Posted on 01/27/2011 @ 03:45 PM
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Congressional Briefing on Center-Based Strategies for Moving Working Families into the Middle Class
By Kori Hattemer on 12/05/2012 @ 12:00 PM
United Way of the Bay Area (UWBA), Annie E. Casey Foundation, Local Initiatives Support Corporation (LISC), United Way Worldwide and MDC are leading the way in developing an innovative approach that provides “bundled” services that integrate multiple programs in one place to address the complexity of a person’s financial situation.
UWBA partnered with the Annie E. Casey Foundation, LISC and MDC to present their approach yesterday during a congressional briefing hosted by Congresswoman Barbara Lee, who chairs the Out of Poverty Caucus. The organizations presented the findings that are outlined in the Ladders to Success report UWBA recently published. The report details how United Way and other organizations are providing multiple services under one roof to move people out of poverty.
At the briefing, UWBA highlighted their 10 Bay Area SparkPoint Centers that bundle services to give low-income residents one location where they can access public benefits, receive financial and job coaching, credit counseling and job training, and get referrals to housing, child care and emergency food. UWBA and their partners emphasized the need to find innovative ways to streamline services and shift how government services are administered as Congress works to fix the federal budget.
The Annie E. Casey Foundation created the Center for Working Families model that is being implemented across the country by United Way, LISC and MDC in more than 90 sites. In 2011, these sites provided education, employment and financial services to nearly 13,000 clients and found that clients who received two or more bundled services were two to three times more likely to achieve their economic goals (e.g., obtaining employment, increasing skills, improving credit or starting savings) than those who only took advantage of a single service.
CFED believes that the integration of services presents a tremendous opportunity to impact low-income households by innovating on how, when and where integration occurs – particularly when it comes to embedding financial empowerment strategies. Currently, we are bringing together five social service delivery organizations in an Intensive Learning Cluster and working with them to integrate financial empowerment into the services they provide by leveraging our asset-building expertise and connections to experts throughout the field. We recently published a blog post and brief about our work on this project to date and will continue to publish our findings throughout the Intensive Learning Cluster as we work to build on the integrated service delivery model.
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.
Prize-Linked Savings to be Featured at #ALC2012
By Joanna Smith-Ramani, Guest Contributor on 09/13/2012 @ 11:00 AM
Joanna Smith-Ramani is the Director of Scale Strategies for D2D Fund, working on the expansion of successful innovation pilots. Prior to joining the D2D, Joanna was the Director of the Baltimore CASH (Creating Assets, Savings and Hope) Campaign, an asset building, tax preparation and EITC coalition in Baltimore, MD.
All too often, the act of saving is seen as a sacrifice and denial. It’s no wonder in that context that when given a choice between saving and spending on entertainment or something “fun,” most Americans choose the fun. It’s about time for Americans to get it all out of saving – an engaging product that powerfully bundles saving, entertainment, and a moment to dream. This bundle is not altogether different from what drives consumers to the $50 billion lottery industry. Imagine how many people could be reached if saving was an exciting game with no risk of losing?
Prize-linked savings (PLS) engages consumers to save by changing the savings experience. Savers are rewarded with prizes and incentives. By doing so, PLS reframes the act of saving into a fun game with real rewards, rules, suspense, and possibility. Different features of the game can be changed or customized to better suit a range of savings products and programs. The PLS game concept has no limit beyond creativity and can be applied in a variety of settings from banks and credit unions to prepaid cards and online financial management systems.
PLS programs began overseas and have been successful in the United States, most notably in Michigan. In 2009, Michigan credit unions participated in the PLS-based program “Save to Win” and rewarded members who saved by entering them into various savings raffles. Annually, one member got the shock of a lifetime when they won a $100,000 grand prize. Michigan credit unions increased their engagement with financially vulnerable consumers and kept them coming back for more – 64% of new savings accounts rolled over from one year to the next. The success of Save to Win Michigan inspired other states and entities to launch similar PLS programs to better serve consumers.
Since the pilot in Michigan, Save to Win (STW) has grown to 58 credit unions, with over 25,000 unique accounts saving more than $40 million. The state of Nebraska signed on to STW at the beginning of 2012 and is showing promising gains. In its first seven months, Save to Win Nebraska has engaged 10 credit unions and opened over 1,300 member accounts. These STW accountholders have saved over $1.1M, representing an average savings of $857. Recent legislation has opened the doors for more states to follow Michigan and Nebraska as they bring innovation to sustainable savings programs. Click here to learn more about Save to Win.
The game frame worked into PLS products has nurtured positive attitudes towards saving and motivated consumers to save for the long term. A new PLS lottery ticket model takes the game concept a step further by offering a “no-lose lottery ticket” offered by the experts in games - a state lottery. A consumer simply buys a designated PLS lottery ticket and the funds are held by the state in a savings account. The ticket is a “win-win” because even if a prize isn’t won, the entire cost of the ticket goes towards a savings fund the consumer can build up and use for their financial needs. The PLS lottery ticket is designed to attract a wider audience with the chance to win, without the risk of losing, generating high levels of excitement and reward-anticipation.
The PLS Lottery Ticket will be debuted at the 2012 Assets Learning Conference, where Doorways to Dreams Fund will be administering their own “lottery” complete with prizes. Join D2D Fund, PayPerks, and MD CASH as they offer insight into the future possibilities of prize-linked savings and how advocates can bring PLS to their state. View the agenda for more information on this session.
Innovative Idea Champion Patricia Johnson Authors Op-Ed
By Patricia Johnson, Guest Contributor on 12/19/2011 @ 11:30 AM
I’m hopeful the Occupy moment will evolve into a less grungy, more strategic political movement to lessen economic disparities in the United States. A more realistic vision is that it could unite the 99% to work together on solutions that don’t require negotiation with the 1%, or even Congress.
I’ve got a suggestion that doesn’t cost much, doesn’t need a government agency to run it, and could help reinvigorate our cities: hire teenagers.
Nationally, youth unemployment hovers around 20 percent. In neighborhoods where low-income African-American and Latino youth are the majority, unemployment approaches 40 percent for people under 24 years of age.
I teach at Game Theory Academy, a nonprofit I founded to make economic education more relevant, and accessible to marginalized youth. In our classroom conversations, we discuss topics such as how the economy works, how students can act in their own best interest, and the opportunity costs of doing nothing, rather than working or pursuing education. Students often ask me, “Hey, Trish, can you find me a job?”
Among students at Game Theory Academy, a shocking 63 percent report not having any kind of part-time job. When I was 15, I got a job at a local real-estate office answering phones. I worked at a copy shop the summer before college. But it’s not the 90s anymore, and businesses don’t hire teens the way they used to.
The receptionist answering the phones at the local real estate office is easily twice the age I was when I did that job. I've never seen a teen at the register at the copy shop near my office. Adults need those jobs too, but could they use some support from an eager teen?
The U.S. Small Business Administration reports that small businesses generated 64 percent of all jobs created in the last 15 years. If they are the engine for growth, then small businesses are in the best position to take the lead on ending youth unemployment.
Back of the envelope: if a local, small business hires one teenager for ten hours per week at ten bucks an hour, the cost is about $100 per week, plus some supervision expenses. Assuming 50 weeks of work in the year, that costs $5,000 and change.
Oakland, where I am based, is home to 25,000 youth ages 15 to 19, and at least 10,000 small businesses. If each of those businesses hired one job-seeking teenager, we could make a huge dent in that 40 percent youth unemployment number. Do the math in any city, and it’ll add up.
What impact will this have?
Youth are local spenders. They ride the bus. They buy snacks and go to movies. If our young workforce spends in Oakland and nearby cities, that’s estimated to be close to $500 in annual sales tax revenue per youth – or $6 million total. Imagine the effect if cities in every state joined this call to action.
A majority of juvenile crimes are property crimes. Teens who earn money have less incentive to steal and deal drugs. A paycheck shifts the risk-reward ratio. They are too busy. They have money in their pockets and a sense of opportunity.
Teens who work are more likely to find and sustain jobs as they age into adulthood. Studies show that unemployment as a youth leads to a lifetime of lower wages. It also lowers life expectancy. Give youth jobs now, and they will have higher lifetime earning potential - and the habit of employment and better health. Once you’ve had a job, you want another one.
Dust off an apron or a clipboard and invest $5,000 in our nation’s youth, and in your own business. They might surprise you with the value they add.
Patricia Johnson is the founder of Game Theory Academy. The Inclusive Economy thanks her for sending us this recent op-ed.
Cordes Fellowship Application Window Now Open
By Sean Luechtefeld on 11/30/2011 @ 12:30 PM
Opportunity Collaboration, the annual convening in Mexico which takes place each October, is now accepting applications for their Cordes Fellowships. Cordes Fellows are exceptional social entrepreneurs and nonprofit leaders engaged in poverty alleviation and economic justice enterprises.
According to Opportunity Collaboration’s website, “the purpose of the Cordes Fellowship program is to (a) open doors, minds and networks for emerging social entrepreneurs and nonprofit executives, (b) enrich the Opportunity Collaboration with new, emerging leaders, and (c) infuse the collaborative discussions with a diversity of perspectives.
Applications are being accepted now through January 31. To apply, visit the Opportunity Collaboration website.
New Book: The Innovation Master Plan Framework
By Sean Luechtefeld on 11/28/2011 @ 11:45 AM
Last month, innovation@cfed Strategic Advisor Langdon Morris released a new book titled The Innovation Master Plan Framework: The CEO’s Guide to Innovation. The book is available for purchase here, and we’re excited to congratulate Langdon on his newest work!
To give readers a preview of the book’s contents, Langdon sent us an excerpt from the introduction. Check it out below, and let us know your thoughts in the comments section!
Is there any doubt in your mind about the importance of innovation? Do you feel that innovation is vital to the future of your company? And perhaps to your own future as a business leader?
Since you’re reading this, it’s reasonable to assume that you do. And of course I agree with you.
If you’re thinking about innovation, then it’s likely that you’ve already discovered that the process of innovation is difficult to manage. It’s risky, expensive, and unpredictable.
This explains why Einstein supposedly said, “It’s called ‘research’ because we don’t know what we’re doing.” If we did know what we were doing we’d call it something else, like “engineering,” or “product design,” or “marketing.” And even when we think we do know what we’re doing, the results from the innovation process frequently fail to live up to our expectations.
Further, our innovation efforts must bring improvement not only to our products and services, but also the very processes we use to run the business. Louis Gerstner puts it this way: “In almost every industry, globalization is leading to overcapacity, which is leading to commoditization and/or price deflation. Success, therefore, will go to the fittest – not necessarily to the biggest. Innovation in process – how things get done in an enterprise – will be as important as innovation in the products a company sells.”
CEF Savings Program Provides Savings Opportunities for Homeless
By Alex Biggers, Guest Contributor on 11/07/2011 @ 11:30 AM
The Community Empowerment Fund (CEF) in Chapel Hill, North Carolina began as a microloan program working with the local homeless population. Based on the idea that poor access to capital (even just $60 for work boots or $500 for a truck) could prevent people from accessing economic opportunities, CEF focuses on providing capital that could allow members to break out of cycles of homelessness and poverty. Volunteer students from the University of North Carolina at Chapel Hill are paired two-on-one with a “member” and act as both loan officers and “advocates,” serving as friends, job coaches, housing searchers, much more. Members and advocates meet weekly to discuss goals, options, resources, and make loan payments.
It was at one of these member-advocate meetings that the CEF Savings Program was born. Tommy, a CEF member at the time, had received a cell phone microloan from CEF for a $120. After weeks of making $15 payments, he was almost ready to pay off the loan. On this day, however, Tommy came into his meeting with $320—almost three times the amount of his loan. The advocates were dumbfounded, but Tommy explained that he trusted them to hold his money so that he wouldn’t spend it.
In this moment, we identified a real need in the homeless community: what people were really lacking wasn’t necessarily just income, but possibly a safe accessible place to save their money as well. Especially for people like Tommy who are recovering from substance abuse, having a safe and “off-hands” account could really help facilitate savings and prevent relapse.
While traditional Individual Development Accounts (IDAs) work towards three main asset purchases – homeownership, education, and small business development – we recognized that savings and housing were in themselves assets to the homeless living in and transitioning out of shelters. While staying at shelters, expenses tend to be minimal. However, when it comes time for many residents to move out, they find that despite their best efforts, they still don’t have enough money – for a rental deposit, furniture, utility deposits, and a financial cushion for emergencies. Though some may have enough funds to move into proper housing, many people have a hard time keeping up with their rent while dealing with volatile incomes and unexpected expenses, and many even return to homelessness.
Based on the unique need of our members, we structured the savings accounts to incentivize savings towards anything the CEF members see valuable, be it $2000 for an emergency fund, $150 towards a refurbished laptop, or $900 to move into new housing. CEF members define both the amount of the goal and the asset. Unlike a traditional IDA, the CEF match rate is only 10%. Although low compared to other match savings programs, CEF staff has found that this rate truly does incentivize saving, while still allowing the program to remain flexible and easy to administer.
While many CEF members have had negative banking experiences (having been shut off from mainstream banking due to poor credit or unmet minimum balance requirements), we help put a face to the institution holding member money, while bringing the convenience of a bank to our members. CEF can take deposits and set up accounts from anywhere—be it at the shelter, in the CEF office, during weekly meetings at a coffee shop, or after weekly CEF classes.
The savings accounts are held in a CEF custodian account “for benefit of” each member. There is a 48-hour waiting period for withdraws after the member makes a request to his/her advocate. Like an IDA, this helps prevent “impulse” withdrawals, giving people time to think whether or not it might be an unneeded expense. Unlike a traditional IDA, however, members are still allowed to withdraw without having to start from scratch to receive match funds. CEF believes that a traditional model just would not work for most of its members, who are living paycheck to paycheck.
Also different from most IDAs, CEF runs its financial classes in discussion-based groups, facilitating resource sharing, fostering confidence in what people do know, and providing learning tools to move forward. Beyond financial literacy, these “Opportunity Classes” seek to cultivate knowledge about all of the topics that are involved in reaching CEF members’ goals—effective goal-setting, health and wealth connections, local resources, job readiness skills, and tools to find and stay in housing.
Through a network of strong relationships, assertive individualized support, flexible accounts and matches, holistic education, and self-selected goals, CEF continues to facilitate savings, promote asset-building, and create access to a mainstream financial world for a population normally deemed “too poor” to be served by most IDAs. By continuing to listen to and believe in our members that have believed so much in us, we hope that we can move our community closer to realizing their own self-defined goals and promoting financial stability.
About the author: Alex Biggers is a Savings Program Coordinator at the CEF.
RAISE Texas College Savings Contest Worth Smiling About
By Stephanie Halligan on 11/03/2011 @ 03:30 PM
Saving for college can be a daunting task; so much so that, sadly, many families forgo it altogether. Yet, recent reports show that children "with a savings account in their name are approximately six times more likely to attend college than those without an account."
And that got our friends at RAISE Texas thinking about how they could help make creating post-secondary education savings accounts easier. For the first time, starting this December 5, RAISE Texas will kick off their statewide 2011-2012 Save ‘n SMILE Family Video Contest. Winners will receive actual tuition startup dollars --- in their own names --- an innovative idea we here at CFED are pretty excited about!
For one grand prize winner, RAISE Texas will create a Texas Tuition Promise Fund award of $2,000 on behalf of the child. That means $2,000 to kickstart his or her Texas state 529 plan, which can be used towards prepayment of undergraduate resident tuition and required fees at any Texas public college or university. Just think... for some Texas state community colleges, that could be an entire year of tuition covered! Two runners-up will also receive Texas Tuition Promise Fund awards in the amount of $250.
"It's all about helping our fellow Texans to get started... by taking the intimidation of college savings out of the picture, families will learn that they can do it. And we can help," said RAISE Texas Executive Director, Woody Widrow.
Our partners at RAISE Texas are asking: What would winning $2,000 towards college savings mean to YOU?
If you’re a practitioner serving clients that could benefit from this opportunity, please feel free to pass this contest information along:
1. Create a video, three minutes or less, that shares what a RAISE Texas $2,000 college savings account deposit would mean to your family. What does your child want to be when he or she grows up and how can a college degree help achieve his or her dreams?
2. Upload your video to your YouTube account. Don’t have one? Creating an account is easy and free, online at www.youtube.com.
3. E-mail firstname.lastname@example.org your video’s URL, your full name, address, phone number, e-mail address, and the age of your child who’d benefit from winning, by January 20, 2012. One submission per family, please.
4. Vote on your favorite videos starting January 30, 2012.
5. Winners will be announced February 20, 2012.
6. View the complete contest rules and eligibility requirements online at www.raisetexas.org/savensmilefamilyvideocontest. Submissions must meet eligibility requirements to qualify for contest entry.
Photo credits: Texans Care for Children & Any Baby Can
We Recommend ‘Mission: Innovation'
By Lauren Stebbins on 10/06/2011 @ 12:15 PM
Around here, we’re always looking for new and interesting resources relating to innovations in our field. Earlier this week we came across ‘Mission: Innovation,’ the newest blog from The Chronicle of Philanthropy.
Okay, so perhaps we’re a little biased because CFED President Andrea Levere is one of the featured innovators. But, more importantly, we really like that they have featured innovators. It’s a really fun way of highlighting nonprofits (in our field and in others) that approach their work from unique and changing perspectives. Like the Chronicle itself, it’s premised on the idea that collaboration leads to more robust ideas that we can all benefit from.
So, when you’ve got the chance, check out Mission: Innovation – we think you’ll like it!
Innovation Update: Access to Healthcare Network
By Anne Li on 09/12/2011 @ 11:00 AM
Sherri Rice's work with Access to Healthcare Network continues to grow. AHN has already provided affordable health care with dignity to 10,000 Nevada residents who have limited incomes but who are not covered by Medicaid or other programs. They pay affordable monthly premiums and in return they receive the care they need at highly discounted rates offered by hospitals, doctors and other health care providers under a "shared responsibility model" where government, providers, employers and employees ("the working poor") share responsibility.
AHN is now beginning to expand from northern Nevada into the Las Vegas metropolitan area and continues to offer a limited number of Health Individual Development Accounts (IDAs) in which the member's savings toward health expenses are matched by philanthropic dollars. In another demonstration of innovation, Sherri is working with a local community college to develop a new degree program targeting lower-income Hispanic and other young people that will lead directly to real jobs with local employers as Patient Navigators or Care Coordinators. The new credential will qualify graduates for living-wage jobs with bilingual requirements. Financial education and asset building will be incorporated into the curriculum.
Listen to Sherri on her weekly radio program by searching podcasts at KTHX 100.1 FM, Reno, NV.
Wanted: Creative Thinking
By Donna V.S. Ortega, Guest Contributor on 09/09/2011 @ 10:22 AM
Letter of Intent Deadline October 3: AARP Foundation Seeks Innovative Ideas on Income
A recent AARP Public Policy Institute fact sheet highlights the murky employment situation for older Americans. The unemployment rate for persons aged 55 and older dipped to 6.9 percent from 7.0 percent between June and July 2011; while the average duration of unemployment for jobseekers aged 55 and older remained above one year. As of July, nearly 54 percent of older jobseekers had been out of work for 27 or more weeks. Faced with job loss and long-term unemployment, 50+ working families are drawing down savings and increasing debt, and with fewer years between them and retirement (whatever that may look like), they have less time to rebuild these lost assets.
To hasten older Americans’ recovery from the Great Recession, and to reverse the downward spiral facing these vulnerable families, AARP Foundation’s Income Impact Area will be investing over $1 million in nonprofit organizations through its Recession Recovery grants. The purpose of this grant opportunity is to identify and fund innovative and strategic business models that begin to build a national network of employment and income support services that address the specific needs of unemployed workers age 50 and older as they recover from the recession and the effects of long-term unemployment.
AARP Foundation seeks to work in partnership with selected grantees to create a new paradigm for delivering meaningful services to older adult workers and to reduce the length and negative impact of long-term unemployment. While helping people obtain jobs offering good wages and benefits is the most critical element of recovery, given the circumstances noted above, obtaining a job is not enough. While dealing with long-term unemployment and with the potential reduction of unemployment benefits, older workers also need access to income supports and social services necessary to meet their basic needs and protect their families’ financial security. The full RFP is now available on our website at http://www.aarp.org/incomegrants. This is a two-step RFP process: Letters of Intent under this grant program are due on October 3, full proposal submissions are by invitation only and will be due on October 17.
This open call for Recession Recovery proposals (as well as our Sustainable Solutions to Hunger Innovation Grants, also open now) represents a new channel and intervention under AARP Foundation’s new mission: The Foundation is dedicated to serving vulnerable people 50+ by creating solutions that help them secure the essentials and achieve their best life. Through thought leadership, direct services, legal advocacy, grantmaking and raising awareness about the particular needs faced by the low-income 50+, we are working to serve the nearly 20 million older Americans who are at risk of not meeting one or more of their basic needs.
Please review and respond to the RFP, share it with your colleagues and help AARP Foundation find those innovative solutions at the national, regional, state and local levels that can help older Americans regain their economic stability. For more information about our grantmaking work, please visit www.aarp.org/foundationgrants.
Spotlight on innovation: Opportunity Fund’s New Take on Traditional IDA Programs
By Gwendy Donaker Brown, Guest Contributor on 08/23/2011 @ 03:00 PM
“I really want to start saving, but I’m not ready to go back to school.” “I’d like some help with saving– not for anything specific - just to have some savings.” I’ve heard variations of this sentiment countless times over the years – from young single mothers, seniors recovering from foreclosure and many people in between. Our clients’ requests for a flexible savings account to get started were based on their understanding that you can’t really think about long-term assets (like a business, college degree or home) without having a basic level of financial stability. And stability means you have savings available in case of life’s emergencies.
We created our newest savings innovation, Start2Save, based on the need we saw within our community. For many applicants (and some of our unsuccessful IDA participants) our existing IDA products simply didn’t take into account their financial reality. In the paycheck to paycheck reality, you are only one unexpected expense (car repair, medical bill etc.) away from falling behind. So in order to have the stability and confidence to dream big, first you need some rainy day savings.
Here’s how Start2Save is similar to traditional IDA programs:
- Savers complete a comprehensive financial education course
- Monthly savings deposits are required - minimum of $20
- Case managers supports savers to work through problems and meet their goals
Here is how Start2Save is different:
- The savings account is the asset – so it doesn’t need to be withdrawn or spent down within a certain time period. Success is when someone is able to build up a savings balance – and rebuild it after the inevitable emergency.
- Smaller savings goal and match amount. Participants aim to save $500 within 1-2 years, which is matched 2:1 (for a total balance of $1,500). This makes the product accessible to people with even lower incomes – and makes it easier to scale due to smaller match requirements.
- No list of “allowed” purchases. Once someone reaches their $500 savings goal, they automatically receive the match in their account. We trust our savers to make the right financial decisions with their own savings – and monitor the accounts as an added protection.
- Wider target population. Rainy day savings is a (far-too) universal need that is relevant at every stage of life. Because Start2Save is privately funded, we’re able to serve individuals without traditional incomes – such as those living on disability or social security income.
- New improved account features. Together with Citi we are piloting their Microfinance Savings Account which (unlike our traditional account structure) offers no deadline to closeout, an ATM card for easier deposits (rather than requiring in-branch deposits), online and mobile access, ability to set up electronic deposits from other accounts, and easy monitoring for outcome evaluation.
