Building on some of the arguments put forth in his new book, What Then Must We Do? Straight Talk about the Next American Revolution, Alperovitz discussed democratized wealth as a linchpin component of a new economic politic. Under this new system, a more inclusive American economy would require:

Alperovitz provided a myriad of examples of wealth democratization, ranging from worker-owned businesses and credit unions where stakeholders actually get a vote, to models such as the Cleveland Clinic Model which focus on sustainable community development. As we listened to these examples, we couldn’t help but be reminded of how these models mirror, in a number of ways, the integrated service delivery models that are being pioneered by leaders in the assets field.

Take, for example, Haven for Hope in San Antonio. This 37-acre residential campus provides communal living facilities, employment assistance, financial education and training, and other asset-building services, all in a convenient one-stop center. The rationale behind Haven for Hope is that by embedding these services together, they can be delivered and taken up more effectively than when offered individually.

This logic seems similar to the rationale for the development around the Cleveland Clinic. As Alperovitz discussed, the idea in that community was to locate cooperatively owned businesses near “anchors” such as hospitals and universities that weren’t likely to leave the community, thereby creating long-term economic growth with the added benefit of giving residents easy access to health care and education services. Again, the logic supposes that bringing services together makes them more effective than when offered separately.

Our question, then (and perhaps unsurprisingly), is how we might bring democratized ownership models together with asset-building strategies to supercharge the effectiveness of both. In other words, how could the idea of cooperative ownership be integrated into a one-stop shop like Haven for Hope as a method for empowering low-income individuals to create their own pathways to economic mobility? Certainly, this is a complex question, but we’d love to hear your ideas.

As always, many thanks to the folks at New America Foundation for yet another thought-provoking event!

A Foot in the Door to the American Dream: A Forum on College Savings Accounts

Nearly every parent aspires to see their child walk across the stage in a commencement ceremony to receive their college degree. Undeniably, access to a quality college education has proven to be essential in climbing the economic ladder out of poverty and into the middle class. Unfortunately, soaring tuition and the burden of out-of-control student debt have threatened to make this important pathway to economic security out of reach for far too many young people.

On Thursday, May 9th, CFED and Opportunity Nation joined forces with Senators Christopher Coons (D-DE) and Marco Rubio (R-FL) to host a lunchtime policy forum to bring attention to an extremely powerful tool for enhancing access to a college education for millions of low income young people: Children’s Savings Accounts (CSAs).

At the event, Senator Coons announced the reintroduction of the American Dream Accounts Act, which uses existing Department of Education funds to create expand college access opportunities to low-income students by monitoring higher education readiness through a personal online savings account.

To watch videos of the event, visit our Youtube page here.

Introducing CFED’s Newest Fact File: Microbusinesses – America’s Invisible Job Creators

As Congress continues to work on how best to create jobs in America, high-growth small businesses receive much attention. But a vast majority of small business owners (26 million, more than 95% of all small businesses) are running firms with five or fewer employees (often called “microbusinesses”), and their firms have not been the targets of many small business policies. This invisible majority of entrepreneurs are cafe owners, construction contractors, bookkeepers, child-care providers and other Main Street businesses.

Unfortunately, 13 million microbusiness owners are financially vulnerable. Federal small business policies aren’t working for the smallest businesses, where and when it comes to research and policy that focus on small business, most emphasize the minority (fewer than five percent) who employ more than 20 workers. As a result, the majority of government programs and resources meant to assist small businesses are unavailable to these microbusiness owners.

For more information on the facts on Microbusinesses, click here.

Rethinking Pell Grants: Enhancing Access to a College Education for Low-Income Students

For more than 30 years, Pell Grants have made the dream of a college education a reality for millions of low-income young people. However, rapid growth in the uptake of Pell Grants has caused some to question the fiscal sustainability of this powerfully important program.

The College Board recently released a report that recommends linking two extremely powerful tools to enhance access to a college education to millions of low income young people: Pell Grants and Children’s Savings Accounts (CSAs). In this report, The College Board recommendations center around the creation of “education accounts” aimed at narrowing the financial and information gaps between low-income youth and young people that grow up under more privileged circumstances. The College Board’s recommendations of linking these two important tools would begin to put college back within reach for millions of low-income young students.

To read the full report, click here.

The Racial Wealth Gap in America

Recently, our colleagues at the Urban Institute released a powerful three-minute video explaining just how pervasive the growing racial wealth gap is, which uses CFED's findings in our Upside Down report to illustrate how, despite spending $400 billion on asset-building incentives, the federal government still fails to reach the populations who need support in building wealth and financial security.

We invite you to view the three-minute video here.

Blogtakes: CFED Viewpoints

Events

June 5-7, 2013 participate in the 8th Annual Underbanked Financial Services Forum, the country’s only conference that brings together bank and credit union executives, technology entrepreneurs, retailers, investors, regulators, nonprofit providers, and consumer advocates to discuss market opportunities for advancing innovative efforts and reaching the financially underserved. Presented by the Center for Financial Services Innovation (CFSI) and SourceMedia, the publisher of American Banker, the Forum provides an opportunity for organizations to share their successes and challenges in the underbanked marketplace. Register here to attend the Forum and use code PTNR13 to receive $200 off of the current rate.

NCLR is hosting an event on Tuesday, June 4th from 10am-11:30am at the National Press Club in Washington, DC. The event will feature the release of a new NCLR report focused on Latino access to financial services, and will highlight immigrant inclusion in the financial market, and the ways in which citizenship provides new opportunities for individuals to build their financial capacity. The event will also feature remarks by Elizabeth Garza, Managing Director of Citi Global Consumer Banking, Governance, Regulatory and External Affairs, Janet Murguía, President and CEO of NCLR, and Janis Bowdler, Director of Wealth-Building Policy Project at NCLR. You can RSVP here.

News

After a decade of advocacy, the Colorado legislature passed SB 13-001, which makes the EITC permanent set at 10% of the federal credit and also includes a Child Tax Credit. The bill, however, includes triggers that mean the credits will only be paid out of revenue above the current General Fund expenditures.

According to the National Conference of State Legislatures, 25 states have bills pending on predatory small-dollar lending. In good news, the Texas House Investments & Financial Services Committee held a public hearing on SB 1247, which has already passed the Senate and would regulate payday and auto-title lending. Washington legislators defeated HB 2040, which would have replaced the payday loan system with an equally predatory high-interest installment loan system.

Senators Coons (D-DE) and Rubio (R-FL) introduced the American Dream Accounts Act, which would open college savings accounts for low-income students and monitor college readiness online. For more info, check out our President Andrea Levere's op-ed in Politico with Opportunity Nation's Mark Edwards here.

From the Assets & Opportunity Network

The Ohio CASH Coalition shared a blog post earlier this week with highlights from their recent brief, "Mothers and Medicaid: Expanded health coverage would help Ohio families."

The Assets & Opportunity Network developed five recommendations to curb predatory short-term, small-dollar lending for the Consumer Financial Protection Bureau.

The Washington Asset Building Coalition, an A&O Network Lead Organization, is accepting proposals for workshop presentations at their statewide conference in Yakima from September 18-19, 2013. The deadline for proposals is May 24.

At CFED, we are always interested in innovative approaches to creating pathways to financial security for low- and moderate-income families, so I enjoyed attending a conference that Local Initiatives Support Corporation (LISC) and United Way hosted last month to share their experiences scaling integrated service delivery.

The conference, “From Promise to Practice: Scaling Innovations for Low-Income Families,” brought together philanthropists, intermediaries, researchers and government agencies involved with this work to share the lessons learned over the past 10 years as organizations have developed the integrated service delivery model. FDIC Chairman Martin Gruenberg delivered the keynote and Jonathan Greenblatt, Director of the White House Office on Social Innovation and Civic Participation, spoke, along with senior leadership from the Annie E. Casey Foundation, the United Way, the Citi Foundation and the Aspen Institute.

At the event, LISC shared the method they developed for integrating services at their Financial Opportunity Centers, where staff members encourage clients to bundle three types of services—financial, income support and employment. Other leaders that are helping expand this model include United Way’s SparkPoint Centers and the Annie E. Casey Foundation’s Centers for Working Families, which was the impetus behind LISC’s work in this area. Since the beginning, these organizations have shared their experiences with one another and used their collective lessons learned to make adjustments and build a new evidence-based model for delivering services that improve family financial stability.

This model of integrated service delivery has produced promising outcomes, which led LISC and its partners to develop a national framework for scaling it. Using this framework, LISC has launched more than 65 centers in 25 cities across the country by standardizing policies and processes (to the extent feasible with diverse implementation partners on the ground) and building the infrastructure needed to support the initiative as it grows.

Recognizing that many organizations struggle to bring promising new practices to scale, LISC has published a report on their own experiences that is a must-read for organizations interested in scaling integration models. Report author Chris Walker said that among the factors that enabled their centers to grow were private philanthropy from foundations such as Annie E. Casey and Citi, federal funding from the Social Innovation Fund, and an intermediary approach in which LISC operated at the national and local level to provide technical assistance and training, maintain high levels of accountability, mobilize resources and develop policy.

CFED is currently involved in numerous projects to explore how asset-building projects—including financial education, tax preparation assistance, getting people banked and helping them to save and build their credit score—can be integrated into existing social services to build financial security and improve program outcomes. Our work in this area (which you can read about here) builds upon the work of these innovative philanthropists and practitioners who have integrated social services to increase financial capability and willingly shared their lessons and models as they evolved, as well as the many organizations who are currently involved in bundling services and integrating asset building. I look forward to continuing to learn from and alongside these innovative partners to improve our policies and programs that empower low- and moderate-income families to achieve financial stability.

You Might Also Like

A couple of weeks ago, WNET’s Need to Know feature on the Mississippi College Savings Account Program, one of two 1:1 Fund pilot sites, aired nationally on PBS. Recently, we spoke with Ernestine Bilbrew, VP of Program Development for the Mississippi Community Financial Access Coalition (MCFAC), to hear how the Need to Know segment impacted her and the MS College Savings Account Program.

How was it having the ‘Need to Know’ film crew in Jackson, MS?

I think it was a really good experience for all of us that are part of the Mississippi College Savings Account Program – MCFAC, our partners, the children, our parents. With the early childhood development centers, the way they got involved and made each of the activities work – visits to the bank, parent workshops, the grocery store a field trip to Jackson State – it was amazing. We were able to capture the whole essence of the program. It highlighted the early childhood development centers and parents, who are central to the program. It was very educational for all of us, but a really positive experience for the centers and parents, as it captured their great participation and they were the key focus of the segment.

What was the most powerful part of the few days of filming for you?

Ernestine with savers at Hope Credit Union (image courtesy Megan Thompson & WNET).

Wow, several parts of those few days really moved me. First of all, when the kids went to the bank. Many of the students stood up on the stool, and would say they wanted to make a deposit. Then, the children would sign their name to show what they were doing, and make the deposit official. For me, this was very telling – these kids had taken ownership of their savings account.

Also, on the tour of Jackson State, the kids had so many questions – they wanted to know everything that was going on at the college, from the different subjects taught in buildings to where students would go to eat.

Then, with the parent session one evening at Jones Early Childhood Development Center, all of it really hit home. I did not realize the type of effect the program was having on parents, who were really proud that they were taking steps to help their children build a better future. That had to be one of the most powerful moments when parents were talking about how much the program had helped and motivated them.

What did you learn from the filming and overall experience?

I did not realize the impact that the program had on parents. Even though it is a children’s savings program, and we were more or less focused on the kids, I did not realize that we were having such a large impact on parents. Hearing parents say they felt very good about helping their kid go to college and reach their dreams, it was very inspiring.

And, it highlighted some of the gaps of our program, specifically around the need to work with parents more. One takeaway for us was the need to really focus on supporting and engaging parents.

Will this film be helpful to the MS CSA Program? If so, how?

It is already having a positive effect – others in our community now want to be involved. Other early childhood development centers, Head Start programs and other partners want to help grow the Mississippi College Savings Account Program, or are using our program as a potential model to replicate. Also, we are going to use the segment as a way of telling our story, and how child savings programs can really energize kids and their parents.

You Might Also Like

The newest edition of the Center for Housing Policy (CHP)'s annual Housing Landscape report finds that severe housing cost burdens among working renter households have risen for the third consecutive year. Housing Landscape 2013 explores the latest American Community Survey data from 2011, showing that 26.4 percent of working renters spent more than half of household income on housing costs. While severe housing cost burdens stayed relatively stable for working homeowners between 2008 and 2011, roughly one in five working homeowners experienced severe housing affordability challenges throughout this period -- despite falling home prices and mortgage interest rates.

CHP, the research affiliate of the Washington-based advocacy group the National Housing Conference (NHC), charts the trends in housing cost burdens among working households from 2008 to 2011 in the latest edition of Housing Landscape. In addition to housing costs and income, the new report includes housing cost burden data from the 50 largest U.S. metropolitan areas, all 50 states and the District of Columbia. The report defines a working household as one with an income less than 120 percent of the median for its area, and with members working at least 20 hours per week on average.

