probing the audience to think about the role that the Church and other faith-based organizations play in advancing the anti-poverty mission. The Church, Dionne argues, does fantastic work in connecting hard-working, lower-income Americans with the services that they need and that make a lasting impact on our communities. Yet, this important function isn't widely enough known; we need to do a better job of singing the praises of the work of every person in this room.
This idea is one that has reverberated throughout today's programming. One important priority in the anti-poverty field is to change the dialogue about the approaches we take to improve service delivery. The fact of the matter, Dionne notes, is that we're doing good work. At no other time in the history of our field have we been so innovative in our approach to expanding the bounds of the mainstream economy. This needs to be known publicly, and this dialogue needs to reflect that.
On another note, Dionne is talking about the way the anti-poverty dialogue depicts lower-income Americans. The problem isn't that poorer families are irresponsible as popular discourse would suggest. Instead, these people are drowning in responsibility, responsibility that higher-income individuals don't have. This is another essential part of how we need to reshape the dialogue about poverty - support for anti-poverty programs won't succeed without the recognition that lower-income people are lower-income because of current inadequacies in anti-poverty programs. Clearly, it's the people in this room who will continue to heed Dionne's call and lead the charge to reshape the anti-poverty dialogue in America.
Still with us at the Poverty Summit? Use the Comments below to share your thoughts and feedback about this exciting keynote speech, and about the other great sessions we've brought you over the past two days.
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