We launched Start2Save this spring to very high demand – we’ve already “sold out” the first 50 accounts and have another 100 slots to fill this fall. We’ll be evaluating the program impacts by monitoring savings behavior and interviewing a sample of savers every six months over a 3 year period. Our goal is to show that rainy day savings serves two critical functions:
- Prevention: Savings keeps a minor issue (e.g., needing new brakes for your car) from turning into a major problem (e.g., Inability to pay for car repairs leads to missing work, even risking losing a job or taking out a high-interest payday loan).
- Aspiration: Having some savings set-aside makes it possible to set and achieve longer term goals – you have the confidence to try something new (e.g., take a class to improve your skills) and the reserves to stick with it (e.g., not drop out of class after you have to miss a day of work staying home with a sick kid).
My personal aspiration is that eventually, emergency savings is understood to be an essential piece of the asset-building spectrum – and is offered by IDA programs around the country with full support from both private and public funders.
Gwendy Donaker Brown is Director of Policy & New Initiatives at Opportunity Fund in San Jose, CA. Gwendy helped develop and launch Opportunity Fund’s groundbreaking savings products including Start2Save emergency savings, Saving for Citizenship and customized products for foster youth and single mothers. www.opportunityfund.org.
CFED’s Strategic Plan 2007-2011: An Analysis
By Rashmi Joshi on 07/22/2011 @ 04:00 PM
In January 2007, CFED embarked on an ambitious process to create a Strategic Plan that outlined our work for the next five years. The purpose of the plan was to ensure that CFED fulfilled the promise it made during the time of its foundation- to provide low- and middle-income people everywhere with the ability to be savers, investors, homeowners, skilled workers and entrepreneurs. In order to make certain that that we sufficiently contributed to an opportunity economy, CFED devised its Strategic Plan a strong vision in mind to:
- Provide a reasonable public incentive to every person to save for the future, including every child, starting at birth
- Ensure that every family who desires to own a home has the opportunity to do so
- Provide every person who wants to start a business with the opportunity to access entrepreneurial training and financial resources to generate income and create jobs
The initial version of the strategic plan was grounded in specific strategic goals, framed in measurable terms, to be achieved over a five-year period. Staff were tasked with determining the specific program, policy, research and financing activities that could best lead to the achievement of these goals. In addition, staff set annual milestones that could serve as benchmarks to assess the organization’s progress toward realizing the measurable outcomes in each five-year goal. This series will analyze three of the goals that were integral to the Strategic Plan:
Each year, CFED sought to measure our successes within each goal by gauging the results of performance measures we initially created specific to that goal. For example, in order to assess our success within Financial Security, we referred to our performance within the measure “Number of asset-building opportunities.” Over the next several weeks, we will go into further detail regarding the process of creating measures to determine our performance within each goal, our actual performance and the implications of those metrics for the future.
In the same vein of the objectives we had when drafting the Strategic Plan, our objective in analyzing our successes is to ultimately improve the livelihood of millions of Americans through organized, professional and precise efforts in asset building. We hope that this endeavor will not only provide us with development areas that will tailor our strategic planning in the future, but also will demonstrate, by virtue of our transparency, the pride that we take in our work.
Innovator Towarnicky Points Out Flaws in WSJ Article
By Anne Li on 07/21/2011 @ 03:30 PM
Here is a timely and hard-hitting post from CFED’s Innovative Idea Champion Jack Towarnicky, prompted by a recent front-page Wall Street Journal article. You may also want to read Jack’s Executive Summary, The 401(k) as a Lifetime Financial Instrument, available through his Innovator Profile Page. Here are Jack's thoughts:
It was discouraging to see a front-page Wall Street Journal article on July 7th that was only the most recent of many articles critical of benefit plans: "401(k) Law Suppresses Saving for Retirement." The WSJ is America’s #1 daily newspaper - reaching 2.11 million Americans. The article focused almost entirely on some workers, perhaps as many as 40% of those automatically enrolled, who say they would have contributed more under a 401(k) savings plan with a voluntary (instead of automatic) enrollment process. Did you get a call from the Vice President of Human Resources or maybe the Chief Financial Officer of your organization?
Here’s my take on the article.
Consider a recent study from Vanguard, the huge investment management company, "How America Saves, 2011.” On page 25, see figure 23 – for those with less than one year’s service, only 29% voluntarily enroll versus 75% with automatic enrollment. So, a year’s tradeoff between voluntary and automatic enrollment 401(k) plans might be estimated as:
- 12% (40% of the 29% who would have enrolled) who say they would have contributed more
- 17% (the rest of 29%) would would have contributed 3% or less anyway, compared to
- Another 46% (for a total 75%) who are enrolled only because of the automatic features, while
- All 75% are “teed up” for automatic escalation.
Importantly, that same Vanguard exhibit confirms that participation is also dramatically higher for lower income and younger Americans:
- Income < $30,000: 26% voluntarily enroll, 76% accept automatic enrollment
- Age < 25: 18% voluntarily enroll, 72% accept automatic enrollment
The importance of early money, in terms of building financial security, cannot be overstated!
Automatic features have been around for over 15 years. The article’s lead paragraph incorrectly attributes automatic features as originating in that 2006 Act. The WSJ article's author also ignores the rest of the Pension Protection Act of 2006 provisions for 401(k) plans and other retirement plans, to solely focus on this one group who SAY they intended to save more. Why didn’t she take the time to confirm that EACH and EVERY worker who allowed the default to take effect was specifically notified of their opportunity to enroll? Why didn’t she mention those who did take action to voluntarily enroll - those who rejected the default for a different rate, those who selected Roth 401(k) or those who rejected the Qualified Default Investment Alternative?
But, okay, let's focus on those who SAY they woulda, coulda, shoulda saved more with a plan that uses voluntary enrollment. The workers’ failure to respond when solicited is not a surprise - it is sadly typical. Many studies confirm workers state an intention to start saving or to increase contributions but fail to follow through. My favorite is a 2001 Harvard study, “Saving for Retirement on the Path of Least Resistance” (updated December 2005). There, on pages 6 and 7, the study confirms that for every 100 workers, 67.7% report that their current savings rate is "too low" relative to their ideal savings rate, 35% of those who said their savings rate is "too low" confirmed an intention to increase contributions, most within the next two months; however, only 14% actually increased contributions in the four month after the survey. Why didn't the WSJ reporter identify those workers who did take action post-enrollment to raise their contribution rate? Best intentions are just that - intentions.
Finally, the use of average savings rates among participants is misleading; citing a decline among AonHewitt-administered plans from 7.9% (2006) to 7.3% (2009). However, the 2006 and 2009 populations are very different – by 2009, many joined at a 3% rate specifically due to the increased prevalence of automatic enrollment.
For comparison, in a May 2011 release, AonHewitt published a study of 120 large employer 401(k) plans it manages:
- Participation increased to 75.8% in 2010 from 67.2% in 2005
- Plans with automatic features increased to about 60% in 2010, from 24% in 2006
So, because the WSJ article selectively presented only the change in contribution rates among those who were contributing, recent entrants at, say 3%, depressed the average. A more accurate measure of how automatic features change savings behavior would have been a comparison of the average deferral percentage -- because a variable that includes the non-participant zeroes is much more representative.
To conclude, yes, certainly the features in your automatic enrollment design do make a big, big difference. But, a plan sponsor using automatic features, done right (enroll all workers, escalate all workers, and apply those automatic features perennially), will address each of the top three financial security/retirement preparation issues Americans face – most employers don’t offer a retirement savings plan, not enough employees save, and those who do save, often don’t save enough.
What say you?
The comments here are solely mine and do not necessarily reflect the views of any employer, trade group or association I am affiliated with - past present or future.
Here are links to comments concerning the Wall Street Journal from two other benefits experts:
- Jack VanDerhei - Employee Benefits Research Institute
VanDerhei writes, in part, “The WSJ article reported only the most pessimistic set of assumptions from EBRI research…[It] also chose not to report any of the positive impacts of auto-enrollment…What it failed to mention is that it’s increasing savings for many more – especially the lowest-income 401(k) participants.”
- David Wray - Profit Sharing Council of America
CFED Innovator Featured in Webinar
By Anne Li on 07/13/2011 @ 10:30 AM
Yesterday, Rural Dynamics, Inc., headquartered in Great Falls, Montana, featured former CFED Innovator-in-Residence Mindy Hernandez in a webinar called “Applying Behavioral Science to Asset Building Programs: What Works and How We Can Learn More!”
As they see it, “the success of almost all anti-poverty efforts depends on changing behavior in some way - from wanting people to save more, wanting folks to finish college or hoping for increased attendance to job training classes. Yet, so few of these programs and policies are informed by the science of HOW and WHY people behave the way they do. Mindy decided to change this standard, exploring and utilizing the insights from behavioral science, focusing on the WHY and the reasoning behind the often surprising decisions we all make - and applying these insights to the challenges facing the asset building field. The potential is powerful.”
You may want to read Mindy’s report on her CFED Innovation Year. It provides many great insights into principles of behavioral economics and how they are being put to use to make asset-building programs more effective.
You may also want to mark your calendar for Rural Dynamics’ Mobilizing Rural Communities Conference, September 14 - 15 in Great Falls, the ‘Electric City.’ Check out who is speaking and what 2009 participants had to say.
A Nudge in the Right Direction
A Nudge in the Right Direction: Applying Behavioral Economics to Children’s Savings Programs
We all have the best intentions to exercise, keep our New Year’s resolutions (remember those?) and save money…but even our best intentions don’t always translate into action. This is especially true when the goal is a long way off, like saving for retirement or your child’s college education. Most people have some desire to save more money, and most people have the opportunity to access a financial product to make that happen. In an Individual Development Account or children’s savings program, for example, families enroll with the intention of saving money in their program account. Yet we know that many individuals in these programs don’t take full advantage of their incentive funds or drop out of the program entirely. Why is this? Behavioral economics would argue that the desire to save and access to an account are not enough to change behavior.
Our friends at the New America Foundation recently released a report titled Accelerating Financial Capability Among Youth, which examines the psychological barriers to savings and argues that youth savings programs need to focus on more than just access and financial education. According to the paper, “access + education” may lead to advanced knowledge and skills, but it underemphasizes the most challenging component of a savings program: behavior. Programs looking to increase savers participation need to address the psychological barriers – or “biases” – that get in the way of strong savings habits.
Personal finance includes frequent decision-making challenges about spending, saving and borrowing for the future. Yet behavioral research suggests that people are generally present-oriented: we prefer to have things now rather than save to have things later; we have trouble following through on plans when they require ongoing conscious actions, like remembering to make a savings deposit; and we are bad at predicting the probability of future events and risks (like future job loss or an unpredictable medical expense).
Given these biases, saving money isn’t always easy – especially for low-income families. But with the right support, encouragement and a few behavioral “nudges,” savings programs can help combat those inherent biases and guide savers in the right direction. Here are a few suggestions for applying effective, low-cost “nudges” to a Children’s Savings Program:
- Send reminders - Reminders are a simple and effective tool for encouraging positive savings behavior. A recent experiment found that simply texting savers and reminding them to save money increased their savings-account balances by 6%. Programs not already using an automatic texting service can use the service at “Oh, don’t forget…”
- “Set it and forget it” – Automation is one of the most effective behavioral economics tools. Even more so than reminders, automation helps ensure that your “future self” will follow through with your intentions to save. Signing up account holders for automatic deposits, for example, sets in motion a positive, continuous savings habit that doesn’t require the saver to actively and manually make deposits in the future.
- Create a culture of savings – Behavioral economics suggests that individual behavior is strongly shaped by social pressure. Consider providing periodic reports on how much money families have collectively saved or offering friendly competitions among different groups of participants. Rewards can be as simple as recognition in a newsletter or a special party for the winner. These simple “social pressures” can encourage others to actively participate in a saving program.
Experts in the field have only just begun to explore the applications of Behavior Economics in Children’s Savings Programs, but we here at CFED are excited to continue exploring these little nudges and monitoring the big changes they produce.
By Sean Luechtefeld on 06/27/2011 @ 04:15 PM
Here at CFED, when we introduce our colleagues to one another and to members of the assets & opportunity field, we like to explain the role they play here at CFED. When new folks join the staff, they get introduced to Kim Pate simply as Kim.
Here’s the deal: we’re busy here. If we were to try to explain Kim’s role at CFED, we’d literally have to mortgage an hour of our day just to describing everything Kim does. Kim’s value to the organization is indescribable, but includes overseeing all aspects of Communications, Strategic Partnerships and SETI – the Self-Employment Tax Initiative. Along with these, Kim is event planner-extraordinaire, office safety czar, VP for Innovation, native and rural entrepreneurship expert, purveyor of all things public sector and so much more.
Last week, we celebrated a big milestone: Kim’s 10-year anniversary here at CFED. While it’s not entirely clear how the organization functioned pre-Pate, we’re certain CFED is a better place with her here. To commemorate this momentous occasion and capture just some of what Kim brings to the office everyday, Chris Campbell, Jennifer Brooks and Anne Li put together Captain Kimpossible: Defender of Economic Equality, a comic book chronicling a typical day here at the office (okay, maybe not – but it’s still really fun!). Then, Kristin Lawton, Ida Rademacher and Lauren Stebbins acted in a skit for Kim in front of the entire office. While we don't quite have the video from the skit ready, you can check out the comic book by clicking on the cover image to the left. We hope you’ll join us in congratulating Kim on her 10 years of service at CFED. Her contributions have been incredible, and we’re so thankful to work with her.
Oh, and by the way, Kim’s official title: Vice President for External Relations. I think.
P.S. The tags above don’t work – we couldn’t possibly maintain a tag for everything Kim does!
Takeaways from CFSI’s Underbanked Forum
By Ethan Geiling on 06/21/2011 @ 03:45 PM
Last week, I attended the Center for Financial Services Innovation’s (CFSI) Underbanked Financial Services Forum. The forum brought together over 600 people interested in serving underbanked consumers. The definition of “underbanked” varies depending on the source, but it usually means a person who does not use a checking or savings account and instead relies on some combination of other products and services to meet their financial needs. It’s hard to summarize everything I learned during the conference. So here are a few key takeaways that come to mind:
Underbanked does not always mean poor.
When many people think of underbanked, they often think of low-income and financially unstable individuals. However, this stereotype is not true. The underbanked cross the income spectrum, with a significant percentage of them making more than $40,000 a year. People are not underbanked because they are poor. They are underbanked because banking products are not meeting their needs.
Technology will play an important role in serving the underbanked.
One of the most impressive aspects of the conference was the Core Underbanked Innovators Challenge. Four companies performed live demonstrations of their new products. One product, Goalmine, pioneered in part by CFED Innovative Idea Champion Rimmy Malhotra, demonstrated how it’s making savings and investment accounts easily accessible to consumers, regardless of income level and investment experience. Consumers can log on to the website and open an investment account with as little as $25 in just a few minutes.
The former CEO of Safaricom, the keynote speaker for the conference, was particularly impressive as well. He spoke about many of Safaricom’s innovative products for the underbanked, including M-PESA, a mobile banking service that allows Kenyans to transfer money via their phones and essentially functions as a mobile wallet. Safaricom and M-PESA have demonstrated how a product can quickly go to scale, reaching millions of people. Bringing great ideas to scale is something we often struggle with here in the United States.
Walmart has made a significant contribution to the underbanked field.
Jane Thompson, president of financial services at Walmart, spoke about Walmart’s experience in the underbanked market. Walmart started serving unbanked and underbanked customers nine years ago. Since then, it has grown to become the largest player in the field. According to Jane’s bio, customers will save more than $500 million on financial services at Walmart this year compared to traditional alternatives, like check cashing outlets. Walmart’s $3 check cashing service has pushed many of the more expensive and predatory check cashers out of the market. Additional services like its prepaid MoneyCard have helped consumers manage their day-to-day finances. Jane challenged the audience to think about how little you can charge the consumer with a financial product, rather than how much money you can make from them.
Grocery stores and other retailers are well positioned to serve the underbanked market.
In one session titled “Bread, Milk, and Financial Services,” speakers from Sears and Blackhawk Network spoke about providing financial services to the underbanked where they shop. The speakers argued that now is a “perfect storm” for retailers to take the lead with financial services. Retailers already interact with underbanked consumers on a regular basis, and they are usually more conveniently located than banks. Retailers don’t need to make a huge profit on financial products, unlike check cashers, banks, and other providers. Their main retail business is their primary source of revenue and profit. Walmart opened the door to financial services in retail, and since then other large players like Sears and Kmart have jumped into the space.
Overall, the conference left me pondering the needs of the underbanked, which vary greatly from consumer to consumer. Bank accounts, even with low or no fees, don’t always meet the needs of the underbanked. How do we meet these consumers where they are? And how do we balance questions of access and quality/regulation, which often seem to be in tension. There are no easy answers. I’m looking forward to next year’s conference to learn how the field’s thinking on these issues has progressed!
Recording Now Available: Financial Empowerment through Employer Engagement
By Anne Li on 06/20/2011 @ 11:00 AM
The recording from last Wednesday’s webinar, Financial Empowerment through Employer Engagement, is now available. To access the recording, follow these steps:
- Visit this Microsoft LiveMeeting website.
- When prompted, enter your first name and the Recording ID: 4T3P92.
- Do not enter a Recording Key – public access has been granted.
If you have any questions, don’t hesitate to ask us by sending an email.
I’d like to once again thank our presenters – Leigh Phillips, Cathy Beyda, Eugénie FitzGerald and Ida Rademacher – for what I’ll think you find was a fantastic conversation about how the employer payroll process is a key point for delivering financial services to low- and moderate-income individuals. I’d also like to thank all of you who attended – your participation made the webinar a great success!
Innovator Abell Makes a Move
By Anne Li on 06/14/2011 @ 11:00 AM
Hilary Abell, executive director of WAGES – Women's Action to Gain Economic Security, announced that her last day there would be May 31. WAGES is a 15-year old, Oakland, California-based nonprofit that builds worker-owned green businesses that create healthy, dignified jobs and build assets for low-income women. Until her departure from WAGES, Abell had been a CFED as Innovator-in-Residence, working on a strategy for WAGES' model to achieve national influence and impact.
"Under her leadership, WAGES has grown steadily, successfully launching two of our four worker-owned green housecleaning businesses, as well as laying the groundwork for start-up of the fifth this year and continued growth into the future," say Loren Rodgers and Maria Soria, WAGES board representatives.
"These years at WAGES have been the most gratifying of my career," says Abell in her announcement. "I have cherished the opportunity to work directly with our members these eight years and to learn from their professionalism, their strength and resilience, their growth and their pride. WAGES socias have inspired others across the country to pursue the cooperative dream, and I know they will continue to do so."
Abell is planning to take a short sabbatical before finding new ways to pursue her commitment to women's entrepreneurship and cooperative worker ownership. We extend our very best wishes to her and to WAGES.
New Event: Employer Engagement Webinar
By Sean Luechtefeld on 05/17/2011 @ 01:45 PM
CFED and the San Francisco Office of Financial Empowerment are excited to announce a webinar titled Financial Empowerment through Employer Engagement: Opportunities, Challenges and Next Steps, to take place Wednesday, June 15 from 3 – 4:30 pm EDT. The webinar will feature the findings of research highlighted in a new report, Financial Empowerment through Employer Engagement: Migrating a City to a Paperless Payday, and the discussion will include the authors of this report along with other experts working to bring paperless payday efforts to fruition.
Leigh Phillips, Manager, San Francisco Office of Financial Empowerment and Eugénie FitzGerald, project consultant for the Office of Financial Empowerment, authored the report, which describes original research with businesses and employees designed to understand the impact of direct deposit and electronic pay on businesses and low-income employees throughout San Francisco. FitzGerald and San Francisco Treasurer José Cisneros were among the inaugural class of CFED Innovators-in-Residence, a role designed for creative individuals to bring their concepts to application and scale with assistance from CFED.
Ida Rademacher, CFED’s Vice President for Policy and Research, will introduce and moderate the webinar. Also presenting will be Cathy Beyda, Attorney and Chairperson of the American Payroll Association’s Government Affairs Task Force on Payroll Cards and the Association’s Paycard User Group.
Sign up now for the webinar, which will provide insight into research with businesses and employees about the benefits of and challenges from direct deposit and electronic pay, as well as the implications for future action by city leaders, businesses, state policymakers, advocates and others interested in building assets and financial security for low- and moderate-income individuals.
PLAY Motivates Children to Save
By Anne Li on 05/02/2011 @ 10:00 AM
We want to congratulate Margaret Libby, executive director of Mission San Francisco Community Financial Center, recipient of two national awards. The Dora Maxwell award for social impact and a Desjardin award for innovation and leadership in youth financial education were recently presented to Mission SF for PLAY and Make Your (MY) Path.
PLAY and Make Your (MY) Path are both designed to build savings, savings habits and shift child and youth aspirations – ultimately to support children and youth to uncover and achieve their full potential. Margaret has shared this link to a four-minute ABC News video that features young PLAY savers and their parents talking about why they save. Children learning from their peers, and the littlest savers called “Big Dreamers” are two great reasons to watch.
Mission SF Community Financial Center is the non-profit affiliate of Mission SF Federal Credit Union. The Center’s aim is to expand economic opportunity and access to financial services by:
- Raising awareness of affordable, quality financial services as an alternative to high-cost financial providers
- Providing education about financial planning and management
- Increasing income and earning power of low-wealth individuals and business owners
- Improving community financial services, resources and opportunities through partnerships and education
In some more exciting news, effective April 8, 2011, Mission SF Federal Credit Union became a division of Self-Help Federal Credit Union. Self-Help Federal Credit Union is part of the non-profit Center for Community Self-Help family of organizations founded in North Carolina in 1980. Since 2008, Self-Help Federal Credit Union has been building a network of branches throughout California serving the state’s working class families.
New Publication: Applying Behavioral Research
By Sean Luechtefeld on 04/22/2011 @ 01:00 PM
Today, CFED published Applying Behavioral Research to Asset-Building Initiatives, the findings from 2010 Innovator-in-Residence Mindy Hernandez’s year of experimentation. The publication is now available on the newly-redesigned Behavioral Economics site, found here.
During Mindy’s residency, she partnered with three different asset building practitioners to design and test program tweaks informed by research in the field of behavioral economics. With each organization, she walked through the programs’ goals and processes to target critical leverage points, propose behaviorally-informed design changes and evaluate intervention as rigorously as possible.
Applying Behavioral Research to Asset-Building Initiatives describes these projects and their findings in detail. It is Mindy’s hope, and the hope of all of us here at CFED, that the lessons learned from her residency can be a useful blueprint for practitioners and researchers interested in applying behavioral sciences to a vast array of programs and challenges.
For more information about this publication, about the field of Behavioral Economics or for resources relating to CFED's ongoing work in applying a behavioral sciences approach to asset building, click here.
The Savings Exchange
By Kim Pate on 04/19/2011 @ 01:30 PM
Filene i3 Product – The Savings Exchange
In April of 2010, I joined a team of innovative credit unions through the Filene i3 (Ideas, Innovation, Implementation) program. My collaborators on the i3 team included Jackie Edwards, Connexus Credit Union, Wausau, Wis.; Tamela Meade, American Airlines Credit Union, Fort Worth, Tex.; Jon Reske, UMass Five College Federal Credit Union, Hadley, Mass.; and Alison Wolf, FAA Credit Union, Oklahoma City, Okla. Building on CFED’s work on the expanded Saver’s Tax Credit, we developed The Savings Exchange. This product is a savings group to help people learn about savings, encourage each other to save and take advantage of tax-time savings opportunities like the Saver’s Tax Credit, the Earned Income Tax Credit and the Child Tax Credit.