The share of working renter households with a severe housing cost burden grew over the three-year period due primarily to falling incomes and rising rental housing costs. Nationally, working renters saw their housing costs rise by 6 percent from 2008 to 2011, while their household incomes fell more than 3 percent. Lead report author Janet Viveiros says renters are stretched so thin by growing housing costs that many face impossible choices.

"The growing rate of severe housing cost burdens among renters is not a new trend, but it is clearly an unsustainable one," said Viveiros. "While rental costs have steadily risen over the last few years, wages for these working families have not fully recovered from the hit they took between 2008 and 2009. Spending most of your paycheck on rent means cutting back on other necessities, including healthcare and even food."

Co-author Maya Brennan noted that the causes of rising housing cost burdens among working renters include a difficult economy and an increased demand for rental housing, partly due to the crisis on the homeownership side of the market.

"While the economy pushed both owners' and renters' incomes down, the shift away from homeownership is pushing rents up due to increased demand. What we're seeing with the rental market is not explainable by population trends alone -- it clearly reflects the movement of former homeowners into rentals as well as delays in home purchases by current renters ," Brennan explained. "But this increase in rental demand has not been matched by an increase in supply. This imbalance leads to rising rents in markets across the country."

Working homeowners may have dodged the upswing in housing costs that hit renters, but they have not avoided the effects of falling incomes. In fact, while housing costs among homeowners fell some 3 percent over the study period, household incomes among these homeowners fell even more than they did for renters, down more than 4 percent over the three-year span. However, NHC President and CEO Chris Estes cautioned that a high and growing proportion of all working households -- renters and homeowners combined -- cannot afford their housing, and that little is being done to help.

"The challenge we face is that despite the range of successful tools to help offset this crisis, we are still in a long trend of flat -- and even slashed -- funding for these important programs," said Estes. Estes notes that a recent report from the Bipartisan Policy Center's Housing Commission highlighted the success of federal housing programs like HOME, the housing voucher and the Low Income Housing Tax Credit and encouraged expanded funding for these programs to help respond to the housing affordability crisis.

Read the Housing Landscape 2013 report.

EDITOR'S NOTE: Thank you to the Real$ense Prosperity Campaign of the United Way of Northeast Florida for submitting this inspiring tax time story.

Jennifer Vuich moved from New York to Macclenny, Florida in May 2012. A single parent with twins, no means of transportation and limited job prospects, she found herself struggling.

At the Northeast Florida Community Action Agency in Baker County’s orientation for electric assistance, she found out about the Real$ense Prosperity Campaign. Jennifer had not filed her taxes the previous year because of the move and she lacked a W2. The Baker county NFCAA staff worked with her to obtain the W2 from her previous employer. They also provided additional help by filing her current and prior year tax returns. To her benefit, she was eligible and received the Earned Income Tax Credit. With this boost, she was able to buy a car and pay her childcare bill.

This newfound sense of stability and opportunity even inspired Jennifer to find stable employment to provide for her family. She is very grateful to NFCAA and the Real$ense Prosperity Campaign for their assistance. Thanks to their free tax preparation services, she and her family are now on the road to financial stability.

EDITOR'S NOTE: This story originally appeared on Politico and you can read it here.

Every 5-year-old wants a piggy bank to fill with the jangling pennies and nickels that hold the promise of dreams. But for children from low-income households, even filling a toy bank can be a challenge. That’s why both Democrats and Republicans on Capitol Hill have come together to develop a plan that would help the youngest students learn the benefits of depositing their money in a real bank and saving for a future that includes college.

This week, Sens. Chris Coons (D-Del.) and Marco Rubio (R-Fla.) will reintroduce the American Dream Accounts Act, which would create college savings accounts for low-income students and monitor higher education readiness through a personal online account. The proposal applies existing Department of Education dollars to encourage the development of online platforms that partner students with colleges, schools, nonprofits and businesses, and provide them with a savings account and college readiness tools.

If passed, the Coons-Rubio bill could be an important bipartisan catalyst for new children’s savings efforts nationwide, some of which are already taking shape at the state and local level. Last month, Cuyahoga County, Ohio, approved a measure that will provide all kindergarteners with $100 college savings accounts starting this fall. Similar initiatives are in the planning stages in Colorado and the Puget Sound area of Washington state. These efforts follow in the footsteps of San Francisco’s pioneering Kindergarten to College program, which provides a $50 deposit in a college savings account to every child entering kindergarten. Beyond the initial deposits, these programs seek to encourage families and friends to make regular contributions.

While the deposits may seem like mere pennies given the ballooning costs of a college education, more than a decade of research shows that even small amounts of savings can have a major impact on both college aspirations and attendance. Researchers at Washington University in St. Louis, for example, have found that children with college savings accounts in their own names are six times more likely to go to college than children who do not have an account.

As Cuyahoga County Executive Ed FitzGerald put it at his program’s launch, “Every child in our area will grow up knowing that college is a real and attainable goal.”

The increasing interest in college savings accounts is an acknowledgment of today’s reality: College is indisputably a ticket up the economic ladder, but the soaring cost makes it out of reach for more and more families. According to the Brookings Institution and the Pew Economic Mobility Project, barely one in three children from the poorest fifth of families enrolls in college, and only about one in 10 graduates. By comparison, among the wealthiest fifth of families, four in five children go to college, and more than half (53 percent) graduate.

Children’s savings programs, which have the potential to offer big returns on relatively small investments, are a response with bipartisan appeal. Cuyahoga County’s program, for example, is expected to reach 15,000 students at an estimated cost of $2 million to $3 million a year. Moreover, funding to “seed” and “match” the accounts can come from private and philanthropic sources. The Corporation for Enterprise Development, for instance, recently launched the 1:1 Fund, which raises private dollars for the purpose of matching college savings by lower-income kids through an online platform.

We believe all sectors have a role to play in building strong ladders of opportunity for our children and youth, and that good jobs in our 21st-century economy often require a degree or credential beyond high school. Higher education is one important piece of a comprehensive approach that ensures every young person, regardless of that person’s ZIP code, has a shot at the American dream. With growing state and local interest in college savings accounts, policymakers should seek every chance to encourage their availability nationwide.

They can start by exempting education savings accounts from asset limits that could result in families losing access to much-needed federal benefits programs — a potentially powerful disincentive to save for their children’s future. They can also push for the integration of college savings accounts into existing programs, such as Head Start, and include a financial education component that helps both children and their parents understand the importance of saving for the future.

Finally, they should encourage innovative efforts like the Coons-Rubio legislation. In introducing the original bill last year, Coons posed a simple question: “How can we get more Americans to think about, save for and prepare for education after high school so that they can go to trade school, community college or four-year colleges or universities?” One answer: Give children their own savings account — and then help them fill it with hard cash and hope for the future through personal efforts and policy support.

You Might Also Like

EDITOR'S NOTE: Thank you to the Real$ense Prosperity Campaign of the United Way of Northeast Florida for submitting this inspiring tax time story.

This year, Thelma Small of Jacksonville, Florida attended a Super Saturday event held on March 2 by the Real$ense Prosperity Campaign of United Way of Northeast Florida. At 82 years young, Thelma is living proof that improving your financial education and participating in free tax preparation services can happen at any age.

Thelma got her taxes prepared by trained Real$ense volunteer, Stephonie Holmes, and attended a financial education workshop. She was also able to access her credit report through the event. The best part? All of the services were free and the whole process took just a couple of hours.

One of Thelma’s daughters has been using Real$ense for several years. She’s the one who encouraged her mother and sister to this year’s event. Real$ense has really turned into a family affair for Thelma and her daughters.

“Rosalind Brown helped me,” said Small. “I would definitely come back to Real$ense, it’s a great service. I got lots of great information and my taxes are done!”

Events

Join us next Thursday in Washington, DC for "A Foot in the Door to the American Dream: A Forum on College Savings Accounts." This lunchtime policy forum is sponsored by CFED & Opportunity Nation. For more information, click here. Can't make it but still want to follow the conversation? We'll be tweeting with #CFEDforum.

News

Our friends at the Urban Institute released a powerful three-minute video this week explaining just how pervasive the growing racial wealth gap is. It uses CFED's findings in our Upside Down report to illustrate how, despite spending $400 billion on asset-building incentives, the federal government still fails to reach the populations who need support in building wealth and financial security.

Sean Reardon’s op-ed in this past Sunday’s New York Times,“No Rich Child Left Behind,” takes a look at how and why educational success gaps between high- and low-income students has steadily increased over the past three decades. The 1:1 Fund's Executive Director, Carl Rist, shares his summary of the piece here.

From the Assets & Opportunity Network

United Way of Greater Houston has launched Tweet My Jobs, Houston a new citywide online jobs platform to help Houstonians find work using innovative technology to combine the popularity of social media and the convenience of a smart phone application. This free service already has more than 150,000 Houston job postings from entry level to senior level corporate positions. Tweet My Jobs, Houston is available at www.houston.tweetmyjobs.com.

United Way of Northeast Florida (Real$ense Prosperity Campaign) shared a great tax-time story about Thelma Small, 82 years old, who attended a March tax preparation services in Jacksonville with her daughter.

The Community Action Agency of Southern New Mexico recently published findings from a year-long study from a W.K. Kellogg Foundation grant to explore the feasibility of scaling asset building in rural Doña Ana County. Click here to read their research.

The conservative trickle-down approach to the economy assumes that maximizing rewards for those at the top is the path to both growth and prosperity for the society as a whole. If inequality rises, that does not matter, runs the conservative argument, because absolute levels of prosperity will rise for everyone even if the top gains more.

The progressive approach to the economy is radically different. This approach posits, based on a mass of accumulating evidence, that inequality is not a benign byproduct of growth, but rather a toxic barrier to both middle class prosperity and strong growth in general. In other words, high levels of inequality interfere with the both the quality and quantity of growth experienced by a society. Hence the idea that an economic agenda must concentrate on lifting up the middle class to generate both broadly-shared prosperity and fast growth. The two goals are inextricably linked and one cannot be attained without the other.

Of course, the progressive agenda may be the correct one, but that does not mean it can be easily sold to the public and politicians. It would require a serious reorientation of national priorities and considerable investments in areas like education and infrastructure–spending that is likely to meet considerable resistance in the current environment. Therefore, the question of how to frame the agenda in the political marketplace is key.

One obvious approach is to frame the agenda directly as a means of reducing inequality. Call this the redistributionist approach. This approach is not without merit. Start with awareness of and views about economic inequality.

There is no doubt Americans are aware of rising inequality. In the Pew Research Center’s 2012 American Values survey, respondents were asked if they agreed that today the rich get richer while the poor get poorer. About three-quarters (76 percent) agreed, while just 23 percent disagreed. And the public believes it’s not just the poor who are losing ground to the rich—it’s the middle class as well. In the same survey three-quarters (76 percent) also say the gap between the standards of living of the middle class and the rich grew over the last decade, compared to just 16 percent who think it narrowed.

No wonder that a poll from October 2011 conducted by Pulse Opinion Research for The Hill found that two in three Americans believe that the middle class is now shrinking. And in a Democracy Corps post-2010 election survey, the public endorsed the idea that America is no longer a country with a rising middle class by 57-36. Finally, an October, 2007 poll conducted by political scientists Benjamin Page and Lawrence Jacobs for their book, Class War: What Americans Really Think about Economic Inequality, found 81 percent of the public saying that the gap in wealth between wealthy Americans and the middle class has grown over the last 25 years, compared to just 10 percent who said it has remained the same and 8 percent who said it had gotten smaller.

Of course high awareness of inequality does not necessarily mean that Americans disapprove of it. But further data show that Americans’ high awareness of inequality is indeed matched by high levels of disapproval. For example, in a Pew poll in December, 2011, 61% said our economy unfairly favors wealthy Americans, while only 36% thought the system was “generally fair.” And in an ABC News/The Washington Post poll from January of this year, 55% of Americans said that economic unfairness that favors the wealthy is a bigger problem than overregulation by the government that hurts economic growth. Only 35% of respondents believed the latter was the bigger problem.

Moreover, in an October, 2011 nationwide survey conducted by Greenberg Quinlan Rosner Research and the Center for American Progress Action Fund, the public expressed the following views:

In earlier data from the Page/Jacobs survey, 72 percent agreed that differences in income in America are too large, compared to only 27 percent who disagreed. And 59 percent disagreed that large differences in income are necessary for America’s prosperity. In an October 2008 Gallup poll, 58 percent thought money and wealth should be more evenly distributed among a larger percentage of the people, compared to 37 percent who thought it was fairly distributed.

None of these survey findings are idiosyncratic. Careful academic reviews of public opinion on inequality over time by sociologists Lane Kenworthy and Leslie McCall indicate that Americans have typically been aware of inequality, sensitive to its increase over time and generally disapprove of the levels it has reached on our society.

So, beyond a shadow of a doubt, the public is both aware of rising inequality and disapproves of it. Naturally enough, given these sentiments, the public would also like to see something done about this problem. In a November 2011 poll from the Public Religion Research Institute, 60 percent agreed that “our society would be better off if the distribution of wealth was more equal.” And 63 percent believed that “we need to dramatically reduce inequalities between rich and poor, whites and people of color and men and women.”

