This Law Could Put Thousands of Dollars Back in the Pockets of Wyoming Manufactured Home Owners
By Mikah Zaslow on 03/14/2017 @ 12:00 PM
When Wyoming resident Jason Halvorson sought to refinance his manufactured home, he didn’t know he was embarking on a nine-month endeavor that would lead to changing state law. But, as Wyoming Public Radio reports, that’s what it took for the homeowner to avoid getting gouged and spending an extra $50,000 on his mortgage.
The problem? A law that made it impossible for many manufactured home owners to get the titling paperwork they need for fair financing.
Halvorson wanted to refinance his home after making upgrades, but he learned that the traditional method of going to a banker would not work as he did not have the Manufacture’s Statement of Origin for his home—and a duplicate could not be issued by the county clerk. While financing is available without this paperwork, the options have higher unfixed rates and are out of reach to many homeowners. Halvorson reached out to his coworker State Rep. Tyler Lindholm about the issue, who looked into the matter and was struck by the legal inequality of the state’s titling law. And earlier this month, their efforts resulted in Governor Matt Meade changing Wyoming’s titling law.
CFED’s Doug Ryan, who was interviewed for the story, brought up the lack of consistency in the way states handle titling laws. While New Hampshire, Vermont and Oregon have favorable titling laws, most are somewhere in between. According to Ryan, Wyoming’s house bill is an important example for other states, and that because manufactured housing represents an affordable means of homeownership, “states need to be more creative and more aggressive in making sure these homes are part of the housing system.”
Halvorsen said that other manufactured home owners can benefit from these changes as well if they are willing to dig in to the law. Our new resource guide, Titling Reform: How States can Encourage GSE Investment in Manufactured Homes reviews current state titling laws and can be used to aid in efforts to improve states’ manufactured home titling laws. Titling manufactured homes as real property is also important for the eligibility for the Duty to Serve rule, which details how Fannie Mae and Freddie Mac must serve the manufactured home market. However, outside of a proposed chattel property pilot, manufactured homes must be titled as real property to be eligible for credit under the rule.
States that want to reform their laws don’t have to start from scratch, though. In 2012, the Uniform Law Commission approved a model law—the Uniform Manufactured Housing Act (UMHA). If enacted, UMHA would resolve the many deficiencies and ambiguities in the existing state titling laws and greatly increase the number of homes eligible for financing that satisfies the new Duty to Serve requirements. A clear statutory titling procedure also has the potential to open up new markets for real property lending, offering lenders new lines of business and borrowers better options.
Titling manufactured housing as real property creates financial opportunities and serves to create greater equality among homeowners. The work of advocates like Halvorson is critical to ensuring that manufactured home residents have the same opportunities to access affordable financial products as owners of site-built homes.
2017 Assets & Opportunity Scorecard Policy Data Now Available
By Holden Weisman on 03/09/2017 @ 10:00 AM
As a preview of the upcoming 2017 Assets & Opportunity Scorecard, we’re pleased to release a complete set of this year’s state policy data! The State-by-State Policy Profiles and the series of Policy Briefs contain the full set of policies on how far states have gone to build their residents’ financial well-being, as well as what states can do to put their residents on stronger financial footing. You can browse and download both sets of documents by visiting the Assets & Opportunity Scorecard website.
The State Policy Profiles outline the full slate of policies assessed in the Scorecard and identify what has been achieved and what opportunities still exist to enact policies that contribute to household financial security. After learning about how your state performs, you can dig deeper into any of the policies included by downloading the corresponding Policy Brief. If, for example, you’re interested in proposing legislation to remove asset limits in Tennessee, you can download the “Asset Limits in Public Benefits Programs” Policy Brief, which includes an overview of the policies, what the state can do to enact them, how CFED assesses the states on these policies within the Scorecard and what other states have done in this area.
We encourage you to use State Profiles and Policy Briefs to guide your 2017 state-level advocacy work. This might entail referencing the policy solutions presented in testimony relating to bills introduced in your legislature, or it might entail comparing how your state stacks up against your neighbors to identify policy alternatives to problems faced at home. There are a range of ways to use all of the tools, and if you are interested in exploring how you might leverage them, please send us an email.
The State Policy Profiles and the Policy Briefs are only some of the tools we will make available as part of the rollout of the 2017 Scorecard. Later this year, the policy data will be accompanied by the release of our 2017 outcome data, which paint a picture of how residents in all 50 states and the District of Columbia are faring when it comes to their household financial security. More information about the release of the 2017 Scorecard outcome data will be shared via email, so sign up to stay informed.
If you have any questions regarding the Scorecard or need additional data to support your advocacy work during the 2017 legislative season, please contact Holden Weisman, State & Local Policy Manager, at email@example.com.
Why the Earned Income Tax Credit is Essential to the Opportunity Economy
By Rebecca Thompson on 01/27/2017 @ 11:00 AM
Since 1975, the Earned Income Tax Credit (EITC) has been among the most powerful anti-poverty tools in our country. Because the EITC is a fully refundable tax credit that puts money back into the hands of hard-working taxpayers, it often represents the largest windfall of cash that low- and moderate-income households receive in a given year. As such, the EITC is a critical income support that helps hard-working Americans overcome financial challenges and put a little away for a rainy day, all while fulfilling their civic obligation to pay their taxes.
In recognition of this powerful tool, the IRS has declared today EITC Awareness Day. Now an annual event, EITC Awareness Day is dedicated to raising awareness of, protecting and expanding the EITC. Throughout the month, CFED and the Taxpayer Opportunity Network have been working with our partners in the field to take advantage of this important opportunity, as protecting and expanding the EITC is critical to our mission of expanding economic opportunity.
As we celebrate EITC Awareness Day today, it is also critical that we recognize the important role that Volunteer Income Tax Assistance (VITA) programs play in connecting taxpayers with the EITC. VITA programs provide free, high-quality tax preparation services to low-income workers, and these services not only connect families with the EITC, but also to a range of other financial capability and asset-building services in their community. As such, EITC Awareness Day is a prime opportunity for CFED and the Taxpayer Opportunity Network to say “thank you” to the thousands of VITA volunteers across the country who make the important work of community tax preparation possible.
EITC Awareness Day affords us the opportunity to carry the message of the value and effectiveness of the EITC far and wide, encouraging all who may be eligible to seek out and claim the credit, and to lift up our collective voice with our elected officials at the local, state and federal levels to protect and expand the EITC to help as many taxpayers as possible.
Interested in using your voice to protect and expand one of the most powerful anti-poverty programs in the US? Download our EITC Awareness Day Toolkit for more information, resources, templates and tips for how you can make a difference!
From Talk to Action: What The Next Administration Can Do to Help Close the Racial Wealth Divide
By Emanuel Nieves on 01/19/2017 @ 10:00 AM
This is it. 72 days after the 2016 Presidential election came to a surprising end, the inauguration of President-elect Trump is upon us. Despite the various feelings that may come with tomorrow’s inauguration, the peaceful transition of power will conclude in about 24 hours from now when President-elect Trump is sworn in as the 45th President of the United States.
Once the inaugural ceremonies conclude, President Trump and his team will face the difficult task of not only governing and leading a deeply divided country but also turning many of his pledges into reality. Given what we’ve learned during the campaign and since it ended, President Trump will be heavily focused on accomplishing much of what he’s laid out in his First 100 Days Agenda, which includes a number of ambitious and troubling items such as the undoing of a number of Obama-era executive actions as well as action to weaken the Affordable Care Act.
Given the real impact that a number of President Trump proposals will have on some of our most vulnerable individuals and families, CFED has been working diligently over the past several months to ensure that we’re ready to defend and strengthen affordable homeownership and safety net programs, consumer protections and tax policies that we view as instrumental towards building an opportunity economy that works for all. As a first step towards fulfilling this goal, this past September we released A Federal Policy Blueprint to Close the Ever-Growing Wealth Gap, which outlined a number of wealth-building, inequality-reducing, opportunity-expanding legislation and ambitious budget requests.
Today, as another step towards expanding economic opportunity for all, we’re proud to announce the release of a new publication—Administrative Actions to Close the Ever-Growing Gap (direct download here)—which proposes several ambitious administrative actions the Trump administration could enact to help solve the problems of financial insecurity and wealth inequality. These actions address seven issue areas:
- Rainy Day Savings
- College Savings
- Affordable Homeownership
- Retirement Savings
- Financial Capability Services & Tax Preparation
- Racial Wealth Divide
- Persistent Poverty and Community Development
While each issue area outlined in Administrative Actions is critically important to building an opportunity economy that works for all, we wanted to highlight one in particular that builds off President-elect Trump’s commitment to taking a number of actions the moment he becomes President as well as his expressed interest in tackling the economic realities facing African Americans and other communities of color. This interest has been expressed through his ‘New Deal for Black America’ as well as through meetings with personalities such as Jim Brown, Ray Lewis, Kanye West, Steve Harvey and most recently Martin Luther King III. Thus, Administrative Actions presents the President-elect Trump with a singular action he can take during his First 100 Days to begin addressing the ever-growing racial wealth divide, which today amounts to households of color owning just a fraction of the wealth ($12,377) White households own ($110,637).
