The Asset Building Narrative Is in the Works
By Evelyn Burnett, Guest Contributor and Helen Leung, Guest Contributor on 11/28/2012 @ 12:30 PM
EDITOR'S NOTE: This post originally appeared on Living Cities' blog The Catalyst. Read the original post here.
It is no surprise that many people zone out when they see statistics, but love a good story. The asset-building field is crafting its story, creating the narrative and casting new characters. As the field forms the statistics into a compelling narrative, it is imperative that equity play a leading role. Recently, the Assets Learning Conference sponsored by the Corporation for Enterprise Development (CFED) brought together over 1,300 government leaders, service providers, bankers, and funders to discuss trends, lessons, and best practices for expanding economic opportunity for low-income families. We gained significant insight into the burgeoning field of asset building that we would like to share with you.
CFE defines assets as tangible and intangible economic resources – a home, savings in a bank account, a college education – that can produce value for their owner. Assets are important because they provide the ability to weather a job loss as well as the potential to move up the economic ladder. Someone new to the asset-building field might ask, how can we focus on assets while the basic needs of low-income families are unmet? Michael Sherraden, author of Assets and the Poor, argues that assets have economic, social and psychological power that income alone does not. Assets are the foundation for achieving financial sustainability and escaping poverty. Here are some observations from the conference:
Communities thirst for practical tools. Rather than theories, leaders want tools and action plans. Living Cities designed and moderated a standing-room-only session called “Embedding Financial Empowerment into Social Service Delivery.” Program Associate Helen Leung moderated the panel featuring our Income & Assets Working Group grantees and grant evaluator. The panel highlighted the ways Louisville and Seattle are integrating financial empowerment into their homeless-service continuum for low-income people. Our audience was intrigued by our unconventional focus on the process of helping people manage their assets rather than just the products that dominate the field. Our panelists highlighted various emergent processes in asset building, including cross-sector partnerships, improved contract requirements for social-service delivery, and training on financial empowerment approaches. Ultimately, what matters most is perspective. Seattle’s Senior Mayoral Advisor Jerry DeGrieck, a leader in municipal financial empowerment, commented that “folks are more comfortable talking about sex and drugs than financial empowerment for low-income people.” In order for financial empowerment to succeed as an asset-building strategy, practical tools must be complemented by education, technical assistance and provider training.
Growing race and gender wealth gaps must be addressed. Data strongly link wealth inequality to income inequality. Wealth confers benefits that income does not. Wealth can generate further income, be used as collateral for loans, be passed from generation to generation, and help weather financial crises. Wealth inequality is distinct from income inequality and much more severe. Dr. Mariko Chang, author of Shortchanged: Why Women Have Less Wealth and What Can Be Done About It, states that white families have 18 times the wealth of Hispanic households and 20 times the wealth of African American households. The gender wealth gap is similarly severe. Women have less wealth and disposable income, yet are more likely to be the sole custodial parent and to support more people. For both women and minorities, there needs to be increased focus on the “wealth escalator” – the transition potential from income into wealth. Closing racial and gender wealth gaps is imperative. Strategies to closing these gaps range from access to employment and appropriate financial products, policy interventions that remove asset limits on public assistance and greater focus on product innovation and outreach.
Social capital is not reserved for only the rich. A theme that emerged repeatedly, especially among service providers, is the need to leverage social capital – the value derived from social networks. A big challenge is that lower-income populations have different and arguably more limited types of social capital. For example, 80% of available jobs are never formally advertised and therefore remain inaccessible to people without extensive social networks. Innovative programs piloted by Boston Rising and the Family Independence Initiative help strengthen and broaden social connections for low-income individuals. Both organizations challenge the field to invest in programs that build social capital and encourage support networks among family and friends. The successes of these efforts demonstrate the unleashed power of social capital when applied to lower-income communities’ financial empowerment and asset building strategies.
Unfortunately, most systems we rely on for prosperity are obsolete, and overhauling the systems that support low-income people is incredibly difficult. We believe that asset building practitioners and advocates have to stop working around systemic problems and face wealth and gender gaps head on. There is great potential in moving innovations in financial empowerment and social capital from the periphery to the mainstream and to scale. So, as the asset-building field pens its story, we suggest integrating the points made here into the storyline. The key mandate is that the narrative compels actions on behalf of low income people.
Success Story: New Financial Education Workshop in Texas
By Julian Mensah, Guest Contributor on 11/16/2012 @ 03:30 PM
Literacy Instruction for Texas has been at the forefront of helping improve the literacy rate in Dallas for over fifty years. All of our adult low-level literacy classes are taught by volunteer instructors. We firmly believe that it's unacceptable that 21% of adults in the 11 county vicinity of North Texas are functionally illiterate.
We've recently begun to focus more on financial literacy by partnering with YWDallas to offer our students a financial educational workshop. We had the opportunity to attend the 2012 Assets Learning Conference and realize education and financial stability go hand in hand.