But it does not follow from all this–awareness, disapproval and the felt need for action–that the public would necessarily be happiest with a direct attack on inequality as implied by the redistributionist frame. On the contrary, in the February, 2009 Pew economic mobility survey, by an overwhelming 71-21 margin, respondents though it was more important to ensure everyone has a fair chance of improving their economic standing than to reduce inequality in America.

That preference for economic mobility over direct mitigation of inequality is also suggested by results of another question in the same survey. By 71-27, Americans agreed that greater economic inequality means that it is more difficult for those at the bottom of the ladder to move up the ladder. That is what Americans object to most vigorously about economic inequality: that it makes economic mobility more difficult. In other words, for most Americans what we have is not an inequality crisis but a mobility crisis. This is confirmed by results of a recent series of focus groups on inequality conducted by Greenberg Quinlan Rosner. Participants tended not to connect their economic difficulties with wealth and income inequality but bemoaned, more than anything else, the rising cost of middle class expenses like housing, transportation, medical care and college relative to lagging wages and salaries. This middle class squeeze, which prevents them from moving ahead in life, is what primarily concerns them.

The mobility crisis touches something very, very important to Americans. Americans retain a deep faith in their personal ability to get ahead even in adverse circumstances, provided they have a fair opportunity to do so. Here are some results from a survey I helped conduct for the Economic Policy Institute in March, 2006. That poll found that 69% thought they had already attained the American Dream or would attain it in their lifetimes (note: this figure was actually higher–75%–in a CAP poll conducted in February, 2009 after the financial crisis had hit). And while 60% rated themselves between poor and middle class now on a 10 point economic scale (1-5), 59% said they would be between middle class and wealthy (6 to 10) within 10 years. Finally, while 80% described themselves as working class, middle class, or lower class today, 44% believed it was very or somewhat likely that they would become wealthy in the future.

This personal optimism can and does co-exist with negative views about the overall state of the economy. In the EPI poll, respondents were asked whether economic uncertainty and inequality or success in achieving the American Dream characterizes the economy today. Here is the choice posed by the question:

OR

By 2:1 (64%-32%), respondents selected the first statement about increasing uncertainty as coming closer to their views. But of that group that said that increasing uncertainty, rather than achieving the American Dream, characterized the economy, an amazing 63% nevertheless thought that they themselves would achieve the Dream.

This personal optimism and aspirational outlook is broadly shared across social groups. For example, 69% of the white working class and 74 % of the white middle class believed they have reached or will reach the American Dream, as did 67% of women, 72% of men, 66% of blacks, and 74% of Hispanics (blacks and Hispanics were less likely than whites to believe they had already attained the Dream, but made up for it by being more likely to believe they will attain it in the future).

This aspirational outlook helps explain a stunning finding from the Page/Jacobs survey. A whopping 97 percent agreed (including 85 percent who strongly agreed) that everyone in America should have equal opportunities to get ahead. This is as close to a consensual viewpoint as you find in American public opinion, suggesting the power of a mobility, rather than redistributionist, frame for the progressive economic agenda.

The mobility frame has a strong connection in the public mind to the need for government action. In the 2011 Pew economic mobility survey, an overwhelming 83 percent said they wanted the government to either provide opportunities for the poor and middle class to improve their economic situation or prevent them from falling behind or both. In the same survey, education, a central part of the progressive economic agenda, loomed especially large as a way the government should help provide those opportunities. Ensuring all children get a quality education was rated the highest among options to help people get ahead (88 percent rated it as one of the most important/very important). And improving the quality of elementary and secondary education and making college more affordable were two of the top four options for preventing downward mobility (84 and 80 percent, respectively, one of the most effective/very effective).

Other options that rated highly in this or the 2009 Pew economic mobility survey included promoting job creation, providing basic needs to the very poor, reducing the costs of health care, helping small businesses and business owners, more job training programs and education for adult workers, making it easier to save for retirement and early childhood learning programs. All these mobility-promoting steps are central, of course, to the progressive economic agenda.

In conclusion, the mobility frame lends itself to an “aspirational populism” that makes explicit the argument that current levels of inequality are not just unfair but directly interfere with mobility and economic growth. Not only is there a growing body of economic evidence for the argument but it accords well with the common sense of voters. And perhaps the common sense of an increasing number of politicians. As the President himself has remarked (April, 2012 speech in Florida):

"In this country, prosperity has never trickled down from the wealthy few. Prosperity has always come from the bottom up, from a strong and growing middle class. That’s how a generation who went to college on the GI Bill — including my grandfather — helped build the most prosperous economy that the world has ever known. That’s why a CEO like Henry Ford made a point to pay his workers enough money so that they could buy the cars that they were building. Because he understood, look, there’s no point in me having all this and then nobody can buy my cars. I’ve got to pay my workers enough so that they buy the cars, and that in turn creates more business and more prosperity for everybody."

That about says it all.

Tuition image by Bigstock Photo.

For more than 30 years, Pell Grants have made the dream of a college education a reality for millions of low-income young people. As a former Pell Grant recipient, I can personally attest to the power of the Pell grant, which made my own college education possible and positioned me to serve in the capacity I do today. However, rapid growth in the uptake of Pell Grants has caused some to question the fiscal sustainability of this powerfully important program.

So, how can Pell be saved? In its report, “Rethinking Pell Grants,” the College Board recommends the creation of “education accounts” aimed at narrowing the financial and information gaps between low-income youth and young people that grow up under more privileged circumstances.

Here is how the recommendation of the College Board would work:

The College Board estimates that, if the deposits were equal to 10% of the current average Pell Grant value, at current Pell Grant enrollment levels, the cost of the program would be about $3.7 billion per year. Furthermore, the government would only spend the funds at the point of withdrawal, not when they were credited to the accounts.

As CFED President Andrea Levere often says, “parents will do for their children what they will not do for themselves.” This simple truth has guided CFED’s belief that CSAs are elemental to the economic security and mobility of households, and by extension our country’s economic success. We believe, and research finds, that CSAs can increase college access for low-income individuals and families. Research by Washington University in St. Louis has found that children with college savings accounts in their own names are six times more likely to go to college than children without accounts.

The possibilities evident in these findings have made policymakers at all levels of government take notice. San Francisco’s Kindergarten to College program is pioneering a bold and burgeoning state and local effort to make CSAs widely accessible to all children. More recently, Cuyahoga County, Ohio, announced an effort to open CSAs seeded with $100 for all kindergarteners starting the fall of 2013, while similar initiatives are in planning stages in Colorado and Washington State. Further, Senators Christopher Coons and Marco Rubio have introduced the American Dreams Account Act, which uses existing Department of Education funds to create CSAs for low-income students and to monitor higher education readiness through a personal online savings account.

Bringing together these powerful instruments—Pell Grants and CSAs—has the potential to be a game-changer in the field of college access, and CFED looks forward to working with the College Board to advance these policy recommendations.

Yesterday, the Center for Financial Services Innovation (CFSI) brought together policymakers, regulators, consumer advocates and others to mark the end of Financial Capability Month. The gathering, called Improving Americans’ Financial Capability: Early Lessons and Emerging Innovations for Changing Consumer Behavior, explored the power of combining personalized, timely financial information and advice with high-quality financial products and services.

Given the important role public policy can and should play in fostering an environment where this kind of innovation can flourish, we were pleased to take our conversation to the Hill. Our discussion opened with remarks by Melissa Koide, Deputy Assistant Secretary, Office of Consumer Policy, U.S. Department of the Treasury, and she offered her unique perspective on the state of financial capability in America. The convening was hosted by congressional leaders Rep. Rubén Hinojosa (D-TX) and Rep. Steve Steivers (R-OH), Co-Chairs of the Congressional Financial & Economic Literacy Caucus.

Jeanne Hogarth, Vice President of Policy, CFSI, welcomed a group of distinguished panelists and guests to the event to share insights on a wide variety of interventions impacting financial service providers, regulators, policymakers and funders. Throughout the month, we’ve had the chance to shine a spotlight on innovators who are at the center of the movement to build financial capability around the country.

Jayson Halladay, one of CFSI’s 2010 Financial Capability Innovation Fund grantees, talked about the success of his company, Piggymojo, in using visualization, social commitments, and mobile and online technology to help consumers quantify and enjoy the act of not buying. His comments, along with insights and guidance from the rest of the panelists, offered a fresh view of the financial services market as fertile ground for future innovation.

In fact, promising products and services like Piggymojo are popping up across the country. Representing the best of these efforts, a cohort of nonprofit innovators who were recently awarded a total of $2.5 million through the Financial Capability Innovation Fund II (FCIF II), CFSI’s competitive grant program, discussed their cutting-edge strategies for enabling families to build savings, improve their credit and better manage their finances.

Supporting the evolution of financial capability introduces CFSI to a wide group of innovators. We dig deeper into the current trends of innovation in our recently released report, “Stretch Time: Continuing to Reach for Financial Capability, Trends from the Financial Capability Innovation Fund II.” In the report, we analyze the FCIF II’s high-quality applicant pool, consisting of 127 applications from 38 states and Washington, DC. Highlighting the common features seen in the applications, the results demonstrate widespread adoption of new strategies for building financial capability. We are also excited to see a greater focus on changing consumer behavior and an increased emphasis on sustainability and scalability.

By lifting up successful strategies like those presented on the Hill today and those included in our new report, CFSI seeks to guide and empower others to join us in taking action. Thanks to a remarkable kind of cross-sector collaboration, we are developing a more thorough understanding of consumer needs and ultimately offer a brighter future to all consumers.

EDITOR'S NOTE: This blog post was originally published on the 1:1 Fund's blog and can be read here.

Like many children who grow up in a middle-class household with university-educated parents, I had the notion of going to college drummed into me at an early age. In raising two sons, my wife and I did much the same – making college an important aspiration and setting aside savings to make it a reality. Yet, as much as going to college is a key part of the American Dream, it’s certainly not inevitable or easy. And as anyone who has kids in college knows, it’s a major investment in the future.

What strikes me more as I get older is that, in a nation of immigrants and people seeking to climb the ladder of opportunity, most of us have a story from the present or not too distant past about that person (or scholarship, or philanthropist) who made college a reality for someone important in their lives. For me, it’s the story of two grandfathers growing up in different parts of the world, but whose stories have an uncanny similarity.

My maternal grandfather, Curtis Byrd, grew up in Live Oak, Florida. Raised by a single mom who had to take in boarders to make ends meet, Curtis would have had no chance at attending college had it not been for a local businessman who took an interest in the young man. In a letter dated April 24, 1924, Mr. Hillman, then the vice president of First National Bank in Live Oak writes, “If you need more money to finish your term of school, you may draw on me for the amount.”

At the same time halfway around the world, Albert Rist, my paternal grandfather, was the youngest child in a large peasant farming family in southern Germany. In Albert’s case, it was the local parish priest who took an interest in him and offered to pay, first, the costs of attending the Gymnasium (a German academic high school) in a nearby village and then later college in Tübingen. During college, when my grandfather confessed to the priest that he was really more interested in math than theology, the priest urged him to finish anyway and continued to cover his costs.

Both of these men became the first in their families to graduate from college, and for both, post-secondary education changed the trajectories of their lives and the lives of their descendants. Who is the one person that made college possible in your family? And whom will you help to reach their higher education dreams?

American Home image by Bigstock Photo.

For years, community development professionals were advocates for financial education. Not many lenders, and certainly not customers, took financial education seriously, until the housing bubble burst in 2008. In rural markets, homebuyers typically do not have the same access to services, like homebuyer education. For many rural organizations, expanding their services to include online financial education courses has allowed them to reach more customers.

Tammy Hyman, Homeownership Program Administrator at PathStone, always knew how important homeownership counseling is. PathStone, she said, had offered it since the late ‘90’s. “If they would have done (homeownership counseling) back then, we wouldn’t be having these issues now,” she said of the lenders.

PathStone, which is headquartered in Rochester, serves New York, Vermont, Pennsylvania, New Jersey, Virginia, Ohio, Indiana and parts of Puerto Rico. Many of the markets they serve are rural, and homeownership counseling is offered in Indiana, New York and Pennsylvania.

Hyman said clients have the option of taking an in-person training, which consists of an eight-hour course, or they can take an online course from eHome America. eHome America is a certified provider of online homebuyer education.

For the in-person class, the requirement is an eight- to ten-hour day. Hyman said she tries to include guest speakers, such as real estate agents or lenders. The course is held every other month or sometimes quarterly, depending on the demand for it. Hyman estimates there are 8-18 students in each class.

If the client chooses to take the online course, Hyman said, a staff person schedules a one-on-one call to discuss the course material and answer any questions the client has. Hyman said the benefit to the eHome course is it allows people to take the course at a convenient time for them.

Like PathStone, NHS of Richland County also offers an in-person homebuyer education course as well as the eHome course. NHS of Richland County covers several counties in Southwest Wisconsin, including an area where homebuyer education was not offered.