That action—which President Trump could take with just the stroke of a pen—is an executive action to authorize a government-wide audit to understand how current policies are affecting the racial wealth divide facing communities of color today. Given the role that federal policies have played in creating the racial wealth divide, understanding how current policies continue to shape the economic circumstances of communities of color is a necessary first step towards deliberately crafting policy solutions to close the divide.
As part of this executive action, President Trump should appoint a special advisor or ombudsman to coordinate the audit as well as advise him on unilateral actions he can take to address this pressing economic problem. To ensure the audit is as comprehensive as possible, President Trump should direct the ombudsman to make use of empirical tools that would quantify the economic impact of current federal policies and programs on the racial wealth divide.
In selecting these tools, the ombudsman should first look towards established methods, such as the Racial Wealth Audit framework co-developed by the Institute for Assets and Social Policy (IASP) at Brandeis University and Demos, which underpins a recent paper CFED and IASP co-published that assessed the impact that specific education policies would have on the racial wealth divide. In addition to these duties, the ombudsman should also assist in the development of a legislative agenda and public report that can increase public awareness of strategies that can reduce the government’s role in growing the racial wealth divide.
While the matters facing communities of color today might seem like an isolated problem only affecting a particular group of people, the changing demographics of our country tells us these problems will soon be relevant to everyone. In fact, according to recent research we conducted last year with the Institute Policy Studies, if nothing is done to lift up the economic opportunity of the children and their families now, the racial wealth divide will literally never close.
Once the inauguration ceremonies end and the focus shifts to governing, we hope that Administrative Actions provides President Trump with solutions that can turn his stated concern for communities of color and the places they call home into the actions needed to begin closing the racial wealth divide. By taking deliberate and substantial steps, President Trump can help to ensure that the racial wealth divide does not become a deeply ingrained feature of our future American life.
Congress Hears Your Voice! Making a Difference Through Effective Advocacy
By Arohi Pathak on 01/17/2017 @ 12:00 PM
The 115th Congress is busy transitioning to a new Administration—one that has already prioritized the interest of the corporate sector over that of the working families who sent them to the White House. Over the past several weeks, CFED has engaged with state and local Network members from across the country to send the new Administration and Congress an important message: we need an opportunity economy that works for all, one that allows us the chance to build a more prosperous future for our families and communities.
As Congress focuses on vetting President-elect Trump’s cabinet nominations, our state and local members have shared numerous stories and data with their members of Congress, asking them to hold these nominees accountable for their policy priorities and perspectives, while ensuring that the needs of consumers, working individuals and families and communities are protected.
Ben Carson’s nomination as Secretary of the Department of Housing and Urban Development (HUD)
- CFED shared stories with several Senators on the Banking, Housing & Urban Affairs Committee, showing the impact of HUD programs, such as Family Self Sufficiency (FSS) and housing counseling, which help families move toward self-sufficiency and independence. During the vetting of Dr. Carson’s nomination, we asked that Senators hold Dr. Carson accountable to protecting FSS, housing counselling and other HUD programs that help so many families build financial security.
Steven Mnuchin’s nomination as Secretary of Treasury
- Mnuchin has made no secret of his interest in chipping away at Dodd-Frank, the CFPB and consumer protections. Additionally, while at OneWest, Mnuchin was responsible for racially discriminating against people of color, barring them from the opportunity to own a home and foreclosing on tens of thousands of families. Along with our Network members, CFED shared data, testimony and stories with Senators on the Senate Finance Committee to show how the foreclosure crisis and predatory mortgage practices impacted communities and families in their state. We’re hopeful that this information will inform and arm Senators as they ask questions during the confirmation hearing to better understand Mnuchin’s views on protecting consumers as well on a range of other issues.
Rep. Tom Price’s nomination as Secretary of Health and Human Services (HHS)
- CFED shared stories and data with Senators on the Health, Education, Labor & Pensions (HELP) Committee to show how the Assets for Independence (AFI) program and other HHS programs help low-income families save for their future and move out of poverty. Our hope is that Senators vetting Rep. Price’s nomination will ask the Congressman how he plans to protect AFI and other programs to ensure continued investment in low-income communities.
These are your stories and your voices, and they are making a difference! In sharing your stories and data with Members of Congress, CFED has received great feedback about how this information will arm Members of Congress in:
- holding nominees accountable during the vetting process
- asking nominees tough questions about their priorities as leaders of key agencies over the next four years
- holding nominees accountable over the next four years to protect consumers and communities
CFED’s top priority in 2017 is continued advocacy at the federal level to ensure that we protect and strengthen the hard work that so many of you have engaged in over the past decades to create an opportunity economy. Such engagement will allow the Network to be a strong and credible partner to federal policymakers, it will highlight the incredible work that so many of you do on a daily basis, and it will enable us to fight for priorities that help build economic opportunity and access for all.
As President Obama eloquently reminded us during the final speech of his presidency on January 10, 2017, change is only possible "when ordinary people get involved" and join forces to demand progress. Together, we can demand change and progress. Your voices are important for effective advocacy and they are being heard loud and clear. Over the course of this year, CFED will continue to engage you in other actions to ensure consumers and families are not left behind at the expense of corporations and financial institutions. We hope you’ll join us in these efforts as we work to build an opportunity economy that works for all.
Thank you to all those who have engaged with CFED and shared this information with us.
New IASP/CFED Report Finds Universal Policies Designed to Help Students Succeed May Exacerbate the Racial Wealth Divide
By Emanuel Nieves on 12/20/2016 @ 01:00 PM
Too often, policies aimed at creating greater opportunity for low-income families have resulted in the expansion of the wealth divide between White families and households of color and perpetuating historic inequities. Although past policy choices—such as federally sanctioned housing discrimination and unequal distribution of G.I. Bill benefits—intentionally created the racial wealth divide, current policies continue to drive this gap. These findings and more are included in a new report released this morning by CFED and the Institute on Assets and Social Policy (IASP) called Equitable Investments in the Next Generation: Designing Policies to Close the Racial Wealth Gap, which calls on policymakers and advocates to ensure that investments will result in greater equity.
While there are a number of ways to begin addressing this ever-growing wealth gap, the simplest step policymakers and advocates can start to take is to ensure that policies aimed at creating greater opportunity for low-income families do not have the unintended consequence of expanding the wealth divide between White families and households of color and perpetuating historic inequities. As novel as that may sound, understanding the ways a proposal may affect household finances is critically important to closing the racial wealth divide.
Utilizing a new framework—The Racial Wealth Audit™—jointly launched by IASP and Demos, Equitable Investments focuses on the impacts universal education policy initiatives may have on narrowing or widening the racial wealth divide. In addition, the report also highlights how universal policies designed to help students succeed may exacerbate the racial wealth divide and what we can do to ensure that this doesn’t happen.
For example, the report highlights how universal policies to eliminate student debt could actually increase the racial wealth gap among young adults by nearly 10%, while targeted policies such as providing relief to households making $50,000 (roughly the U.S. median income) or less could reduce the racial wealth gap by 7%.
Although the Racial Wealth Audit framework can and should be applied to many other areas of policy design, it is just one tool to ensure that policies do not spread resources without consideration of need. As the example highlighted above shows, without consideration of need even well-meaning policies can direct resources to those with little financial need, thereby exacerbating the racial wealth gap.
By focusing on the ways in which policy design in the area of education shapes the racial wealth gap, we hope that Equitable Investments will foster a conversation about how policymakers can more effectively address pervasive and far-reaching inequality in the United States through intentional, well-crafted policies that place racial economic equity at the forefront of policy design considerations. Without such focus, our ability to reverse historically-rooted, racial economic inequalities will be greatly impeded.
The Future of the CFPB and Its Upcoming New Rules to Rein in Predatory Debt Collection Practices
By Anju Chopra on 12/07/2016 @ 03:00 PM
Earlier this year, the Consumer Financial Protection Bureau (CFPB) released an initial proposal for regulating the third-party debt collection industry. Debt collection practices affect a large number of Americans with one out of every three adults with a credit history carrying debt that ends up in collections at some point. The CFPB receives more complaints about debt collection practices, over 85,000 last year, than any other issue. These complaints include everything from trying to collect on a debt never owed or already paid in full, to collectors engaging in harassing and threatening communications.
