Children's Youth Savings

Closing Plenary

Mon, 22 Jun 2009 04:36:29 +0000

This closing session, introduced by Pam Flaherty, President of Citi Foundation, featured Michael Lomax of the United Negro College Fund, announcing a new collaboration between Citi, UNCF, KIPP schools, and CFED, aimed at integrating the unique talents of each organization to bring college savings into the achievement-focused environment of KIPP schools across the country.

There wasn't a lot of detail, but just the thought of a major partnership among those four organizations is exciting -- what resources and expertise in that consortium! Many people in the matched savings field will be watching how that project unfolds.

Session on "Working with Youth to Create a New Generation of Savers"

Mon, 22 Jun 2009 04:17:37 +0000

I've been working with Maria Sison of Juma Ventures on the development of SaveTogether, but we had never met in person, so I wanted to be sure to attend the session in which she and researcher Ed Scanlon of the University of Kansas School of Social Welfare talked about the success of Juma.

Juma merges youth-focused social enterprise with leadership development, financial education, and matched savings accounts. While they've always worked to achieve college readiness for the youth in their programs, they recently reformulated the mission to make that the explicit goal of all their work: "We break the cycle of poverty by ensuring that young people complete a four-year college education."

Scanlon attributes a lot of Juma's success at motivating youth to its being such a hip organization, one that youth identify with. It's refreshing to see that savings and financial education can be made to seem hip.

Session on "New Approaches to College Affordability"

Mon, 22 Jun 2009 03:20:52 +0000

This session was highlighted by a presentation from Kathie Little of the College Board (the folks who brought you the SAT test back in high school). The College Board recently released a report titled "Fulfilling the Commitment: Recommendations for Reforming Federal Student Aid." It's an interesting piece of policy advocacy, which could help universal child savings accounts gain more traction. I won't go into much detail because there's a good analysis available on the blog of the Oklahoma Policy Institute.

It was also good to learn more about the College Success Foundation, which seems to be at least partly responsible for some impressive policy victories in Washington state around college access and affordability.

"Market Development" Session

Mon, 22 Jun 2009 02:32:36 +0000

At a conference where everyone seems to have drunk the kool-aid on the importance of financial education, I was surprised to hear Professor Lewis Mandell, renowned expert on financial education, telling us that most financial education doesn't work. My first instinct was to cover the ears of my fellow conference-goers, like when I know foul language is coming up in a movie I'm watching with my young daughters. But soon I realized that his point was not to deny the importance of financial education, but rather to stress how important it is to deliver effective financial education. His studies have shown that the financial education provided in schools rarely has any impact on financial knowledge. It got me wondering if financial education might be generally more effective when delivered in conjunction with a matched savings account, providing a specific purpose for the training that might make it more sticky.

I also enjoyed hearing from David White, speaking about the United Kingdom's Child Trust Fund. White is CEO of The Children's Mutual, a financial firm that focuses on children's savings accounts and controls a large chunk of the market in the UK (which now has a quite a significant market for children's savings accounts since the government began giving such accounts to every child at birth). The UK's example of how child savings accounts can be made universal is definitely worth checking out.

"Practice" Session

Mon, 15 Jun 2009 21:30:22 +0000

The presenters for the core session on "Practice" were Carl Rist of CFED, talking about the lessons of the SEED project, and Elizabeth Vanderweide of the Finance Authority of Maine (FAME), talking about Maine's new universal college savings account program.

I already knew many of the particulars of SEED from CFED's great publications and videos about the project, but I somehow knew nothing about Maine's new initiative. It was fascinating to hear about how the Dexter Shoe Company mogul and philanthropist Harold Alfond was inspired to help raise college aspirations for all children in Maine by pledging $500 to every newborn child in the state for whom a 529 account is opened, with no obligation upon the family to put any other funds into the account. That's potentially 14,000 children per year, or $7 million per year, coming from the late Mr. Alfond's Foundation to support this experimental program. 2009 is the first year in which the program is available to every newborn in the state.

They recognize that it still won't be an easy sell to try to get every newborn enrolled when there is no default mechanism. Their 2009 goal is to get 40% of eligible families to request the application, and 25% of all eligible families to open the accounts in which they can receive the free $500 for college. The families only have 1 year from the day of the child's birth in which to open the account, so FAME is working hard on communications and outreach to spread the word via maternity wards, physician practices, and mailings to addresses supplied via birth records (3 mailings to every family with a newborn).

One of Elizabeth's goals is to simplify the enrollment process so there are fewer barriers to entry. Ideally, they'll get to the point where they can capture a full application (in simpler format) from every mother right in the maternity ward, and then just have to collect the social security number as soon as possible after the family obtains it from the social security administration.

I can't wait to hear more about the outcomes of that initiative in the years ahead.

Opening Plenary

Mon, 15 Jun 2009 17:09:16 +0000

The national CDA conference is off to a great start this morning. Andrea Levere, CFED's President, welcomed everyone with the big vision of the conference: Imagine a world where each and every child has a savings account at birth, where communities and families are making cash investments in a child's future assets before that child even speaks her first word.

Andrea passed the podium to Michael Sherraden, Center for Social Development, whom she described as a true godfather of the matched savings field. He reminded us why we believe in asset-building in general, how it empowers families to get ahead and builds their aspirations. He also said we should frame asset-building as a universal "development" strategy more than an anti-poverty strategy, which is partly what makes universal child savings accounts such a powerful concept. He noted that there are exciting conversations underway with members of the Obama administration about child savings accounts, and it's the aspirational impact that seems to grab their attention the most. And we can't ignore the lessons of behavioral economics -- that default enrollment is perhaps more important to participation than the matching incentives. Also, we shouldn't get bogged down in the competing virtues of government "plans" vs. market products: the differences are exaggerated.

The other plenary speaker of the morning was Luis Ubinas, President of the Ford Foundation, who noted that he could brag about the Foundation's amazing work in this field because as the relatively new leader of the Foundation he wasn't around to be personally responsible for any of it. But he made some very eloquent remarks on behalf of the work. He echoed comments that Jonathan Mintz made last night at the opening reception: we have an unprecedented opportunity in this country now. We've been through a special moment. It's clear that something has to change and Americans are asking themselves, what kind of society do we want to create, and how can our country be a fairer place for all its citizens. Children's savings accounts can be central to that re-orienting.

Luis shared a great anecdote about how a child's participation in financial education and savings can inspire her parent(s) to move down that path, as well, and investigate individual development accounts and other tools. I've seen that happen in arts education, but hadn't thought much about the parallel with financial education and matched savings.

He also made the interesting point that we shouldn't too strongly emphasize the existing potential of re-directing resources from Earned Income Tax Credit refunds, because poor families truly depend on those funds. We should emphasize the opportunity to provide an incremental savings tool through child development accounts.

And my favorite moment was when he was asked by a banker what we can say and do to make other financial institution professionals feel more urgency about this matched savings work when they're being buffeted by CRA reform and other regulatory changes. He replied that if he were running a financial institution today (which could easily have been the case, given his background), he would feel intense urgency about rebuilding the tarnished brands of banks and investment companies by focusing on universal savings products, using available subsidies from the public sector. If we can steer financial professionals toward that awareness of how to re-position their companies' brands for a new economic reality, then we'll be laying the groudwork for terrific accomplishments in the coming years.