CFED Newsletter: May 2012
Earlier today, CFED released findings from research that explores whether or not parents will be strong stewards of their children’s savings accounts (CSAs), or if they will use funds in such accounts for unintended purposes. The white paper, authored by Carl Rist, Brigitte Gavin and Sean Luechtefeld, is titled Take the Money and Run? Investigating Whether Parents Will Raid Children’s Savings Accounts: A Case Study in Non-Qualified Withdrawals and is now available for download at CFED’s Knowledge Center.
In the report, the authors analyze data provided by program administrators at the Oakland Livingston Human Service Agency (OLHSA) site in Pontiac, Michigan (one of 12 sites in a national demonstration of CSAs), to understand if – and under what conditions – parents will take advantage of their children’s savings for their own purposes. Designed in response to critics who oppose investments in CSAs, the report indicates that in most cases, parents recognize that deposits made into CSAs are not to be used to weather a financial emergency or meet short-term needs. In fact, only four percent of parents or guardians made what the report calls “non-qualified withdrawals,” meaning that out of almost 500 accounts established for children across seven Head Start programs in Pontiac, only 18 experienced early withdrawals in the child’s account. When non-qualified withdrawals were made, they were typically made under instances of extreme financial emergencies and funds were actually replaced in many cases, indicating that parents are far from likely to “take the money and run.”
In addition to the research findings detailed in the white paper, Take the Money and Run? is accompanied by a Growing Knowledge brief that outlines key lessons gleaned from the research on non-qualified withdrawals at the OLHSA SEED site. Among these lessons, the researchers found that:
- Non-qualified withdrawals are made at rates much lower than one would expect, based on the experience from similar savings efforts or products.
- When non-qualified withdrawals do happen, it’s because of financial hardship and not because parents want to game the system.
- Parents are rarely interested in raiding their child’s account; in most cases, those parents making non-qualified withdrawals had previously made account deposits, and they tended to pay back the withdrawals they made.
- In any children’s savings initiative, the design of the account is critical: those with “IRA-like” restrictions will likely be the least susceptible to non-qualified withdrawals.
- The goal of saving for college is a powerful motivator for incenting long-term savings among low- and moderate-income households.
CFED is thrilled to welcome Anita Drever, Ph.D., as our new Director of Applied Research. In Dr. Drever’s role, she will lead the organization’s Research Team, providing data collection and evaluation support and guidance to CFED’s strategic initiatives, as well as to our external partners. The hiring of a Director of Dr. Drever’s caliber represents a renewed commitment in being a thought leader in the asset-building field and we are excited to see what new horizons the Research Team reaches under her leadership.
Dr. Drever’s background includes both theoretical and applied research, and she has a passion for engaging stakeholders in research design and ensuring that research identifies solutions to real-world problems. Prior to her arrival at CFED, Dr. Drever was Associate Professor of Geography at the University of Tennessee, where her peer-reviewed publications included analyses of issues such as immigrant inclusion and access to affordable housing. She also managed projects funded by the National Science Foundation and the German Institute for Economic Research. All three of her degrees – Ph.D., M.A. and B.A. – are in the field of Geography from the University of California, Los Angeles.
More recently, Dr. Drever left academia for applied research, directing local, state and national program evaluations at the University of Wyoming and at Catholic Legal Immigration Network, Inc. These experiences drew on her expertise in survey design and statistical analysis and make for a smooth transition into the research culture here at CFED.
Given the robust nature of Dr. Drever’s background, the opportunities presented to the Research Team are extensive. As Ida Rademacher, CFED’s Chief Program Officer noted, “bringing someone of Anita’s stature on board strengthens the Research Team’s ability to engage more than ever in facilitating and originating important research that deepens our understanding of both what’s wrong and what works in the areas of financial access and financial inclusion for low-income Americans.”
In February, CFED hosted a webinar focused on Behavioral Strategies for Successful Individual Development Account (IDA) Programs. The webinar was presented on behalf of the Assets for Independence (AFI) program, the largest source of federal funding for IDAs, and featured former CFED Innovator-in-Residence Mindy Hernandez. Mindy, whose work with ideas42 and CFED during her period of residence pioneered the practical application of behavioral theories and insights to real-world challenges, presented her findings from behavioral research and provided strategies for asset-building and IDA programs to improve program outcomes.