The consequences of not paying debt or being pursued by collectors for debt that is not owed are significant. If collectors garnish wages, it can make it hard for already struggling individuals to pay for basic living expenses or even drive them into bankruptcy. When reported to credit agencies, unpaid debt can also potentially damage a consumer’s credit report, making it difficult or impossible to get a loan to buy a house or car and even hurt their chances of getting a job or renting an apartment.
Given the crucial importance of debt collection reform, today CFED is releasing a policy brief that highlights important background information on the issue and contains federal policy recommendations for ending abusive debt collection practices. Next week we will also be releasing a brief summary of the CFPB’s current regulatory proposal for the third-party debt collection industry.
Click Here to Access the Updated Policy Brief!
Tomorrow (Thursday, December 8) we will also be hosting a webinar, “What’s Next for Debt Collection and the CFPB,” at 2 pm EST. The webinar will explore the problems in the debt collection industry and provide an overview of the CFPB’s current proposal and next steps. We will also discuss what advocates can do to ensure that the final debt collection rules are strong and protect the Bureau’s independence in the new political climate.
Click Here to Register for the Webinar!
Much like the payday loan industry, the debt collection industry is in dire need of regulatory reforms to stop predatory practices that are harming the financial security of low- and moderate-income families and holding them back from getting ahead financially. In the coming year, CFED will be advocating both for the CFPB to release strong debt collection rules to protect working families and for Congress and the incoming administration to protect the independence of the CFPB and its ability to defend consumers from predatory financial practices. We hope you will join us in advocating for these crucially important issues and you can learn more by joining us for the webinar or emailing Anju Chopra at firstname.lastname@example.org.
Bright Spots for Financial Security in the Election Results
By Kamolika Das and Solana Rice on 11/17/2016 @ 12:00 PM
As the dust settles from tumultuous presidential and congressional elections, we are working to forecast and prepare for what is on the horizon for low- and moderate-income families. One thing we do know is that state and local policy will be even more important frontier in advancing financial security. Admittedly, the issue of household financial security took a hit in some parts of the country. For example, Right to Work is now enshrined in the Alabama constitution. We’re taking note of some wins in states and cities in the hopes that they will deliver more financial stability and security to low- and moderate-income families in the coming years.
Increasing income and protecting consumers
While not quite $15 an hour, voters in Arizona, Colorado, Maine and Washington approved ballot measures to increase the minimum wage to at least $12 an hour ($13.50 for Washington) by 2020. Arizona and Washington also approved a minimum of paid sick leave. All four states will adjust the minimum wage based on cost of living after 2020. Aside from the increases last week, other states and cities have either introduced legislation or vowed to pursue a referendum in 2017 for minimum wage hikes. The across-the-board approval of minimum wage increases demonstrate that regardless of changes to the federal minimum wage, states and select cities will continue to march ahead in the coming years. Ensuring a stable income is an essential pillar to financial security. For an overview of where your state stands on the issue click here.
There is also great news out of the Mount Rushmore State! South Dakota voters both protected wages for teenagers by rejecting a referendum that would have decreased the minimum wage people under age 18 from $8.55 an hour to $7.50 AND voters approved a 36% rate cap on payday loans. Advocates overcame both a well-resourced lobby and conflicting ballot measures. These are huge wins for low-income workers and consumers.
At CFED, we are aiming to turn the tax code right side up by ensuring that the tax code protects and supports low- and moderate-income workers in making ends meet, saving for their future and building assets that help weather a financial crisis. We saw voters across the country agree. Florida and Louisiana passed constitutional amendments on property tax exemptions to help tax payers save money. In Florida, Amendment 5 allows senior citizens to save on their property taxes as soon as they file for exemption, instead of waiting. Amendment 4 in Louisiana is exempting property taxes for widowed spouses of military personnel and first responders. Click here for additional ways that states can deliver property tax relief.
In Oklahoma, the bottom 20% of taxpayers pay 10.5 % of their income in taxes, versus just a 4.3% tax rate for the top 1%. Oklahomans took steps to reject an additional regressive sales tax. Despite the fact that the revenue would be used for an “Education Improvement Fund,” opponents to the increase recognized there are other ways to fund valuable things like teacher salaries that don’t disproportionately impact low- and moderate-income families.
Maine, on the other hand, decided to fund public education through a “3% surcharge on the portion of any household income exceeding $200,000 per year.” This increase will provide an estimated $157 million for public education funding that, according to a Maine Center for Economic Policy report, took a hit with two tax breaks for the wealthy since 2011. They project this being a help to closing the opportunity gap in a state where the number of low-income students are increasing.
Affordable housing has become another key issue in state and local races. At the state level, Rhode Island voters approved a $50 million Housing Opportunity Bond designed to expand affordable housing and improve blighted properties. However, the bulk of movement around affordable housing occurred in cities from Boston and Baltimore on the east coast to a slew of west coast cities. Boston voters approved a 1% property tax surcharge to fund affordable housing units, while voters in Baltimore approved an amendment to the city charter to create an Affordable Housing Trust Fund. Several measures in Los Angeles County, Orange County and the Bay Area could change the outlook for affordable homeownership in California. For example, voters in Alameda County overwhelmingly supported creating an Affordable Housing Bond to construct 8,500 units of affordable rental housing with the support of a slight property tax increase. Affordable housing measures expanded beyond just the west coast and Northeast – Asheville and Greensboro, North Carolina also voted to dedicate part of their annual transportation budget to affordable housing initiatives.
Do you have bright spots for financial security to share from your neck of the woods? Or are there particular policy challenges to financial security that you’d like our support on? Submit a comment below!
Back By Popular Demand: Guides for Advancing State & Local Policy
By Solana Rice on 10/06/2016 @ 09:00 AM
Though you don’t always hear it, change doesn’t have to be daunting. In 2011, CFED published With a Stroke of a Pen, a report that offered 24 recommendations for advancing meaningful, moveable and manageable policies—ranging from children’s savings to higher education to retirement—designed to boost financial security. CFED’s State & Local Policy team is now transforming this framework into an ongoing series to highlight upcoming and trending state and local policies that have potential to advance financial health and well-being for vulnerable individuals and their families. This ongoing series will frame key challenges, present policy recommendations and propose concrete actions for advocates, making them an educational tool for the field and policymakers alike.
The first briefs in our series focus on inclusive retirement security, options for financing children’s savings account programs and youth financial capability in the workforce development context. While each brief is founded on policies and topics highlighted in the Assets & Opportunity Scorecard, they also succinctly outline action steps advocates can take to incorporate these issues in their policy platforms.
These particular briefs are timely given recent developments in the field. For example, the retirement security brief was informed by CFED partners in several states on the verge of implementing AutoIRA programs, which will make it possible for millions of workers to save for the future. Given new rules from the U.S. Department of Labor, we anticipate interest from many more states in the coming months.
As another example, through the new Workforce Innovation and Opportunity Act, the nation’s workforce development system now requires all workforce development plans to incorporate youth financial literacy. We teamed up with MyPath to identify ways that local workforce development boards and financial institutions can take this mandate a step further by fostering financial capability—the skills, knowledge and access needed to boost financial well-being—at the critical moment when young people are earning their first paychecks.
Finally, the brief on financing models for children’s savings highlights innovations that are emerging from Children’s Savings Account (CSA) programs. This brief—which targets key decision makers who have committed to the idea that all children deserve access to higher education regardless of their family’s economic background—explores ways to fund a CAS program.
We welcome your feedback about how you use these briefs, as well as which policy issues should be covered next in the series. We also invite you to find more state and local policy resources on our website!
The Color of Patrimonial Capitalism
By Dedrick Asante-Muhammad and Chuck Collins, Guest Contributor on 09/07/2016 @ 02:00 PM
Editor's Note: This article originally appeared on the Huffington Post.
Without a course correction, French economist Thomas Piketty warned, we are hurtling toward a grotesquely unequal future. A future governed by a hereditary aristocracy composed of the progeny of today’s billionaires.
In his assessment, however, Piketty overlooked the “peculiar institution” of our nation’s original sin. The color of what Piketty calls our “patrimonial capitalism” will be almost exclusively white.
Progress in race relations has done little to narrow the racial wealth divide. If average black wealth grows at the same rate it has over the last 30 years, it will take another 228 years before it equals the amount of wealth currently possessed by white households.
If we stay on our current trajectory of unequal wealth growth, the wealth divide between white families and black and Latino families will double to about $1 million by 2043, the same year when households of color are projected to account for half of the U.S. population.
The legacy of discrimination in asset-building programs, which help people purchase homes, save for college or increase retirement savings, goes back generations and has a direct impact on the net worth of today’s families. Assets are a more durable measure of inequality than income, providing a buffer against economic downturns, both personal and societal.
Wealth plays an essential role in establishing financial security and opportunity for future generations. The average retirement savings for black and Latino households is $19,049 and $12,229, respectively, compared to $130,472 for White households.