A coalition of credit unions formed by the Filene Research Institute and partially funded by the National Credit Union Foundation (NCUF) is implementing the Savings Exchange Pilot. This pilot, open to credit unions interested in joining the coalition, will help credit union members save for the future through savings groups that provide a structure and incentives to save. Filene recommends the program for credit unions active in the Volunteer Income Tax Assistance program, paid tax services, and with the Investor Education in Your Workplace program, which is sponsored by the Investor Protection Trust and supported by NCUF. For more information about the Savings Exchange Pilot, visit http://filene.org/blog/post/SCPN.
Ed Ablard Advocates for Veterans
By Anne Li on 04/13/2011 @ 10:30 AM
It is exciting to learn that Ed Ablard's advocacy with Pentagon Federal Credit Union, which has a branch right at the Veterans Administration Medical Center here in Washington, DC, may have resulted in a policy whereby the PFCU will now open an account for a veteran even without an initial deposit. The credit union manager told Ed that she has personally witnessed the problems of unbanked veterans receiving and quickly spending benefits and other payments, and that made her open to working with Ed to find a solution. On a recent visit with another veteran, an account was opened without a hitch. This is a first step toward enabling an unbanked, homeless veteran to be able to receive payments with a degree of security and with a greater chance of saving for future needs.
Ed, a CFED Innovative Idea Engineer who is a practicing attorney who does a lot of pro bono work, receives referrals of homeless veterans from a faith community-based meals program. He will personally introduce potential clients to the credit union. Over time, he hopes to gain a base of ‘banking the unbanked’ experience to share with others who are also concerned about veterans’ welfare.
Ed also continues to work on the development of a trust instrument that would create greater financial security to veterans. He reports that recent cases he has handled show the barriers to transferring assets to a trust from insurance and employment annuities. These barriers negatively impact families of pensioners of modest means who would benefit from the control of the flow of proceeds from the annuities implicit in a trust instrument.
Toward Broadly-Shared Prosperity
By Steve Crawford, Senior Fellow on 04/07/2011 @ 11:30 AM
Welcome to Toward Broadly-Shared Prosperity, a new blog series aimed at helping economic and social policy professionals better understand the broader context in which they labor – the “big-picture” and its relevance for their work. More specifically, the goal is to help connect the dots between strategies for economic development and poverty reduction. I plan to write new installments in the series twice a month and to focus on a specific theme over the course of several postings. The first three themes will be entrepreneurship, human capital and innovation.
When it comes to promoting prosperity, mainstream policymakers tend to focus on expanding the pie, advocates for the poor on better distributing it. In fact, both approaches are vital. Growth that benefits only those who are already prosperous means that those with the greatest need, including children who had no say in their circumstances, fail to advance.
Sure, some upward and downward mobility takes place, but increased inequality also makes “equal opportunity” more problematic. Even prosperous Americans have reasons to be concerned about that, given the implications for the social fabric. Moreover, there is some evidence that widespread poverty itself inhibits a city’s or region’s growth at all levels, undermining its image and fostering outflows of talent and capital.
Although regional growth may not lift all boats, it surely helps. It puts upward pressure on wages, increases government’s resources, and creates a more favorable political climate for initiatives designed to assist the poor. Yet, many advocates for the poor downplay the importance of economic development, and some support policies that discourage it, fearing the diversion of resources from their priorities or the dilution of their constituents’ political clout.
Similarly, economic developers tend to neglect the shared part of “more broadly-shared” prosperity. Focused on keeping existing firms and launching or attracting new ones, they hope that trickle-down works but regard poverty reduction as someone else’s job. Many of them even view workforce development as foreign – as a social program aimed at helping the disadvantaged rather than growing the economy. As one wag put it: “economic developers are from Mars, workforce developers from Venus.”
To some extent, the economic development and business communities should focus on growing the economy, and others on ensuring that everyone benefits. Yet, it is important that these different groups’ strategies be compatible. Ideally, investments and policies in a whole host of related areas – from infrastructure and housing to economic development and job training to work supports and taxes– would be understood, developed and assessed in terms of their contribution to broadly-shared prosperity.
“Realists” will object that that’s highly unlikely. For one thing, we lack any consensus on a definition of broadly-shared prosperity, much less on how to measure it. Moreover, powerful interests within and outside the relevant agencies will resist major revisions of their goals. I agree, but think we can still make progress toward an integrated framework for analyzing key issues. In fact, one already exists. It is called the competitiveness triangle.
The Competitiveness Triangle
Good mainstream policymakers understand that economic growth hinges on their jurisdiction becoming more productive and competitive. Enhanced competitiveness enables more exports, which generate additional jobs and higher incomes. Competitiveness experts often focus on three components of what some call the competitiveness triangle:
But it is not only mainstream thinkers and practitioners who focus on these; so too do the more creative researchers and advocates in the poverty reduction community. Take CFED. It champions innovation in several ways, promotes entrepreneurship as a path out of poverty and sponsors initiatives that facilitate saving for postsecondary education. Indeed, the entire asset-building approach to expanding economic opportunity suggests interesting parallels with more mainstream approaches.
In future postings, this blog series will examine the competitiveness triangle through the screen of poverty reduction. The first few postings will focus on entrepreneurship, with special attention to the tensions between gazelle-targeting and the promotion of self-employment among the unemployed and poor. A set of postings on human capital will acknowledge the conventional analysis of the problems of college access, completion and affordability, but emphasize the power of matched savings to improve educational attainment. A third mini-series will acknowledge the importance of investing in innovation, but suggest policies for helping those on the losing end of creative destruction to remain economically productive and secure.
I have no illusions of doing full justice to the complexities of these topics, and encourage comments from readers. It would be wonderful if this blog became less an expression of my views and more of a mutual exchange of ideas, information and insights.
Ideas, Innovation and Implementation
By Anne Li on 03/30/2011 @ 11:00 AM
Over the years, CFED has found sympathetic resonance with partners in the credit union movement, based on a shared interest in building the assets and financial security of individuals and families. Over the past year, we teamed up with Filene i3 (Ideas, Innovation, Implementation), which is committed to strengthening the credit union industry through the development of new products, services and business models.
Denise Gabel, Chief Innovaton Officer of the Filene Research Institute and CFED Innovative Idea Engineer, met with Kim Pate, CFED’s Vice President for External Relations, and Anne Li, CFED’s Program Director for Innovation, more than a year ago to brainstorm how to work together to promote innovation. From that conversation came an invitation from Denise for innovation@cfed to propose five consumer-focused financial solutions that needed labs for testing. The fruits of the creative efforts of five Filene i3 teams are described, together with other innovations, in a new report authored by Gabel titled Key Findings: Blueprints for Innovation.
- CFED Innovative Idea Champion Diane Browning worked with an i3 team to look at Retirement Bonds. While many of today’s headlines focus on financial problems such as credit card debt and mortgage foreclosures, the next looming issue could easily be caused by a lack of planning for retirement. Low- to moderate-income individuals and those who work for small businesses are likely to be particularly hard hit.
- Kim Pate worked with two i3 teams. Savings Exchange: The current structure of retirement incentives within the U.S. tax code does little to help those who have the fewest resources. The majority of the nation’s $367 billion in asset incentives helps households earning more than $80,000 a year (for more, read CFED’s report, Upside Down). While the 60% of American taxpayers making less than $38,000 share less than three percent of these benefits, the top one percent of households – whose average income exceeds $1.25 million – receives more than 45% of the subsidies.
- The Signal: Simply living to full life expectancy will disable an estimated 65 – 75% of Americans, who will need help managing benefits and understanding asset growth limits so their benefits stay intact. Given the complexities of disability benefits, consumers have to go to multiple websites and agencies to determine their benefit levels and asset limits. It is confusing, time-consuming and frustrating – and the margin for error is great.
- CFED’s Savings & Financial Security Program Director Leigh Tivol and Innovative Idea Champion Rimmy Malhotra worked with a team on Goalmine(TM) College Savings. For the first time in generations, young adults in the United States are no longer attaining post-secondary education at a higher rate than their parents. For students in low-income households, the challenge of obtaining a college degree is especially difficult. Families making less than $20,000 per year face an average cost burden of at least 44% of their annual incomes for four-year public universities, even after factoring in grant aid.
- CFED Senior Program Manager for Applied Research Kasey Wiedrich worked with a team on MI-COOP. For over 17 million Americans, the path to the American dream includes a manufactured home. With an average cost in 2009 of roughly $63,000, today’s manufactured housing offers an affordable entry into home ownership. This low price, relative to a site-built home, underscores how manufactured housing can help more families build assets and achieve affordable housing. Sadly, there are a number of obstacles in obtaining traditional financing on a manufactured home, specifically when the borrower is unable to afford a significant downpayment.
You can read about the innovations, from problem to solution, as well as the work of the other Filene i3 teams in Key Findings: Blueprints for Innovation by Denise Gabel. The publication is available for free download for a limited time only through the special innovation@cfed link, found here.
Plan, Prepare and Take Home Bigger Refunds...
Posted on 03/28/2011 @ 01:00 PM
Take Home Refunds Seven Times as Large: The Campaign for Working Families VITA Site Helps Self-Employed Clients Follow Through on Intentions to Prepare for Tax Day
A project with the Campaign for Working Families of Philadelphia.
Program background: The Campaign for Working Families (CWF) is a partnership that promotes increased resources for low-wage working families by providing free filing of the federal Earned Income Tax Credit (EITC) and connecting Philadelphia residents to other tax credits, work supports and asset-building resources.
The goal of our project was to help self-employed clients receive the refunds they earned by increasing their preparation for tax day by having their paperwork and receipts in order.
Behavioral insight: Preparing for tax time is a hassle and the short-term stress may eclipse the longer-term reward of a potential refund. Rationally, if we believe something is important, we should simply follow through on our intended plans. In a strict cost-benefit analysis, the hours it may take to collect tax information is surely worth the possible cash reward. But in reality, it is easy to let the present costs of hassle and stress eclipse future rewards.
CWF hoped the information and persuasive messages conveyed during orientation would motivate people to overcome the perceived stress of tax preparation and actually gather and organize the necessary tax information. But this was not happening. We hypothesized that the hassle of preparation might pose a significant barrier, and that people needed reminders and a sense of accountability to follow through on their intentions to prepare.
To make the reminders as powerful as possible, we wanted to leverage the following behavioral insights:
- Commitment and consistency: Telling others that we intend to behave in a certain way helps us keep our word. We like to appear consistent to ourselves and others, so we find it important that our actions and beliefs align, or at least appear to align. In fact, some early behavioral theorists considered the desire to be consistent as a central motivating human behavior. (Festinger, 1957; Heider, 1946; & Newcomb, 1953).
For example, in one study people were called and asked to predict what they would say if asked to spend a few hours volunteering for the American Cancer Society. Most people wanted to appear charitable, and many predicted they would agree to help. This small commitment device produced a 700 percent increase in volunteers when representatives from the American Cancer Society came to their door asking for volunteers a few days later. (Sherman, 1980).
Our desire to be consistent can be especially effective when faced with written evidence of a commitment in our own handwriting. As the well-known behavioral theorist Robert Cialdini explains, “There is something magical about writing things down.”
- Planning or "implementation intentions": There is evidence that implementation intentions can also help people follow through and accomplish a desired goal. (Gollwitzer, 1993). An implementation intention spells out the when, where and how of what one will do to reach a goal. For example, asking people to create a “voting plan” (What time will you vote? How will you get to the voting station?) significantly increased voter turnout in comparison to simply asking if someone would vote and encouraging the person to do so. (Nickerson & Rogers, 2010). Detailing the steps needed to implement our goals helps us follow through on our intentions.
- Channel Factors: Making things easy makes a difference. Research tells us that adjusting small nuances in our situation can have a surprising impact on our ability to close the gap between our intentions and actions. In a well-known study by Leventhal, Singer and Jones (1965), college seniors were given persuasive messages about the value of an inoculation against tetanus. While the messages were effective at changing the students’ beliefs and attitudes, few actually took the step of getting a tetanus shot. Other students received the same messages but were also given a map of the campus with the infirmary circled and urged to think about a particular time and route they would take to the infirmary. This small adjustment led to a significant increase in the percentage of students who actually got their inoculation.
Intervention: Building on the behavioral findings described above, the CWF project sought to improve self-employed tax assistance clients’ level of tax preparedness by asking then to formulate a tax preparation plan (implementation intentions), write it down for the CWF staff to see (commitment) and then sending the preparation steps back to the clients (consistency) along with another copy of the preparation worksheet (ease or channel factor).
Every self-employed tax client at CWF must complete an orientation before the tax session. We varied the orientations between treatment and non-treatment sessions. Every other orientation was a treatment or a control session, which takes advantage of the fact that a client’s selection of one class over the next is largely random.
At the close of the treatment pre-tax orientation, the group was asked to complete a form detailing their three next steps in preparing for their tax appointment. One of the steps had to be completion of a tax preparation worksheet handed out by CWF.
This form would later be used as their appointment reminder. A few days after orientation, clients received this sheet in the mail with their appointment date, an extra tax prep worksheet, and a list of preparation next steps written in their own hand. The control group went through the same orientation but did not go through the next steps exercise. They received a reminder letter in the mail with only their appointment time.
Experimental Design, Sample Size = 41 clients
The treatment seemed to significantly impact clients’ tax refund amount. The treatment group had refunds that were significantly larger (in fact, seven times larger) than those in the control group: $1,837 for the treatment group compared to $241 in the control group. Note that because a taxpayer’s EITC amount is correlated with final tax refund, our comparison is based on their tax refund without the EITC.
This is a large effect, and we wanted to be confident that it was not the result of different populations in the treatment and control groups. That is, was there something about the treatment group that made them more likely to receive higher refunds? In statistical analyses, we found the two groups to be randomly distributed and similar. Each group had similar EITC refunds, W-2 incomes and business incomes.
Discussion: These findings may be very powerful, with the potential to increase refunds—and therefore incomes—for thousands of self-employed people. More broadly, behaviorally-informed reminders may help people follow through on a variety of high-stress, high-hassle goals like creating a budget or completing complex forms like the FAFSA. More research is needed before we can be confident that these results are replicable with a self-employed or even more general population. This is especially true given the study’s relatively small sample size. Because the intervention had such an unusually large effect, this is an especially exciting area for further exploration.
Integrating Asset Building Opportunities
Posted on 03/22/2011 @ 01:00 PM
Our guest blogger today is Tracy Fischman, executive director at AccountAbility Minnesota. This highly innovative organization has been a partner with CFED’s Self-Employment Tax Initiative (SETI). As this year’s April 18th tax deadline draws near, certain for-profit tax preparers are marketing “refund anticipation loans” or similar products which are overpriced and inappropriate for most people, so Tracy’s information is particularly timely.
AccountAbility Minnesota was founded in 1971 by a group of justice-minded accountants who believe that a person’s ability to access quality tax preparation and financial services should not rely solely upon one’s ability to pay. Enlisting the help of hundreds of volunteers, the organization offers free tax preparation and financial services at 13 sites in the Twin Cities that enable low- and moderate-income individuals and families to maximize the opportunity that tax time provides. (Customers can use our online clinic finder to find a list of locations, schedules, and eligibility.)
In 2010, we helped 11,000 taxpayers received $21 million in refunds. We also trained 15 organizations throughout Minnesota who in turn helped another 9,000 taxpayers receive an additional $14 million in refunds. At AccountAbility Minnesota, we recognize that it is expensive to be poor. The customers we serve – whose average income is $13,400 – too often have to spend their money just to access it. And tax time is no different. As such, we’ve adopted strategies to promote economic security through the tax preparation process. With tax credits designed to significantly boost incomes of low-wage earners, tax time provides a unique moment to begin or continue a conversation about saving. It also offers an essential alternative, by way of education and services offered, to paid preparers and fringe – often predatory – financial products they offer, like the Refund Anticipation Loan.
The money-moment that tax time provides
AccountAbility Minnesota is uniquely positioned to reach underserved families and communities with financial education and information about saving, money management, developing and keeping a budget, planning and more. Tax time is a prime time to educate and offer services that can put people on a path towards financial security – empowering them to make informed and effective decisions that reflect their individual circumstances. Over the years, AccountAbility Minnesota has innovated and partnered with other organizations and financial institutions to expand its financial services, offering non-predatory services and products that promote savings and asset development. Our financial services include free savings accounts, low-cost prepaid debit cards, free credit reports, financial planning and benefits screening.
Update on Refund Anticipation Loan market
As previously referenced, may low-income taxpayers are targeted by paid preparers offering costly products that promise fast refunds. In recent years, the most common product has been the Refund Anticipation Loan (RAL). RALs are short-term, high-interest loans secured by a taxpayer’s expected tax refund. According to the National Consumer Law Center, 8.4 million persons in the U.S. spent an estimated $738 million in RAL fees in 2008. This year the IRS has terminated access to its debt indicator – a tool used by tax preparers and related financial institutions that offered information about whether a taxpayer will receive their federal refund and therefore was used to determine whether to underwrite a RAL. Thus H&R Block is not providing RALs this year but Jackson Hewitt and Liberty Tax Services (and possibly others) are still offering the product. We were excited to see that the FDIC has recently notified both Jackson Hewitt and Liberty Tax Service that their RALs are “unsafe and unsound.” As the RAL market shifts, other products are popping up in its place, such as the Refund Anticipation Check (RAC). A RAC is a temporary bank account that is opened to allow for direct deposit, and taxpayers’ refunds are then uploaded onto a prepaid debit card or they are issued a paper check. In 2008, about 12 million taxpayers received a RAC at a cost of $360 million. With information provided by our partners studying this market, we are keeping an eye on RALs, what the FDIC’s recent notice will mean, and what products are popping up in its place. We will continue to innovate, offering financial services and products that meet the financial needs of our customers.
In a future Blog, Tracy will describe some of AccountAbility’s latest innovations. Please let us know your thoughts and questions on Tracy’s message.
Exciting Lessons from a Year of Behavioral Experimentation: A Look at What We Learned
By Genevieve Melford on 03/14/2011 @ 11:00 AM
Over the next few weeks we are thrilled to post early excerpts from a paper to be published this spring by 2010 Innovator-in-Residence, Mindy Hernandez.
For her Innovation Year, Mindy partnered with select asset-building organizations to create innovative projects. With each organization, Mindy walked through the programs' goals and processes to target critical leverage points, propose behaviorally-informed design changes and evaluate each intervention as rigorously as possible.
The soon-to-be-released white paper describes the surprising, exciting and potentially powerful lessons from her Innovation Year. The paper also includes helpful hints on how practitioners can design, implement and evaluate similar behavioral interventions in their own programs.
Upcoming blog: We learn the outcome of the Campaign for Working Families (CWF) study in which Mindy and CWF designed an intervention to help self-employed clients at the CWF tax site prepare for tax day with the hope that better preparation would lead to higher tax refunds.
- Does preparation really lead to bigger refunds for self-employed VITA clients?
- What works in getting self-employed clients to prepare? And what's that worth in dollars?
The results are exciting and surprising. Check out the next post for more details!
Obama's Budget Includes Social Impact Bonds
By Anne Li on 03/09/2011 @ 10:30 AM
We noticed a highly innovative development called social impact bonds in the U.K. last year, and we weren’t the only ones. President Obama’s FY 2012 budget includes a similar innovation. Up to $100 million would be invested in a “pay for success” approach in seven pilot areas including, among others, job training, education, juvenile justice and care of children’s disabilities. The amount would be set aside from existing department budgets and would be spent only if the programs work.
The following article, reproduced in its entirety from the New York Times, provides more information. Please Comment to share your thoughts about this new and different way for public dollars to be spent toward addressing social needs.
For Federal Programs, a Taste of Market Discipline
by Davis Leonhardt, New York Times, February 8, 2011
Wouldn’t it be nice if taxpayers could somehow get a refund for government programs that didn’t work?
Instead, the opposite tends to happen. Programs that fail to make a difference — like many of those that train workers for new jobs — endure indefinitely. Often, policy makers don’t even know which work and which don’t, because rigorous evaluation is rare in government. And competition, which punishes laggards in the private sector, is typically absent in the public sector.
But there is some good news on this front. Lately, both American and British policy makers have been thinking about how to bring some of the competitive discipline of the market to government programs, and they have hit on an intriguing idea.
David Cameron’s Conservative government in Britain is already testing it, at a prison 75 miles north of London. The Bloomberg administration in New York is also considering the idea, as is the State of Massachusetts. Perhaps most notably, President Obama next week will propose setting aside $100 million for seven such pilot programs, according to an administration official.
The idea goes by one of two names: pay for success bonds or social impact bonds. Either way, nonprofit groups like foundations pay the initial money for a new program and also oversee it, with government approval. The government will reimburse them several years later, possibly with a bonus — but only if agreed-upon benchmarks show that the program is working.
If it falls short, taxpayers owe nothing.
The first British test is happening at Her Majesty’s Prison Peterborough, where 60 percent of the prisoners are convicted of another crime within one year of release. Depressingly enough, that recidivism rate is typical for a British prison.
To reduce the rate, a nonprofit group named Social Finance is playing a role akin to venture capitalist. It has raised about $8 million from investors, including the Rockefeller Foundation. Social Finance also oversees three social service groups helping former prisoners find work, stay healthy and the like. If any of those groups starts to miss its performance goals, it can be replaced.
For the investors to get their money back starting in 2014 — with interest — the recidivism rate must fall at least 7.5 percent, relative to a control group. If the rate falls 10 percent, the investors will receive the sort of return that the stock market historically delivers. “It’s been only a few months,” says Tracy Palandjian, who recently opened a new Social Finance office in Boston, “but the numbers are coming in O.K.”
Antony Bugg-Levine of the Rockefeller Foundation told me it had invested in the project for two main reasons. One, it expected to get its money back and then be able to reuse it. Two, if social impact bonds work, they have the potential to attract for-profit investors — and vastly expand the pool of capital that’s available for social programs.
Clearly, social impact bonds have limitations. For starters, it’s hard to see how private money could ever pay for multibillion-dollar programs like Medicaid or education.
Just as important, the execution of any bond program will be complicated. It will depend on coming up with the right performance measures, which is no small matter. Done wrong, the measures will end up rewarding programs lucky (or clever) enough to enroll participants who are more likely to succeed no matter what.
But whatever the caveats about the bonds, the potential for improving the government’s performance is obviously huge. That’s true in education, health care, criminal justice and many other areas.
A recent review found that 10 major social programs had been rigorously evaluated over the past two decades, using the scientific gold standard of random assignment. Only one of the 10 — Early Head Start, for infants, toddlers pregnant women — was a clear success. Yet all 10 still exist, and largely in their original form.
Jon Baron, the president of the Coalition for Evidence-Based Policy in Washington, points out that the social problems addressed by antipoverty programs have not gotten much better in years. School test scores have barely changed. College graduation rates for low-income students have stagnated. The poverty rate is as high as it was in 1981. Median household income is lower than it was in 1998.
“If we just keep funding social programs the way we have been,” Mr. Baron says, “there’s not a lot of reason to think we’ll have much success.”
The Obama administration’s seven pilot programs would create bonds for, among other areas, job training, education, juvenile justice and care of children’s disabilities. Nonprofit groups like Social Finance could apply. So could for-profit companies, said the White House official, who asked not to be named because the president had not yet released next year’s budget. The $100 million for the bonds would come out of the budgets of other programs, to stay consistent with Mr. Obama’s announced freeze on non-security spending.