Applying Behavioral Economics to the Asset Building Field
But how exactly can behavioral strategies help asset-building programs? We all know about the benefits of opening a bank account, making regular deposits and saving for the future. Yet getting clients through the door and enrolled in an asset-building program – like an IDA program or free tax prep – and getting them to follow through with their intentions to save money is often surprisingly challenging.
That’s where behavioral economics can make a difference. Research and experimentation from the field are continually finding new ways to help people act on their intentions and form good savings habits. Program “tweaks” can help:
- Improve program enrollment and retention
- Promote better participation through automation, reminders, and simplified processes
- Enhance clients’ capacity to follow through on their intentions
During the February webinar, CFED also announced the release of a new guide to Behavioral Strategies for Successful IDA Programs, developed in partnership with behavioral consultant Mindy Hernandez on behalf of the Assets for Independence (AFI) IDA Resource Center. The guide outlines easy, cost-effective tactics for improving IDA program recruitment, enrollment and retention.
Want to learn more about applying Behavioral Economics to your work?
CFED will be holding several behavioral economics sessions during the Assets Learning Conference in September. To learn more and to register, please visit www.assetsconference.org. We’re excited about the synergies between behavioral economics and asset building, and we look forward to planning some in-depth sessions that highlight these synergies.
Last month, CFED announced that registration for the 2012 Assets Learning Conference, Ideas Into Action, is now open at www.assetsconference.org. If you’ve visited the ALC website, you’ve likely noticed that on Wednesday, September 19, the Conference opens with half-day or full-day Institutes. A new and perhaps unfamiliar feature of this year’s ALC, these Institutes are extended sessions designed to provide depth about a given topic. Whereas typical 75-minute Concurrent Sessions (of which we’re planning over 40!) give a brief and broad overview of a given topic, Conference Institutes are designed to deliver more focused education and to provide experience grappling with the particular area of interest.
While we’ll be spending the summer months fine-tuning the Conference Institutes to ensure optimal usefulness for attendees, we are eager to share with you preliminary details about four of these sessions:
- Assets & Opportunity Advocates’ College
The purpose of this Institute is to provide participants with the tools they need to engage in the policy process at local, state and federal levels. We know that many service providers in the assets field don’t feel they have the time, expertise or comfort to advocate for the issues they care about with policymakers. This session, which is designed for members of the Assets & Opportunity Network but open to all ALC attendees, will address those concerns.
- Assets for Independence (AFI) Institute
Developed especially for AFI grantees, this institute will explore the latest in innovative programmatic approaches to effective IDA program delivery. This Institute is restricted to current AFI grantees.
- Entrepreneurship Institute
Whether you provide free or low-cost tax preparation for low- and moderate-income entrepreneurs, or if you work in small business development in the public or private sectors, this Institute will provide a helpful, in-depth focus on the challenges and opportunities facing the entrepreneurship field. The Entrepreneurship Institute is open to all ALC attendees.
- Children’s Savings Account (CSA) Institute
Open to all ALC attendees, the CSA institute will be of special interest to those new to the CSA field and interested in launching CSA programs at scale. During this Institute, participants will address some of the barriers to program scaling and will discuss best practices for ensuring success in CSA program implementation.
We will be sharing updates about these sessions via the Conference website as they become available, so be sure to check back often. As these Institutes are included with your Conference registration fees, we hope you’ll be thinking about which of these helpful sessions you plan to attend.
- Webinar: Incorporating Asset-Building Strategies into Neighborhood Revitalization
Thursday, May 10, 3:30 pm EDT
- Webinar: Getting Started: AFI Program Rules & Regulations
Wednesday, May 16, 3:30 pm EDT
- National Small Business Week
May 20-26, 2012
- Webinar: Opening Doors to New Funding Streams
Co-presented with NeighborWorks America
Wednesday, May 23, 1:00 pm EDT
- Webinar: State & Local Frameworks for Federal Funding: Manufactured Housing in Consolidated Plans
Thursday, May 24, 3:30 pm EDT
- Webinar: Goal-Setting and Planning Your 5-Year AFI Grant
Wednesday, June 6, 3:30 pm EDT