Homeownership still stands as the most significant asset for low- and middle-income families. In the years after World War II, as the G.I. Bill propelled millions of white households into homeownership, discrimination in mortgage lending left most people of color behind.
The result today is an enormous gap in homeownership. More than 70 percent of white households own their home compared to less than half of black and Latino families.
The driving causes that both compound wealth inequality and worsen the racial wealth divide are overlapping but different. Policy preferences that favor asset owners over wage earners, such as low capital gains taxes and most global trade agreements, have supercharged the share of wealth flowing to the top one percent. The Forbes 400, a list exclusively of billionaires, now possesses a stunning $2.34 trillion — more wealth than the entire black population and one-third of the Latino population combined or a total of over 60 million people.
Policy inaction to reduce inequality, such as allowing the minimum wage to lag and diminished investment in higher education, undermine workers of all colors. Yet popular equalizing initiatives, such as raising the minimum wage or expanding college access, will not aid black and Latino workers in the same way it does for Whites. Homes in black and Latino neighborhoods do not appreciate at the same level as homes in predominately white neighborhoods. And the return on investment for black and Latino college graduates is significantly lower than Whites in terms of lifetime earnings.
So what course corrections are needed to reverse generations of racial economic inequality?
For starters, consider public programs aimed at asset-building and homeownership. These well-intentioned policies lack rigorous enforcement against predatory and asset-stripping products and services.
Low-wealth households often must rely on alternative financial services, such as payday loans, prepaid cards and check-cashing. In some cases, these services take away as much as 10 percent of a household’s income. Black and Latino households are more than twice as likely to have to turn to these services, thanks to barriers to traditional banking. We should provide incentives, such as reduced taxation, to banks that provide accessible banking services to those without significant assets.
We also need to make a full-throttle effort to reverse existing upside-down tax incentives. Over $600 billion in tax subsidies each year helps promote homeownership, private retirement funds, and savings and investments. The overwhelming majority of these subsidies flow to affluent and white households. Why not push these subsidies towards people who actually need them?
The racial wealth divide was created and exacerbated by public policies that currently threaten to push our nation towards fundamentally un-American levels of inequality and unequal opportunity. Another future is possible, one where public policy can begin to bridge our nation’s deep divisions, not continue to widen them.
Even the “Worst Housing Stock” in America is Unaffordable to Many
By Merrit Gillard on 09/07/2016 @ 10:00 AM
Manufactured housing may be the largest source of unsubsidized affordable housing in the country, but for many low-income residents, it’s still not affordable enough. In some of the most economically distressed regions of the country, old and energy-inefficient mobile homes eat up so much of residents’ incomes that they struggle to cover other basic needs.
A new study out this week by the Virginia Center for Housing Research (VCHR) at Virginia Tech, part of an initiative led by CFED, Fahe and Next Step, with support from NeighborWorks America and the Wells Fargo Housing Foundation, takes a look at the manufactured housing landscape in the Appalachian regions of Alabama, Kentucky, Tennessee, West Virginia and Virginia. Manufactured homes make up a large share (between 13-19%) of the housing mix in these regions. In some areas, such as Southeastern Kentucky, manufactured homes make up more than a third of all occupied housing.
Residents of manufactured homes are slightly more likely than households as a whole to be “cost-burdened,” meaning they spend 30% of their incomes on housing costs—and may not have enough left over for their other expenses. That’s the situation facing half of manufactured home renters and nearly 35% of those with a home loan.
Typically, most cost-burdened households are struggling to pay their rent or mortgage, but residents of manufactured homes also face another big cost: utility bills. The study finds that residents of manufactured homes are much more likely than other households to be cost burdened by energy bills alone, and more than 70,000 manufactured home households in the study region (11%) spend over 30% of their incomes just on utilities. In Alabama, where residents sweat through sweltering summers, more than half of cost-burdened families living in manufactured homes are cost-burdened by their alone.
The problem is worse for residents of mobile homes, which make up 20% of the manufactured housing stock in the study areas and were built before 1976 when the federal government established minimum energy efficiency standards. These homes may have leaking roofs, dangerous or inefficient heating sources, a lack of insulation and other problems that not only put residents’ health and safety at risk but also keep energy bills high.
But despite these findings, manufactured housing offers a pathway to affordable homeownership and financial security for many low-income families. After all, the cost per square foot for a new manufactured home is half the cost of the site-built equivalent. It’s worth noting that residents who own their manufactured homes free and clear were far less likely to face cost burdens than renters or those with an outstanding loan. Plus, modern manufactured homes are built to strict standards that make them much more efficient than their pre-1976 counterparts.
Still, there’s much more to be done to make this housing option safer, healthier and more affordable for residents. That includes replacing mobile homes with new, energy efficient models, as well as supporting other energy efficiency measures and making mortgage financing of manufactured homes more easily accessible. We are looking forward to working with our partners on this study to develop a series of concrete policy recommendations to improve the experience of the more than 17 million residents of manufactured homes in Appalachia and throughout the US.
When Neighbors Resist Affordable Housing, What’s a City to Do?
By Kate Davidoff on 09/01/2016 @ 10:00 AM
When affordable housing developments get off the ground, communities often have a lot to say about them—especially when information about the proposal is scarce. But with the federal government starting to push states and municipalities to do more with their housing programs, getting neighbors invested in new developments in a positive way is more important than ever. Without their buy-in, projects can stall for months or even years, and local governments sometimes try to avoid clashes with residents by making deals as quietly as possible. Housing leaders need to make neighborhood engagement a priority if efforts to expand opportunity are going to be successful—and equitable—for all community members.
For years, the legacy of residential segregation has kept many households of color locked out of neighborhoods—and wealth-building opportunities—in communities across the country. In recent years, the federal government has started to crack down on housing policies that keep communities segregated—even inadvertently. In a much discussed decision, the Supreme Court ruled in last year that state and local governments do, in fact, violate federal housing laws when they spend money from the U.S. Department of Housing and Urban Development (HUD) on policies that perpetuate segregation. The ruling stipulated that this is the case even if the intent of the policy itself was not explicitly to segregate housing by race.
This decision is still reaching municipalities and their efforts to build affordable housing that doesn’t perpetuate decades-old divisions along the lines of race. Partially as a result of this decision, HUD is providing local governments with the data necessary to understand and measure segregation, in the hopes that localities will use this data to comply with the Supreme Court’s order: creating affordable housing in new places and ending the seemingly endless cycle of segregation in housing in America.
However, regardless of the Supreme Court’s decision, HUD’s data and the White House’s support, state and local officials' ability to comply with this rule can be greatly impacted by individual citizens, like Veronica Walters.
On Dec. 12, the Baltimore Sun published a 6,100 word story…that describes how the city Housing Authority, complying with a federal court order, has been quietly buying homes over the past decade in prosperous suburbs to use as public housing…The reaction to the Sun story was immediate. “City housing program stirs fears in Baltimore County,” Donovan wrote in a follow-up piece.
Veronica Walters, 73, who lives in Catonsville, a middle class, largely white Baltimore County neighborhood with a median household income of $77,165, told Donovan. “We have worked for years in order to have a house in the county, and the government is pushing people out here,” she said, before adding: “They don’t deserve to have what my family worked hard for. It’s a shame we didn’t know about this ahead of time. I would have been right there protesting.”
Wealthy suburban counties such as Veronica’s are not the only group to resist affordable housing. Earlier this month, in the Inwood neighborhood in Northern Manhattan, residents protested and successfully stopped rezoning efforts that would’ve cleared the way for the construction of a new 23-story, mixed-use development that included over 150 affordable units. The predominantly Latino neighborhood felt that the below-market-rate rents weren’t below-market enough to be affordable for most New Yorkers. Moreover, residents feared that, if the building succeeded, it would gentrify the neighborhood, raise rents and lead landlords to force current residents out of their homes.
The dueling examples of Baltimore and Inwood highlight the difficulty of implementing an affordable housing program. Each example offers its own lessons, but both illustrate existing residents’ resistance to change, and how this hampers the ability of governments to use affordable housing to lift people out of poverty.
The reaction to affordable housing certainly isn’t new, but hiding its implementation isn’t the answer. Baltimore city officials have long faced resistance to affordable housing. In one noteworthy example, 1990s Moving to Opportunity project that would’ve relocated people living in segregated poverty to middle income neighborhoods was met with such protest (in one case just 10 new homes were slated to be built in a majority white neighborhood) that the project had to be abandoned. Just this month, under pressure from suburban residents who feared lower property values, Baltimore City Council rejected a bill that would have made it illegal for landlords to discriminate against prospective tenants who use Section 8 vouchers to pay their rent, making it even more difficult for families to find affordable units. These are just some of many examples in Baltimore—so it’s no surprise why city officials may have wanted to keep the purchasing of homes in suburban counties a secret from residents like Veronica.