Officials in Massachusetts and New York are looking at similar ideas but have not yet decided whether they will issue bonds.
Beyond the impact of any single program, the bonds have the potential to nudge all government agencies to pay more attention to results. Mr. Obama, after all, campaigned as a reformer who wanted to create a sleek, efficient “iPod government.” He has had some success, like the expansion of a program — backed by years of solid evidence — in which nurses go to the homes of new at-risk parents to counsel them.
Over all, though, the administration has not done enough to improve government efficiency. Put it this way: If someone asked you how Mr. Obama had made government work better, would you have an answer?
Making government work better will be all the more important in the years ahead. The free market is not going to solve many of our biggest problems, be it stagnant pay or spotty medical care. And government — in Washington and locally — is going to be financially squeezed for a long time.
There never was a good excuse for wasting billions of taxpayer dollars on programs that didn’t work. But now, especially, there’s no excuse.
Eva Margolis Makes Exciting Move
Posted on 03/03/2011 @ 09:00 AM
Innovative Idea Champion Eva Margolis was one of the many stars of the Innovation Marketplace at the 2010 Assets Learning Conference. She was also one of the inspirational innovators who shared their “assets moment” visions in the Opening Plenary. She recently let us know about her move to a new position in the following letter:
I hope this finds you all well! I may have had the chance to speak with you informally about my departure from AccountAbility Minnesota (AAM), but I wanted to write to formally express my gratitude, share my excitement for this new opportunity, and reassure you that AAM’s financial services initiatives will not be affected by this transition. I will greatly miss working for AAM, which has always been an organization I deeply believe in and have enjoyed working for. I am thankful for the opportunities to grow personally and professionally during my 5 years with the agency, and I am especially grateful to have worked with such inspiring, insightful minds –especially regarding asset development and financial empowerment! Please know that I have deep respect for your work and the services you provide to communities.
I regret leaving AAM at the height of tax season and in the middle of the exciting work we are doing around asset building and increasing access to financial services. However, the opportunity to continue similar work through the Eastside Financial Center, which is a program of Lutheran Social Service of Minnesota, was rare and one that I could not pass up. I am looking forward to continuing the work towards economic justice and expanding access to underserved communities in this new capacity. My last day of employment with AAM will be March 4, 2011. During this transition time, I will be working closely with Tracy Fischman, our Executive Director, to ensure our programmatic and operational requirements continue to be met after my departure.
It truly has been a pleasure working with you through AAM and I look forward to keeping in contact with you through my new role.
With great respect,
We wish Eva the best and look forward to staying connected with her in her new role. We also will continue to feature the innovative work of AccountAbility Minnesota, especially with respect to connecting low-income households with asset-building opportunities at tax time.
A Green Foundation for Community Development
By Anne Li on 03/01/2011 @ 01:20 PM
‘Green’ development and ‘green’ jobs present exciting opportunities for innovation that will benefit lower-income people. Several ideas in CFED’s Innovation Portfolio explore the green economy. For example, check out Leonard McCollum’s and Chuck Shannon’s work with Green Business and Prisoner Re-entry and Ted Howard’s efforts with the Evergreen Cooperative Initiative in Cleveland, OH.
Coming up on March 10 – 11 in New Orleans is an interesting conference called Strengthening the Green Foundation: Research & Policy Directions for Development & Finance. It is co-sponsored by Tulane University's new Master of Sustainable Real Estate Development Program and the Federal Reserve Bank of Atlanta's Center for Real Estate Analytics. The two sponsors invite researchers, industry practitioners, and policymakers to participate in a conference to advance the understanding and improve the practice of green development and finance.
The conference aims to influence the national dialogue on green building and will bring together top scholars and practitioners to investigate core issues surrounding green development and assess the tools, costs, benefits, and opportunities in financing green development. Discussions will focus on underwriting and valuation of green development projects, the role that real estate industry organizational structure plays in supporting green development, the application of green standards to real estate portfolio management, and green measurement criteria and certification issues.
Climate change is not the only concern driving the ‘green’ focus today. Rising energy costs, and the need to find long-term operational cost savings by consumers large and small – state and local governments who are feeling acute budget squeezes, companies and individual households like yours and mine – are another reason to explore and implement ‘green’ development approaches.
This conference looks like it should produce some interesting ideas and information. For more information, go to the conference website.
Mercado Global Links Guatemalan Women to U.S. Consumers
By Anne Li on 02/18/2011 @ 09:11 AM
Some of the excitement at the Innovation Marketplace of the 2010 Assets Learning Conference came from the fact that visitors could exercise their market skills by buying unique products and services. Mercado Global was one of the Marketplace’s featured International Innovations. Founded by Ruth DeGolia when she was a student at Yale, Mercado Global is a cutting-edge nonprofit, Fair Trade organization with an innovative approach to fighting poverty and empowering indigenous women in Guatemala’s highlands by connecting their artisan cooperatives to sales opportunities in the U.S. on an unprecedented scale.
I was not the only visitor who was drawn to Mercado Global’s Innovation Station by beautiful glass necklaces and bracelets, handcrafted by women’s cooperatives in Guatemala. Thanks to generous support from the Levi Strauss Foundation, Mercado Global also supplied all 1,100 attendees with hand-woven conference bags. Ruth reports that Mercado Global has recently started advanced technical trainings with their weaving cooperatives, which will enable more women to participate in current and future orders of woven goods. Over the next few months, these artisans will be learning a new technique on the foot-loom called the “panalito” technique. This complicated technique will help them build their skills of weaving with finer threads to create more complex scarves, which is perfect for new fall styles that will be carried by Levi’s.
Barbara Quieju, Mercado Global’s training program coordinator, reported, “At first, a lot of the artisans were slightly intimidated by the complex technique but soon they were laughing and easily picking up the new skills. The days were long but the artisans were excited and grateful to be learning a new technique.”
“The fabric of this scarf is different than what we usually make, it is a good thing that we are being taught how to loom well.” - Anju Siona
“This opportunity is a gift for me because now I am going to be an expert at foot looming.” -Fabiola Mendoza
“This technique seemed difficult, but when I did it it was not so complicated. We did not loom this well before.” – Saloj Guarcax
The work of Mercado Global illustrates the interconnectedness of decisions we make in our households, communities and country, as part of a global economy. And the efforts of Ruth DeGolia and her colleagues in the U.S. and Guatemala are examples of the kind of creative energy to spark innovation that will help us all to expand economic opportunity around the corner and around the planet.
Photos, courtesy of Mercado Global.
Rewards and Consequences of Breaking Up
Posted on 02/15/2011 @ 07:46 AM
Guest Blogger Patricia Johnson uses popular songs and culture to teach young people about economic decision making. She is founder of Game Theory Academy in Oakland, CA and a CFED Innovative Idea Champion. Look for yourself in the vivid words of her students that she shares in this commentary.
Game Theory Academy (GTA) teaches young people ages 16-22 about the economy. Our mission is to use money to engage young people in conversations that lead them to think deeply about their best self interest when it comes to money, education, jobs and recreation.
Typically GTA teaches in out-of-school settings, but each winter I have a very special opportunity: to bring the GTA curriculum to seniors at Met West High School in Oakland, CA for credit and graduation prerequisite. It’s a great lab for me to test myself. Do my students graduate with a solid understanding of economics? Are the GTA lessons tangible and memorable? When I read their homework assignments and grade exams, I see my own successes and failures as a teacher in their answers. Then I go back and revise my methods. Met West is a great ally in GTA’s quest to make economic education more relevant for young adults.
Met West is a very special high school. Founded as part of the ‘big picture,’ small school movement, Met West has students in class Monday, Wednesday and Friday. On Tuesdays and Thursdays they are in internships at businesses and nonprofits in the community, getting job skills, testing out their various career interests and applying what they learn in school in a real-world environment. Because of Met West’s experimental and innovative approach to educating urban youth, it’s a great partnership for GTA.
Last week, for homework, I asked students to listen to the lyrics of the songs they love and write an essay about how they relate to economics. “Does the song have to be about money?” they asked me. No. The way we teach at GTA, economics applies to any decision that has consequences – whether that’s sleeping in rather than getting to class on time, majoring in computer science instead of art, running up your credit card or breaking up with your girlfriend. Any decision can be boiled down to economic concepts: best self interest, willingness to pay, risk tolerance, constraints and tradeoffs.
In his essay about rapper 50 Cent’s song, “I Get Money,” Jovan writes, “Some constraints Curtis Jackson faced before becoming a successful rapper were his economic status and location.” Jovan recognizes that growing up poor, in a poor neighborhood, are factors that hold many young people back from success. In class I ask students what their own constraints are, and challenge them to develop a strategy for overcoming those constraints.
Along a similar vein, Umar shows that he understands the concept of equal access to perfect information – one of the tenets of an efficient market. He cites the song “Money on My Mind” by Lil’ Wayne, who sings, “All we know is rocks and presidents like Mount Rushmore.” Umar writes that Lil’ Wayne, “is passively saying that he does not have access to perfect information because he was not educated well…He doesn’t know much about money or work.” His options are limited because he doesn’t have a good education, and is surrounded by a drug economy, and this puts him at a disadvantage.
Doraius builds on Umar’s point, in his essay about the Birdman song “Money to Blow.” The song is about getting everything you want when you have a lot of money. Doraius warns, “This makes people desire what the artist has. Unfortunately this song is not giving people perfect information. It creates an unrealistic image of how to obtain wealth.”
Doraius also connects the song to the core concept we teach at Game Theory Academy: “It might not be in your best self interest to blow all of your money on unnecessary things, even if you are able to.” At GTA, we make a clear distinction between best self interest and preferences. When it comes to making decisions, it’s easy to decide what to do when your preference and best self interest are the same. When they differ, deciding which course to take can be very stressful.
In her essay about the song “Fireworks” by Katy Perry, Marissa reflects that “it takes time to realize what your best self interest is at a young age.” Even some of you professionals reading this blog on the CFED web site probably struggle with making decisions in your best self interest all time. When is the last time you skipped a workout, wasted time on Facebook or hit the snooze button a few times on a dark winter morning?
Marissa writes, “You just need help getting steps to help you figure out what is best for you.” That’s what Game Theory Academy is all about. We give students what every MBA student gets: basic tools to make value-driven decisions for yourself. Every high school should use the same lens to introduce young people to their role in our complex, competitive economy.
A Ticket to Work Gives a Smoother Ride
Posted on 02/09/2011 @ 04:11 PM
Guest Blogger Joyce Armstrong is Project Director for Connecticut’s Connect to Work Center Work Incentives Planning and Assistance Project, working with persons with disabilities. Joyce and her colleague, Nora Bishop, are 2010 CFED Innovative Idea Champions. You may have met Joyce at the 2010 Assets Learning Conference’s Innovation Marketplace.
Co-opportunity and the Connect to Work Center have continued to work on the IDA pilot that we presented information on at the 2010 Assets Learning Conference’s Innovation Marketplace in Washington, DC. One major step that had to be completed was for Co-opportunity to become an Employment Network (EN) under Social Security’s Ticket to Work Program. They applied, were initially asked for some additional information and finally, a few weeks ago, they were accepted as an EN. This now allows us to move forward with recruiting people who are receiving Social Security benefits due to a disability who are interested in going off of their Social Security benefits, saving in a traditional IDA and participating in Financial Literacy Training.
Co-opportunity will be paid for each month that these individuals who assign their ‘tickets’ to them have earnings above the Ticket Payment Guidelines. ‘Ticket’ payments have “no strings attached” and can be used in any way that the program chooses. In our case, the payments will be used to support future ‘alternative’ IDAs that will better meet the needs of those with disabilities. Unlike traditional IDAs, the savings will not be restricted to homeownership, education or business ownership, but can be more versatility used for such purposes as vehicle modification or computers designed for persons with a particular disability. Through ‘Ticket’ payments, over a period of two to three years, we expect to have enough money to make this IDA program self sustaining.
Co-opportunity has decided that by utilizing distance learning and individual financial coaching over the phone, they will be able to serve our whole state. That will make it easier for us to find candidates for the IDAs. It’s also good because it involves all of the Connect to Work Center’s Community Work Incentive Coordinators/Benefits Counselors. Because they can all potentially refer people, we can discuss issues involving this in staff, talks about potential candidates and collectively, we’ll have an energy to move this project forward that wouldn’t be as strong if it only involved one area of our state and one or two of our Benefits Counselors.
We are starting now to look for potential candidates for the traditional IDAs (funded through the Assets for Independence Act). There are 3 slots that have been set aside for us. This will allow us to at least get started and to start getting ‘ticket’ payments.
Our search for “seed” money to offer ‘alternative’ IDAs is still ongoing, but things are looking up. Co-opportunity recently applied for a State of Connecticut Department of Labor Grant that would provide the seed money we need. We have all the relationships established that the grant proposal was looking for. The agency I work for, State of Connecticut Bureau of Rehabilitation Services (BRS) is talked about as a place to find appropriate candidates for the target population, people with disabilities. No other community IDA program approached BRS for a letter of support and/or to talk about partnering with us.
The Connecticut Dept. of Labor grant would allow for purchase of a car, which is the savings goal that we expect most people who are on Social Security Disability to want. Although Connecticut is a small state, public transportation is very limited, and some areas have none. Even in more densely populated areas, it can be impossible or very time consuming to go from one city to another. I’ve seen people take jobs less than 10 miles from home and then have to spend almost 2 hours on 3 different buses to get to work. Most people aren’t going to do this for very long. It’s tiring and people with children probably aren’t going to be able to do this at all. We also have issues with limited hours of service even where there are bus routes. Often, the bus doesn’t run as late as needed for someone to get home from work; and holidays and weekends have very limited bus service.
We will hear about our eligibility for the Dept. of Labor grant in March. They will be awarding more than one grant and we’re confident that one of those will be ours. We can’t wait for March and the announcement. Next time I bring you up to date, I expect to be able to give you good news on our funding status. Also, I hope that we will have at least one person started in a traditional IDA.
Savings Bonds are a Smart Move
Posted on 02/07/2011 @ 08:49 AM
Guest Blogger Diane Browning heads the rural retirement Project of the Women’s Institute for a Secure Retirement (WISER) from Lewisburg, West Virginia. She is a 2010 CFED Innovative Idea Champion. This post first appeared as an Op-Ed Commentaries section of the Charleston Gazette:
The parties are over, the holiday lights are coming down and the long slog to spring has begun -- made all the drearier by having to account for last year's income and file taxes.
However, there is a new bright spot in this annual ritual -- the opportunity to build savings at tax time.
The federal policy to facilitate the purchase of a savings bond via a refund was set in place last tax season and has been streamlined for 2011 filings, along with the addition of the option to buy savings bonds as gifts.
In our society, we get a barrage of offers to spend our refund, but how often do you get asked to save it? Yet savings is a key indicator of upward mobility. The Pew Charitable Trust's Economic Mobility Project found that 71 percent of children born to high saving, low-income parents advance economically.
Saving isn't easy, though, no matter what your income bracket. It doesn't seem as difficult when you have extra cash, which many people do at tax time. After paying their payroll taxes, many low-wage workers receive earned income tax credits or child tax credits. Directing some of that refund into a savings bond is smart.
And the U.S. I Bond is a smart savings product. It is purchased at face value for as little as $50, is guaranteed, has an interest rate tied to inflation, a rate competitive with bank CDs (but without the high minimums) and is portable. Most all banks and credit unions redeem them. For people who operate without a checking or bank account, you don't need one to buy a savings bond.
A national pilot program testing the sale of bonds at tax time found that the overwhelming reason people bought bonds was for their children or grandchildren. It is a simple truth that no matter what our station in life, we want our children to prosper. This year, the IRS tax form 8888 allows you to direct part of your refund to
The bonds will be mailed to you about three weeks after you file.
Our economic turmoil in these past few years has had a few upsides. One is being thrifty and saving is "cool" again. By offering a universal and safe savings product at an opportune time to save, it has also become easy. So, as you get ready to see your tax preparer or bravely do your taxes yourself, plan to buy a bond -- and tell your friends and family to buy a bond, too. In the end, it is improving our individual balance sheet with increased assets at the household level that will make our economy sustainable over the long haul.
A New Mayor and an Experienced Mayor Trade Thoughts
By Anne Li on 02/02/2011 @ 09:12 AM
Hello! My name is Anne Li and I am CFED’s program director for innovation. I will be blogging pretty regularly from now on, and also inviting you and others to be Guest Bloggers.
I’d like to share some observations from a standing-room only event on January 20th at the St. Regis Hotel. It featured a number of mayors and others who are leading cities into the forefront of asset innovation. CFED’s new report, Building Economic Security in America’s Cities: New Municipal Strategies for Asset Building and Financial Empowerment was the centerpiece of the event. Generous funders Living Cities and the Surdna Foundation were represented by Ben Hecht and Jasmine Thomas, respectively. The Cities for Financial Empowerment (CFE) Coalition, whose members inspired and provided much of the information in the report, were represented by (among others) Jonathan Mintz of New York City and Jose Cisneros of San Francisco.
Many in the audience, including myself, were struck by the observations of a new mayor and an experienced mayor. Mayor Angel Taveras of Providence RI had been in office only 17 days! Himself raised by a single mom and attending Head Start, Mayor Taveras went on to Harvard University and Georgetown Law School before being elected mayor last fall. He said, “A child is poor because the parents are poor. Lift the parent out of poverty, and you’ve lifted out the child, and broken the cycle of poverty.”
Mayor Chris Coleman of St. Paul, MN has more time in grade than Mayor Tavares. He had recently been re-elected to a second term. He said, “Cities are uniquely qualified to have an impact on citizens’ financial security. Cities can use their schools, their libraries, their parks, and so many other places and ways in which they touch people where they live.”
Mayor Coleman asked Mayor Taveras: “You’ve been in office 17 days. How many calls about snow removal have you already received?” He went on to use snow removal (a touchy subject for so many of us, this winter) as an example of the way cities have unique types of interactions with residents that affect their financial security. When a city declares a snow emergency, the Mayor said, it is very often lower-income residents who don’t move their cars from the snow emergency routes. Why? Sometimes because they’re not tuned in well enough to hear about the snow emergency declaration. Sometimes their car won’t start and they can’t afford to buy a new battery.
And then what happens? The Mayor asked and answered. Their car is ticketed and towed. And the $75 for a ticket plus the $350 for towing, while a nuisance for more affluent residents, may become a financial catastrophe for a low-income household. It may be enough to push that household into crisis.
With that very graphic and compelling story, Mayor Coleman sounded the theme echoed by the other speakers and by the report: cities can leverage municipal power and politics to advance a diverse financial empowerment agenda. The report describes a variety of innovative municipal approaches – not only New York and San Francisco, but also Seattle-King County, Newark and San Antonio among many others. It’s a user-friendly catalogue of innovative strategies and policies that localities across the country can adapt to the needs of their citizens to help them build and preserve financial security.
Interested in what else was discussed during the January 20th event? Watch the recorded briefing and panel discussion here.
New SBA Advantage Programs for Capitalizing Underserved Small Businesses
By Lauren Stebbins on 01/27/2011 @ 03:43 PM
This year the Small Business Administration (SBA) is launching two new programs, Small Loan Advantage and Community Advantage, to expand access to capital for underserved small businesses. Such businesses often experience difficulty in securing loans from mainstream financial institutions which typically do not offer small loans because of their low profitability. The SBA’s Advantage Programs are designed to fuel economic growth in underserved communities by increasing access to small loans for these businesses.
The Small Loan Advantage Program encourages larger SBA lenders to offer small loans through streamlined paperwork, quick approval times (minutes for Small Advantage Loans submitted through the e-Tran system and one business day for all other loans), a $250,000 loan amount maximum and a higher guarantee for loans below $150,000 (85% compared to 75% for loans over $150,000).
The Community Advantage Program is a three-year pilot to increase the number of SBA 7(a) lenders in underserved communities. The pilot is focusing on mission-driven financial institutions (e.g., CDFIs, CDCs) that previously have not been able to offer SBA loans. As with the Small Advantage Loan Program, the required paperwork is streamlined and the maximum loan amount is $250,000 with a higher guarantee for loans under $150,000. The approval time for Community Advantage loans however is 5 – 10 business days.
Both programs are scheduled to be implemented beginning March 15, 2011. Applications from mission-driven financial institutions for the Community Advantage Program are being accepted starting on or before February 15. For more information, check out the SBA press announcement.
Fostering Green Entrepreneurship
By Lauren Stebbins on 01/26/2011 @ 03:20 PM
ACE, Access to Capital for Entrepreneurs, is a SBA microloan intermediary, USDA intermediary re-lender and a certified CDFI that provides loans to underserved small businesses unable to access traditional lines of credit. ACE serves small businesses in 68 counties throughout northern Georgia and since its founding in 1999, has loaned more than $5 million to disadvantaged small businesses. ACE loans range from $500 to $50,000.
In 2009, ACE established Georgia Green Loans, a program that provides loans to small businesses that produce eco-friendly products or want to “green” their operations. ACE administers the program and works with two other Georgia small business lenders – Small Business Assistance Corporation and Albany Community Together, Inc. – to provide these loans throughout the state.
With the creation of Georgia Green Loans, ACE gained national attention as a leader in developing green and sustainable entrepreneurship and subsequently received $700,000 grant from the Georgia Environmental Finance Authority (GEFA) to create Save and Sustain, a program that provides subsidized audits and low interest loans to small businesses seeking to reduce energy costs.
ACE was also awarded an SBA PRIME grant to create the Academy for Green Micro-enterprise Development, which helps other organizations with green business development programs. Already organizations in Spokane, WA, New Orleans and Detroit have been assisted through the Academy. In addition to these federal and state government awards, ACE received the 2010 Wachovia Wells Fargo NEXT award for the category of industry innovation.
For over 10 years ACE has been investing in underserved communities through small business development and is now pioneering the way to further invest in them through environmental sustainability.
Making Entrepreneurship Accessible
By Lauren Stebbins on 01/20/2011 @ 03:41 PM
People with disabilities face disproportionately high rates of unemployment. In order to address this and develop self-employment as a viable option for people with disabilities, the U.S. Department of Labor Office of Disability Employment Policy (ODEP) funded the Self-Employment Technical Assistance, Resources, & Training or START-UP USA, a partnership between Virginia Commonwealth University and Griffin-Hammis and Associates, LLC. START-UP USA provides technical assistance and disseminates a range of resources to people with disabilities that want to pursue self-employment. START-UP USA also provides technical assistance to three START-UP demonstration projects in New York, Alaska, and Florida.
The New York demonstration, START-UP NY, has been particularly successful in creating a model of “inclusive entrepreneurship” that can serve as a model for replication – one the overall goals of the START-UP initiative. START-UP NY, a partnership between the Syracuse University Burton Blatt Institute (BBI), the University’s Whitman School of Management (through its South Side Innovation Center) and Onondaga County, has worked with 204 individuals with disabilities since 2007 to assist them in exploring self-employment options, of which 48 have started their own businesses. The “Inclusive Entrepreneurship” model entails working with partners to leverage financial resources, access financial literacy services and train college students to work with entrepreneurs with disabilities as business development consultants, a component of a new jointly-taught Whitman School and BBI course. BBI, on behalf of the Onondaga County Department of Social Services, managed the design and implementation of the START-UP NY program. The Whitman School’s South Side Innovation Center houses the program which enables access to other related services offered by the Center. Through this model, START-UP NY provides participants with assistance in business plan development and review, benefits planning and financing as well as other resources.