Just this week, three students were the first to graduate from the Financial Educational Workshop. We owe a big thank you to YWDallas for administering the workshop on our grounds! These three are now eligible for Individual Development Accounts (IDAs).
Daria Sheehan of the Citi Foundation Reflects On the ALC and Beyond
By Veronica Weis on 11/02/2012 @ 02:30 PM
EDITOR'S NOTE: While the Assets Learning Conference took place over a month ago, ideas and suggestions from those who participated are still pouring into our inboxes. To showcase the power of the sessions and conversations that took place in September, we've compiled a series of interviews with attendees.
Daria Sheehan is the Senior Program Officer at the Citi Foundation where she directs the Financial Capability and Asset Building portfolio in the US, managing over $13 million in philanthropic investments annually. She was moderator of two sessions during the Conference, "Nonprofit Distribution of Financial Products: The Need, Opportunity and For-Profit Perspective" and "Promoting Financial Capability by Improving Access to Financial Products: A Winning Strategy for Building Consumer Credit" and recently shared her reflections with our team based on that experience and other sessions she attended.
Which session(s) inspired you the most and what were some of the major takeaways?
There was a session moderated by Credit Builder’s Alliance about using rental payments as an alternative data source to improve someone’s credit score. CBA is launching a pilot with Citi Foundation’s support to test this idea using Experian’s Rent Bureau product. Since so many LMI people rent and rent is most likely their largest monthly expense, they should earn credit for timely and consistent rent payments just like someone who pays a mortgage. It was interesting to learn more about how this alternative data such as rental payments can help thin file or no file clients build their credit. It was also interesting to hear the reaction -- both positive and the concerns that were raised in the session. Although most were very excited about the potential of this program, others expressed concern about hurting clients who have difficulty paying on time, while others underscored the importance of building residents awareness of the program and the need for financial education to help clients take advantage of the opportunity. All of this will be useful as CBA designs and launches the pilot.
I was moved by the young woman who spoke about her struggles to get an education and build her independence after being in foster care. I wondered why the Foster Care system doesn’t set up trust funds for children to help them once they age out of the system.
Did the ALC inspire any changes or new approaches after you returned to your organization?
The ALC always inspires me. The sheer growth in attendance underscores that this is important work and that there are a lot of dedicated professional working to find ways to help low-income families gain greater financial security.
I was interested in the 1:1 Fund to raise private funds to match savings through a social media site. I could see applicability to our work to promote children’s savings for college.
What more can we do post-ALC to foster communication with and between attendees?
There were so many sessions I couldn't attend because the agenda was so full of great sessions. Continuing to highlight and provide updates on the more innovative work that’s being done on your website would be terrific.
If you attended the 2012 Assets Learning Conference and have a similar impact story to share, please leave a comment below!
"A Foot in the Door" Premieres in San Francisco
By Veronica Weis on 11/01/2012 @ 10:30 AM
This evening, the San Francisco Office of the Treasury will host an exclusive screening of Kindergarten to College's premiere mini-documentary, "A Foot in the Door."
The 17-minute video, produced by CFED, Citi Community Development, the San Francisco Office of Financial Empowerment, GroundSpark and Citizen Film, tells the story of Kindergarten to College, the first universal children's savings account program in the country. Piloted by the City and County of San Francisco, the program automatically provides a college savings account to children when they start kindergarten.
The film was developed for policy advocates, government agencies, nonprofit service providers and others to help make the case for universal CSA programs as an essential method for helping children build assets at a young age to ensure their full participation in higher education and the financial mainstream. The event will take place from 5:30pm to 8:00pm in the Brava Theater Center.
The September debut during the Assets Learning Conference was met with applause and praise for the groundbreaking work being done in San Francisco to further CSA programs across the country. If you missed the film premiere during the Conference and cannot attend the event tonight, you can order a free copy. Simply visit www.afootinthedoor.info and click the “Order a Copy” link in the navigation menu. We hope you enjoy this powerful film and share it with your friends and family.
Tiziana Dearing, CEO of Boston Rising, Shares Her Post-Assets Learning Conference Ideas
By Veronica Weis on 10/30/2012 @ 03:30 PM
EDITOR'S NOTE: While the Assets Learning Conference took place over a month ago, ideas and suggestions from those who participated are still pouring into our inboxes. To showcase the power of the sessions and conversations that took place in September, we've compiled a series of interviews with attendees.
Tiziana Dearing, CEO of Boston Rising, presented at the conference on the topic of Social Capital and Wealth Accumulation. She recently shared her perspective on a few of the sessions that she attended and how they've influenced her work.
Which session(s) inspired you the most and what were some of the major takeaways?
The session that had the biggest impact on me was about the Racial Wealth Gap. While I knew the current disparities in racial wealth in the United States, the panel really brought home in a new way the extent to which the gap compounds. Assets accrue, so if you start with fewer, or none, the gap can grow exponentially over time. That is exactly what we’ve seen.