However, purchasing homes in secret, and trying to keep entire housing programs operating under the radar only encourages the stubborn, occasionally virulent skepticism with which existing residents treat affordable housing. The Supreme Court decision and the provision of HUD data calls for transparency from advocates and city officials alike while giving them the ability to address segregation and poverty. The hard conversations with residents should be at the forefront of these efforts, rather than at best an afterthought and at worst a non-entity. Residents should have the opportunity to understand what the problem is, why the court decisions matter and how they may work together to improve the lives of everyone in the community. The CFED data illustrates the depth of the problem, and the potential for affordable housing to be an effective solution. The opportunity to recognize these benefits exists, but the people who can put a stop to affordable housing are also the people who can ensure its success. Advocates and city officials shouldn’t fear these people; they should welcome them into the process.
What Can Mayors Do To Promote VITA?
By Kamolika Das and Holden Weisman on 07/27/2016 @ 10:00 AM
For many middle- and high-income American families, tax refunds are a welcome infusion of cash that augments their regular paychecks—cash that can be put towards a vacation or shopping spree. But for others, especially those making less than the median household income, tax refunds make up a substantial share of their annual resources. Working families often rely on tax refunds to stay afloat and purchase basic household necessities. Accessing free and trustworthy tax preparation services is key for ensuring that families maximize the refund amounts that they rely on and deserve. The Volunteer Income Tax Assistance (VITA) program fills this gap by offering free income tax return preparation to low-wage earners, persons with disabilities, the elderly and limited-English-speaking taxpayers. Demand for the program has surged since 2003, but despite its popularity, millions of people eligible for VITA services are not benefiting from the program.
Mayoral Role in Promoting VITA
Fortunately, mayors and local civic leaders have the ability to help expand VITA services and ensure the program’s success in building financial security for residents. To begin with, mayors and local leaders need to recognize the fact that tax preparation support is necessary throughout the year, not just during tax season. Organizations that provide year-round services are better able to integrate other strategies into their work that contribute to financial capability, such as financial coaching and retirement planning. To enhance tax assistance services for low-income residents, advocates should urge their mayors and civic leaders to take realistic, effective actions throughout the year. Our VITA one-pager highlights some potential actions, such as greater VITA and EITC outreach and developing direct ties with local VITA sites.
Model Cities: Louisville & San Antonio
These recommended actions are both practical and achievable. San Antonio successfully established VITA sites as a hub for financial capability services that often have in-house counselors. The 21 sites are located throughout the city at college campuses, delegate agency sites and libraries. At the 16 library sites, San Antonio’s Department of Human Services worked with library leadership to establish LEARN, an adult education center that provides job search assistance, financial empowerment education and one-on-one counseling. Not only does the City of San Antonio contribute to the sites financially, but the City Council also promotes the programs through public events such as the annual EITC Awareness Day and by sponsoring one of two VITA mobile teams with the local United Way.
Louisville has also been a top-performing city in terms of VITA outreach and the availability of VITA sites. Mayor Greg Fischer has championed the program since taking office, has prioritized VITA funding for those sites that can demonstrate that VITA is integrated into a suite of additional financial capability services. The mayor also hosts local VITA and EITC awareness events during tax season. Former Louisville Mayor Jerry Abramson and a team of community leaders initially established the Louisville Asset Building Coalition (LABC), a collaborative of over sixty organizations, to administer the VITA program and connect clients to other financial resources. The program has grown enormously in the last fifteen years—from filing 635 returns in its first year to 10,000 returns in the 2015 tax season.
Outcomes & Recommendations
These cities’ efforts have been worthwhile. In the 2014 tax season, Louisville’s 27 VITA sites returned $82 million to the community. San Antonio has also made strides in the past year, filing approximately 36,500 tax returns in the last tax season—about 3,000 more than the year prior. San Antonio also established 1,290 mobile teams (an increase of 84 teams from last year), and attracted 6,990 first-time users.
Both cities attribute a large part of their success to the collaborative efforts and partnerships they have established throughout their respective communities. In San Antonio, the Department of Human Services has collaborated closely with IRS, United Way, financial partners in the coalition and volunteers. Partners at LABC relayed that mayors can play a critical role in helping organizations access federal dollars for continued support of VITA and EITC outreach.
VITA has been critical for improving the uptake of EITC and other tax credits. The program has helped low-income taxpayers maximize their tax refunds, avoid unnecessary fees, increase financial stability and improve the accuracy rate of their tax filings. As former Louisville Mayor Jerry Abramson reminded the public, “This is not charity. This is your money. It belongs to you.” It is our hope that more mayors and local leaders throughout the nation will follow San Antonio and Louisville’s lead and do their part to support low-income workers and their communities, and we look forward to supporting cities in these efforts.
Lessons from Family Assets Count for Using Data to Promote Financial Security in Your City
By Solana Rice on 05/03/2016 @ 12:00 PM
Over the last two years, CFED has partnered with Citi Community Development on the Family Assets Count project to help reframe how we think about poverty and financial security. We used the power of numbers to draw out local stories, understand the pervasiveness of financial insecurity and spur critical conversations about how to improve financial well-being for residents.
In addition to developing an in-depth local data profile in 10 cities, we developed the local data center to make local data and shorter reports available for many more advocates, practitioners and decision makers.
New data can reframe our assumptions.
This project was as much about new ways of defining poverty as it was about emphasizing just how many people are impacted by financial instability. Despite the fact that liquid asset poverty is not a household term by any means, 44% of households in the US are facing it, as they do not have three months of savings to live above poverty level should they experience a disruption or loss of income.
Across the ten cities profiled through Family Assets Count, we see that earning well above the median income doesn’t protect you from liquid asset poverty. In Baltimore, for example, the median household income is $40,798, but fully 42% of families earning $50,000-$75,000 are without three months of savings to live above poverty level. This is not an issue that is relegated to very low-income families. Financial security depends on more than having sufficient income.
In all ten cities (with the exception of Miami), households headed by someone with an associate’s degree or only some college are twice as likely to live in liquid asset poverty as a household headed by a college graduate. We know that having a bachelor’s degree translates into greater earnings, but this suggests that it also means a greater likelihood of saving.
Data can tell us what is, but not why we see what we do or how we change it.
In each of the ten cities, CFED compiled demographic data, brand new local estimates on liquid asset poverty, asset poverty and unbanked and underbanked rates. While the data illuminated just how pervasive financial insecurity is, they did not tell us about the factors leading to this or how to turn the tide. Partnering with leaders in our Assets & Opportunity Network was critical because they ensured that the numbers painted an accurate picture of financial security in their community. They also were able to convene partners to develop a set of recommendations and describe existing local resources (programs, policies, initiatives) to address this issue.
Data is a great excuse to get people in a room.
In each of the ten cities profiled, we used the data to convene community leaders, funders, media and elected officials. Across the cities, these conversations renewed coalitions, spurred mapping and inventorying of community services and led to new partnerships. In Los Angeles, for example, a coalition was reignited to support county and city service coordination around financial capability. In Oakland, the data jumpstarted a conversation about inventorying nonprofit services in advance of a city-led feasibility study for an office of financial empowerment, so that public and nonprofit agencies could better coordinate. In Miami, a convening featuring the data spurred Catalyst Miami to partner with the City of Miami, United Way and another community organization to start coordinating and connecting their tax preparation services.
We cohosted five briefings for funders interested in tackling the issues and held press conferences in several of the cities. This new data gave long-time advocates a new angle to talk about their issues and gave new reasons to convene diverse stakeholders. In Boston, longstanding asset-building organizations were brought in to help shape the new Office of Financial Empowerment and develop a broad economic opportunity agenda.
Numbers are better with stories.
Numbers are great, but they are more powerful when they exemplify a larger pattern. In Sacramento, the camera crews filed into city hall where Mayor Johnson held a press conference to release the new local data and to announce a commitment to income inequality. Our partners had worked hard in preparing mayor’s staff with talking points, identifying clients that could speak to the issues of financial security and preparing press packets for media. As the mayor concluded, a woman in the audience shared, with tears in her eyes, that the mayor and other presenters were talking about her and her experience of living with the stress of not having savings or financial security. She shared her commitment to helping other women in her situation. Later that night, news crews covered her story. She bravely gave a face to an issue that affects 47% of Sacramento households but is not often in the headlines.
Keep beating the drum; people will listen.
In Oakland, we held a small press event to release the data. While we had a good crowd of people in attendance, we did not get media coverage. It turns out that getting the data profile into the mayor’s hands has been just as important. Mayor Schaaf has disseminated the report to her staff and uses the data in her talking points at community events to speak to the need to address financial security. Mayor Walsh in Boston has also been a great champion and has dedicated his commitment by opening a new Office of Financial Empowerment that has taken on children’s savings as one of its priorities. Mayors can be influential champions for improving services, drawing attention to the issue and convening stakeholders to improve financial well-being for families.