The success of START-UP NY has led to efforts to replicate the program in Manhattan and is informing other similar initiatives throughout the state. Furthermore, a grant from the Kauffman Foundation, as part of the Syracuse Campus-Community Entrepreneurship Initiative referred to as Enitiative, initiated a pilot IDA program for disabled entrepreneurs through the Syracuse Cooperative Federal Credit Union. In addition, the Gifford Foundation’s (also in Syracuse) Matched Savings Program provided matching funds for another 35 IDA accounts for disabled entrepreneurs.
For more information on START-UP/USA and other state and federal self-employment initiatives for people with disabilities, check out ODEP’s self-employment page.
SSIR Webinar Collective Impact: Creating Large-Scale Social Change
By Lauren Stebbins on 01/14/2011 @ 02:46 PM
On Wednesday, January 19 at 2pm ET, Stanford Social Innovation Review will host a webinar on collective impact, a strategy for collaboration and partnership that differs from most in that involves a centralized infrastructure, a dedicated staff, and a structured process that leads to a common agenda, shared measurement, continuous communication, and mutually reinforcing activities among all participants. The webinar discussion is a follow up to the December SSIR article “Collective Impact” by John Kania and Mark Kramer of FSG Social Impact Advisors that features the Strive Partnership in Cincinatti, OH as a premier example of collective impact and how it has been effective in significantly improving student achievement in the area’s public schools. Webinar speakers will include the article authors, Jeff Edmondson, Executive Director of the Strive Partnership, and Patty Stonesifer, former CEO of the Bill & Melinda Gates Foundation. Moderating will be Eric Nee, Managing Editor of Stanford Social Innovation Review and there will be a Q&A session.
Registration to view the webinar is $49 and includes an unlimited number of accesses to the archived webinar for 12 months. For more information and to register, click here.
2011 Social Innovation Fund Competition
By Lauren Stebbins on 01/11/2011 @ 01:43 PM
Just before the start of the new year, the Corporation for National and Community Service (CNCS) released a draft Notice of Funding Opportunity (NOFO) for the 2011 Social Innovation Fund. Right now, CNCS is currently accepting comments and feedback on application and program guidelines for the Fund in 2011, specifically four changes CNCS have made to this year’s competition:
- Clear articulation of CNCS requirements for transparency
- A decrease in the maximum dollar amount for which intermediaries can apply from $10 million to $7 million
- Elimination of the provision allowing applicants to “pre-select” subgrantees
- General streamlining and clarification of the overall content of the NOFO
Native Community Development Financial Institutions Network Launched
By Lauren Stebbins on 01/07/2011 @ 11:45 AM
A new year brings new and exciting beginnings. As 2010 came to a close, First Nations Oweesta Corporation, a leading Native Community Financial Development Institution (CDFI) intermediary, announced the launch of the Native CDFI Network. With the mission of supporting the growing field of Native CDFIs and economic development in Native communities, the Native CDFI Network was formed with support from the Annie E. Casey Foundation.
Over the next year, the Network will seek strengthen the voice of Native communities and native CDFIs at the national policy level and organize networking opportunities to better connect leaders and practitioners of the Native CDFI industry.
First Nations Oweesta will serve as a partner of the Native CDFI Network as it moves forward and becomes more established. Click here to read the press release about the launch of the Native CDFI network.
Plaza Adelante: An All-in-One Model for Service Delivery and Community Development
By Lauren Stebbins on 01/04/2011 @ 09:41 AM
Mission Economic Development Agency (MEDA), a community-based organization in San Francisco that provides asset development services for low- and moderate-income Latino families, unveiled in March of 2010 Plaza Adelante, a “one-stop” center housing several community-based nonprofits, an in-house café, exhibits of work from local artists and a market that serves as a business incubator. The nonprofits housed in Plaza Adelante provide a wide range of services including technical assistance for microenterprises, homeownership counseling and foreclosure intervention, financial education, technology education and training, affordable financial products and services and tenant counseling.
Not only does Plaza Adelante provide a central location for low-income Latino and immigrant individuals and families to access critical services, it also offers a solid model for integrated service delivery and cost savings by pooling administrative resources and sharing space. This enables each organization to devote more resources to their programs and services. This method of collaboration also supports greater efficiency of nonprofit operations and maximizes benefits received by community residents in need of financial security.
El Mercadito, Plaza Adelante’s market and Mission Street retail business incubator is part of a larger program to develop businesses owned by low-income, Latino entrepreneurs. Although Plaza Adelante has been open since March, the grand opening of El Mercadito took place in late October. Entrepreneurs that secure a space in El Mercadito are contracted to operate in the space for up to five years, with the goal of growing enough in a minimum of three years to be able to secure their own space. MEDA assists businesses in this process by providing legal assistance and counseling.
The process for selecting the businesses for El Mercadito starts by participating in free business development classes on marketing, financing, management, and operations. Students in these classes are provided with one-on-one support in developing their business plans. Upon completing the classes and the business plans, participants engage in selling their plans to a panel of judges that selects occupants for El Mercadito.
Plaza Adelante is a great example of how merging nonprofit operations can go well beyond reducing administrative costs for organizations and also produce a bounty of benefits for communities served. innovation@cfed is particularly excited to highlight MEDA’s success in launching Plaza Adelante and El Mercadito as MEDA's Executive Director is innovation@cfed Strategic Advisor Luis Granados. In addition, one of the nonprofits housed in Plaza Adelante is Mission Asset Fund, which is directed by Innovative Idea Champion José Quiñonez.
To watch a video on El Mercadito’s grand opening, at which San Francisco City and County Treasurer Jose Cisneros was in attendance, click here.
Seeing is Believing
By Lauren Stebbins on 12/22/2010 @ 11:29 AM
At CFED’s 2010 Assets Learning Conference, Innovator-in-Residence Hilary Abell presented during the Worker-Owned Cooperatives conference session where she spoke about her work in leading the expansion of WAGES’ green housecleaning cooperatives in San Francisco and the East Bay, and the creation of a Co-op Network to support growth and sustainability of mature cooperatives.
WAGES celebrated its 15th anniversary in late October 2010 with a reception and dinner that featured testimonials from members of WAGES cooperatives, who are mostly Latina immigrant women. A brief video produced for one of these testimonials tells the story of Bertha Naranjo, a founder of and worker-owner in the Eco Care Professional Housecleaning Cooperative. The Levi Strauss Foundation also produced a short video on the work that WAGES does in developing and supporting green housecleaning, worker-owned cooperatives.
These videos highlight the drastic difference in income, benefits and assets earned by the worker-owners in the cooperatives compared to that earned through their previous jobs. They also show how the cooperatives enable members to develop valuable business management skills. The stories of the women featured in the videos are a powerful testament to the efficacy of the WAGES model and, more broadly, how economic opportunity and financial security pave the way for healthy lives and futures.
Happy holidays to all! The innovation@cfed blog is taking a brief hiatus and will be back the first week of the new year.
Unleashing Youth Entrepreneurship
By Lauren Stebbins on 12/16/2010 @ 01:53 PM
It’s never too early to develop an entrepreneurial interest and spirit. When we talk about entrepreneurs we often subconsciously refer to adults, but youth are more than capable of creating and sustaining businesses as well. Two organizations that help support and develop youth entrepreneurs, Ogallala Commons and YESCarolina, focus on tapping the energy and potential that lies in youth to transform their interests and values into successful enterprises.
Ogallala Commons, a nonprofit that works to foster a holistic approach to community socio-economic development in the rural Great Plains region centered over the High Plains-Ogallala Aquifer, views youth engagement as critical in helping the region’s overall development and vitality. Last month, the organization held its 4th Annual Regional Youth Entrepreneurship Fair. The purpose of the Fair is to encourage youth to pursue business ventures in their hometowns and connect them with an adult support system. Thirty-four teens presented their ideas with the teens associated with the three top-rated ideas receiving cash prizes.
Also last month, one week after the Fair, Ogallala Commons sponsored Campo Youth Engagement Day, a conference geared toward youth in Baca County, CO to promote youth leadership and community service as a means for being proactive in planning for the future. Ogallala Commons' executive director, Dr. Darryl Birkenfeld, gave a keynote speech through which he informed students about skill-building internships offered by Ogallala Commons and encouraged them to consider building their futures in their rural hometowns after completing their education.
YESCarolina, a nonprofit that focuses on developing youth entrepreneurs in South Carolina, trains educators from across the state to teach young people entrepreneurship skills. The only organization of its kind in the state, YESCarolina views youth entrepreneurship as essential to the future of South Carolina'sbusiness development.
YEScarolina has trained and certified over 500 South Carolina teachers on the subject of entrepreneurship. Through the training of these teachers and its Summer Business Camps, YESCarolina has helped thousands of students learn business development skills and start their own enterprises. YESCarolina recently released a new book, The Spirit of Outreach, which is a compilation of 20 stories of youth that have launched successful small businesses as a result of the knowledge and skills they gained through YESCarolina programs. The book is authored by the organization’s Founder and Executive Director Jimmy Bailey, who previously served three terms in the South Carolina House of Representatives from 1988 to 1994. The Spirit of Outreach is available to purchase through Amazon.com.
Registration Now Open for the 2011 Underbanked Financial Services Forum
By Lauren Stebbins on 12/10/2010 @ 12:57 PM
The 6th Annual Underbanked Financial Services Forum, presented by the Center for Financial Services Innovation, will be held from June 8-10, 2011 in New Orleans, LA. Pre-registration is now open and from now until December 31, you can receive a discount of $200 on the lowest conference rate.
The Underbanked Financial Services Forum brings together leaders and practitioners from financial institutions, government agencies and nonprofits to explore cutting-edge innovations in financial products and services designed for underbanked consumers and also new and emerging strategies for helping underbanked consumers improve their financial health and move further into the economic mainstream. For information on last year’s forum including highlights and the agenda and to register for the 2011 forum, click here.
Good News for Small Businesses
By Lauren Stebbins on 12/07/2010 @ 03:33 PM
Last week, the Baltimore Business Journal reported that M&T Bank has launched its Built for Business Program, which is targeted specifically to small businesses making less than $1 million in annual sales. The Built for Business Program includes discounts on financial services and products such as credit-card processing and business checking and (drum roll) an expanded microloan program that makes available no-fee lines of credit totaling between $25,000 and $250,000. M&T has instituted this program in Baltimore and its other mid-Atlantic markets.
The expansion of M&T’s microloan program is no doubt great news for small-business entrepreneurs that are struggling to obtain growth or start-up capital. The articles notes how that is increasingly difficult for these entrepreneurs in this tough economic climate where it is hard to obtain home equity loans because of falling property values and to use credit cards because of cuts in spending limits. With this being the context surrounding the availability of business growth or start-up capital for small businesses, the importance of additional affordable options to obtain credit cannot be understated given the crucial role these businesses often play in driving community economic development and employment.
As I read about the Built for Business Program, I couldn’t help but to be reminded of a post I wrote in early November about the success of a small dollar loan program in Baltimore. M&T’s program is not limited to Baltimore, but two things came to mind:
- The parallel between the significant positive impact low-income people and small businesses receive from affordable financial products and services better tailored to their needs
- That fact that programs offering these products and services have been established or brought to Baltimore, a city that had experienced a long period of economic decline and has sizable population of low-income residents and thus definitely can benefit from the availability of these programs
As these programs continue to be offered and hopefully grow, it will be exciting to see what I optimistically predict to be the positive effects and impacts they may have on more individuals and whole communities.
Don’t Miss This Opportunity!
By Lauren Stebbins on 12/03/2010 @ 02:51 PM
Next year’s Opportunity Collaboration, a four-day problem-solving, strategic retreat for nonprofit and for-profit leaders and social entrepreneurs working in the fields of poverty alleviation and economic justice, is scheduled to be held October 17-20, 2011 in Ixtapa, Mexico. Applications for Opportunity Collaboration delegates are now being accepted and there are fellowship spots available!
Specifically, Opportunity Collaboration offers the Cordes Fellowship to innovative and effective entrepreneurial nonprofit and for-profit executives with a demonstrated commitment to poverty alleviation and economic justice. In addition to participating in all parts of the Opportunity Collaboration retreat, Cordes Fellows attend a special networking breakfast on the first day of the retreat and participate in the University of the Pacific Global Center for Social Entrepreneurship training program.
The Fellowship covers all on-site costs of attending the Opportunity Collaboration. As such, financial need is a primary consideration when reviewing applications for the Cordes Fellowship. Applicants from both nonprofit and for-profit organizations with adequate resources are less likely to be selected for a Fellowship.
Applications are reviewed on a first-come, first-served basis and are being accepted only through January 30, 2011 so apply soon! For detailed information about eligibility requirements for the Cordes Fellowship, the retreat agenda, and other pertinent information regarding Opportunity Collaboration, click here.
A Glimpse into the Future
By Lauren Stebbins on 12/01/2010 @ 11:09 AM
On November 18, PBS aired a special “Fixing the Future,” which featured innovative initiatives happening across the United States that are achieving positive social and economic change and present viable solutions for creating a more economically and environmentally sustainable future for the country.
This special included two segments on worker-owned cooperatives, one of which was the Evergreen Cooperative Initiative in Cleveland, OH – a collaboration between the Cleveland Foundation, the Ohio Employee Ownership Center and the Democracy Collaborative at the University of Maryland, which is led by Innovative Idea Champion Ted Howard. This segment featured portions of host David Banaccio’s interview with Howard and an inside look at one of the three Evergreen co-ops, Evergreen Cooperative Laundry, including an interview with the co-op’s Operations Manager, Mendrick Addison. The segment highlights the multi-faceted mission of the Evergreen initiative, which is that in addition to providing an opportunity for stable employment and asset-building for underserved residents of Cleveland, the co-ops are the core component of a broader economic development strategy for the whole city.
To watch the segment on the Evergreen initiative and other segments comprising the “Fixing the Future” special, click here.
Ride the Wave: Innovations in Native Financial Education and Entrepreneurship
By Lauren Stebbins on 11/24/2010 @ 10:36 AM
Four Bands Community Fund, one of the nation’s leading Native CDFIs, set out to challenge the entire Cheyenne River Indian Reservation community to engage in learning and promoting key tenets of financial literacy and entrepreneurship through the launch of its Making Waves Campaign. The campaign is a major initiative to create economic opportunity and spur business development for the current and future generations of the Lakota Tribe. Four Bands works with schools and community organizations on the reservation to actively promote and teach members of the Tribe, especially children and youth, the guiding principles, or the “ABCs,” of financial literacy and entrepreneurship. In its work with the schools, Four Bands created Making Waves Teacher Tool Kits for teachers of grades Kindergarten through 12 that contain lessons on financial literacy and entrepreneurship designed to build the teachers’ own financial literacy skills as well as complement the four core subjects of the school curriculum (math, science, language arts/reading, social studies).
Making Waves has delivered these tool kits to teachers throughout the reservation, and is now able to offer them to teachers in other communities. Adding to this success, Mark Peacock, a local entrepreneur and business and financial education trainer with Four Bands’ Making Waves Teacher Institutes and C.R.E.A.T.E. (Cheyenne River Entrepreneurial Assistance Training and Education) classes, will soon be releasing a new motivational book on effective approaches for teaching financial education.
In moving forward with the Making Waves Campaign, Four Bands is excited about the opportunities that lie ahead to make an even bigger impact on the Cheyenne River Indian Reservation and other communities interested in their model.
For more information about the Making Waves Teacher Tool Kits or Mark Peacock’s upcoming book, contact Tanya Fiddler, Executive Director, at email@example.com.
It’s Awards Season, Part 2…
By Lauren Stebbins on 11/23/2010 @ 09:32 AM
This past summer, Bank of the West launched its Philanthropy Awards to recognize nonprofit organizations in California that are achieving significant social and economic impact in their local communities, particularly underserved populations. Earlier this month, Innovative Idea Champion José Quiñonez’s organization, Mission Asset Fund (MAF), received the top award for the Innovation in Philanthropy category, which recognizes “an emerging nonprofit organization that is directly improving the quality of life for individuals and catalyzing greater systemic change.” MAF has developed innovative financial products and services that enable members of immigrant communities in the Bay Area to build assets and credit by tailoring these products and services to cultural traditions and practices.
In addition to a $15,000 cash grant, Bank of the West awarded MAF and the recipients of the Community Impact and Team Member Commitment award categories with a short video highlighting their outstanding work. To watch the video featuring the Mission Asset Fund, click here!
innovation@cfed congratulates José and MAF on this fantastic recognition!
FDIC Shines a Spotlight on Children’s Savings Accounts
By Lauren Stebbins on 11/18/2010 @ 03:52 PM
On November 16, 2010, the FDIC Advisory Committee on Economic Inclusion held its most recent committee meeting which included a panel discussion on one of CFED’s core areas of work: children’s savings accounts (CSAs). Guest speakers on this panel included moderator Peter Tufano, Sylvan C. Coleman Professor of Financial Management, Harvard Business School and Founder and CEO, D2D Fund; José Cisneros, Treasurer for the City and County of San Francisco; Robert Annibale, Global Director, Citi Microfinance and Community Development; Katryn Gabrielson, Deputy General Counsel, Finance Authority of Maine; and CFED Founder, Board Chairman and General Counsel Bob Friedman.
Bob summarized remarks from the previous speakers and highlighted the key aspects of CSAs that speak to their effectiveness and success in providing asset-building opportunities to low-income and underserved children:
- Savings. The savings patterns of participants of the SEED Initiative showed that low-income and very poor families will save for their children’s economic futures given the opportunity.
- Automation. CSAs need to be opened automatically to ensure higher take-up and participation rates, and then linked to financial education. Overcoming barriers to automation such as obtaining Social Security numbers and parental consent are hefty challenges but necessary to ensure wide access to these accounts.
- Lifelong. There is a false dichotomy pitting children’s savings against retirement savings. The fact is these two are not really in opposition. CSAs are and should be the first step on a path to lifelong savings and interaction with the mainstream financial system.
- Incentives. Research (from the Center for Social Development at Washington University in St. Louis) suggests that the amount of incentives is perhaps less important than the pure existence of the account. Specifically, this research found that youth with savings accounts expecting to graduate from a four-year college were 4-7 times more likely to go to college. Given the high levels of asset poverty for adults and children however, matching funds are still essential components of CSA programs.
- Affordability. The ASPIRE Act, which would create a savings account every child born in the United States, would cost $40 billion over 10 years. That cost is minimal compared to the current federal asset-building subsidies that disproportionately benefit high-income Americans. Eliminating some of those subsidies would save taxpayers money and easily pay for CSAs and other asset-building incentives such as expanding the Saver’s Credit.
- Politics. Polling data collected during the SEED Initiative showed the impact of including CSAs in a platform for hypothetical candidates. CSAs have always been a “bipartisan” issue, but the word “bipartisan” doesn’t go very far in our current political climate; rather, CSAs are a “Republican idea and a Democratic idea.”
- Growth. The reach of CSAs needs to be significantly expanded in order to deal “back into the system the majority of families that I think right now are dealt out.”
For more facts about Children’s Savings Accounts, check out this CFED Assets and Opportunity Scorecard factsheet.
To watch parts or the entire webcast of the meeting, click here. More information about the FDIC’s economic inclusion initiatives can be found here.
This Week in Events...
By Lauren Stebbins on 11/16/2010 @ 01:31 PM
I’M HOME Webinar on Single-Family Financing for Manufactured Homes
On Wednesday, November 17 from 2 – 3:30pm ET, CFED’s Innovations in Manufactured Homes initiative, I’M HOME, will host a webinar on single-family financing for manufactured homes. Historically, residents of manufactured homes have faced predatory lending and limited financing options. This webinar will discuss conventional lending practices, the history of manufactured housing financing and issues regarding current single-family financing options. Speakers will include:
Kathryn Gwatkin Goulding, Director of I’M HOME at CFED
Lisa Davis, Program Officer at the Ford Foundation
John Van Alst, Staff Attorney at the National Consumer Law Center
Stephen Wheeler, Managing Director at Housing Advisory Services
Lewis Dancy, Assistant Director of Mortgage Lending at Self-Help Credit Union
To register for this webinar, click here!
11th Annual World Congress on Disabilities
The 11th annual World Congress on Disabilities (WCD) takes place this week from November 18-19 in Dallas, TX. The mission and vision of the WCD is to educate, inform, and provide a useful exchange of ideas for people with disabilities and special health care needs and those involved in their care and development. Emceeing this year’s event is renowned TV host and correspondent Rita Cosby and keynote speakers include Carmen Irwin, Health Insurance Specialist and Centers for Medicare & Medicaid Services Representative, and Admiral Michael Mullen, Chairman of the Joint Chiefs of Staff.
For more information and to register for this year’s WCD Exposition and Conference, click here!
This month’s issue of Exceptional Parent magazine, a sponsor of this event, features a full-page ad on innovation@cfed which spotlights Innovation Portfolio members Tom Foley, Joyce Armstrong, and Nora Bishop.
Addressing ALL the Costs of College
By Lauren Stebbins on 11/11/2010 @ 01:07 PM
There’s no doubt about the grim context currently surrounding the subject of college affordability in the United States given the skyrocketing costs of both public and private colleges and universities. With that in mind because of a recent conversation I had with a friend about steep tuition hikes at private universities, I was happy to read about a program called Dreamkeepers, which provides funding in the form of grants to college students facing unexpected financial emergencies. Although Dreamkeepers is not a tuition assistance program, it does play a vital role in helping students stay in school and graduate on-time, ultimately helping them to stay on track to start a career or move on to a four-year college or university. Because the aid is issued to the students in the form of a grant, they are not required to pay it back and thus do not accumulate additional debt. Another great component is that students who receive aid through the program are also given access to a financial education tool so they can learn how to effectively manage their money. When Dreamkeepers was implemented in 2005, it was offered through 11 community colleges. Since then the program has expanded and is now offered through 19 additional community colleges plus one four-year university and one inner-city college.
The future of college affordability right now seems uncertain and even glum, but I think programs like Dreamkeepers prevent that future from looking too bleak. To read more about innovative concepts and programs addressing college affordability, check out the profile pages for Innovators Maggie Reilly and Peter Blanchard.
Signs of Success for Small-Dollar Loan Program in Baltimore
By Lauren Stebbins on 11/09/2010 @ 02:26 PM
An article in today’s Baltimore Sun reported on the expansion of a relatively new small-dollar loan program called Borrow and Save, which provides low- and moderate-income Baltimore residents with low interest (7.99%), small loans that range from $300 - $1000. Loan recipients that save a minimum of $5 each month during the repayment period will have the total amount of their savings matched once the loan is fully repaid.
Borrow and Save has made substantial progress in its short existence of less than 2 years. It has gone from serving just residents in East Baltimore to serving those in all neighborhoods of the city. Modifications to the program such as a required financial literacy course before receiving the loan have already been instituted and are making progress to address the default rate of 20 percent.
Low-interest, small dollar loans are a much needed alternative to costly payday loans and credit cards, which often have extremely high interest rates that make repaying the loan or debt prohibitively difficult. Given the large financial toll that unexpected and high-cost expenses (e.g., car repairs, medical bills) can have on individual and household finances, it is very encouraging to hear about programs like Borrow and Save that not only help people manage these expenses without accumulating large amounts of debt but also encourage them to start or continue building their savings.