Linda Smith, NHS of Richland County Homeownership Center Coordinator, said they offer in-person courses, and they attempted to offer distance learning classes. The distance courses were broadcast from the main Richland Center site to remote sites, typically high school classrooms, in neighboring counties. Smith said because broadcasting the course was too staff-intensive, and there were technology problems, the remote course was cancelled. They are now using eHome America for their customers who cannot attend the course in Richland Center, which has gotten a great response. “eHome, because we are rural, is a good fit. It fits the needs for many of our households, especially the younger households who cannot attend classes at night or on the weekends,” she said.

Like PathStone, NHS requires customers who have taken the eHome course to have a phone conference with a staff person.

Gary Throckmorton, eHome Senior Executive Vice President, said eHome’s model is a network of local agencies. “We want the customer to be connected to a local agency. Follow-up is key,” he said. eHome has had steady growth, he said, and approximately 250 agencies are registered with over 36,000 clients served since 2009. Throckmorton expects growth to continue, especially since online education has become more accepted. eHome is currently offered in English and Spanish, but Throckmorton said adding additional languages would be considered if there was a demand.

eHome America was started in May 2009 by Community Ventures Corporation (CVC), a Kentucky-based non-profit. It is endorsed by NeighborWorks America.

Events

For those looking for an Asset Building 101 webinar, register today for "What is Asset Building?" It's being offered on two dates, April 25 & 29, and will share information such as asset-building tools and resources for programs and clients, information about assets as a way to build financial stability for low-income communities of color and more.

What's it like to live on $1.50 a day? Join the Live Below the Line challenge and try it for five days. The initiative is meant to simulate what it’s like for the 1.4 billion people worldwide who live in extreme poverty.

The Center for Financial Services Innovation (CFSI) is hosting an event, "Improving Americans' Financial Capability: Early Lessons and Emerging Innovations for Changing Consumer Behavior" this upcoming Tuesday on Capitol Hill. There's a great list of speakers so make sure you drop by. For more information, click here.

News

Last week, Hawai`i Governor Abercrombie signed HB 868 into law, eliminating the asset test in the state’s Temporary Assistance for Needy Families (TANF) program, making Hawai`i the seventh state to do so. To read more about this positive development, check out an earlier blog post.

The Consumer Financial Protection Bureau released a new white paper examining payday and deposit advance loans. This study is more comprehensive than almost any other study ever conducted, since the CFPB was able to acquire data on millions of borrowers directly from banks and small dollar lenders. For a full summary and key findings, click here.

From the Assets & Opportunity Network

The Illinois Asset Building Group recently published a blog post that argues that while our student loan system is wrought with deep problems, there are options to allow students to borrow at lower rates and payback their loans easier and safer.

Last week, Hawai`i Governor Abercrombie signed HB 868 into law, eliminating the asset test in the state’s Temporary Assistance for Needy Families (TANF) program, making Hawai`i the seventh state to do so.

This victory was not easily won. It took years of hard work by assets advocates, service providers, researchers, and policymakers across the state. The idea of lifting asset limits came from a 2008 Hawai`i Alliance for Community-Based Economic Development (HACBED) report, co-authored by CFED, which laid out a policy roadmap for helping families build economic security. The report argued that asset limits are counterproductive and force Hawai`i’s most vulnerable families to sacrifice longer-term savings in exchange for short-term assistance from public benefit programs.

Soon after the policy roadmap was released, policymakers created a state task force to explore strategies to help Hawai`i families climb the economic ladder. The task force, which was staffed by HACBED, took on three issues: asset limits, financial education and children’s savings accounts. The final recommendations from the task force spurred state policymakers to take action. Advocates worked with policymakers to introduce asset limit bills in 2011 and 2012. Although these bills didn’t pass immediately, they helped policymakers further understand the issues with asset limits. Ultimately, the legislature asked the State Department of Human Services to conduct a study examining the potential impact of eliminating the TANF asset test. The study recommended eliminating the asset test, which provided the final push the legislature needed to take the 2013 legislation across the finish line.

Organizations that submitted testimony in support of the legislation, included:

Hawaii is the seventh state to eliminate the asset test in TANF. The other six states to eliminate the test are Colorado (2011), Maryland (2010), Alabama (2009), Louisiana (2009), Virginia (2003), Ohio (1997). Click here to learn more about asset limits in public benefit programs.

You Might Also Like...

Yesterday, the Consumer Financial Protection Bureau released a new white paper examining payday and deposit advance loans. The paper found that most borrowers are not using payday loans for short-term needs (as the payday industry often claims), but instead are repeatedly rolling over loans and taking out additional loans. As a result, borrowers often become stuck in an expensive and financially disastrous cycle of debt. The CFPB found that nearly half of payday borrowers have more than 10 loans a year, while 14 percent undertook 20 or more transactions annually.

This study is more comprehensive than almost any other study ever conducted, since the CFPB was able to acquire data on millions of borrowers directly from banks and small dollar lenders.

In a press release, CFPB Directory Richard Cordray explained: “This comprehensive study shows that payday and deposit advance loans put many consumers at risk of turning what is supposed to be a short-term, emergency loan into a long-term, expensive debt burden. For too many consumers, payday and deposit advance loans are debt traps that cause them to be living their lives off money borrowed at huge interest rates.”

The paper indicates that the Bureau is very concerned with current industry practices. The Bureau plans to conduct additional research and analysis, looking at online payday lending, the effectiveness of state restrictions on payday lending, and consumers’ motivations for borrowing. The report concludes that consumers need additional protections in this market and that the Bureau intends to use its authority to implement new protections once its research is complete. Even though, by law, the CFPB cannot set rate interest rate caps (the gold standard policy), there is much the Bureau still can do to protect consumers.

The Bureau’s interest in investigating payday borrowers’ experiences provides an important opportunity for asset builders to bring attention to the financial instability that results when predatory loans lead consumers into cycles of debt. This opportunity comes as asset-building advocates have worked for years to implement better consumer protections at the state and local levels. In fact, Twenty-five states currently have pending legislation addressing predatory small dollar lending. And the Assets & Opportunity Network recently released a 2013 Network Federal Policy Agenda, outlining the key policy issues that are most important to Network members. The number one issue on the agenda is educating the CFPB on predatory small dollar lending and other consumer issues. A few weeks ago, Network members weighed in with their recommendations on how the CFPB could curb predatory lending, which will become the basis for a statement and comments to the CFPB in the coming weeks.

Click here to read the full CFPB paper. Other key findings from the report are below.

Key Findings: Payday and Deposit Advance Loans Can Become Debt Traps for Consumers

The report found many consumers repeatedly roll over their payday and deposit advance loans or take out additional loans; often a short time after the previous one was repaid. This means that a sizable share of consumers end up in cycles of repeated borrowing and incur significant costs over time. The study also confirmed that these loans are quite expensive and not suitable for sustained use. Specifically, the study found limited underwriting and the single payment structure of the loans may contribute to trapping consumers in debt.

Loose Lending: Lenders often do not take a borrower’s ability to repay into consideration when making a loan. Instead, they may rely on ensuring they are one of the first in line to be repaid from a borrower’s income. For the consumer, this means there may not be sufficient funds after paying off the loan for expenses such as for their rent or groceries – leading them to return to the bank or payday lender for more money.

Risky Loan Structures: The risk posed by the loose underwriting is compounded by some of the features of payday and deposit advance loans, particularly the rapid repayment structure. Paying back a lump sum when a consumer’s next paycheck or other deposit arrives can be difficult for an already cash-strapped consumer, leading them to take out another loan.

High Costs: Both payday loans and deposit advances are designed for short-term use and can have very high costs. These high costs can add up – on top of the already existing loans that a consumer is taking on.

Sustained Use: The loose underwriting, the rapid repayment requirement, and the high costs all may contribute to turning a short-term loan into a very expensive, long-term loan. For consumers, it is unclear whether they fully appreciate the risk that they may end up using these products much longer than the original term. Or, that they may end up paying fees that equal or exceed the amount they borrowed, leading them into a revolving door of debt.

Today is Teach Children to Save Day, a national program of the American Bankers Association that organizes banker volunteers to help young people develop a savings habit early in life. Since the program started in 1997, some 123,000 bankers have taught savings skills to more than 5 millions students. This year, over 10,000 bankers in 49 states are taking part in this nationwide effort to improve financial literacy.

As part of our commitment to improve financial literacy and teach kids how to save for their economic futures, we launched the 1:1 Fund, a social enterprise and online community that promotes educational opportunity for low-income students. Leveraging the power of social media, the 1:1 Fund connects low-income students with individual donors who match the savings of these students in qualified child savings accounts (CSAs).

Just in time for Teach Children to Save Day, Need to Know on PBS correspondent Stacey Tisdale traveled to Mississippi to examine the Mississippi College Savings Account Program (MS CSA) designed to help low-income, mostly African-American children save for college – and teach them about banking and money along the way. You can learn more about the MS College Savings Account Program on the 1:1 Fund's website and by watching the video below.

We'll be tweeting today using #TCTS2013 and if you're interested in participating in this important conversation, we've included ways to get involved below.

Ways to Engage:

Insights from behavioral economics can transform the way we design programs in the asset-building field, and we’re interested in learning how. That’s why CFED, ideas42 and the Citi Foundation launched the Behavioral Economics Technical Assistance (BETA) Project and issued a request for proposals (RFP) in late 2012 from organizations interested in piloting behaviorally-informed interventions. Working with the selected pilot sites, we hope to also develop technical assistance tools for other organizations in the field.

Through the RFP process, we received 99 proposals from organizations across the country. Today, we released a brief that examines themes among these 99 proposals, explores common challenges and lays out next steps for the BETA Project.

With 99 applications from a diverse set of organizations, you might expect an infinite range of different problems and program challenges. Interestingly, we found that many of the problems organizations reported are quite similar. Almost all of the problems fell into four broad categories:

Although many of the problems identified in the proposals were similar, we believe that the underlying reasons why these problems exist could be very different for each organization.

For example, take the problem of getting more people to sign up for a financial education class. If the class has a good curriculum, and has led to successful outcomes, why is it hard to get people to sign up?

It’s easy to assume that the underlying reason for this problem is about the advertising and promotion of the program, and that if more people knew about the program, more would sign up. However, the reality could be that people know about the program and had the intention to sign up, but did not act upon it. In this case, it would not matter how effective a new advertising campaign is—the problem was not the advertisements.

All behaviorally informed interventions start with a statement of the problem. Over the coming months, the BETA Project will share lessons from our three selected test sites: Neighborhood Trust Financial Partners (New York), Cleveland Housing Network (Cleveland) and Accion Texas (San Antonio). We’ll start by analyzing the original problem statement provided by each of the sites in their application:

Designing effective solutions ultimately depends on how we represent the problems. That means that we must disentangle the core challenge from preconceptions or hidden assumptions. Stay tuned for lessons on how we take these original problem statements and refine them into the core challenges that can be addressed by behavioral diagnosis and design.

By sharing insights from these sites, we hope more organizations will come to appreciate how accounting for client behavior in the context of service delivery can greatly impact program outcomes.

Click here to read the full brief.

Now, the reviews are in. Consensus: the 13-minute segment was a powerful testament to the power of Children’s Savings Accounts (CSAs) and the importance of starting children early on the path towards higher education and long-term financial well-being.

Watch Financial literacy on PBS. See more from Need To Know.

Need to Know traveled to Mississippi to showcase the Mississippi College Savings Program and its partners, W. K. Kellogg Foundation, Delta State University and Hope Credit Union, but momentum for wide-scale adoption of CSA programs is building across the country with many other organizations, cities, state houses and in federal agencies working to make aspirations to go to college a reality for all students, regardless of the ZIP code into which they were born.

Just how deep is the impact of CSAs? As the Need to Know segment indicates, children with savings accounts in their names are six times more likely to go to college than those without accounts. And, this finding controls for factors like race and household income, meaning that children are more likely to go to college if they have an account in their name even if other demographic measures would predict a low propensity for college enrollment. In other words, the power of having a savings account isn’t about how much money is in it, but rather, about how it informs a child’s aspirations.

Without a doubt, we stand on the brink of an important mindset shift. People who understand just how powerful CSAs are will inevitably support them; the question is how we promote that understanding among the public at large. Friday’s episode of Need to Know does exactly that.

Of course, you can help. Start by watching the video and share Friday’s episode of Need to Know on Twitter by clicking here. Want to help the College Savings Accounts of the Mississippi kids grow? Provide matching donations through the 1:1 Fund. Finally, use the comments section below to share your thoughts on CSAs. Thanks for keeping the conversation going!

Events

The UW-Madison Center for Financial Security and the University of Wisconsin-Extension, Cooperative Extension, are pleased to announce the 2013 Pathways Conference Financial Security over the Life Course, taking place online the week of June 3-7, 2013. The conference planning committee has organized a program that aims to inform your work and provide new ideas and resources related to family financial security.

To mark Financial Literacy Month, tonight's episode of WNET's Need to Know, which airs nationally on PBS, will offer a thoughtful account on the Mississippi College Savings Account Program, an innovative collaboration between CFED, the Center for Community Economic Development at Delta State University, the Mississippi Community Financial Access Coalition and Hope Credit Union, with support from the W.K. Kellogg Foundation. The episode chronicles a single mother of three-year-old twin girls who are saving for college with the help of the Mississippi CSA program, supported by the new 1:1 Fund. To watch the full episode online, visit the Need to Know website later this evening. To watch on television, check your local listings.