It is our hope that we can continue to compile data that is useful for telling stories, convening new partners and leaders, and eventually co-designing solutions that address the many facets of financial insecurity.
The Power of Partnership: How to Tackle Financial Insecurity, City by City
By Arohi Pathak on 04/21/2016 @ 11:00 AM
In an average major American city, almost half (45%) of all households are on the brink of financial insecurity. These households are “liquid asset poor,” which means that they do not have enough savings to live above the poverty level for three months if they suffer an income disruption such as a job loss. The inability to bounce back from such financial pitfalls is not only detrimental to families, but also hurts the economic potential and growth of the cities in which they live.
And even though the economy has been improving across the nation, the lack of economic opportunity and mobility in many cities like Baltimore and Newark have resulted in high crime, blighted neighborhoods, spiraling unemployment, low educational attainment and high incarceration rates, all of which undermine local development and progress. Furthermore, municipalities that want to address these issues are challenged by dwindling government resources and increasing demand for services.
So how do we address financial insecurity at the local level? How do we leverage existing resources to temper financial insecurity while also investing in the types of services necessary to build economic opportunity?
One option is to embed financial empowerment strategies into local government infrastructure. Local leaders and municipalities across the country have begun to realize that in order to revitalize and grow their economies, they need to invest in programs and services that provide opportunity, help residents break out of cycles of debt and poverty and empower them to build financial security. As a result, comprehensive financial inclusion programs are emerging as an important priority for many city leaders.
What makes for a successful financial inclusion strategy at the local level? According to a recent report by the National League of Cities, it includes several key features:
- A local elected official — such as the mayor or city council member — who serves as a champion for financial inclusion
- A structural “anchor” for financial inclusion strategies, such as a dedicated office or staff person within City Hall
- A cluster of financial inclusion efforts that the city already supports (such as VITA or financial education) that can be built upon with new and innovative programs
Financial empowerment efforts, such as those as piloted by the New York-based Cities for Financial Empowerment Fund, show that by combining financial capability with social services, municipalities can increase financial stability and improve long-term client outcomes. Another important feature of successful financial empowerment is coordination and community-based partnerships, which ensure that municipal strategies are effective and wide-reaching. By coordinating and leveraging the full range of community resources at their disposal, cities can be more innovative and provide services that build on each other — rather than replicating services that don’t result in desired outcomes.
Combining municipal strategies with social service delivery and community-based support is the hallmark of the Family Assets Count initiative, a partnership between CFED and Citi Community Development. Family Assets Count is a two-year, data-driven initiative that has worked swith community-based partners and local policymakers to expand financial stability in ten cities across the country, resulting in embedding financial empowerment strategies within local (and state) government infrastructure.
Here are some examples of those successful strategies and partnerships:
- Miami: ACCESS Miami is a city-wide initiative embedded within the city government that provides residents with the tools and financial education they need to realize economic self-sufficiency and prosperity. ACCESS Miami focuses on four clusters of financial inclusion efforts: access to existing benefits, access to capital, building wealth and accumulating assets, and improving financial literacy. The initiative pools communitywide resources and private investment, and coordinates with local partners to offer one-on-one, customized supports to their clients, as well as financial seminars, financial empowerment coaching, free tax prep assistance, job training, job listings, financial supports, small business assistance, housing assistance and more.
- Boston: In 2014, Boston Mayor Martin J. Walsh, along with partners from the United Way of Massachusetts Bay and Merrimack Valley, Local Initiatives Support Corporation and Jewish Vocational Service, formed a new Office of Financial Empowerment (OFE) to tackle poverty and income inequality. The agency’s mission is to link those seeking financial security and wealth generation with access to capital, financial education, and financial services. In 2015 the initiative provided access to free tax prep at 27 community-based locations and offered a comprehensive range of services, including free financial coaching, a career specialist, help with getting a job, access to benefits and more at two Financial Opportunity Centers. The Boston OFE also used its unique position and influence to partner with a community coalition in supporting two key pieces of legislation to protect consumers from predatory practices of the debt buyer industry and to increase the state’s Earned Income Tax Credit to provide more refund dollars to Boston’s most economically vulnerable taxpayers at tax time.
- San Francisco: San Francisco also has an Office of Financial Empowerment housed within the Office of the Treasurer. Supported by City and County Treasurer Jose Cisneros, the Office uses City Hall’s strength and influence to help San Francisco’s lower-income residents become financially empowered and stable. The agency created several, first-of-their-kind programs to help lower-income people get access to financial education and counseling, low-cost checking and savings accounts, college savings accounts, electronic pay solutions, responsible payday loans and more. Some of the successes from SFOFE include increasing banking through the Bank On program and establishing a matched savings program to help Kindergarteners save for college.
- Philadelphia: In 2013, the City of Brotherly Love launched the Office of Community Empowerment and Opportunity (CEO) to work with multi-sector partners to increase the financial well-being of the city’s most vulnerable citizens. As a result, the City currently integrates financial capability services into other social services through their Financial Empowerment Centers, which provide such community-based services as financial education, debt management, credit counseling, low-cost banking and savings for homeownership or college. Now the city is success of CEO forming a new collaborative called the Philadelphia Financial Empowerment Network. This Network made up of innovative leaders from local asset building organizations, academia, regulatory agencies and financial institutions, which will be tasked with creating a shared vision of fighting poverty and removing barriers to opportunity.
- Delaware: States like Delaware also getting in on the financial security game. Led by the State of Delaware and the United Way of Delaware, the $tand By Me program is a coalition of community partners that provide one-on-one financial coaching, help navigating college and financial aid applications, access to consumer-friendly alternatives to pay-day loans and check cashing stores and much more. In recognition of the close link between financial health, physical and mental health and overall wellbeing, this financial empowerment project is uniquely housed within Delaware’s Department of Health and Social Services. And it is a priority of Governor Markell, who believes that economic security for Delawareans is a core element of economic development. While $tand By Me is not a Family Asset Count initiative, it is nevertheless an important example of how state-wide investment can be instrumental to building economic opportunity and financial security.
If you are interested in learning more about building economic opportunity and financial security through municipal strategies, here are some resources to get you started:
- Examples of financial inclusion strategies at the municipal level can be found on CFED’s Family Assets Count site, as well in the CFED report on Building Economic Security in America’s Cities.
- More information on strategies supporting the creation of a OFE can be found on Cities for Financial Empowerment Fund site.
- The National League of Cities has research on successful municipal strategies around financial inclusion.
Advocacy Doesn’t Have to Be Scary
By Arohi Pathak on 03/29/2016 @ 04:00 PM
Practitioners and community-based nonprofits engaged in building financial security play a key role in protecting and empowering the vulnerable households to succeed. They are on the front lines every day, confronting the financial challenges clients face, meeting their families’ basic needs and empowering clients to build a successful future. As a result, they are keenly attuned to the strategies and practices that can help individuals and communities create their own financial success.
This unique perspective equips practitioners, service providers and community-based organizations to be effective advocates. Practitioners and community-based organizations have the knowledge and power to shape policies that strengthen the financial well-being of disadvantaged communities and individuals, advance their values and set priorities. That’s why these community leaders need to be a vocal presence in the decision-making process.
However, too many of such organizations lack the tools — or confidence — they need to become effective advocates. There are misconceptions around the definition of advocacy, unease with the political process, and a fear of breaking the rules that govern non-profit lobbying.
But engaging in advocacy doesn’t have to be scary. There are many tools and resources that can help organizations build their advocacy prowess. Bolder Advocacy, an initiative of the Alliance for Justice, has a premier series of resources and workshops that can help you understand the rules of advocacy as they relate to executive or administrative advocacy, influencing legislation, ballot measures and electoral activity. CFED also has a series of advocacy training webinars for those in the financial security field.
Perhaps the best way to become more comfortable as an advocate, however, is to start by raising awareness or educating clients and partners about specific policy issues. Broad-based coalitions or other formal partnership structures that bring together will understand the importance of a collective voice in policy change and are probably already engaged in advocacy in some way. If you’re new to advocacy, consider building your skills by joining already established coalitions and networks in their efforts, including visiting with policymakers to educate them on your issues, highlighting the stories of clients impacted by policy decisions and using traditional or social media to build public awareness.