It’s Awards Season…
By Lauren Stebbins on 11/04/2010 @ 12:29 PM
September and October were big months for two members of the Innovation Portfolio: Innovative Idea Champions Henry Red Cloud and Tom Foley. Both innovators were in Washington, DC to participate in CFED’s 2010 Assets Learning Conference in late September by presenting their work in the Innovation Marketplace and then were off to receive distinguishing awards recognizing their leadership in expanding economic opportunity for underserved populations.
On September 30, Henry (right) was in New York City to receive the Nuclear-Free Future Award for his work in manufacturing renewable energy equipment for Native American reservations. Soon after on October 11, Henry was in Los Angeles to receive the 2010 Interstate Renewable Energy Council (IREC) Annual Innovations Award for the Clean Energy American Recovery and Reinvestment Act (ARRA) Projects category.
On October 19, Tom (left) was back in Washington, DC to receive the National Disability Institute's (NDI) Richard Keeling Leadership Award for his leadership in promoting and developing asset-building outreach, education and resources for people with disabilities. Tom received the award at NDI's Real Economic Impact Tour Celebration event at the National Press Club.
innovation@cfed congratulates Henry and Tom on their outstanding achievements!
A Huge Boost for Rural Microenterprise
By Lauren Stebbins on 11/01/2010 @ 10:59 AM
Last Thursday the U.S. Department of Agriculture announced the first awardees of the Rural Microenterprise Assistance Program (RMAP), which was authorized by the Farm Bill (Food, Conservation and Energy Act of 2008). In total, 75 organizations in 36 states will receive funds through RMAP to provide loans and technical assistance to rural entrepreneurs for small business financing. Of the approximately $31 million awarded, $24 million will take the form of loans to microlenders that can use it to provide loans to rural entrepreneurs. The remaining $7 million will take the form of grants to microlenders and microenterprise development organizations to provide expanded technical assistance services to these entrepreneurs. By expanding technical assistance support and providing start-up and growth capital for small business and microenterprises, RMAP is designed to help create much-needed jobs in hard-hit, rural areas.
The full press release from USDA on the RMAP awardees includes a list of all of the organizations that received funding. CFED was delighted that USDA incorporated several of our recommendations to the Interim Rule establishing RMAP and will be working to monitor its implementation and availability of additional funds for the program.
Another Victory for the Paperless Payday
By Lauren Stebbins on 10/26/2010 @ 11:26 AM
In late September, the City Council for Austin, Texas unanimously passed a resolution to increase the percentage of city employees receiving their salary through electronic fund transfers or pre-paid debit cards to 98% by September 30, 2011. The resolution was introduced by Council Member Bill Spelman and cosponsored by Council Member Sheryl Cole. Over the next year, city managers will be working with city employees receiving their salary through paper checks to identify barriers preventing them from choosing electronic payment, develop procedures encouraging them to opt for electronic payment, and promote accessible bank accounts and other financial services. To carry out this project, the resolution directs the City to work with Bank On Central Texas, an initiative of United Way Capital Area and PeopleFund to provide un- and under-banked Texans access to mainstream financial products and services.
A paperless payday is a critical strategy for bringing people into the financial mainstream by connecting them with bank accounts and financial services that are not easily accessible for them. Access to these products and services helps them avoid the costly fees that come with money orders and check cashing institutions and build their assets.
Austin’s efforts are informed and inspired by the innovative work of the San Francisco Office of Financial Empowerment and their efforts to be the first city in the country to implement a plan to move all employees in the city of San Francisco – not only city employees but all workers employed in the private sector as well – to a paperless payday. More details about San Francisco’s efforts can be found on CFED’s Innovation Profile page highlighting the work of José Cisneros, Treasurer for the City and County of San Francisco; Leigh Phillips, Program Manager for San Francisco’s Office of Financial Empowerment; and Eugénie FitzGerald. Research from the design phase of San Francisco’s paperless payday initiative will be disseminated to leaders in other cities who are considering this type of strategy.
By Lauren Stebbins on 10/21/2010 @ 11:07 AM
Greetings innovation@cfed supporters! I’m Lauren Stebbins, Program Associate for Public Sector and Innovation here at CFED, and I’ll be taking over for Sean in bringing you the latest news about the outstanding work being led by our innovators, exciting developments in the asset-building field, webinars and events being hosted by innovation@cfed, and much more. Since joining CFED in April of this year, I have had the pleasure of getting to know members of our Innovation Portfolio, contributing to and attending the 2010 Assets Learning Conference, learning in more detail about asset building policies and other CFED programs and, by way of all of this, being a part of the ever-growing Assets Movement.
Now I am very excited to engage the innovation@cfed learning community through our blog. I encourage you to contact me anytime if you have questions about innovation@cfed or would like to contribute to the blog – just a click away at firstname.lastname@example.org!
Everything I need to know I learned at CFED…
By Sean Luechtefeld on 10/18/2010 @ 11:17 AM
Ten months ago, I joined the CFED Team as a Graduate Communications Intern for innovation@cfed. This week, my short tenure (or extended internship, depending on how you look at it) comes to an end, and I wanted to share with the community what I’m taking away from CFED as this was my first real foray into the Assets & Opportunity field. When I was trying to narrow down my top three takeaways, I thought of dozens of lessons I’ve learned, so excuse me for rambling about what many of you already know; these are simply those lessons that resonate so strongly with me.
- A stable income means nothing if coupled with asset poverty. I have to admit that until I worked at CFED, I never really thought about financial stability in terms of anything beyond income and savings. Ultimately, this meant if you had a good job that allowed you to pay the bills and live comfortably while putting a few dollars in your savings account, then you were good to go. Sadly, that’s not the case, and asset building through things like affordable homeownership and self-employment really is a critical piece of the puzzle. Furthermore, the rhetoric of the past that posited that it was all about “making ends meet” really doesn’t do justice to the economic climate in which we live. Being able to pay the rent or the mortgage and putting groceries on the table means little when the car breaks down, a medical accident occurs or, worse yet, when a hardworking American loses their job to the recession. Living with a hole in your pocket really can be financial ruin, and confronting asset poverty is the only proven mechanism for ameliorating these harsh realities for many families.
- “Partnership is an advanced technical skill.” This one came to me from Mindy Hernandez via CFED Senior Program Manager Genevieve Melford. It’s such a simple statement, yet totally true. We often can articulate that collaboration is a valuable endeavor, but can also recognize that it’s an endeavor that rarely reaches its potential. Partnering across the field and across other disciplines is the keystone to success. Whether it’s partnering with research organizations to make more robust our data collection techniques, partnering with community foundations to identify and share best practices or partnering with the public sector to bring innovative approaches for savings to scale, one thing is clear: we can’t do it alone. Developing the partnership skill is perhaps the single-most reliable strategy for increasing our effectiveness.
- The triangle really works. During my first few weeks at CFED, everyone I met came up to me with their thumbs and index fingers joined such that their hands formed a triangle. They repeatedly asked me if I had become familiar with the three-pronged approach to our work. Indeed, within a day I was intimately familiar with the “triangle”: community practice, private markets and public policy. I have to be honest about this: if one more person showed me the triangle during those first two weeks, I might have left and never come back. Early on, I could talk about how CFED was built on the premise that the most effective strategies for expanding economic opportunity were those that worked across all three prongs. Yet, it made no sense to me at the time. Now, ten months later, I could not believe more in such an approach. What sets CFED apart from other organizations in the field, in my opinion, is this methodology. Change simply can’t happen if it’s focused solely at the policy level. Likewise, policy reforms don’t work absent the right community practices. And, like the point I make in #2 above suggests, little can be effective if nonprofits work on their own and fail to partner across private markets and with the public sector. In other words, let the triangle live on!
I could go on, and I probably should since I could write a whole blog about how awesome my colleagues here are. Unfortunately, this is probably already my longest blog post! So, in short, my experience here has been incredible, both because I’ve worked with some incredible individuals, and because I have learned so much about the exciting and challenging work this field does.
Thank you all for reading my rants, and thank you for being such an important part of the movement to identify innovative approaches that create the save and invest economy. Do keep in touch, too: find me on LinkedIn and follow me on Twitter!
Signing off for now…stay tuned to meet our new innovation@cfed blogger, Lauren Stebbins!
ALC Highlights from Young Women’s Drumming Empowerment Project
By Sean Luechtefeld on 10/13/2010 @ 12:59 PM
The other day, my colleague Kristin Lawton, came across this blog post from Elliette at Young Women’s Drumming Empowerment Project. The post highlights their performances at the 2010 Assets Learning Conference.
Read and subscribe to Listen Up 2010!, the official YWDEP blog, here!
The post, while accurate in describing people’s excitement in the room, is far too modest. The women of YWDEP literally stole the show and we’re still getting comments on how incredible they are. These women bring it all to the table; they’re talented musicians, energetic individuals and tell a compelling narrative of how it’s possible to excel when you apply your energies to a worthwhile endeavor.
Thanks, Elliette, for the CFED shout-out, and thanks to all the women of Young Women’s Drumming Empowerment Project for two spectacular performances last month!
SETI, innovation@cfed Announce New Webinar
By Sean Luechtefeld on 10/08/2010 @ 04:54 PM
This week, CFED’s Self-Employment Tax Initiative and innovation@cfed announced a new webinar, which will take place on Wednesday, October 20, 2010 from 2:00 – 3:00 PM (EDT). The virtual seminar, called Partnerships that Leverage Tax Time and Empower Entrepreneurs, will examine the best ways to promote entrepreneurship as an asset-building strategy, especially during tax time when savings practices are most vital.
Speakers during this interactive dialogue will include Linda Paulson of Foundation Communities in Austin, TX, Andrea Beleno of the Legal Assistance to Microenterprise Project of Austin, and Cheryl Sesnon of Washington CASH in Seattle. These innovative and talented individuals will present findings from their efforts to leverage tax time as a resource for microentrepreneurs. Their presentations will be complemented with information about lessons learned from SETI, including the identification of best practices for simplifying processes, effectively training volunteers and staff, and targeting promotion and education.
To register for this exciting opportunity free of cost, click here. If you have questions, please feel free to contact my colleague, Brigitte Gavin, at email@example.com.
The Innovation Marketplace: An ALC Debrief
By Lauren Stebbins on 10/06/2010 @ 03:44 PM
As a featured event of this year’s Assets Learning Conference, the Innovation Marketplace showcased 50 Innovators, Sponsors and Exhibitors that had booths set up during the entirety of the Conference. Conference attendees were afforded an amazing opportunity to learn about and make connections with practitioners and organizations leading cutting-edge work in the asset-building field. The diversity of topics in CFED’s innovation portfolio was well-represented at the Marketplace; some of the work featured included green entrepreneurship opportunities as a prisoner reentry strategy, matched savings accounts for higher education costs and assistive technology for people with disabilities, solar energy products for Native American communities, financial education and savings accounts for children in Uganda and a shared responsibility model for healthcare costs. Traffic in the Marketplace reached its peak during its featured time slot of 4:30-6:30pm on Thursday, September 23 and included the addition of the Entrepreneurship Fair. During this time, Marketplace participants were joined by about 20 creative entrepreneurs committed to social change and expanding economic opportunity who were able to demonstrate and sell their products and services. A fantastic performance by some of the young ladies of the Young Women’s Drumming Empowerment Project infused the atmosphere with even more energy and excitement.
The Marketplace proved to be successful in creating a large, interactive space for CFED innovators to expand outreach on their work, and in creating a dynamic and fun setting for Conference attendees to become intimately introduced to them and other innovative ventures. The feedback we have received has been extremely positive, with many commenting on how the Marketplace created both a fun and informative setting to learn about an “amazing display of innovations” and having it open during the whole Conference created opportunities for “meaningful interactions” and “some of the best conversations.” Our innovators have expressed to us how much they appreciated having a venue to personally meet and connect with a national audience and make valuable connections that will help them move forward.
We would like to send a huuuuge thank you to all of the Marketplace’s innovators, sponsors, exhibitors and volunteers! Your participation helped make this year’s ALC the best ever. For us here at CFED, the success of the Innovation Marketplace exceeded our expectations, and we could not be more pleased to know that the both the innovators and visitors gained so much from this event.
Going to Scale: Initiatives to Strengthen Financial Security are Spreading
By Sean Luechtefeld on 10/04/2010 @ 11:53 AM
EDITOR'S NOTE: This guest blog post comes to us by way of David Blatt, Director of the Oklahoma Policy Institute. To read the full text of this post and to explore the rest of David's blog, click here.
Last week, I had the pleasure of attending the 2010 Assets Learning Conference that brought together over 1,000 participants for three days of plenaries, workshops and sessions exploring approaches to building an economy in which all Americans, including those of limited means, are provided opportunities to achieve household financial security through savings, investment, and entrepreneurship.
As I noted in my blog post reporting on the opening plenary, a major theme of the conference was the notion of “scale” – the need and opportunity to take policies, programs, and products that have been introduced and tested in modest ways up to now and expand them to serve a much greater number and range of individuals and families. In session after session, I learned about innovative practices that are already working at the local level or in pilot programs and that community organizations, government agencies, and financial institutions are gearing up to expand. Here are just four of the policies, programs and products from the asset building field that seem poised for a larger impact:
- The Bank On Initiative: According to a 2008 FDIC survey, one in four U.S. households is unbanked or underbanked, which means they do not have a checking or savings account, or rely on high-cost alternative financial services. In 2006, the city of San Francisco, in partnership with banks, credit unions and non-profit organizations, launched the Bank on San Francisco project to make it easier for the unbanked to get into mainstream banking by providing consumers with starter accounts and financial education. Building on the success of the San Francisco program and with the active involvement of the National League of Cities, the program has spread to over a dozen cities. The Administration has now proposed $50 million for a national Bank on USA initiative “to promote access to affordable and appropriate financial services and basic consumer credit products for households lacking such access.”
- $ave USA Initiative. For many low-income families, the Earned Income Tax Credit (EITC), which can be worth over $5,000 to a two-child household, provides an annual lump-sum payment that can not only be used to spend on ongoing and one-time expenditures, but that can also be saved and invested. In New York City, the Office of Financial Empowerment launched the $ave NYC Account Program to provide opportunities for families to invest part of their EITC refund in savings. $ave NYC is a matched savings program operated at tax time that provides low-income households 50 cents of public match for every $1 of savings up to $1,000. An evaluation of the program found that 61 percent of program participants deposited over $500 to their $ave NYC account, despite having average households earnings of roughly $15,000. These findings confirm the growing body of evidence showing that with the right incentives and program design, low-income families can and do save. In July, the federal government announced its financial support for the program in New York and three other cities, including Tulsa.
- Small Dollar Loan Program: Many low- and moderate-income families regularly depend on payday loans, which have APRs that can exceed 450 percent and tend to be extremely short-term, to try to make ends meet. Payday loans often lead to patterns of frequent, high-cost borrowing which perpetuate a cycle of debt and economic insecurity. In 2008, the FDIC launched the Small-Dollar Loan Pilot Program in partnership with 31 banks. All the banks committed to offering borrowers closed-end installment loans up to $2,500 with payment periods that extended beyond a single paycheck and APRs below 36 percent. Some banks coupled their loan product with financial education classes and resources. According to a study of the program, “most pilot bankers in the pilot indicated that small dollar loans were a useful business strategy for developing or retaining long-term relationships with consumers.” The FDIC intends to use the lessons from the pilot to work with the public, private, and non-profit sectors on strategies to expand the supply of lower-cost small-dollar loans.
- The Saver’s Credit. At the national policy level, the Obama Administration is promoting a broad set of tax policy changes that encourage and facilitate savings. One proposal that is strongly backed by CFED and a coalition of corporate and non-profit supporters would expand the Saver’s Credit, which currently is claimed by less than 6 million individuals. Under the Administration’s proposal, the Saver’s Credit would provide a flat 50 percent match on deposits into qualified retirement accounts up to $1,000 per year for joint filers, automatically deposit this match directly into a designated account, and extend this benefit to households earning less than $65,000. If enacted, up to 50 million Americans would be able to use the Saver’s Credit to build up a nest egg for retirement and other eligible uses.
These four examples are from an exhaustive list, but they are representative of a field in which a growing number of partnerships are bringing together government, non-profits, and the private sector to help build assets and strengthen financial security. The Oklahoma Asset Building Coalition is eager to be an active part of this work here in Oklahoma; whether or not you’ve been a part of the regional meetings that the Coalition is hosting around the state, we hope you’ll join our effort and help us ensure that Oklahoma contributes to bringing the assets movement to scale.
Expanding the Pie
By Sean Luechtefeld on 09/30/2010 @ 10:06 AM
EDITOR'S NOTE: This blog post comes our way from Alison McIntosh of Neighborhood Partnerships, who was a Social Media Partner for the 2010 Assets Learning Conference. Check out Neighborhood Partnership's newsblog at http://neighborhoodpartnerships.org/newsblog/.
Neighborhood Partnerships staff is in Washington DC attending the CFED Assets Learning Conference. We were also fortunate to attend a pre-conference session for State & Local Assets Coalitions. This pre-conference session was attended by 43 state asset coalitions and over 30 local asset coalitions. Both on days one and two, attendees were challenged to help CFED build a movement in this country to expand economic opportunities for all Americans.
At the end of day one, attendees were asked to respond about how we view asset building as part of a larger social movement, its strengths and weaknesses, and what we need from partners, national organizations, researchers and funders in the coming years to create opportunity for all Americans.
The discussion continued on day two, with a panel discussion on the role of government, state coalitions, foundations and national intermediaries in the asset building movement. Robert Friedman, Founder and Chair of CFED presented state and local asset coalition partners with three opportunities he sees on the horizon:
- This is a federal moment for the asset building movement. The financial crisis has presented an opportunity where more than ever before, Americans are interested in saving and our leaders are interested in encouraging saving and investing. Legislation to expand the savers credit to fifty million low income families (sponsored by our own Congressman Earl Blumenauer, Oregon District 3) is within our reach as are other asset building proposals. We need to take advantage of this opportunity.
- The money we spend on asset building at the federal level is upside down—each year the federal government spends nearly $400 billion every year on asset building activity through tax benefits and credits—but most of it is for the wealthiest Americans. CFED’s recently released report Upside Down highlights the opportunity to simply reprioritize a small portion of this asset building budget which could significantly and positively impact very-low , low and moderate income Americans.
- Lastly, and possibly most importantly, the asset building agenda addresses the major problems this country is currently facing. Asset building can create long term economic stability, access to opportunity and a true and stable middle class, and we can expand the pie in an “old fashioned” American way—though enterprise, saving and investment.
Most importantly, Mr. Friedman talked to the group about how this work is work that should appeal to all Americans. It expands opportunity for all Americans. It develops businesses and promotes entrepreneurship. It promotes the American Dream. We have a history in this country of intentionally implementing policies that have helped over time to create a middle class, including the GI Bill, and the Home Mortgage Interest Deduction. While these policies historically have not been open to all Americans—especially people of color—we can now implement intentional policies that positively impact everyone. Mr. Friedman is right—this is the moment for the asset building movement. It’s time to create economic opportunity for all Americans.
New Tools to Help Meet the Needs of the Un- and Underbanked
By Sean Luechtefeld on 09/29/2010 @ 02:03 PM
EDITOR'S NOTE: This blog post, which reflects on the 2010 Assets Learning Conference and highlights a new AARP publication, was provided to us by Donna Ortega of the AARP Foundation. innovation@cfed and the ALC Team send special thanks to Donna for her contribution. If you have questions or comments, please use the comments feature below to share.
At yesterday’s “Bank On Initiatives” session at the Assets Learning Conference, Bank On programs were in the spotlight. Modeled on the successful Bank On San Francisco effort launched in 2005, local Bank Ons bring together governments, financial institutions, and nonprofits to help consumers access low-cost, safe, financial accounts and high-quality financial education, and are part of a growing movement striving to better meet the needs of the unbanked (those who have neither a checking or savings account) and underbanked (those who have an account but who still rely to some extent on alternative financial service providers such as check cashers, payday lenders, and auto-title loans).
The panel, facilitated by Wynne Lum from Bank of America, included Anne Stuhldreher with New America Foundation, Heidi Goldberg with National League of Cities, and Matt Pippin with the U.S. Treasury Department, who shared the highlights from the last few years of Bank On growth and outlined the goals of the Bank On USA initiative. There are now close to 70 Bank Ons around the country, and 25 cities have fully launched programs. The importance of relationship-building and making the business case for financial institution involvement were big themes in the session and highlighted the particular promise of Bank Ons: beyond getting people into appropriate products, Bank Ons are also about “getting better products into the marketplace.” As the movement matures and new Bank Ons come on board, knowledge-sharing and evaluation to show the impact of the programs’ effectiveness will be key. JoinBankOn.org is the home for those looking to start or learn more about Bank On programs and National League of Cities will release a toolkit for starting a Bank On in the next few months.
Bank Ons and other programs hoping to better serve the unbanked and underbanked have a new resource to help them identify the needs and motivations of this population. Today, the AARP Public Policy Institute and AARP Foundation together released “A Portrait of Older Underbanked and Unbanked Consumers: Findings from a National Survey,” a new report examining the 45+ un- and underbanked population and their consumer financial behavior. Based on data from the 2008 Center for Financial Services Innovation (CFSI) Underbanked Consumer Study, this new report breaks out CFSI survey results across ethnicity, income, and employment status for the 45-64 and 65+ un- and underbanked population, and makes policy and practice recommendations for policymakers, nonprofits and funders.
We know that consumers at all ages need access to safe places to save, manage their money, and access credit on fair terms. Bank On programs are one strategy that holds promise in helping to move more Americans into the financial mainstream. But we also know that banking accounts are not the only solution. In the comments, let us know what you think is working to meet the needs of the un- and underbanked.
Donna V.S. Ortega manages the AARP Foundation's national Financial Innovation work—an effort to increase access to asset-building financial services for low-income older Americans. Formerly, Donna served as Associate Director of Capital Area Asset Builders (CAAB). She Tweets regularly about asset-building, financial services for the un- and underbanked, economic security, consumer protection, and financial literacy as @AARPInnovation.
Recapping ALC 2010
By Sean Luechtefeld on 09/29/2010 @ 01:55 PM
The innovation@cfed blog is back! On behalf of all of my colleagues at CFED, I want to start by thanking everyone – participants, speakers, sponsors and exhibitors – who made the 2010 Assets Learning Conference a huge success! We’ve received so much positive feedback in the past week and we couldn’t be happier!
Second, I want to share a few highlights and resources from the ALC. More of these will become available in the next couple weeks, so we’ll be sure to cross-post these items between here and The Assets Moment. I’ll also be posting the last of our ALC-related guest posts from our Social Media Partners, so check back daily for those!
Many of the ALC presenters have agreed to share their PowerPoint presentations with CFED so that we may post them online. So far, we’ve posted the ones we have on the Agenda Page (click on the individual session descriptions) and we’ll continue to do so until we have all of these resources posted.
You may have also noticed that we live-blogged each plenary session. Here are the links to these live-blogs, which will eventually be archived here as well.
- Opening Plenary: The Policy Moment
- Thursday’s Breakfast Plenary: The College Success Moment
- Thursday’s Lunch Plenary: The Innovation Moment
- Friday’s Breakfast Plenary: The Scale Moment
- Closing Plenary: The Entrepreneurship Moment
What do YOU think?
Want to share your thoughts on the ALC? Care to be a guest blogger and share your top takeaways (or any other innovation-related topic)? Send me an email and let’s chat about your contribution to the innovation@cfed Blog!
innovation@cfed Update: Win a Prize!