June 5-7, 2013 participate in the 8th Annual Underbanked Financial Services Forum, the country’s only conference that brings together bank and credit union executives, technology entrepreneurs, retailers, investors, regulators, nonprofit providers, and consumer advocates to discuss market opportunities for advancing innovative efforts and reaching the financially underserved. Presented by the Center for Financial Services Innovation (CFSI) and SourceMedia, the publisher of American Banker, the Forum provides an opportunity for organizations to share their successes and challenges in the underbanked marketplace. Register now to attend the Forum.

News

A new guide by the Insight Center for Community Economic Development, Measuring Up: Aspirations for Economic Security in the 21st Century, shares innovations for measuring economic security via poverty measures.

Next Tuesday is Teach Children to Save Day, a national program of the American Bankers Association that organizes banker volunteers to help young people develop a savings habit early in life. Since the program started in 1997, some 123,000 bankers have taught savings skills to more than 5 millions students.

A bill sponsored by North Carolina State Representative Nathan Ramsey seeks to increase the supply of affordable housing by creating restrictions that say that counties cannot adopt or enforce zoning regulations that exclude manufactured homes from being located on individual lots in areas zoned for single-family residential use.

Integrated service delivery is a promising model for creating pathways to financial security. FEGS Health & Human Services in New York City and Solid Ground in Seattle are two of the innovative organizations exploring strategies for integrating financial empowerment services into their existing social service delivery. These organizations have launched pilots to test their integration plans, which have produced key takeaways for other organizations interested in this type of work.

FEGS has integrated a conversation about savings and referral to the NYC OFE Financial Empowerment Centers and SafeStart Account into the post-employment retention counseling their clients receive after they are placed in new jobs. Solid Ground, a Community Action Agency, is training their housing case managers to provide financial coaching to clients. Below are five findings from the pilot experiences of FEGS and Solid Ground.

See this recently published brief for more information about these organizations’ innovative integration work and the lessons they have learned so far.

These organizations participated in an Intensive Learning Cluster convened by CFED and supported by the Bank of America Charitable Foundation. Click here for more information about this Intensive Learning Cluster.

Last month, our colleagues at the Center for Community Development Investments at the Federal Reserve Bank released a Working Paper highlighting the success and promise of MY Path, an initiative that provides disadvantaged youth with peer‐led financial capability trainings, a savings account at a mainstream financial institution and incentives to set and meet savings goals. The paper, Increasing Financial Capability among Economically Vulnerable Youth: MY Path, shows how MY Path’s powerful outcomes relate to academic writings on the topic of youth savings, and in particular, how financial capability initiatives are uniquely promising interventions to provide economic opportunities to low-income, working youth.

Initial findings show that MY Path is an innovative and promising model for empowering disadvantaged youth. According to the report, early results find that:

How do these findings inform your programs? Read the Working Paper and let us know what you think!

April is Fair Housing Month. This year marks the 45th anniversary of the Fair Housing Act. As readers know, the Act makes it illegal to discriminate in the sale, financing or rental of housing based on the protected classes of race, color, sex, religion, national origin, familial status or disability. But the purpose of the law is much broader than halting discrimination.

The Act was passed in the immediate aftermath of the assassination of Martin Luther King, Jr. While the letter of the law speaks to prevention and enforcement, the spirit of the law, indeed the legislative intent of the law, is open housing. Quite simply, open housing laws would open the front door to housing opportunities long off limits to people because of their race, color, religion or other characteristics. In essence, fair housing laws offered new housing options. You can get a sense of this from President Lyndon B. Johnson’s statement upon signing the law, which was formally titled the Civil Rights Act of 1968.

So what does this have to do with CFED’s goal of expanding affordable housing?

CFED’s major homeownership initiative, the Innovations in Manufactured Housing (I’M HOME) initiative, aims to mainstream manufactured housing finance and policy. Income and wealth are not protected classes, and there is no legal right to a mortgage. But the recent housing crisis has taught us that misleading lending practices and unfair loan terms, including unnecessarily high interest rates, undercut communities and compromise the ability to meaningfully extend homeownership, which for most Americans is the key to wealth building and financial security.

CFED and its partners have documented that purchasers of manufactured housing are often offered different, and in many ways unfair, loan products. Most manufactured housing loans are chattel, or personal property, loans, similar to car loans. Various factors, such as state laws, help explain this. The relationship between manufactured home dealers and financial companies is another part of it. Chattel loans can have rates as much as nine percent higher than a mortgage, and we have learned far too vividly that higher interest rates can lead to higher delinquency and default rates. A mortgage would be a better deal for a homeowner if it was affordable or even available.

Certainly, some state laws need to change to expand the universe of manufactured home owners eligible for mortgages. However, many borrowers who may be eligible for mortgages do not get to consider them. Banks, state Housing Finance Agencies, and the GSEs, Fannie Mae and Freddie Mac, can change internal practices and procedures to extend mortgage opportunities to worthy buyers of manufactured homes. Federal regulators can also help make the mortgage environment fairer and more accessible to potential manufactured home buyers. One of CFED’s major objectives in its I’M HOME strategy is to make lending to this underserved mortgage market a greater part of lenders’ business models.

A new CFED report, Toward a Sustainable and Responsible Expansion of Affordable Mortgages for Manufactured Homes, makes clear that manufactured housing loans can be made responsibly, particularly to low- and moderate-income buyers, the same demographic that was too often exploited by dishonest or simply reckless lending practices in the run up to the housing crash. The report demonstrates that mortgages to buyers of manufactured home can perform as well, and perhaps better, as the mortgages many lenders are already making.

There are plenty of examples of which policy and business practices work and which do not. The challenge for affordable housing advocates is to help CFED and its local and state partners better integrate manufactured housing into local planning, state laws and lenders’ portfolios. CFED is working to promote best practices and enhance its already robust toolkit for advocates.

Jurisdictions and other entities that receive federal housing dollars must demonstrate that they are affirmatively promoting fair housing through their planning and program activities. Depository institutions must comply with the Community Reinvestment Act and show how they offer credit and financial services to qualified low- and moderate-income households. Members of the Federal Home Loan Bank system have access to two programs, the Affordable Housing Program and the Community Investment Program, which are, broadly, designed to provide funds to underserved markets.

Each of these tools can be used to promote fair housing, economically integrate communities and meet local goals such as workforce housing and wider tax bases. Expanding homeownership through products such as manufactured housing mortgages can complement the tools already available to lenders and communities.

Broader and better mortgage lending is, at its core, fair housing. CFED looks forward to expanding its homeownership work across the country to help further the spirit of the Fair Housing Act.

To help families achieve the goal of homeownership, Bank of the West has partnered with CFED to match the money that low-income individuals save for a down payment and to support the nonprofits that provide financial education to these savers. As part of Financial Literacy Month in April, this is the second story in a three-part series featuring Individual Development Account (IDA) program graduates from across the country.

For Shannon Fox, buying her first home was scary, exciting, and sometimes frustrating. “I thought I would never find anything in my price range,” she says. Eventually, Shannon opened an Individual Development Account through Home Forward and says, “Their encouragement gave me hope that maybe I can become a homeowner, something I thought would never be possible for me being a single woman and living in the great Northwest where prices for homes are a little more expensive than elsewhere.” In addition to the support from Home Forward, Shannon found that the homebuying class gave her knowledge and confidence she would not otherwise have had.

Still, the process wasn’t always easy. Shannon found that the paperwork associated with buying a home felt difficult and overwhelming. Reflecting on the experience, she relates, “I learned that dreams, like buying my own home, can come true if you save up for them. It was a long process, so it takes patience, but it was definitely worth it. I love my new home!”

Shannon says that given the opportunity, she would save using an Individual Development Account again in a heartbeat. To others, she shares the advice that helped her succeed: “Stick with it! Don't give up! Be patient, and your dream of owning a home can come true too, like it did for me.”

Below are some highlights from our conversation, which I found insightful practically, as I learned about the day-to-day decisions Tricia and her husband Don make to save and prepare their daughter for college, and inspiring, as I considered the impact that similar family commitments could have for families across San Francisco (and beyond!) on college attainment and economic opportunity.

How long has your family been in San Francisco?

My husband is a San Francisco native, and I have been here since 2004. I moved to California in 1984 for college and never left! We plan to raise our daughter and family here in SF.

How did you hear about the Kindergarten to College program?

I actually heard about the program when I was first registering my daughter for kindergarten at her new school. I thought it sounded too good to be true, a free college savings account with a $50 deposit and ability to earn matching funds, but I was so thrilled to learn that it was real.

What was your strategy for saving?

My husband I wanted to get in the habit of saving for college early, and we wanted to make it easy, something we did not need to think about all the time. So, we set up a direct deposit with my husband’s employer.

Times are tight, so we started small, saving $5 a month. When my husband got a small salary increase recently, we decided to bump up the amount we save, so we upped the monthly direct deposit to $11. We know it’s not a huge amount, but it feels good, and it will add up.

Do you talk about the college savings account with your daughter?

We actually don’t speak a lot about the college savings account, or the cost of college. My husband I do not want finances to be a constraint on our child’s dreams.

That said, we talk about college and the future all the time. Our daughter is a first-grader now, and recently she came home complaining about how hard multiplication tables are. We told her that it’s important to study and focus, because this is what she will need to do in college and in the future. Also, my husband often talks with our daughter about how college creates better opportunities in life.

Do you have any advice for other K2C parents?

College seems far off, but start saving now! Make it easy for yourself and your family to save—set up direct deposit so you do not need to think about making the deposit every week or month.

Also, talk often about college and getting prepared with your child. Saving for and talking about college help create that expectation for your child. For instance, if I am talking to my daughter about a friend of mine, I mention that we met in college, and that she will go to college one day too.

President Obama’s budget lays out a strong starting point for rebuilding American opportunity. He preserves our historic commitment to protect the nation’s most vulnerable households, reverses some of the most harmful impacts of sequestration, and calls for a sensible, balanced approach to reducing the federal deficit.

In particular, the President should be applauded for his commitment to the success of the Consumer Financial Protection Bureau, which in the short period of its existence has already made huge strides in protecting consumers against predatory financial products and empowering them to build savings and financial security.

The President’s budget also calls for sustaining the nation’s investments in education by increasing access to high-quality early childhood education, improving the nation’s high schools and making college more affordable and attainable, especially for low-income students. The budget also maintains a commitment to fund programs that have been vital to the efforts of low- and moderate-income families who have been striving to save and build wealth. These vital programs include the Community Development Block Grant, the Community Development Financial Institutions Fund, the Earned Income Tax Credit, the Child Tax Credit and the Assets for Independence program, which has helped more than 70,000 low-income families open special matched savings accounts to help them buy a home, launch a business or pay for school.

But the President’s budget could also do more to ensure that low- and moderate-income households have full access to the tools they need to achieve financial security. While the budget includes a laudable commitment to simplify the tax code to make it more fair, it should include as part of that commitment an effort to broaden tax incentives for savings for the low- and moderate-income households who now get virtually no benefit.

In addition, the budget should contain an explicit commitment to help households save, build wealth and improve their financial capability. As CFED’s 2013 Assets & Opportunity Scorecard found, as many as 44% of households in America lack the cash savings to survive three months at the federal poverty line in the event of a loss of income.

For example, the President did not request funds for Bank On USA, an innovative effort in multiple cities across the nation to connect households without bank accounts to the financial mainstream, as he has in his past budgets.

CFED looks forward to working with the President and Congress to improve the financial security of America’s households and expand economic opportunity for all families.”

Among the more exciting innovations of this year’s Assets & Opportunity Scorecard release is the new Custom Reports and Graphics center, which lets visitors create and download their own handouts and comparative charts using the Scorecard’s 69 outcome and 33 policy measures. Don’t know where to start? Here’s a brief description of what you’ll find:

State Profile Report: The classic report you might be familiar with from previous Scorecards has been given an update. New graphics on the first page highlight your state’s asset poverty rate and six additional outcomes of your choosing, while the rest of the report details your state’s performance on all 69 outcome and 33 policy measures. It’s the full Scorecard experience, in an easy-to-use four-pager.

State Policy Profile: How does your state perform on the Scorecard’s 12 policy priority measures? Find out with this simple one-pager that breaks down what policies your state has passed, and where there’s room for improvement. Helpful graphics make it easy to find state strengths and weaknesses, while the customizable menu lets you to choose whichever policy priorities you’d like to highlight, allowing for anything from a general “State of the State” report to a targeted “Education Policy” profile.

Custom Data Report: Wonder how your state compares to others in specific Scorecard outcome measures? Head to the Custom Data Report, where you’ll be able to create a one-pager listing your state’s national rank and performance alongside four others (and the United States) for up to seven outcome measures. The one-pager includes bar graphs that visualize the between-state difference, while the brief outcome definitions help advocates better make the case for their policy or research proposals.