Did the ALC inspire any changes or new approaches after you returned to your organization?
I would say it did. At Boston Rising, I and we talk about the three tools for rising – an education that gives you a shot at a job, a job that lets you build assets over time, and strong social connections you can leverage along the way. The conference brought home for me the extent to which one might have a job that provides sufficient income to accrue assets, but there are a range of policies, practices and questions of access that could still make it incredibly difficult. Therefore, “a job that lets you build assets over time” has at least two stages to it. This will affect how we think about investing in the second tool for rising in the long run.
At the ALC, more than once I heard someone refer to the “intergenerational transfer of poverty.” That really hit home for me. It creates a parallel construct with the “intergenerational transfer of wealth” that I think resonates quickly with people. I use it all the time now in my speeches and communications.
What more can we do post-ALC to foster communication with and between attendees?
It’s always terrific if you can continue to send people very small action steps that they can take quickly and easily to keep the momentum going.
If you attended the 2012 Assets Learning Conference and have a similar impact story to share, please leave a comment below!
Closing the Divide
By Alan Cantor, Guest Contributor on 10/24/2012 @ 10:45 AM
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
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.
A Conversation with Savers: IDA Saver Tiara from Trinity University
By Veronica Weis on 10/17/2012 @ 06:30 PM
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
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.
A Foot in the Door
By Sean Luechtefeld on 10/12/2012 @ 03:30 PM
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.
A Conversation with Savers: Rising Up to Give Back
By Veronica Weis on 10/11/2012 @ 05:00 PM
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
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.
Highlights from Understanding Prepaid Cards
By Lebaron Sims on 10/10/2012 @ 12:30 PM
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
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.
Leveraging a Full Range of Philanthropic Resources
By Lauren Williams on 10/05/2012 @ 04:00 PM
What is impact investing? It’s an investment that generates both a financial and social return. The Calvert Foundation makes it possible for anyone to be an impact investor by selling a Community Investor Note, which can be held in investors’ accounts like any other security. Calvert takes the capital from those notes and invests in communities.
Does it have to be market rate? Many people talk about impact investing as the opposite of Socially Responsible Investing (SRI)—which used to primarily involve “negative” screening, but also now aims to affirmatively invest in companies that represent socially responsible behaviors. Calvert sees SRI as a type of impact investing. SRI investing is typically market rate, but other types of impact investing is done at a below market rate. Given today’s interest rates, the Calvert Foundation’s below market rate options are still relatively competitive. As long as a social return is being generated, they still see it as an impact investment.
How does impact investing work at Bank of America? Dan Letendre began by quoting the Bible (Matthew 6:24): “No one can serve two masters. Either you will hate the one and love the other, or you will be devoted to the one and despise the other.” How is this scripture relevant, you ask?
On an institutional basis, Dan suggests that we need to identify creative ways to combine “right brain” and “left brain” investors—assuming that each serves a different “master”—in order to create impactful investments. Essentially, he argues that in some cases, the best way to deliver impactful investment is to bifurcate investments based on investors’ goals. For instance, Bank of America is an investor in Resident Owned Communities USA (ROC USA®)—a social venture that enables and finances the conversion of manufactured home parks into resident owned cooperatives. As an investor, Bank of America’s focus is on minimizing financial risk. At the same time, other joint investors provided the base equity investment for ROC USA®. These investors—CFED, the New Hampshire Community Loan Fund and NCB Capital Impact—have a primary interest in ROC USA’s outcome: preservation of affordable housing through cooperative community ownership.
Dan Letendre directs Bank of America’s Community Investments; in 21 years of lending to CDFIs, they have not lost one dollar. Dan’s operation is not generating a ton of money for Bank of America, but as he said, Bank of America has other endeavors whose primary focus is profit-generation. Still, he can sit across from any nonprofit or any impact-minded investor and tell them that they can invest and get their money back. In the long run, his primary aim is to operate a break-even operation while providing capital to CDFIs so that they’ll invest in low-income communities where no other banks will offer financing. In effect, Dan’s team only provides capital where no other bank will and in such a way that the operation breaks even.
Why did the W.K. Kellogg Foundation begin exploring impact investing? They did so in an effort to confirm that they were doing everything in their power to serve children’s needs. They began by taking $100 million from their endowment for what they call “Mission Driven Investment.” Today, they have deployed about 80 – 90% of that investment and created a direct investing portfolio with about five investments to date. So far, they’ve found that direct investments have given them the best return and the greatest impact.
All three presenters agreed, we’re dealing with a spectrum when it comes to the structures we need to finance social change. The best way to address some social needs is through philanthropy; for others, impact investing works best.
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.
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.
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.
2012 Strength of State Asset Limit Policies
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.
Currently reading page 1 of 5.
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