By Sean Luechtefeld on 09/21/2010 @ 07:00 PM
Don’t miss your opportunity to win a prize! Thanks to the generosity of the Levi Strauss Foundation, innovation@cfed Team Members will be offering prizes for the participants who have the highest number of engaging interactions with Innovators, Sponsors and Exhibitors. For every Station you visit, you’ll earn a stamp on the map. The goal is to earn as many stamps as possible by engaging in meaningful dialogue with as many presenters as possible in the Marketplace. The first person to earn 40 stamps will win a gift basket filled with Levi Strauss merchandise, while the first 20 people to earn 20 stamps will win an Innovation Marketplace t-shirt!
Innovation@cfed Blog Schedule Update: #ALC2010
By Sean Luechtefeld on 09/17/2010 @ 03:13 PM
Over the past ten or so days, you may have been wondering where we’ve been. While I’d like to answer that question by saying I’ve been laying on a beach somewhere or traveling throughout the country enjoying the beginnings of fall, the real answer is that we’ve been right here in DC, gearing up for next week’s Assets Learning Conference!
Between now and September 26, the innovation@cfed blog will be on hiatus. However, don’t fret! We’ll be bringing you a ton of content – constant updates, news from the Conference, and observations from our Social Media Partners – so you can stay connected from the ALC or from across the globe via The Assets Moment blog.
Guest bloggers will be posting a variety of articles here, as will I. Additionally, I’ll be live-blogging the plenary sessions, so you’ll have a space to leave comments and share your thoughts on the dynamic speakers who will be presenting next week. So, while we won’t have new content here until the week after next (when you’ll be able to access highlights galore!), The Assets Moment blog will be your one-stop shop for all things ALC. I look forward to seeing many of you in just a few days!
Request for Feedback: Burning Questions
By Sean Luechtefeld on 09/13/2010 @ 11:24 AM
Aaaaand we’re back! Sorry for the brief hiatus at the innovation@cfed blog – we’ve been busy preparing for the 2010 Assets Learning Conference! Are you registered yet? The full agenda is online and the Pre-Conference Sessions kick off a week from tomorrow, so make sure you’re all ready to go!
As you know, one of the centerpiece events of the Assets Learning Conference is the Innovation Marketplace. In order to foster productive and engaging conversations in the Marketplace, our Innovators have provided you with their Burning Questions, found here. These questions are designed to get at the heart of the challenges facing these creative individuals’ attempts to expand economic opportunity. When you have a moment between now and next Wednesday, check out the Burning Questions and use the comments option to leave feedback. Then, be sure to visit the featured Innovators at their Innovation Stations throughout the entirety of the 2010 Assets Learning Conference.
To sweeten the deal, the Levi Strauss Foundation has generously furnished prizes for the people who engage in meaningful dialogue with CFED Innovators. At each Station, you’ll have the opportunity to earn stamps and the participants with the most stamps will win valuable prizes! Stay tuned for further details.
Will the Corporation for Enterprise Development Lead the World?
By Sean Luechtefeld on 09/03/2010 @ 03:34 PM
EDITOR’S NOTE: The blog post below was written by Jack Taggerty, who maintains the 5 Star Innovation blog. The post has been edited to fit the format of CFED Blogs. If you have questions or comments for the author, please post them in the comments section below.
Throughout the world, the aging populations of many Western countries is starting to have severe impact on economies as the baby boomer generation starts to come to grips with what retirement will mean to their lifestyle. The Corporation for Enterprise Development (CFED) is leading the world with its 2010 Assets Learning Conference.
Innovation and the 2010 Assets Learning Conference
The Corporation for Enterprise Development (CFED) is a nonprofit organization that has a mission of expanding economic opportunities for those that are low and moderate income communities and families. CFED is based in Washington, DC. The 2010 Assets Learning Conference will be held on September 22-24. The website can be accessed here.
The organization uses a Think-Do-Invest approach, which consists of:
- Think: The organization explores various practices and ideas that may in fact help communities and families have a better opportunity to engage in the larger economy in which they live. The ideas help to bridge the gaps that currently exist economically.
- Do: Once the organization has the ideas and practices, they then seek out funding collaborators as well as those that make the policies in order to carry out and demonstrate the program throughout the nation. Demonstrating is the best way to show exactly what the organization is seeking to accomplish.
- Invest: The organization then seeks out investors as well as those that are advocates for policies in order to bring about change on a larger scale.
What is the role of CFED?
The role of CFED is to make changes with policymakers so that within the near future, every American will have the same opportunity from birth regardless of economic status.
The main reasons that CFED has organized the 2010 Assets Learning Conference
The Assets Learning Conference is a way to bring many different people together at the same time in order to figure out ways in which to initiate the change needed to the economy.
- The Assets Learning Conference is where the group plans the 2010 economy focused on saving and investing in the future.
- To bring national and international government, researchers, policy makers, business leaders and entrepreneurs together to lay the groundwork for expanding the economy as well as plan paths to recovery.
- The group is having its first innovation marketplace where they will have on display exhibits.
- The Assets Learning Conference will have approximately 60 sessions back to back demonstrating research, innovations, homeownership, children’s savings programs and many more.
- With the economic crisis and government changes, the conference is way for everyone to put their goals into action and map out the next strategies.
Some main reasons for the First-Ever Innovation Marketplace
- A way to bring in-person and virtual leadership together for the first time
- An opportunity to show innovative ideas and how these can help the next generation
- The Marketplace will present products that are safer for the environment and which can help the next generation
- The marketplace brings ideas on the national and global level that allows interaction among participants at the Conference
How do you access the Innovation Marketplace?
The Innovation Marketplace is part of the 2010 Assets Learning Conference, so in order to gain access to the in-person Marketplace, you will need to register for the conference. The virtual Marketplace can be accessed here.
Why consumers and innovators should participate
- Financial Assets and Income – asset ownership and financial security are interconnected because they enable people to plan for the future.
- Business and Jobs – earning an income from business or wage employment funds the plans and wealth creation.
- Housing and homeownership – owning a home is the chief asset of many households while affordable rental can be a step along the way to achieving homeownership for many.
- Education – education is an asset that produces skills and knowledge resulting in income and asset building for the individual and the country.
- Health Care – access to quality health care is a necessary foundation to fitness to be able to earn income and build assets.
CFED and the Assets Learning Conference is about building the future by creating the positive innovation environment that will generate the ideas that makes the Think-Do-Invest approach work. The Global Financial Crisis has brought to the fore the need for innovation that is easily understood and will create hope for the future by building assets.
Innovation Marketplace Burning Questions: Blair Benjamin
By Sean Luechtefeld on 08/30/2010 @ 01:20 PM
The Innovation Marketplace, hosted by innovation@cfed and sponsored by the Levi Strauss Foundation, brings together leaders at the cutting edge of social innovations that expand economic opportunity for all Americans in a virtual and in-person interactive venue.
To stimulate discussion before the in-person installment of the Innovation Marketplace, innovators will pose their burning questions - questions about challenges facing their ideas - in order to solicit feedback from the public. The Innovation Marketplace is designed to discuss these challenges, and sharing the questions before the Assets Learning Conference will help prolong that conversation in hopes of making it as robust as possible.
innovation@cfed extends a special thanks to Blair Benjamin for sharing his questions and allowing the conversation to start even before the ALC! Be sure to check out Blair’s Innovation Station for Assets for Artists at the Conference. In the meantime, use the comments section below to provide feedback.
- How do we dispel the myth that individual artists and craftspeople choose to be low-income and therefore don’t “deserve” asset-building assistance? Or, do you believe that most often they have made a choice to pursue a career with minimal income-earning potential and they shouldn’t take away limited resources from those truly in need who are working to climb the wealth ladder?
- Is it feasible to deliver high-quality financial, business and home ownership training to individual artists in remote locations through technology-enhanced distance learning (with online self-directed tutorials and real-time instructor-led webinars)? Are there any specific tools or models you would recommend?
- Is there an opportunity to use crowdfunding strategies to tap into a low-income artist’s social network “fan” base to raise match funds for matched savings accounts? What characteristics would we have to look for among participating artists for them to be successful with online crowdfunding?
Innovation Marketplace Burning Questions: Tom Foley
By Sean Luechtefeld on 08/30/2010 @ 01:20 PM
The Innovation Marketplace, hosted by innovation@cfed and sponsored by the Levi Strauss Foundation, brings together leaders at the cutting edge of social innovations that expand economic opportunity for all Americans in a virtual and in-person interactive venue.
To stimulate discussion before the in-person installment of the Innovation Marketplace, innovators will pose their burning questions - questions about challenges facing their ideas - in order to solicit feedback from the public. The Innovation Marketplace is designed to discuss these challenges, and sharing the questions before the Assets Learning Conference will help prolong that conversation in hopes of making it as robust as possible.
innovation@cfed extends a special thanks to Tom Foley for sharing his questions and allowing the conversation to start even before the ALC! Be sure to check out Tom's Innovation Station for Assets for Artists at the Conference. In the meantime, use the comments section below to provide feedback.
- How can the asset building community help address the punitive nature of asset limit restrictions in benefit programs?
- How can we change a culture of economic oppression to one of economic expectation?
- Many people with disabilities FEAR the loss of their meager benefit entitlements. How can we better message opportunity and hope?
Highlights from What is innovation@cfed? Webinar
By Sean Luechtefeld on 08/26/2010 @ 02:51 PM
On Tuesday, innovation@cfed hosted What is innovation@cfed?, an engaging webinar designed to introduce the newest members of the innovation network to CFED’s learning community at-large. The hour-and-a-half-long virtual event enjoyed an audience of about 80 participants, many of which are new to the innovation@cfed platform.
Visit the Innovation Summits page to download the recording from the webinar.
Presentations were made by members of the Innovation Team, including myself, Kim Pate (Vice President, Innovation and Strategic Partnerships), Anne Li (Program Director), Lauren Stebbins (Program Associate), Rochelle Howard (Senior Program Manager) and Aimee Chambers (Graduate Intern). We were also privileged to hear from 2010 Innovator-in-Residence Hilary Abell and 2009 Innovative Idea Champion Diane Browning. At the end of the presentation, there was a 45-minute Q&A period which included several thoughtful questions from audience members.
On behalf of my colleagues, I extend many thanks to those of you who attended and helped make the webinar a success. If you have questions from the discussion, feel free to email them to us at firstname.lastname@example.org!
By Sean Luechtefeld on 08/26/2010 @ 02:24 PM
Innovators-in-Residence, Innovative Idea Champions, Innovative Idea Engineers and International Innovators will be posing their burning questions during the Innovation Marketplace, soliciting input from participants to help identify solutions to the challenges they face in their work. Visit the Innovation Marketplace website to read these questions!
Innovation Update: Mindy Hernandez
By Sean Luechtefeld on 08/26/2010 @ 02:12 PM
At the end of next month, 2009 Innovator-in-Residence Mindy Hernandez’s residency will officially come to an end, but as you can see from her update below, Mindy continues to lead the way in bringing together assets practitioners and behavioral economics researchers. We look forward to continuing to work with Mindy as her contributions have been significant, and we’re especially pleased with her leadership role in planning two sessions on Behavioral Economics at the 2010 Assets Learning Conference. Be sure to check out Behavioral Economics 101 and 201 at #ALC2010!
CFED is currently partnering with Mindy on developing specialized behavioral economics (BE) technical assistance to improve the participation of self‐employed households in the services and products provided through CFED’s Self Employment Tax Initiative (SETI). SETI was launched in 2005 to support microentrepreneurs using tax time to strengthen their businesses with asset-building opportunities and to use that interface to connect them with other business support services. Two SETI innovation sites - Foundation Communities in Austin, Texas and the Greater Philadelphia Urban Affairs Coalition - are receiving customized BE technical assistance and are partnering with Mindy and her research colleagues to study the effects of their programmatic experiments.
Mindy’s project is also exploring opportunities to assist the Cities of San Francisco and Washington, DC with their initiatives to bring low‐ and moderate‐income residents into the financial mainstream through direct deposit and banking access initiatives. In addition, she has collaborated with CFED to create a website and blog – “Applying Behavioral Sciences in the Real World” – that serves as a home for a rich and evolving set of resources for anyone interested in policy and programmatic applications of behavioral insights. The blog includes guest posts from practitioners and researchers who are experimenting with behaviorally-informed interventions, providing a channel for those findings to be disseminated to the broader field and for practitioners to communicate directly with their peers.
If you have questions for Mindy, use the comments section below to share them with the community.
Thanks for the update, Mindy!
Going for the Gold
By Sean Luechtefeld on 08/25/2010 @ 05:35 PM
On Monday, Jonathan Lewis, Founder and CEO of the Opportunity Collaboration, posted an article to the Huffington Post about next month’s Assets Learning Conference. In the article, Jonathan describes one of the centerpiece events of the ALC, the Innovation Marketplace, as “a kind of Olympic finals for good ideas for ending poverty in America.”
To read the full text of Jonathan’s Huffington Post article, click here.
The write up, for which we’re incredible grateful, highlights the Assets Learning Conference as one of the premier events in the field, touting its unique content and how it stands apart from other conferences. It goes on to describe the interactive showroom featured by the Innovation Marketplace and even highlights the work of Innovative Idea Champion Ramón León. Ramón was recently awarded the Opportunity Collaboration Fellowship for his work with the Latino Economic Development Center in Minneapolis.
I can’t quite do the Huffington Post article justice as Jonathan’s witty writing style reads much more eloquently, so make sure you check out his post. While there, leave some feedback.
Oh…and one more thing…my favorite line: The Assets Learning Conference “[…] the name is not exactly a heart-pounder, but the content will make your blood race.”
Innovation Marketplace Burning Questions: Kyril Calsoyas
By Sean Luechtefeld on 08/25/2010 @ 05:29 PM
The Innovation Marketplace, hosted by innovation@cfed and sponsored by the Levi Strauss Foundation, brings together leaders at the cutting edge of social innovations that expand economic opportunity for all Americans in a virtual and in-person interactive venue.
To stimulate discussion before the in-person installment of the Innovation Marketplace, innovators will pose their burning questions - questions about challenges facing their ideas - in order to solicit feedback from the public. The Innovation Marketplace is designed to discuss these challenges, and sharing the questions before the Assets Learning Conference will help prolong that conversation in hopes of making it as robust as possible.
innovation@cfed extends a special thanks to Kyril Calsoyas for being the first to send in his questions. They’re posted below, and feedback is encouraged via the comments section at the foot of this post.
- How can cooperatively operated or owned farming equipment assets be best managed to meet the needs of Native American farmers and insure their continued access to these valuable tools?
- For indigenous societies, where common ownership or shared assets are the norm, is it possible or desirable to instill a new ethic of individual asset building while considering their basic cultural imperatives?
- Given the extreme poverty existing in Native American populations in the US today, how is it possible to overcome their inclination and need to immediately consume income or assets for survival purposes?
- What are some of the state-of-the-art models of communal ownership and management of building and equipment assets used among extremely low income societies?
Innovation Update: Chuck Shannon
By Sean Luechtefeld on 08/19/2010 @ 06:15 PM
Today’s Innovation Update comes from Chuck Shannon, who has been working closely with CFED Innovative Idea Engineer Leonard McCollum to incorporate green aspects and IDAs into entrepreneurship training programs for prisoners transitioning back into mainstream society. Chuck and Leonard will be presenting their idea and discussing the topics of green entrepreneurship and prisoner reentry in a session at the 2010 Assets Learning Conference.
Since the fall of 2009, Chuck has modified and refined his idea to focus on incorporating green jobs and IDAs into prisoner re-entry programs. A business model, “Prisoner Reentry and ‘Green’ Business: Synergy with IDAs,” has been developed through the consortium of the Triple Bottom Line Partners, the Green Entrepreneur Program, The Progress Group and Charles Shannon Consulting. The first community-based collaborator is Leonard McCollum, another 2009 CFED Idea Engineer, of Grace Capital CDC in Houston, which has an established program for prisoner reentry, but will now add ‘green’ jobs and ‘green’ business development as an area of focus. Prisoner and/or family member IDAs can be used for traditional individual uses such as post-secondary vocational education and small business start-up. However, upon reentry to community, prisoners may pool their IDA savings to form business ownership cooperatives. Chuck and his colleagues continue to dialogue with representatives of the American Correctional Association, whose interest includes collaborating and using his model with inmates.
Thanks for the update, Chuck! Should you have questions for Chuck, please use the comments section below!
You Mean it Could Have Been Worse?
By Sean Luechtefeld on 08/17/2010 @ 12:01 PM
Although the US is formally beyond the “Great Recession,” signs of economic turmoil remain among us. Daily we hear about the latest employment report indicating less-than-expected job creation, quarterly earning reports from major corporations suggesting slowed economic recovery and stock losses around the globe that show the US isn’t alone in this post-recession world. With the milieu of different messages about the economy, it’s hard to tell what’s working, what isn’t and how things really are.
One resource I came across a couple weeks ago helps shed some light on these questions. A report released by the Economic Policy Institute’s Economic Analysis and Research Network (EARN) asks the question of what the recession would have been like had we not taken steps as a nation to promote recovery. Controversial efforts like the stimulus package and TARP aren’t universally popular, and the verdict is still out regarding their effectiveness.
Download the EARN report, How the Great Recession was Brought to an End, here.
In short, EARN used Moody’s analytics to determine that without the stimulus or TARP, the US GDP for 2010 would be about 11.5% lower, there would be about 8.5 million fewer jobs and the currency would be undergoing deflation. Of the measures that neutralized some of these effects, TARP has definitely been more effective, although both measures in tandem helped pull the nation from the brink of depression. Also of interest from this report was the finding that the estimates of the impacts of these measures are indeed consistent with the estimates published by the nonpartisan Congressional Budget Office and from officials within the Obama Administration. Despite rampant skepticism, these measures are pretty much on-par with previous expectations.
So, what do you think? How consistent is this report with what you previously knew? Know of any other resources that help determine the health of economic fixes? Use the comments section below to share!
New Behavioral Economics Research: Saving for Retirement via Virtual Reality
By Sean Luechtefeld on 08/12/2010 @ 06:22 PM
Innovator-in-Residence Mindy Hernandez’s most recent blog post at Applying Behavioral Sciences in the Real World was published last week. This most recent Behavioral Economics research examines innovative ways to encourage people to save for their retirement, a practice that millions of Americans identify as important, but often fail to engage.
To read the full text of Mindy’s latest blog post, Feeling Connected to Your Inner Old Man, click here.
Mindy’s post highlights the findings of research conducted by researchers Ersner-Hershfield, Bailenson and Carstensen, who hypothesized that perhaps one of the reasons people don’t save for their retirement – even when they know they should – is that they can’t picture themselves as older individuals. To test their hypothesis, they used immersive virtual reality to generate avatars of participants that depicted them as older individuals. Participants then used the virtual reality software to “see” themselves as older and afterwards were given retirement savings surveys.
Their research found that those who had seen their “future selves” saved significantly more money for retirement (the mean saved by participants in the control group was about $75, whereas the mean saved by participants in the experimental group was about $175).
Of course, we don’t all have access to virtual reality software than can allow us to see ourselves as older. But, as Mindy points out, that’s exactly the challenge: how do we use these findings to inform the way we incent saving behavior? How might one’s ability to see themselves in the future impact the way they behave now? These questions aren’t just fascinating, but they get at the crux of Behavioral Economics research – how can we use these academic pursuits to inform financial decision making and the ways practitioners administer their programs?
I know, I know…lofty questions for a Thursday afternoon. Think about it this evening and share your thoughts below in the morning!
Virtual Innovation Marketplace Now Open!
By Sean Luechtefeld on 08/12/2010 @ 10:13 AM
Last week marked the launch of the virtual Innovation Marketplace. As the digital home of this dynamic in-person event, the virtual Marketplace features a platform through which you can interact with Innovators, Entrepreneurs, Sponsors and Exhibitors. Innovate, connect and share 24 hours a day.
Innovation Update: Stacey Epperson
By Sean Luechtefeld on 08/11/2010 @ 11:11 AM
Innovator-in-Residence Stacey Epperson provides today’s innovation update, which describes the progress Stacey has made in bringing low- and moderate-income families closer to homeownership. Between her new organization, the strategic alliance established with the largest manufacturer of homes in the country and the passage of HB5019, Stacey’s innovation is making strides left and right. Be sure to check out Stacey’s session at the Assets Learning Conference, called Getting Affordable Homeownership Right: Strategies to Support Sustainability.
On October 29, 2009 at the Innovation Summit, Frontier was thrilled to announce a strategic alliance with Clayton Homes, the leading home manufacturer and largest homebuilder in the nation. With this signed agreement, elements are in place to create the first national network of nonprofit manufactured homebuilders, the Frontier Network™. This unprecedented public-private partnership creates a new market dynamic that makes it easier for more low-income families to achieve homeownership.
Frontier National, a new, national nonprofit organization in the process of being spun off from Frontier Housing, has moved forward to define a product strategy that includes:
- Factory built (modular and manufactured) Energy Star single-family homes marketed to low- and moderate-income homebuyers
- Replacement of old energy-inefficient mobile homes with new Energy Star homes
- Factory built multifamily housing marketed to nonprofit developers
Frontier National’s product strategy is complemented by a comprehensive policy approach that presents replacement of mobile homes with Energy Star manufactured homes as an affordable housing and energy conservation strategy. Together with a broad coalition comprised of housing development nonprofits, energy advocates and the manufactured housing industry, CFED and Frontier support the approved House Bill 5019, or HomeStar Bill, which includes a new program which would offer $7,500 rebates to facilitate the purchase of a new Energy Star qualified home. It also adds a decommissioning grant of up to $2,500 for the cost of home removal. A companion bill was introduced into the Senate by Senator Jon Tester (D, MT), SB 1350. If the Senate approves this measure, Frontier’s new venture is faced with rapidly building systems to effectively meet demand generated by this program. The new program can support 60,000 replacements over two years. Stacey, formerly President of Frontier Housing and now President of Frontier National, and an I'M HOME network member, testified on March 11, 2010 before the U.S. Senate Energy & Natural Resources Committee on the proposal to replace old mobile homes with energy efficient new manufactured homes as part of the Jobs bill. Click here to read her written testimony.
Thanks, Stacey, both for providing us with this exciting update, and for the work you do in the manufactured housing arena!
Asset Building and Employment for People with Disabilities
By Sean Luechtefeld on 08/04/2010 @ 05:31 PM
Today we’re featuring guest blogger Tom Foley. Tom is a CFED Innovative Idea Champion (selected in 2009) and Deputy Director and Program Director for the World Institute on Disability. If you have questions for Tom, send him an email.
Asset building – and its attendant tools and strategies – represents an under-utilized and under-discussed opportunity for people with disabilities to improve their employment and economic lives. Through asset building principles, people with disabilities can own their own homes, fund retirement accounts, continue economically empowering educations and even start a business. These kinds of outcomes are nearly absent from the current discussion within the disability community. There is an unspoken relationship between asset building and employment. Earnings from employment are necessary to participate in most asset building programs, but, by the same token, asset building outcomes like retirement accounts and personal autonomy encourage and motivate people to risk employment. How can we continue to work together to reach out and include more people with disabilities in asset building programs and begin to change the economic expectation for people with disabilities?
I think Tom raises a hugely important point about the relationship between asset building and employment for people with disabilities. While employment renders the necessary income for asset building practices, asset building practices necessarily open doors for employment. As Tom points out, the disability field and the assets field will be well-served by working together on these important issues.