Custom Data Charts: Want to compare states across one particular outcome measure, but need a presentation graphic, not a report? Check out the State Comparison Data Chart, which lets you compare your state to four others (and the United States) in any of the 69 Scorecard outcome measures. Or, if you want to see how your state compares nationally, try the National Comparison Data Chart, which shows your state’s performance in relation to all 51 states and the national average. Paste either of the files into your reports and presentations, or onto your website, to help make the case for your state’s asset-building policies.

Asset Poverty Snapshot: Need to talk asset poverty in your state, but don’t have a graphic to back you up? The Asset Poverty Snapshot tool lets you quickly and easily download a graphic comparing your state’s income poverty, asset poverty, and liquid asset poverty rates. This tool also creates an embeddable graphic, for use in any media.

While we introduced each of the above as part of the 2013 Scorecard release, as of this past week, advocates have a new tool in their arsenal:

Trend Data Charts: Track your state’s movement over time in all sixteen Scorecard outcome trend measures, from foreclosure to uninsured rate, asset poverty to microenterprise ownership. Select any available measure, then compare your state’s performance with up to three others (and the United States). Just like with the other custom graphics, you can embed your Trend Data Chart into any report, presentation tool, or website.

With these new reporting instruments, telling a story with the Scorecard has never been easier. Head to the Custom Reports and Graphics hub now, and create visuals for your next presentation or report. (Or, you know, just for fun. We don’t judge.)

Thursday, May 9, 2013 | Noon - 1:30 pm

Dirksen Senate Office Building, Room G-50, Washington, DC

Lunch available at 11:45 am

Opening Remarks:

Keynote speaker:

Screening of “A Foot in the Door” with introductory remarks by Jose Cisneros, Treasurer for the City and County of San Francisco. “A Foot in the Door” is a short movie that tells the story of Kindergarten to College, the first universal children’s savings account program in the United States. Launched by the City and County of San Francisco, the program automatically provides a college savings account to children when they start kindergarten.

Featured experts:

A college degree for their child is the aspiration of almost every parent in America. Unfortunately, soaring tuition and the burden of out-of-control student debt threaten to make this important pathway to economic security increasingly out of reach for too many families. One solution, Children’s Savings Accounts, has proven to be an effective method of helping children (especially low- and moderate-income children) go to and complete college. With so many of the available jobs in our 21st century economy requiring a degree or credential beyond high school, we must build strong ladders of opportunity for any student or family willing to climb them.

At this lunch event, some of the nation’s top experts on children’s savings, asset development and higher education success from various sectors will offer their ideas on how to help families save (as early as kindergarten) to make an investment in their children’s future. This event is free, but space is limited, so RSVP today by clicking 'Reply' or by sending an email to rsvp@cfed.org. The deadline to register is May 3.

Join the conversation on Twitter by following @CFEDNews and #CFEDforum!

To help families achieve the goal of homeownership, Bank of the West has partnered with CFED to match the money that low-income individuals save for a down payment and to support the nonprofits that provide financial education to these savers. As part of Financial Literacy Month in April, this is the second story in a three-part series featuring Individual Development Account (IDA) program graduates from across the country.

Manuel Nava's Story

Manuel Nava and his wife bought their first home in 2012. While it only took them about two months to find the right house, their journey to homeownership took much longer.

Originally from Mexico, Manuel and his wife came to Oregon as farmworkers, living in housing owned by Bienestar, a nonprofit organization that also helped them find their first home. Although Manuel was a citizen, his wife was not, which made it difficult to settle in Oregon permanently or even consider homeownership. The couple yearned for a family-friendly home with a yard for their four children, and had begun saving for a down payment. However, in order for Manuel’s wife to gain citizenship, she had to go back to Mexico and wait while Manuel took care of the legal process with the state of Oregon. During this time of separation, Manuel kept his focus on saving for his home and supporting his family. “[The long separation] was frustrating and it broke my heart,” Manuel says.

After about five years of legal battles, Manuel and his family were reunited, and his wife became a citizen. Having wiped out their savings in legal and reunification fees, the family started again to save for a home and got a boost in savings from the Individual Development Account program at Bienestar. “I had to keep believing,” says Manuel. “I knew that we could do it.” Together, the whole family sat down and talked about their finances as a household and what each of them could do, coming up with $150 a month in discretionary money after looking where their money was going. Manuel and his family did not stop at the $3000 savings goal; they saved an additional $2000 for their home.

Reflecting on his experience in saving for his home, Manuel expresses pride that he set a goal and achieved it, adding that after all the family has been through, their new home also gives them a new beginning: “At this house, we can start over.”

For over 30 years, CFED has worked hard to identify solutions to some of the biggest challenges facing low- and moderate-income Americans. Our list of accomplishments is long, and CFED is an industry leader in expanding economic opportunity and building assets for all Americans.

Occasionally, CFED staff take a break from advancing the assets movement to do some work along somewhat different lines. Each spring, a group of us at CFED gets together to build a diorama out of Peeps – those sugar-coated, marshmallow-y bunnies that inundate the market every year around Easter – and enter it into the Washington Post’s Peeps Diorama contest.

This is not a joke.

This year, the team placed in the top five out of over 650 entries! The team of seven – Kristin Lawton, Kasey Wiedrich, Ethan Geiling, Lebaron Sims, Sean Luechtefeld, Roberto Arjona and former CFEDer Jane Hanley – was recognized by The Washington Post for their creativity in portraying the iconic U Street haunt, Ben's Chili Bowl.

The diorama and the team was featured in the March 31st edition of the Washington Post Magazine:

If you apply for a job at the Corporation for Enterprise Development, a nonprofit that helps low-income Americans, you should be prepared for Peeps to pop up in your interview. This office team has submitted dioramas for five of our seven contests. By now, diorama-building has become a skill the 40-person organization seeks in applicants.

In 2011, the group was named finalists for its Peepification of Transportation Security Administration agents at Reagan National Airport. The team tries to focus on local scenes, and as many of the members live in the U Street corridor, Ben’s Chili Bowl, in operation since 1958, was a natural choice for the contest.

“It’s such an important part of the U Street community,” said Ethan Geiling, 24. “It brings together an eclectic mix of people at all hours. We were surprised no one had done it before.”

In the team’s homage to the U Street haunt, President Obama visits Peep’s Chili Bowl with his Secret Service detail while the injured Redskins quarterback Robert Griffin III waits outside. The team photographed Ben’s to help them scale the diorama. They dressed some of the Peeps in aprons and illuminated the restaurant with a strand of holiday lights. The structure is built out of foam board, and accessories — the Secret Service agents’ ties or the cash register — are made out of painted sculpting clay.

You can vote for fan favorite by clicking here or if you're in the DC area, you can check out the Peeps dioramas in person outside the Washington Post offices through the end of the month.

Events

The Center for Financial Security at the University of Wisconsin-Madison is hosting a webinar, Family Financial Security Webinar: Promoting Financial Capability Building Services with Families in Head Start, on Tuesday, April 9th. For more information, click here.

Don't miss the latest audioconference in the Exploring Innovation in Community Development series, Case Management: A Holistic Approach to Asset Building, on Thursday, April 11th. Our very own Kate Griffin, Senior Program Manager for Savings & Financial Security, is a speaker on the panel.

On Wednesday, April 24th, Local Initiatives Support Corporation (LISC) will host Scaling Innovations for Low-Income Families at the Hotel Monaco in Washington, DC. Click here to register.

News

An article in The Economist this week recognizes that despite aging populations and rising educational costs in America, the savings rate has been steadily falling and proposes savings incentives as a form of reversing this troubling trend.

As inequality increases, how can we address this issue in the US? Nick Galasso at Oxfam America offers seven possibilities in this blog post.

As part of Curious George's digital makeover, publisher Houghton Mifflin Harcourt is adding in some new and important life lessons for the beloved children's character. The narratives will feature city planning and fiscal responsibility tailored to a preschooler. An accompanying app to the print book Curious George Saves His Pennies will award coins when children complete tasks and encourages them to save up to buy objects that eventually populate a digital city of the child's creation.

To kick off Financial Literacy Month, BET has launched Wealth Wednesdays, an educational campaign with information on credit, debt, saving and investing and the path to successful homeownership — all strategies to help grow wealth and help build a solid financial legacy for generations to tackle expanding wealth inequality in the African-American community.

From the Assets & Opportunity Network

The Opportunity Fund released a new report this week, U.S. Microfinance: Small Loans, Big Results. Conducted in collaboration with the Accion U.S. Network, the report analyzes results from the first-ever nationwide survey of microloan borrowers in America. The report measures outcomes from Opportunity Fund and five Accion affiliate’s lending, and answers the fundamental question that drives our work: Do the loans we offer reduce poverty by helping the business owner to increase their own income and pay wages to their employees? We answered this question using the microTracker Client Outcomes Survey, developed by FIELD at The Aspen Institute, a think tank that has worked with more than 100 U.S.-based microenterprise programs. Key findings can be read here.

The Illinois Asset Building Group put together a brief legislative update for the month of April on the issues that are gaining momentum.

On March 20, the Corporation for Enterprise Development (CFED), through its Innovations in Manufactured Homes (I’M HOME) initiative, released a study analyzing manufactured home loan performance. The report, which summarizes the analysis of mortgage data from 20 sources, including 13 state HFAs, says manufactured home loans perform similarly, and in some cases better, than similar site-built homes. NCSHA assisted in the report’s development and attended a roundtable last month to discuss a draft version. Other roundtable participants included NCSHA President Brian Hudson, executive director of the Pennsylvania Housing Finance Agency, and David Haney, executive director of the Wyoming Community Development Association.

The study finds that HFA loan products generally outperform similar loan products, and that manufactured home mortgages can serve low- and moderate-income borrowers who cannot afford large down payments and may not have top-tier credit scores, while still performing well. For example, the report says HFA-purchased USDA guaranteed loans have a non-delinquency rate of 82.3 percent, compared to 76.8 percent for all USDA guaranteed loans. This is despite the fact that HFA-purchased loans have a higher weighted loan-to-value ratio than non-HFA loans in the USDA guaranteed program. The Pennsylvania Housing Finance Agency (PHFA) and the Idaho Housing and Finance Association (IHFA) are credited specifically for their exemplary manufactured housing lending programs.

Comparing its manufactured home loan data to Office of the Comptroller of the Currency (OCC) data on mostly site-built homes, CFED finds that manufactured home loans not insured by the U.S. Department of Agriculture (USDA), which includes loans originated by private lenders and HFAs, had a non-delinquency rate of 90.3 percent, while the OCC loans had a performance rate of 89.2 percent. USDA manufactured home loans had a performance rate of 77.9 percent, but the report explains that some lenders and investors have portfolios of USDA loans that perform well.

The report finds that traditional underwriting standards, such as a borrower’s credit history, debt-to-income ratio, and loan-to-value ratio, are strongly associated with performance, but that manufactured housing loans can be successful without following the traditional criteria. For example, the study finds that manually underwritten self-insured loans following less stringent underwriting standards perform slightly better than conventional loans with mortgage insurance. The report also finds that lenders and HFAs that practice “high-touch” servicing (reaching out early and often to late-paying borrowers and offering short and long-term loan adjustments and loan modifications as may be required) enjoy strong performance on manufactured home loans. The report praises PHFA and IHFA specifically for their customer-driven servicing policies and the large proportion of their portfolios that are non-delinquent (97.5 percent average combined) of their manufactured home loans.

The report concludes with some recommendations. First, citing a lack of comprehensive data, CFED calls for the collection of additional data and analysis on affordable manufactured home loans to help attract more lenders and investors. This includes a recommendation that NCSHA and state HFAs work with government officials and private sector parties to develop loan data delivery protocols that ensure that manufactured loan data can be tracked and analyzed.

Second, the report suggests that stakeholders work to promote development and innovation in manufactured housing to increase manufactured housing lending. It also recommends developing best practices for manufactured housing lending.

The 2013 U.S. Microenterprise Census—the nation’s leading source of data on the microenterprise industry—launched yesterday! The Census, created by the Aspen Institute’s FIELD Program in 1992, has become the most comprehensive and widely used source of information on this field. It provides quality, up-to-date information illustrating the size, scale and impact of the U.S. microenterprise industry.

If your organization offers microenterprise training and technical assistance, IDAs for microenterprise, or microloans, please take the survey! Even if that’s only one part of your mission, your input is valuable. The first organization to complete the Census will receive a prize, and additional incentives will be offered throughout the course of FIELD’s Census campaign. Also, CFED will raffle off a free registration for the 2014 Assets Learning Conference (a $700 value) to those who fill out the Census by June 2. All you need to do to enter the raffle is complete the survey.

The Microenterprise Census is important to CFED because it demonstrates the power of microenterprise ownership to help lower-income families lift themselves out of poverty. Throughout CFED’s 33-year history, we have promoted microenterprise as an asset-building strategy, and, thanks to the Census, we have the data to prove it. One analysis of Census data, for example, found that microenterprise owners who received training and loans over a five-year period increased their revenues by 60 percent; the percentage of clients living in poverty declined from 16 percent to 9 percent, a reduction of more than 40 percent.