For example, United Way of Greater Houston, an Assets & Opportunity Network Leader, noticed that a number of people seeking financial coaching services in their community were being trapped in a cycle of debt. So they decided to step their toe into the waters of advocacy around regulating predatory lending. They started by joining a state-wide coalition in Texas focused on educating policymakers and influencing legislation. After working on advocacy at the state level, they realized that they may be able to have an impact through a city ordinance regulating predatory lending in Houston. They gathered the support of the groups they met in the state coalition and coordinated efforts to educate City Council members, the Mayor and other decisionmakers on impactful policies and led the way for a strong ordinance to be introduced by a City Council member that is now in place.
The Idaho Asset Building Network (IABN), also an Assets & Opportunity Network Leader, has done this, too. IABN is a relatively new network but is actively developing the comfort of its partners to become effective advocates, ensuring that Idaho invests in the resources people need to become financially stable. Early this year, IABN hosted a two-day legislative advocacy event and training focused on improving partners’ and allies’ knowledge of asset-building policies and advocacy skills. On the first day, IABN provided advocacy training to 25 advocates from 14 organizations. The next day, advocates put their training into practice, spending a full day at the state Capitol visiting legislators to talk about asset-building policy and participating in hearings.
In addition to the very hands-on advocacy days, IABN launched a free, five-part webinar series on advocacy designed to help practitioners understand advocacy. The series, which features a national expert on public policy and civic engagement, will be available on the IABN website shortly (but in the meantime, contact Jessica Sotelo for more information).
IABN is on one end of the spectrum, proactively building confidence with advocacy for those that are new to this work. But what if your coalition is more established, and is generally comfortable with advocacy? Or what if your coalition is large and represents multiple policy priorities? How do you continue to engage those partners in effective advocacy, encouraging them to lend their voice and influence to issues that may be a lesser priority?
The Minnesota Asset Building Coalition (MABC), another Assets & Opportunity Network leader, has been doing just that. MABC has a large, statewide coalition made up of more than 130 members. The coalition has been actively engaging with their partners and recruiting new allies through regional conferences, workshops that address the concerns community-based organizations have about advocacy, annual member surveys that inform the coalition’s policy agenda and practitioner learning circles.
MABC’s practitioner learning circles have proven to be a successful strategy for cultivating the coalition’s advocacy efforts. These learning circles are issue-driven convenings that meet virtually once a month to develop policy expertise, build a shared policy agenda, learn from each other and build members’ advocacy skills. MABC currently has three practitioner learning circles focused on small business development, VITA sites and vehicle programs. The learning circles have served to create trusting relationships within the coalition and build collective impact, while engaging in critical advocacy activities such as vetting policy language, holding in-district events to educate policy makers and testifying at the state Capitol. The learning circle on vehicle programs was involved in passing legislation in 2015 around a transportation equity bill. While the bill was not ultimately funded, the learning circle engagement in this issue in 2016 will advocate for funding the bill that will benefit many low-income, working individuals.
Effective advocacy is not linear and does not follow a one-size-fits-all formula. As shown by the efforts of many Assets & Opportunity Network members, the best way to get comfortable with advocacy is to just do it. Find opportunities to engage in advocacy ensures that clients’ challenges and voices are heard, particularly during critical decision-making processes. You can join the Assets & Opportunity Network as General Member to keep informed about federal, state and local advocacy opportunities. Or, better yet, reach out to your Assets & Opportunity Network Leader to hear more about policy issues in your area!
CSAs: Coming Soon to a City or State Near You!
By Shira Markoff on 03/24/2016 @ 10:00 AM
As part of the Campaign for Every Kid’s Future, CFED has set out an audacious goal of connecting 1.4 million children with a Children’s Savings Account (CSA) by 2020. Achieving this goal will require big, bold new programs in states and large cities. That’s why we’re excited to see the emergence of many new policy proposals and legislation across the country that would create, expand or test out children’s savings options. It’s clear that opportunities are ripe for expanding publicly-supported CSA programs in many states and cities over the next few years.
Here are a few highlights of recent developments:
- Colorado: A bipartisan bill is pending in the Colorado legislature to create the Aspire to College program, a three-year pilot CSA program run by the state’s Department of Human Services (CODHS) and targeted towards low-income pre-school children. CFED provided extensive technical support to CODHS in designing the program.
- Maryland: Maryland Democratic legislative leaders have proposed a match of up to $250 per year for families making contributions into the state’s 529 college savings plan. The match rate would be on a sliding scale based on income, with families earning under $100,000 needing to deposit only $25 to earn the $250 match. While CFED would prefer the proposal’s authors lower the annual income cap for the match from $225,000 to ensure that the bulk of the match goes to households of modest means, the idea shows promise.
- Baltimore, Md: DeRay McKesson, a candidate for Baltimore Mayor and leading activist for Campaign Zero and Black Lives Matter, has called for the creation of a CSA program providing an account for every student in Baltimore schools.
- Washington State: Rep. Christine Kilduff proposed a bill in the Washington House to create a universal CSA program for every child born or adopted in the state. Each child would receive a $250 initial deposit, with low-income children eligible for an additional $250 in match.
CFED and the Campaign for Every Kid’s Future will continue to support and promote these and other efforts to help more children have the opportunity to build savings for a future that includes postsecondary education. Your organization can lend its support by signing on as a Campaign partner. Email Shira Markoff for more information.
We Can Make America’s Greatest Anti-Poverty Tools Even Better
This week, as part of the first-ever Assets & Opportunity National Week of Action, we are joining with advocates nationwide to call attention to the issues of economic insecurity and inequality that too many families across this country face and highlight the successful solutions that create an opportunity economy in which everyone has the chance to get ahead. Today, we're focusing on connecting working families with tax credits that help them get ahead .
For millions of hard-working, low-income taxpayers, 2015 ended with a huge victory. As one of its final acts last year, Congress passed a law that made permanent key provisions of three tax credits aimed at low- and moderate-income workers: the Earned Income Tax Credit (EITC), Child Tax Credit (CTC) and American Opportunity Tax Credit (AOTC). These tax credits are some of the most powerful anti-poverty tools we have, and their recent expansions will impact nearly 16 million people in hard-working families to cover their basic expenses and begin to create a foundation of savings to build stronger financial security in their lives. The new law also increased funding for the Volunteer Income Tax Assistance (VITA) program by 25%, greatly expanding the capacity of community tax preparation sites to connect low-wage taxpayers with these important credits. These successes came as the result of years of successful advocacy by service providers and other stakeholders across the country. As we finish celebrating this victory for low-wage workers, now is the time ask, what’s next?
Today, on EITC Awareness Day, CFED and the Taxpayer Opportunity Network are working to ensure the dialogue doesn’t stop here. We’re partnering with key allies, supporting local communities, raising awareness about these critical anti-poverty tax programs and working together to ensure effective policy reforms that support low-income and working families as they build their financial security. This morning, we hosted an event with Tax Credits for Working Families on Capitol Hill to hear from key decision-makers about the future of tax credits for low-wage workers. The event—keynoted by Johns Hopkins University Distinguished Professor Kathryn Edin—brought together legislators, advocates, tax practitioners, scholars and taxpayers to share their knowledge and first-hand experience with refundable tax credits, while addressing what the recent tax deal means and what can be done to improve tax programs even more.
Many of our local partners and members of the Taxpayer Opportunity Network are also working to bring awareness of the EITC in their communities to ensure every eligible taxpayer is aware of the credit—and of the free, high-quality tax preparation services available at VITA sites. These partners are hosting press conferences and briefings at their state capitols, bringing key stakeholders to visit VITA sites and more. For example, Goodwill Industries of Greater Sacramento Valley & Northern Nevada hosts an annual event at an AARP tax preparation site to raise awareness about the EITC with local taxpayers. CA$H Maine sets up information tables with resources about EITC and VITA for legislators to peruse at the state capitol. And Prepare + Prosper in Minnesota is working with the financial empowerment department in one of their state’s most populous counties, Dakota County, to share resources about EITC and VITA with county employees.
Here are a few ways you can support further improvements to these tax credits:
- Promote EITC Awareness Day in your community by using this social media toolkit.
- Advocate for the expansion of the federal EITC. Learn about efforts to expand the EITC for childless workers and help all EITC recipients build emergency savings through the Rainy Day EITC program. If your organization would like to endorse the proposal, please contact CFED’s Ezra Levin.
- Promote adoption and expansion of state EITC programs. As we document in the newly released Assets & Opportunity Scorecard, 26 states and the District of Columbia have adopted EITCs that add to what the federal credit puts in the pockets of low-income taxpayers. Check out these policy briefs on what states can do.
- Promote EITC outreach efforts in your community to increase the uptake of these credits by those who can benefit the most. Nearly 20% of workers eligible for the tax credits don’t receive them each year because they lack awareness or have been misinformed.
- Explore your own free tax filing options, including VITA, IRS Free File and MyFreeTaxes.
Join the national EITC Awareness Day conversation today by raising awareness using #EITCAwarenessDay, #VITAWorks, #AOActionWeek and this social media toolkit. Stay tuned in the future for more information about how we can secure, expand and improve these essential tools to create an opportunity economy that works for all.