Innovation Update: Eugénie FitzGerald & José Cisneros
By Sean Luechtefeld on 08/04/2010 @ 12:08 PM
This week’s innovation update comes from Innovator-in-Residence Eugénie FitzGerald and San Francisco Treasurer José Cisneros. Eugénie & José, along with Leigh Phillips, are working to transition the City of San Francisco to a paperless payday, a win-win for the City and for its employees. At the 2010 Assets Learning Conference, they will be presenting SafePay – Shifting San Francisco to a Paperless Payday, an engaging concurrent session with a focus on getting people connected with bank accounts to promote direct deposit options that permit accountholders to avoid seeking predatory lending centers. Be sure to register for the Conference today so you don’t miss out on this lively discussion and see how the lessons being learned in the Bay Area can be applied to your city.
This team has completed key research to understand the direct deposit landscape in San Francisco and designed an implementation plan to shift the city of San Francisco to a paperless payday. Specifically, primary research has included a focus group with employees who had been transitioned by their employer from paper checks to electronic pay. Further, informed by results from a broad survey of San Francisco's workforce, a diverse group of local companies and nonprofits were engaged in an innovative co-design employer engagement model. The aggregate research findings have resulted in the refinement of an implementation strategy to engage private employers in this initiative and improve the financial security of low-income families in San Francisco. This has culminated in the writing of both a comprehensive implementation plan and a summary project plan, the latter available to share with external parties the key elements of the strategy moving forward.
In addition to the research, initial conversations brokering agreements with key partners such as payroll companies, workforce development and asset-building nonprofits, business associations and city departments has taken place. Further, a Request for Investment (RFI) for a robust payroll card for city employees was released and a card selected, bringing together innovation in the payroll card sector and a mainstream financial institution. Finally, a design company has been engaged and is starting to put together the branding specs and marketing elements.
Eugénie is currently engaged with completing the initial design efforts by writing up the primary research with Leigh Phillips and CFED's Ida Rademacher to disseminate the findings broadly to other cities and thought leaders. She is also putting together a promotional video to tell the asset-building story behind shifting to a paperless payday and highlighting the innovations from the Office of the Treasurer. At this stage all of the foundational elements underpinning this initiative are in place, and the Office of the Treasurer is preparing to take the next step, hiring a full-time project implementer to carry this work forward.
innovation@cfed extends a special ‘thank you’ to Eugénie for providing this update. If you have questions for Eugénie or any of her colleagues, use the comments section below and ask away!
Special Assets Learning Conference Discount for DC Interns and Students!
By Kristin Lawton on 07/29/2010 @ 05:28 PM
CFED, a national nonprofit dedicated to expanding economic opportunity for all Americans, invites you to attend its 2010 Assets Learning Conference. The conference, The Assets Movement at its Moment: Creating the Save & Invest Economy, will convene over 1,000 leaders from the Assets & Opportunity field at the Marriott Wardman Park Hotel in Washington, DC, September 22‐24. This year’s conference remains the only place where a diverse group of leaders comes together to focus on the issues you care about the most, paying particular attention to the biggest challenges facing low- and moderate income American individuals and families.
CFED is offering a special discount to students, interns and fellows who are interested in learning more about the asset-building field! For just $450 you’ll have access to five plenaries, over 60 concurrent sessions, an Innovation Marketplace showcasing the most innovative ideas in poverty alleviation and two networking receptions where you can interact with the most insightful and influential domestic and international community practitioners, government officials, policymakers, researchers, business leaders, innovators and entrepreneurs who are dedicated to addressing the challenges facing low-income Americans.
Contact Kristin Lawton at email@example.com to receive the discount code before registering. For more information on the Assets Learning Conference, visit www.assetsconference.org.
Innovation Update: Diane Browning
By Sean Luechtefeld on 07/28/2010 @ 03:17 PM
Innovative Idea Champion Diane Browning was selected for the Innovation Portfolio in 2009 and has been working to advance the R-Bond, a saving product developed for aging low- and middle-income Americans. As you can see from the update she provided us below, the development of Diane’s idea is progressing well and the R-Bond has even been added to tax forms as a purchase option!
Diane has been promoting the creation of a retirement savings bond, the R-Bond, by participating in the Savings Bond Working Group hosted by D2D, a nonprofit organization that works to expand access to asset building opportunities for low-income people. WISER and D2D achieved a major victory by securing the inclusion of the savings bond as a purchase option on tax forms starting in 2010. This victory has laid critical groundwork for the creation of the R-Bond, a bond with retirement savings characteristics that, unlike other U.S. savings bonds, would qualify for the Saver’s Tax Credit. The R-Bond would be an accessible and stable savings vehicle for low- and middle-income people, particularly those that do not have access to employer-based retirement plans or cannot afford to start an IRA offered by a financial institution. WISER is currently in the process of expanding its R-Bond demonstration, the findings of which will be detailed in a white paper.
If you’re interested in learning more, send Diane a question using the comments section below and check out her Innovation Station at the Innovation Marketplace, part of the 2010 Assets Learning Conference. Thanks, Diane, for sharing this update!
Innovation Resource: Social Innovation Podcasts
By Sean Luechtefeld on 07/26/2010 @ 06:07 PM
I recently came across a resource that I’m finding to be more and more valuable from our friends at the Stanford Graduate School of Business’ Center for Social Innovation. On their website, they maintain what they call Social Innovation Conversations, a series of podcasts featuring experts in topics ranging from corporate responsibility to nonprofit management to disaster relief.
Some of the podcasts are directly relevant to my work, some are totally unrelated – but so far, all of them have been really interesting. They range in length from 10 minutes to an hour and a half, feature experts from all over the globe and can be added to your personal playlist so you can listen at your convenience. It’s free to listen to the podcasts online, although a donation of $5 per month ($2.50 for students) gets you an account where you can create a playlist and save the recordings to a device. Not only does membership help the Center for Social Innovation continue to publish their podcasts, but it also gives you access to podcasts on other Conversations Network Channels.
In short, Social Innovation Conversations is a great resource for, well, anyone. Check it out!
Automatic IRAs: A Letter to the Editor
By Sean Luechtefeld on 07/23/2010 @ 04:12 PM
This morning I came across a letter to the editor, penned by David C. John, Senior Research Fellow at the Heritage Foundation, which is written in response to an article in The Hill which argues that Automatic IRA legislation has narrow bipartisan support and would be a bane to employees and small business owners. As John argues in his letter (the full text of which I’ve shared below), automatic IRA enrollment is beneficial to low-income Americans who might otherwise lack a simple and low-cost way to save for retirement. I think this debate is fascinating, represents an issue important to CFED’s mission and deserves more attention as we work to find innovative ways to provide low-cost saving tools – let me know if you agree.
To the Editor:
Your July 13 article on the Automatic IRA (“Democrats and AARP want to make IRA enrollment automatic”) left out several crucial parts of the story.
First and foremost, the Automatic IRA has had wide bipartisan and cross-ideological support since it was first unveiled at The Heritage Foundation in February 2006. This is not some partisan initiative as implied in your story. It was developed by Mark Iwry, who was then at Brookings, and I as partners in the Retirement Security Project. In the election of 2008, the Automatic IRA was endorsed by both the McCain and Obama campaigns. This broad support continues, and the Heritage Foundation’s most recent article in favor of the Automatic IRA was published in February of this year.
The Automatic IRA is designed to provide a simple, low cost way for American workers who don’t have access to a 401(k)-type plan to save for retirement. By combining the automatic enrollment technique that has been adopted by most larger 401(k) plans with the IRA that workers have known for decades, we hope to enable new savers to build retirement security while giving older savers who may have had a 401(k) at another employer the ability to continue to increase their savings.
Studies show that small business employees want the Automatic IRA, and as they learn more about the proposal, employers do also. In past congresses, the proposal had bipartisan co-sponsorship. While the current political climate makes that more difficult, such support is possible this year also. In addition to AARP’s support, the Automatic IRA has also been endorsed by a number of small business groups including the US Women’s Chamber of Commerce, the National Alliance of African-American Chambers of Commerce, Women Impacting Public Policy (WIPP) and the Business and Professional Women’s Foundation.
In short, the Automatic IRA is not part of a narrow partisan agenda as your article implied. Rather, it is a broad based cross-ideological effort to improve American’s retirement security.
David C. John
Senior Research Fellow
The Heritage Foundation
214 Massachusetts Av., NE
Washington, DC 20002
Frankly, I think Mr. John makes a compelling case for automatic IRA enrollment. The initiative doesn’t force new employees to maintain their enrollment – opt-out is possible at any time. Furthermore, policymakers on both sides of the aisle have voiced support for Automatic IRA, especially as the Obama Administration has placed legislative emphasis on ensuring Americans are able to save in this tough economic climate. To me, it seems that Automatic IRA is a simple yet effective way to promote saving for retirement via a mechanism that even the Hill article recognizes has proven strong. In other words, such an effective savings tool advances CFED's mission of expanding economic opportunity - a win-win for all of us.
What do you think? Post your opinion or pose your own question using the comments section below.
innovation@cfed Thanks Stanford Social Innovation Review
By Sean Luechtefeld on 07/21/2010 @ 06:21 PM
innovation@cfed wishes to extend a special “thank you” to our friends at Stanford Social Innovation Review, our 2009-2010 Media Partner. Their work in expanding social innovation and their interest in propelling the innovation@cfed community forward have enabled CFED to build a far-reaching and strong platform for innovations in asset building.
Innovation Update: Dennis Campa
By Sean Luechtefeld on 07/21/2010 @ 04:30 PM
The innovation blog has been quiet over the past week as I’ve been away on vacation. Today I’m back, which means you don’t have to wait any longer for our latest innovation update. This week’s update comes from Innovator-in-Residence Dennis Campa. Dennis was selected to be part of the innovation@cfed platform in 2009 and is working to develop savings products for low-income individuals in the San Antonio area.
Since his selection in 2009 as CFED’s Friedman Fellow Innovator-in-Residence, Dennis has brokered an agreement with the San Antonio AARP chapter, WellMed Charitable Foundation, the city of San Antonio’s Office of Financial Empowerment, Project QUEST and the Annie E. Casey Foundation’s Making Connections initiative to create a matched savings program for AARP students enrolled in WellMed’s Certified Medical Assistant training program. This agreement will use AARP Foundation funds, federal IDA funds, and Casey funds to provide a $4 to $1 match for the portion of the students’ stipends that will be saved in the account. Their IDA will pay for their training, leaving them debt-free. WellMed has committed to hiring their graduates, paying the city’s $10.75 per hour living wage (for non-durable goods jobs), plus full benefits. Project QUEST, a Harvard Innovations winner, will provide the case management and training supports for the students. In addition to the creation of this matched savings program, Dennis secured the endorsement of the local Citibank Vice President in San Antonio to expand the Cribs to College children’s savings program to a new cohort. It will be financed through the Annie E. Casey Foundation’s Making Connections program, Citibank, and other local donors.
Dennis has also conferred with the Mayor’s Office on using direct deposit as a cost efficiency measure in the upcoming FY 2011 budget process. Given that the city of San Francisco estimates that it costs the city $1.75 for every payroll check that is issued and that the city of Houston has gone to mandatory direct deposit, Dennis will be reviewing Houston’s cost efficiencies created by this measure for the San Antonio Mayor’s office.
Lastly, Dennis has been invited by the Department of Health and Human Services’ (HHS) Administration for Children and Families (ACF) to serve on their committee of experts. This committee will consider the challenges and opportunities for low-income families, especially those involved in Head Start and Child Welfare, in building assets.
Thanks for the update, Dennis! Have a question for Dennis? Use the comments section below to post it!
Innovation Update: Ed Khashadourian
By Sean Luechtefeld on 07/14/2010 @ 04:57 PM
This week’s Innovation Update comes from Ed Khashadourian, whose idea has evolved into the Ramp-UP Accelerated Savings Account. Ed will be sharing his idea in an Innovation Station with an audience of over 1,000 professionals in the asset-building field at the 2010 Assets Learning Conference. Here is what Ed had to share about his innovation:
Ed is working to scale the Ramp-UP Accelerated Savings Account, sponsored by the United Way of Greater Los Angeles and Citi. Participants open a savings account with an initial deposit of $500 and make a $40 deposit each month for a 14-month period. After six months of savings, participants receive an interest subsidy of 19.35%, and receive additional interest after months twelve and 14. Traditional IDA participants receive matching funds upon completion of the program requirements, but Ramp-UP enables participants to save and receive significant interest payments during various intervals, regardless of their ability to purchase an asset. At the end of the savings period, participants are encouraged to transfer their funds into an IRA or other investment product. As of February 2010, six organizations are offering Ramp-UP accounts.
Ed’s goal is to scale the Ramp-UP program by creating a social enterprise called Opportunity to Assets that would market the Ramp-UP model as a turn-key savings product for organizations with a penchant to matched savings, but at a lower cost than the traditional IDA model. Organizations would not have to fundraise for the non-federal match, which is a significant barrier for some non-profits to participate in the Federal Assets for Independence, IDA program. In this current economic climate where funding for the IDA program is sparse, an organization could work directly with a financial institution partner with an interest to open matched savings accounts and possibly provide limited funding for the program. Financial institutions would not need to make a significant gift to the non-profit to manage the program. Instead, they would offer the interest yield which is significantly less than the cost to provide matching funds. Also, the nonprofit would not need to increase staffing to operate the program since Opportunity to Assets would provide the back-office functions. Ed secured an additional sponsor, Union Bank, for the Opportunity to Assets model, which has offered a grant to the United Way to open additional accounts.
Thanks, Ed, for sharing this update. Be sure to check out Ed's Innovation Station at the Innovation Marketplace, one of the many exciting events planned for September’s Assets Learning Conference.
National Association of Workforce Boards Forum 2011: Call for Presentations
By Sean Luechtefeld on 07/13/2010 @ 04:31 PM
This morning, Anne Li, Program Director for innovation@cfed, pointed me to this Call for Presentations which we think might be of interest to the members of the innovation@cfed learning community. It comes from NAWB, the National Association of Workforce Boards. They’re hosting Forum 2011, a Conference whose theme is “Dialogue for Workforce Excellence.” Forum 2011 will take place February 5-8 in Washington, DC. I’ve copied the text of the Call for Presentations below, and you can visit the NAWB website here.
Forum 2011: Dialogue for Workforce Excellence has been packed with content, starting with a Town Hall Meeting on Saturday afternoon and ending with a hands-on leadership development session on Tuesday afternoon.
All of our workshops will be held on Sunday and Monday. We invite submissions that address:
• Advocacy and policy leadership;
• WIB effectiveness and efficiency;
• Partnerships and collaboration; and
• Promising practices in program delivery.
The Application deadline for all session proposals is Friday, August 20, 2010! Note that this is much earlier than last year.
For full conference details or to register online, visit nawb.org/forum.
IMPORTANT FACTS TO REMEMBER
• Due to the great number of applications that NAWB receives, no more than two proposals will be accepted from any one individual or group.
• NAWB will not approve presentations that are substantially sales pitches for products or services.
• All presentations (including handouts and/or PowerPoint presentations) must be submitted to NAWB electronically for posting on the NAWB Forum website no later than January 26, 2011. When you submit a proposal you are providing NAWB permission to make your presentation available to conference attendees and others through the NAWB Forum web site and other marketing avenues. If you choose to provide hard copy handouts, you should expect an audience of 50-150 people.
• Applicants need to be flexible concerning the exact day and time of their presentation; we cannot guarantee a time slot in advance. NAWB receives a high volume of great presentation proposals each year. To accommodate as many proposals as possible given our space limitations, your presentation, if chosen, may be combined with a similar presentation. In addition, some presenters may be asked to repeat their sessions or make their presentation part of a super session. Applicants should be prepared to make any adjustments as needed.
• All workshop rooms are set in theatre style.
The presentations must:
• Include ideas that are relevant and significant to the economic and workforce challenges faced today;
• Provide useful and practical information;
• Be designed for 60-90 minutes;
• Be targeted to employer-volunteers and executive staff of workforce boards;
• Create opportunities for audience participation;
• Focus on solutions and not just state a problem; and
• Feature practitioners and emphasize a peer-to-peer learning exchange.
Slots for presentations are limited and each year we have many more applicants than slots available. Your presentation proposal is more likely to be selected if, in addition to the above criteria, it has one or more of the following attributes:
• Provides tools and resources that participants can take back;
• Offers opportunities for structured interaction and, if relevant, the opportunity to "try out" an idea or strategy;
• Relates how another organization can replicate the model through lessons learned, obstacles overcome, key drivers, and tools;
• Includes content and presenters from WIBs and One-Stop Centers; and
• Shares the perspective of multiple presenters and WIBs.
Want feedback from other members of the innovation@cfed community on a proposal you’re thinking about submitting to NAWB? Use the comments section below to ask your questions!
Behavioral Sciences and the World Cup?
By Sean Luechtefeld on 07/09/2010 @ 02:50 PM
Yesterday, Innovator-in-Residence Mindy Hernandez posted an interesting piece to her Applying Behavioral Sciences in the Real World blog that argues that decisions made by soccer players in the World Cup can demonstrate an important lesson in Behavioral Sciences.
To read Mindy’s blog post, check it out here.
In the post, Mindy posts a variety of interesting resources that examine a simple question: while soccer players are statistically most likely to score a point by shooting down the middle of the goal, they almost always kick to the left or right side of the goal. Why?
While the resources Mindy shares are interesting, I won’t do them the justice they deserve here. Instead, given my interest in Behavioral Economics, I’ll share the main takeaway. It turns out that shots fired directly at the middle of the goal, although more likely not to be blocked by the keeper, are also perceived as the easiest shots to make. Therefore, there is a fear among soccer players that if they miss these allegedly-easy goals, they’re weak players. To mitigate the potential impact such a perception would have on the player’s image, players tend to shoot for the sides so that a miss seems like the skill of the goalkeeper, rather than a weakness on behalf of the person attempting to score.
In other words, soccer players act in their own self-interest. Rather than do what it takes to score a point, they often engage face-saving measures to avoid appearing unskillful. While this sounds terrible on face, such behavior is consistent with what we know about Behavioral Sciences. A guiding principal in this research is that people, especially when making financial decisions, tend to act in their own self-interest. The key, then, is to understand how to transform that knowledge into products that promote healthy economic decision-making.
In a few short paragraphs, Mindy has explained the entirety of behavioral economics research! Okay, not really – it’s WAY more complicated than that. Nevertheless, Mindy once again provides an interesting framework with which we can think about Behavioral Sciences in a way that we can relate to. Thanks, Mindy!
Why Attend the Assets Learning Conference? Participate in the First-Ever Innovation Marketplace!
By Sean Luechtefeld on 07/07/2010 @ 03:16 PM
The Innovation Marketplace, hosted by innovation@cfed and sponsored by the Levi Strauss Foundation, is a unique and dynamic space for innovators and entrepreneurs to advance creative approaches to asset building. The Marketplace will bring together Innovators-in-Residence, Innovative Idea Champions and Engineers, Innovative Entrepreneurs, International Innovators, Sponsors and Exhibitors focused on identifying the next generation of concepts that expand economic opportunity.
The Innovation Marketplace will exist in-person and online before, during and after the Conference:
- The in-person Innovation Marketplace will take place from 4:30-6:30PM on Thursday, September 23 in Salons 1 & 2 of the Washington Marriott Wardman Park Hotel. It will feature innovators from around the world presenting their ideas at Innovation Stations, Innovative Entrepreneurs demonstrating products and services that exist as a result of social innovation and a colorful variety of sponsors and exhibitors. The Marketplace will also be the site of live entertainment, free Internet access and more. Of course, these incredible opportunities don’t exist for just two hours – select portions of the in-person Marketplace will be available throughout the entirety of the Conference.
- The virtual Innovation Marketplace, going live on July 19, will feature a user-friendly way to interact with the individuals presenting in the in-person Marketplace so that the conversation can start well before September and last well beyond the closing plenary. Before the Conference, this virtual platform will be the best way to identify innovation leaders developing ideas that matter to you the most. After the Conference, the platform will allow you to keep in touch with the variety of dynamic individuals you meet in Washington, DC. Check the ALC website on July 19 when the virtual Innovation Marketplace will be unveiled.
Innovation Update: José Quiñonez
By Sean Luechtefeld on 07/07/2010 @ 03:11 PM
Building on what we started last week, I’m happy to provide you our next Innovation Update, this time from José Quiñonez. José will be presenting at the 2010 Assets Learning Conference, and will also have an Innovation Station at the Innovation Marketplace.
Building on the success of the innovative Cestas Populares Program which formalizes peer lending circles common in immigrant communities as a way to help them build and/or improve their credit scores, Mission Asset Fund (MAF) launched two new financial products to provide cesta members more opportunities to build savings and access loans.
“Cestas Con Bono” provides a 25% savings match to members who plan to use their cesta loan money to acquire IDA-like, asset-building purchases. Members opt-in to this new program at the beginning of a cesta by signing a program agreement indicating that they will use their cesta loan money to invest in their business or in their education. MAF agrees to hold participants’ money until the end of the cesta, at which point MAF then releases their money along with a 25% match.
“Cestas Con Fondo” provides cesta members with the option of a zero-interest match loan of up to 100% of the cesta loan. Cesta members have the option to opt-in to this match loan program only after they have successfully participated in a prior cesta. For those members who opt-in to this program, they agree to sign a separate promissory note, pay an upfront 3% management fee and repay the match loan along with their peer loan within the same timeframe.
Be sure to connect with José at the Assets Learning Conference and visit his brand new profile page beforehand to get in touch with him!
Assistive Technology Fund Needs Your Input
By Sean Luechtefeld on 07/02/2010 @ 11:34 AM
Our colleague, Andrea Dimond of the Washington Access Fund, asked that we post the following to our blog to see what input members of our community have for developing new savings products for people with disabilities. The Washington Access Fund is doing some innovative work and we hope that putting all of our heads together will help propel the next generation of savings for persons with disabilities.
The Washington Access Fund provides Assistive Technology IDAs, Assistive Technology Microloans and Business Equipment Microloans for people with disabilities in Washington State. We are working on a new savings product to help encourage our clients to create emergency savings and plan ahead for future assistive technology needs and expenses. We currently automatically withdraw loan payments from our borrowers' bank accounts, and we automatically withdraw savings deposits from our IDA clients' bank accounts and then deposit them into their IDA savings accounts.
Almost none of our loan applicants have sufficient emergency savings when they come to us to apply for a loan. We thought we could help our non-IDA users save by withdrawing an amount above and beyond their loan payment which would then be deposited in a savings account. For example, if a loan payment is $50, we could withdraw $75 and then $25 would be deposited in that individual’s savings account every month by us. We believe this automated system would make it easier for clients to save regularly and accumulate money over time. The client could withdraw the money for emergency situations and then hopefully have a permanent emergency fund and a well established savings habit once the loan is paid back.
We are currently in talks with a large local credit union to house the accounts and offer the savings incentives for our clients. I specifically wanted to know of anyone offering a similar product and what incentives for savings were most effective. I am particularly interested in savings products outside of IDAs. We do have an IDA program and I think IDAs are great, but we are hoping to set this up as something that more of our clients might be able to take advantage of and as something to address the lack of emergency savings that our clients have.
Please let me know if you are aware of any research or other folks I might be able to learn from in setting up the parameters and infrastructure for this new product.
Washington Access Fund is a 501(c)(3) nonprofit and Community Development Financial Institution (CDFI). Our mission is to promote access to technology and economic opportunity for individuals with disabilities in Washington State.
If you have ideas for individuals, organizations or research that might be helpful to the Washington Access Fund, share them in the comments section below and email them to Andrea!