By participating in the Census, you not only help make the case for microenterprise as an income- and asset-building strategy, you also help your organization succeed. MicroTracker is increasingly becoming a valuable source of data and information on the micro industry for funders, the media and other stakeholders. Participating in the Census also gives you access to valuable data that can help you manage and showcase your program’s performance, including metrics that compare your organization to industry averages. Join the more than 800 organizations that have participated just in the past five years and take the Microenterprise Census today!

To help families achieve the goal of homeownership, Bank of the West has partnered with CFED to match the money that low-income individuals save for a down payment and to support the nonprofits that provide financial education to these savers. As part of Financial Literacy Month in April, this is the first story in a three-part series featuring Individual Development Account (IDA) program graduates from across the country.

Hassan Rasheed's Story

Ever since he moved to Portland in 1996, Hassan Rasheed dreamed of owning a home for himself, his wife and their five children. His team of GOALS coordinators at Home Forward, formerly the Housing Authority of Portland, introduced Hassan to Individual Development Accounts, and encouraged him to save $50 each month instead of the minimum of $25. Hassan beams as he describes the team that helped him “get on his feet by saving” his way to a downpayment on his 2,725-square-foot home, a vast improvement on the 900-square-foot, three-bedroom apartment where his family of seven lived for five years. Reflecting upon the moment he received the keys from his broker, Hassan says, “I sat in the car and started crying. I couldn’t believe it.”

His favorite part of his new five-bedroom home? “It’s all my favorite,” smiles Hassan, who is originally from northern Iraq. When the country eventually became unsafe for him and his family, they were forced to flee to Turkey and Guam before settling in Oregon. Now, in their new home, everyone has their own space to thrive and a community in which they feel safe. Describing IDAs as “a good program for people to stand on their own feet, move to work and don’t [sic] stay in the same position,” Hassan adds that now that his dream of homeownership has been achieved, he has begun saving to help send his five children to college.

I remember when I first met Wilma Mankiller, thirty years ago at the first convening on women’s economic development hosted by Jing Lyman and Sarah Gould of CFED at Wingspread. After dinner the first night, one incredible woman after another introduced herself, including Kathy Keeley, who had just founded WEDCO, the first women’s microenterprise program in the country, and Rebecca Adamson, who introduced what would become First Nations Development Institute. But, when Wilma, then Deputy Chief of the Cherokee Nation, stood up, it was like the world stopped, and centered on her quiet, grounded, visionary voice.

Wilma understood and believed in what I now believe is the most crucial insight in economic development—that common people, including low-income and very poor people -- are capable of leading their own development, as entrepreneurs, students, skilled workers, homeowners, savers, investors and crafters of their own futures. The new movie on Wilma’s life and work, The Cherokee Word for Water, elaborates on this basic insight, even as it tells the story of Cherokee volunteers building an 18-mile waterline. Click here for the movie’s trailer, or visit the movie’s website at www.cw4w.com.

I and CFED continued to learn from Wilma throughout our lives. Having her say that individual allotment of communally held native lands was one of the greatest disservices done to native peoples by the federal government, it was with trepidation that I brought her Michael Sherraden’s idea of Individual Development Accounts. She loved the idea—a not-unimportant judgment given that she led the economic development committee of the Ford Board of Directors while Melvin Oliver, Frank DeGiovanni and Lisa Mensah funded the birth and growth of the assets field, and the American Dream Demonstration.

In 2006, Wilma keynoted our Assets Learning Conference in Phoenix, underscoring that what may be most important about matched saving and asset building is not the money, but the sense of empowerment and possibility that accompanies the money.

As I think about Wilma now, I recall so many of her simple summaries of profound truth, including:

“Every day is a good day,” which is the title of her second book, drawn from her interview with Carrie Dann.

“Things have a way of turning out the way they’re supposed to.” To which my wife, Kristina, would respond, “That’s the way you lost a continent.” To which Wilma would respond with, “I did not lose a continent.” In my old age, I recognize the way she meant her statement, and trust much more in the aspects of this life that I scarcely understand. I remember as well how, when I stayed with her during her last weeks, Spring seemed to hold off as she clung to life. The moment she died, the trees sprung into bloom, the birds into song. It was as if her life had spread to the universe, even, as the tradition held, she climbed the Milky Way, eating strawberries as she went.

It is my hope that all CFEDers and all our friends, when you have occasion to be in the Mankiller Room in our Washington, DC, offices, will reflect a moment on the untapped promise of all people, and the wisdom, humor and faith Wilma conferred.

We've teamed up with the CFPB to understand what combinations of knowledge, skills, behaviors and attitudes help consumers succeed in achieving their own financial goals that will help us improve policies and practices. To build this knowledge, we are working with the CFPB to develop rigorously tested measures of consumer financial knowledge, behavior, wellbeing, and related factors. We hope to learn which elements of financial knowledge have a positive effect on financial wellbeing, and what else contributes to financial wellbeing. We will share the critical elements we identify with other financial educators and help them build it into their work. More information here.

Mississippi KIDS COUNT 2013

The latest MS KIDS COUNT report has been released. This edition specifically addresses the effects of housing and employment on the economic well-being of children. To download the full PDF, click here. Be sure to check out their housing and employment, health and wellness and education infographics, as well.

April is Financial Literacy Month

April is a time for planting gardens and watching things bloom. It’s also Financial Literacy Month, which makes it the perfect time of year to consider savings options from the U.S. Department of the Treasury to help grow your savings and take control of your future.

Whether you are an experienced investor or someone who is just starting to save money, the Treasury Department’s safe, affordable and convenient savings options can help you reach your goals.

Make an effort during April Financial Literacy Month to visit the Treasury Department’s Ready.Save.Grow. site – www.treasurydirect.gov/readysavegrow – to learn more about Treasury savings options. You can create your free online TreasuryDirect account today and build tomorrow’s savings.

Pittsburgh-Area School Offers Incentives to Save for College

Students at Propel charter schools in Pittsburgh now have an incentive to set some extra money aside for college. Called Fund My Future, the program sets up savings accounts in the child's name and offers raffles for gift cards as incentives to make deposits. The plan is designed to make savings fun and simple for low-income students and their parents.

From the Assets & Opportunity Network

Maryland CASH posted a call to action regarding a new gas tax. It calls for the state to increase the refundable EITC to offset the negative individual economic impacts on low- and moderate-income workers of the increases in the gas tax. Read more here.

The Illinois Asset Building Group is honoring Women's History Month by recognizing the gender wealth gap. In a recent blog post, they note the many gender disparities with regard to income, credit card debt, median wealth of full-time workers, homeownership rates and overall assets.

It isn’t often that a nonprofit from little New Hampshire gets to speak into a big megaphone. But in 2009 the New Hampshire Community Loan Fund received a national honor, the NEXT Award for Opportunity Finance, for being the first organization in the US to make real mortgage loans for manufactured homes (sometimes called mobile homes) located in cooperatives.

You might be surprised to learn that manufactured homes are usually financed like cars, with personal property loans at rates 3 to 5 percentage points higher than traditional mortgage loans. This financing is patently unfair, because not only do these short-term, higher-cost loans limit the affordability of these homes, lack of access to mortgages make them harder to resell.

We had seen the positive effects of offering fixed-rate, real mortgage loans for manufactured homes: Families became more financially stable and their homes gained value. So I used our NEXT acceptance speech to urge a roomful of community-lending peers from across the country to make loans like this in their states, too.

Acting on my request was heard as an act of faith, or wishfulness. Lenders regard owners of manufactured homes as riskier borrowers than other homeowners. Our peers weren’t convinced that our low loss record (1.6 percent—excellent loan performance by any standard) could be replicated outside of N.H.

This week the I’M HOME Loan Data Collection Project released its first report, which analyzed data from 23 organizations (including us) that originate or purchase manufactured-housing loans. It found that these are good loans, as good as mortgage loans for site-built homes. It also found that lenders like us, who accept low down payments, make decisions based on an applicant’s total financial picture (not just their credit scores), and who work with borrower through difficulties, were almost as successful as those with the most-stringent standards.

The national report validates our experience in New Hampshire. Our Welcome Home Loans for manufactured homes in resident-owned communities proved so successful over a decade that last year we started offering them to homeowners on their own land, who weren’t getting fair financing either.

And we’re still urging lenders to recognize that manufactured homes are real homes that deserve real mortgages, and that their owners are responsible borrowers—maybe even more responsible than most.

Juliana Eades is President of the New Hampshire Community Loan Fund.

On March 21, 2013, CFED released Toward a Sustainable and Responsible Expansion of Affordable Mortgages for Manufactured Homes, which reported findings from an analysis of data on $1.7 billion in manufactured home mortgage lending from a variety of lenders and investors who provide long-term home mortgage products to owners and buyers of manufactured homes. The report finds that manufactured home mortgage borrower repayment records are generally comparable to the site-built mortgage market. In some instances, the repayment records of manufactured home mortgage borrowers were better than comparable general mortgage portfolios.

The report’s authors conclude that conventional underwriting criteria such as higher FICO scores, low loan-to-value and low debt-to-income ratios are strongly related to higher loan performance. However, some of the lenders have been able to achieve strong loan performance with manual underwriting of loans with lower downpayment and less stringent credit requirements by maintaining good contact with the borrowers.

Data were compiled by a two-year effort of the I’M HOME Loan Data Collection Project, part of Innovations in Manufactured Homes (I’M HOME), a national initiative managed by CFED. The goal of this effort is to make affordable manufactured home financing available to current and potential low- and moderate-income home owners and a viable alternative to higher cost personal property (chattel) loans.While this effort represents progress in documenting the viability of such financing, more data and further study is needed.

The report includes recommendations to improve the quality of the data, promote product development and innovation among lenders and investors, and organize stakeholders to build recognition of the value of manufactured housing as an energy efficient, lower cost housing option in the mainstream affordable housing policy in the United States.

Toward a Sustainable and Responsible Expansion of Affordable Mortgages for Manufactured Homes, Download the Executive Summary and the Full Report.

You Might Also Like

The foreclosure crisis. Homeowners “underwater.” Neighborhoods blighted with vacated homes. Tougher credit standards and new regulations making it harder for lower-income households to qualify for a mortgage.

These have been sadly familiar headlines for almost five years. Is there anything new—and positive—one can say about mortgages?

To find that bright spot, we can turn in a surprising direction: toward manufactured homes.

A groundbreaking I’M HOME report released this week by CFED in partnership with the Fair Mortgage Collaborative, titled Toward a Sustainable and Responsible Expansion of Affordable Mortgages for Manufactured Homes, analyzes $1.7 billion in loan performance data and finds that, contrary to common belief, mortgages on manufactured homes perform as well as comparable site-built home mortgages.

The study goes on to identify manufactured home mortgage products that actually outperform other loans.

Based on this evidence, more lenders and investors should be convinced to enter or expand their manufactured home mortgage offerings as good business. Home owners will then benefit by finding it easier to obtain affordable, long-term financing.

More than seventeen million Americans rely on manufactured homes for affordable housing. Manufactured homes utilize factory-built technology and cost up to 30 percent less on average than comparable site-built homes. Modern manufactured homes can be highly energy efficient, safe and attractive.

But while the price of the home is one essential ingredient in affordability, it is not the only factor. The cost of financing can be an equal or even greater factor; despite the challenges of the past several years, the U.S. tradition of a fixed-rate, 30-year mortgage has been at the heart of achieving the dream of homeownership.

Sadly, millions of owners of manufactured homes don’t have the mortgage option. For up to three quarters of all owners and buyers of manufactured homes, a chattel loan is what they get. They must spend hundreds of dollars more each month to service their chattel loan—dollars that they could otherwise spend on food, clothing, utilities, education and savings. The reason that these households can’t get a mortgage is two-fold: the majority of mortgage lenders don’t lend for manufactured homes, and many manufactured homes are titled under state law as “personal property” like automobiles, and as a result don’t qualify for mortgages.

The good news is that, as shown in the new I’M HOME report, there are a solid group of lenders and investors offering mortgages to owners and buyers of manufactured homes—and these mortgages are performing well.

More good news can be found in the passage of the Uniform Manufactured Housing Act, or UMHA, by the Uniform Law Commission. The UMHA creates a simple and consistent method for owners and buyers who choose to title their manufactured home as real property instead of personal property. In many states today, the process is too onerous or limited to give homeowners a real choice, and UMHA would change that. As personal property, these homes can only be financed with chattel loans; as real property, they may be financed by mortgages. In almost every state, the UMHA would represent an improvement on existing titling law, but each state must introduce and enact the act in order to make freedom of choice a reality for more homeowners. Advocates in several states are considering introducing the UMHA, and Vermont made the first such introduction in February.

So, take heart! There is indeed good news on the mortgage front. First, owners and buyers of manufactured homes may already be able to find an affordable, long-term mortgage (if your home is titled as real property). Some sources you may want to consider include:

Second, more lenders and investors are to be encouraged to initiate or expand their mortgage offerings for manufactured homes on the basis of the data analysis provided in the report, Toward a Sustainable and Responsible Expansion of Affordable Mortgages for Manufactured Homes.

We hope you will join us in realizing the potential of manufactured homes to play a vital role in establishing a stock of permanently affordable and energy efficient housing in the US.