Want to expand access to tax credits that lift millions of working families out of poverty? Join the Taxpayer Opportunity Network!
Payday and Car-title loans: A Billion-Dollar Burden for America’s Consumers
By Nikitra Bailey, Guest Contributor and Ezekiel Gorrocino, Guest Contributor on 01/27/2016 @ 01:00 PM
This week, as part of the first-ever Assets & Opportunity National Week of Action, we are joining with advocates nationwide to call attention to the issues of economic insecurity and inequality that too many families across this country face and highlight the successful solutions that create an opportunity economy in which everyone has the chance to get ahead. Today, we're focusing on the need to rein in predatory lending.
Even though economists declared years ago that the recession was over, many consumers still await their own personal financial recovery. Caught in a financial tug of war between stagnant wages and a rising cost of living, America’s low- and moderate-income families are still striving just to hold on.
So what happens to consumers when an unexpected expense leaves more bills than cash? Some raid their savings, others tap into retirement accounts. But a large number of consumers turn to short-term, predatory loans to help bridge a cash shortfall.
Beckoned by promises of quick and easy cash without a credit check, payday and car-title lenders charge triple-digit interest rates disguised as ‘fees.’ The Center for Responsible Lending (CRL) has published a series of research papers over the past decade that together show how on an annual basis these fees strip hard-working people of more than $3.4 billion each year. Further, CRL has found that:
- At a state level, the fees from payday loans alone represent a loss of as much as $770 million each year.
- Each year, car-title lenders reap $4.3 billion in fees on loans totaling $1.9 billion.
- The typical car-title borrower takes eight renewals on a single loan and eventually pays $3,391 – over three times the average amount borrowed.
In addition, the Consumer Financial Protection Bureau has found that over 75% of payday loan fees come from people stuck in more than 10 loans a year.
For years, state-based coalitions have worked to secure a 36% interest rate cap on small-dollar loans. But without rate caps to protect all U.S. consumers, many more state-level actions are still needed before citizens in every state are sufficiently protected.
For example in Nevada, a report by the University of Las Vegas found that one in five veterans residing there use payday loans. That 20% rate of usage is nearly four times the national 5.5% usage rate. With 339 payday loan stores charging an average of 521% APR, Nevada’s annual payday loan volume of more than $420 million includes over $77.7 million just in fees.
Nearby New Mexico doesn’t fare any better. A combination of payday and car-title loans along with high-cost installment loans carrying rates over 175% APR siphoned over $88.8 million from borrowers in fees and interest in 2014, increasing the community’s financial vulnerability as a result.
At the federal level, the Consumer Financial Protection Bureau (CFPB) is soon expected to announce long-awaited rules on both payday and small-dollar lending. That action has the potential to stop lenders’ access to borrowers’ bank accounts and also limit the length of indebtedness to no more than 90 days in a 12 month period.
Unfortunately for consumers, the CFPB cannot enact a rate cap – even though bipartisan public support for one has existed for a few years. There also looms the likelihood that, just as payday lenders have discovered ways to bypass state rate caps, similar evasive actions will soon follow whatever regulation is announced.
For real financial reform to occur, a combination of state and federal actions are needed. In other words, instead of debating the shortcomings of either approach, both should be implemented with as much vigor as lenders have already done to preserve their billion-dollar revenue streams.
Something is seriously wrong when billions of dollars are taken from people with some of the most meager financial resources. That kind of ‘commerce’ is really financial exploitation.
America’s financial services community can do better than that. In fact, some institutions are already doing so. States like Texas and Mississippi have financial institutions where employees are able to secure low cost loans through their payroll systems. These employee-based systems offer an opportunity to create scale and infrastructure, which helps to keep costs low.
Efforts to forge more consumer protections should be encouraged knowing that over the past decade, no new state has authorized either predatory payday or car title loans.
The shackles of debt that deny poor and moderate-income consumers their dreams of a better life must be broken. When people of principle join with consumer advocates in coordinated, targeted action, we will prevail. And may 2016 be the year.
Nikitra Bailey is CRL’s Executive Vice President of External Affairs, overseeing CRL's coalition building and constituent relations. She also provides technical assistance to local municipalities, state legislators, and federal policy makers on abusive lending practices ranging from small dollar loan abuses to preventing foreclosures.
Ezekiel Gorrocino is the Government Relations and Policy Associate for CRL, overseeing its engagement in western states, helping coordinate the nonprofit's efforts in fighting predatory loans such as payday, car title, and installment loans.
Want to expand access to opportunities for families to build assets, access safe and affordable financial products, and create a more prosperous future? Join the Assets & Opportunity Network!
Does the Social Safety Net Work?
By Lebaron Sims on 10/08/2015 @ 12:00 PM
Last month, the Census Bureau released updated annual estimates of Poverty, Income, and Health Insurance Coverage. Nationally, many of the trends from recent years continued unabated: there was no change in median annual income or the official poverty rate. The stagnation in the income and poverty numbers remains troubling, but there is a silver lining: the social safety net is helping to ensure the well-being of American families.
These data are invaluable for tracking how Americans are faring in this economy, but the official poverty numbers still don’t give a complete picture of low-income families’ complex financial lives. Since the spike in the poverty rate in the wake of the recession, our nation’s social benefit programs have done incredible work, largely keeping household poverty at bay and families afloat. Nowhere is this role more evident, nor articulated more clearly, than in the Census Bureau’s Supplemental Poverty Measure (SPM) estimates of household poverty.
The SPM is the Census Bureau’s more comprehensive view of both household poverty and the effect of public benefit programs on poverty alleviation. This measure has historically remained higher than the official poverty rate, particularly among the elderly and this year’s SPM estimates are no different. However, the share of children in poverty drops nearly five percentage points, from 21.5% according to the official poverty measure down to 16.7% in the SPM—a total of over 3.5 million fewer children living in poverty:
What accounts for these dramatic differences? These declines in childhood poverty can be traced back to the national Earned Income and refundable Child Tax Credits, without which the childhood poverty rate would have been 23.8%, and the Supplemental Nutrition Assistance Program (SNAP), which lowered the childhood poverty rate by nearly three percentage points, from an estimated 19.5%. Both of these programs had significant effects on the overall poverty rate, as well, though the effect of both pales in comparison to that of the Social Security program, which keeps a full 26 million Americans above the SPM’s poverty threshold, and, without which, poverty in the United States would balloon to nearly a quarter of the population:
The Census Bureau’s estimates of Health Insurance Coverage provides further evidence of the real impact of the nation’s social safety net. The 2014 estimates represent the first full year of data after the implementation of the Affordable Care Act (ACA) and its accompanying expansion of Medicaid benefits to the adult population living in households earning up to 138% of the federal poverty level.
The effects were big. Both the CPS health insurance survey (national only) and the American Community Survey (national and state) estimates show a three percentage point decline in the national uninsured rate, which is directly attributable to the implementation of the ACA. In other words, the share of uninsured Americans fell more after one year under the ACA than it had over the entire previous decade. As expected, the groups that experienced the largest declines in percentage uninsured were those with the highest historic rates: working age adults and communities of color, all of whom experienced declines greater than four percentage points:
What Can We Do?
The data are clear: U.S. safety net programs provide critical support to low-income children, families and individuals. While these programs have continued to keep millions of Americans out of poverty and away from disaster, they have collectively failed to bring down the poverty rate, which has hovered around 15 percent for far too long. Similarly, dogged improvements in the economy at large—such as steady job growth and low interest rates spurring private sector investment—have done little to tangibly improve the financial security of the majority of American households. The stubborn persistence of these historically high levels of poverty belie the superficiality of these improvements to our economy.
This is where states have an opportunity—and a responsibility—to pick up the slack where the private sector and federal government have fallen short and implement broad-based social reforms that provide all citizens the foundation necessary to thrive. Only half of the states and the District of Columbia offer a statewide EITC, to complement the federal tax credit. As demonstrated in Table 2, the EITC has served as one of the nation’s key weapons in the fight against childhood poverty; expanding this benefit at the state level will provide the youngest Americans the early support they need to develop and flourish throughout their formative years.
Additionally, while the ACA will continue to drive down the national uninsured rate by increasing access to affordable health care, 20 states have chosen not to expand Medicaid, leaving thousands of the poorest Americans without affordable health insurance coverage. Correcting this will not only result in fewer Americans in poverty, but will also create a healthier and more productive workforce.
States should also eliminate asset limits for public benefit programs, removing a major impediment facing many families and allowing a greater number of families at the margins to take advantage of our nation’s many foundational resources. Many states have already taken each these steps, but only when every state acts will the US truly have an opportunity economy, one in which all citizens can take part.
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