The young have been faring poorly in the job market for some time now, a condition only exacerbated by the Great Recession. Now comes disturbing news that they are also falling behind in their share of society’s wealth and their rate of wealth accumulation.

Signe Mary McKernan, Caroline Ratcliffe, Sisi Zhang, and I recently examined how different age groups have shared in the rising net wealth of the U.S. economy. Despite the recent recession, our economy in 2010 was about twice as rich both in terms of average incomes and net worth as it was 27 years earlier in 1983. But not everyone shared equally in that growth.

Younger generations have been particularly left behind. Roughly speaking, those under age 46 today, generally the Gen X and Gen Y cohorts, hadn’t accumulated any more wealth by the time they reached their 30s and 40s than their parents did over a quarter-century ago. By way of contrast, baby boomers and other older generations, or those over age 46, shared in the rising economy—they approximately doubled their net worth.

Older Generations Accumulate, Younger Generations Stagnate

Change in Average Net Worth by Age Group, 1983–2010

Source: Authors’ tabulations of the 1983, 1989, 1992, 1995, 1998, 2001, 2004, 2007, and 2010 Survey of Consumer Finances (SCF). Notes: All dollar values are presented in 2010 dollars and data are weighted using SCF weights. The comparison is between people of the same age in 1983 and 2010.

Households usually add to their saving as they age, while income and wealth rise over time with economic growth. If these two patterns apply consistently and proportionately, then one might expect to see, say, a parent generation accumulate $100,000 by the time its members were in their 30s and $300,000 in their 60s, whereas their children might accumulate $200,000 by their 30s and $600,000 by their 60s.

This normal pattern no longer holds for the younger among us. However, this reversal didn’t just start with the Great Recession; it seems to have begun even before the turn of the century. The young increasingly have been left behind.

Potential causes are many. The Great Recession hit housing hard, but it particularly affected the young, who were more likely to have the largest balances on their loans and the least equity relative to their home values. If a house value fell 20 percent, a younger owner with 20 percent equity would lose 100 percent in housing net worth, whereas an older owner with the mortgage paid off would witness a drop of only 20 percent.

As for the stock market, it has provided very low returns over recent years, but those who hung on through the Great Recession had most of their net worth restored to pre-recession values. Bondholders usually came out ahead by the time the recession ended as interest rates fell and underlying bonds often increased in value. Also making out well were those with annuities from defined benefit pension plans and Social Security, whose values increase when interest rates fall (though the data noted above exclude those gains in asset values). Older generations hold a much higher percentage of their portfolios in assets that have recovered or appreciated since the Great Recession.

As I mentioned earlier, however, the tendency for lesser wealth accumulation among the younger generations has been occurring for some time, so the special hit they took in the Great Recession leaves out much of the story. Here we must search for other answers to the question of why the young have been falling behind. Likely candidates for their relatively worse status, many of which are correlated, include

When it comes to conventional wisdom and media attention to distributional issues, there’s a tendency simply to attribute any particular disparity, such as the young falling behind in wealth holdings, to the growth in wealth inequality in society. But the two need not be correlated. Disparities can grow within both younger and older generations, without the young necessarily falling behind as a group.

Whatever the causes, we should also remember that public policy now places increased burdens on the young, whether in ever-higher interest payments on federal debts they will be left or the political exemption of older generations from paying for their underfunded retirement and health benefits. At the same time, state and local governments have given education lower priority in their budgets; pension plans for government workers now grant reduced and sometimes zero net benefits to new, younger hires; and homeownership subsidies post-recession increasingly favor the haves over the more risky have-nots.

Maybe, more than just maybe, it’s time to think about investing in the young.

EDITOR'S NOTE: This is the first in a series of blog posts covering last week's release of the new I'M HOME Data Report titled Toward a Sustainable and Responsible Expansion of Affordable Mortgages for Manufactured Homes. Special thanks to Brian Hudson, Executive Director of the Pennsylvania Housing Finance Agency, for today's post.

At the Pennsylvania Housing Finance Agency (PHFA), we understand that our public service mission includes an obligation to help our borrowers stay in their homes. More than 20 years ago, we made the decision to bring all of our loan servicing in-house and to use a variety of mostly low-tech, but “high-touch,” techniques to help borrowers in trouble. The effectiveness of this approach is reflected in PHFA’s lower-than-average foreclosure rates.

PHFA’s portfolio of manufactured housing mortgages is included in CFED’s new report, Toward a Sustainable and Responsible Expansion of Affordable Mortgages for Manufactured Homes. The report describes an important effort by the I’M HOME Loan Data Collection Project to compile and analyze loan origination and performance data on manufactured home loans. Manufactured homes are an important source of affordable housing for thousands of Pennsylvanians and millions of households across the US, which is why PHFA has invested more than $200 million in manufactured home mortgages during the past decade.

I am aware that there are many investors that, unlike PHFA, avoid manufactured home loans, possibly because they believe that these loans do not perform well. To the contrary, CFED’s new report, based on $1.7 billion of loan originations, finds that manufactured home mortgages actually perform comparably to general mortgage portfolios, and in some cases they outperform comparable site-built home loans.

An outstanding factor correlated in the study with superior loan performance is “high-touch” loan servicing of the sort practiced by PHFA for all of our loans. Steps taken by PHFA to help borrowers are not complicated but involve targeted communications with borrowers. For example, if a homeowner falls more than 12 days delinquent during the six-month period after the loan closes, PHFA staff will reach out by telephone to the customer prior to the 15th of the month.

Another example is that staff attempting to reach unresponsive homeowners will hand write addresses and use colored envelopes to avoid a formal business look. Postage is also applied by hand and not run through the office mail machine. The messages inside are handwritten in a friendly, informal tone and address borrowers by their first names. This not only raises the odds that the message will be read, but it also increases the likelihood the borrower will not be intimidated by the correspondence and will contact us. The goal is to let the borrower know that our staff cannot help them if they ignore the situation.

Since 2003, PHFA has helped nearly 1,100 borrowers, including owners of both manufactured and site-built homes, who would have otherwise certainly lost their home to foreclosure. We use a variety of tools, including lowered interest rates and extended repayment plans. The typical household helped by this program is a family of three with a remaining loan balance of about $70,000. A recent review of the special-treatment loans shows that 59 percent remain current with payment, 38 percent are delinquent and only 3 percent are in foreclosure.

I encourage you to read the new CFED report for its full analysis, findings and recommendations about manufactured home mortgage performance. Affordable mortgages for manufactured homes can produce positive returns for investors and lenders and are essential for homeowners. More investors and lenders should take a serious look at investing in manufactured home mortgages as good business. A “sustainable and responsible expansion of affordable mortgages for manufactured homes” will be an essential element of a comprehensive approach toward finding affordable housing solutions that benefit our neighborhoods and households around the state and around the nation.

Brian A. Hudson, Sr. is Executive Director and CEO of the Pennsylvania Housing Finance Agency, the Commonwealth’s leading provider of capital for affordable homes and apartments. PHFA is one of the largest housing agencies in America. He is also President of the National Council of State Housing Agencies (NCSHA), a national membership organization of state housing finance agencies.

Education Sequester Will Hurt Poor and Special-Needs Kids

The National Education Association estimates that 7.4 million students and 49,365 school personnel will be affected by the sequester cuts if Washington does not reach a compromise on budget cuts.

Federal funding for education is expected to see a 5.1 percent decrease. The majority of these funds go to to Title 1, special education, Head Start and programs to support school lunches, improvements, and aid. Two groups of school kids -- the poor and the disabled - will therefore be the ones who suffer the most. Title 1 and Head Start stand to lose $740 million and $406 million, while special education will lose $644 million. Other cuts include: $58.8 million in Impact Aid, $126 million in Teacher Quality State Grants, $59 million in 21st Century Community Learning Centers, and $9 million in rural education.

Hawaii Senators Introduce Measures to Help Make Homeownership More Attainable for Native Hawaiians

Hawaii’s Congressional delegation, led by Senators Brian Schatz and Mazie Hirono, introduced various measures to make homeownership more attainable for Native Hawaiians. Schatz proposed three amendments to the Native Hawaiian Homes Commission Act (HHCA), which will expand housing program eligibility and succession authority to those who are one-quarter Hawaiian. It also authorizes the Hawaiian Homes Commission to set interest rates on home loans based on market conditions. Senator Hirono is an original co-sponsor of the bill.

Hirono proposed the Hawaiian Homeownership Opportunity Act, legislation to reauthorize the U.S. Department of Housing and Urban Development’s Native Hawaiian Housing Block Grant. This bill provides an avenue for Department of Hawaiian Home Lands beneficiaries to secure financing to purchase a home on Hawaiian Home Lands.

Is Income Inequality Increasingly Permanent?

A new paper published by The Brookings Institute as part of the Brookings Papers on Economic Activity asks the question, “Rising Inequality: Transitory or Permanent?” The researchers looked at pre- and after-tax incomes from 1987 to 2009 and concluded that income inequality is increasingly permanent in America. The data only considered male and household earnings and did not break out women’s income.

"Pound Foolish: Exposing the Dark Side of the Personal Finance Industry" Event

Our friends at the New America’s Asset Building Program hosted author Helaine Olen for an event featuring her new book, Pound Foolish: Exposing the Dark Side of the Personal Finance Industry. Olen critiques the personal finance industrial complex and makes the case that our systems and structures for achieving financial security are broken or badly damaged, and that profiteers have exploited the desire to for personal financial control and turned it into a profit center for their own benefit. To watch a live recording of the event, click here.

Assets & Opportunity Network Blog Updates

Don't forget to check out the national Assets & Opportunity Network blog for regular updates on asset-building developments from the states.

For generations of Americans, graduating from college has been the surest route to achieving the American Dream. Indeed, in his acceptance speech at the Democratic National Convention last September in Charlotte, North Carolina, President Obama noted, “Education was the gateway to opportunity for me.” Yet, the price tag for attending college continues to rise. With tuition and fees for resident students at public four-year colleges and universities rising at an annual rate of 5.6% (from 2001-2011), one has to wonder what this financial barrier means for the future of economic and social opportunity in the United States.

A new report from Brandeis University’s Institute on Assets and Social Policy sheds some light on this question, and the emerging answer is a growing wealth gap, especially along racial lines, resulting from unequal education opportunity. In their report, The Roots of the Widening Racial Wealth Gap: Explaining the Black-White Economic Divide, the Brandeis researchers find a growing wealth gap between white and African-American families. The main driver of this wealth gap is homeownership, but the Brandeis researchers also identify educational inequality as another key factor, and a major cause of this is paying for college. For example, financial considerations such as rising college costs, the need to work while in school rather than attend full-time, and the concern about taking on high levels of debt result in more African-American students (compared to whites) dropping out of college without a degree. Ultimately, the Brandeis researchers estimate that educational inequality is the fourth most important driver of the racial wealth gap, behind only homeownership, household income and unemployment.

So what’s the solution? Certainly, controlling college costs and ensuring that need-based aid keeps up with inflation are strategies that we, as a nation, must pursue. But there are also things that students, families and communities can do. Since we know that students with a savings account are much more likely to attend and finish college, we need to encourage all families to start saving money early for their children’s higher education. That strategy will have a positive impact on individual families’ financial health, their children’s job prospects and economic opportunities, and the overall health and prosperity of our country. As a nation, though, we’re not great savers, and for students from low-income families, who often are students of color and who will be affected most by the financial hardships of college, the challenge is even greater.

Here at the 1:1 Fund, we believe in the importance of saving for college and want to bring this opportunity to all children, especially students of color and those from lower-income backgrounds. In San Francisco, our partners at Kindergarten to College (K2C) work with every kindergartner in the San Francisco Unified School District, whose students are 41% Asian American, 23% Latino, 11% white, 10% African American, 1% Native American, and 14% other or declined to state. Of all SFUSD students, 26.5% speak English as a second language. In Mississippi, 100% of our student savers are African American and low-income. While the rising cost of college and the limits of need-based aid must be solved at the federal and state levels, individual families and their communities can help offset the financial burden of higher education by saving early and often – the 1:1 Fund exists to help them do just that. Please consider donating to the cause, and matching students’ savings, at www.1to1fund.org.

As the job market slowly continues to awaken from its long slumber, many young Americans remain searching for quality employment. For those who have struggled to find work, are underemployed or are unfulfilled by a current career path, starting a social venture may be the answer. Becoming a social entrepreneur doesn't hold the potential of a financial windfall like many other pursuits, but it can be a means to sustainable long-term employment that's personally rewarding and leaves a positive impact on society.

For those who hear the calling of this noble life choice, consider these sound strategies for starting a successful social enterprise:

Final Thoughts
Social entrepreneurship is a viable alternative to the workforce grind, providing a platform to find financial stability through helping others. By choosing a worthy cause, creating a sound business structure, and generating the ideas and energy necessary to succeed, you can create new opportunities for yourself and others while effecting real change.

What other tips can you provide to those who wish to engage in social entrepreneurship?

Brian Spero is a contributor for the online resource, Money Crashers Personal Finance. He writes about ideas related to economic policy, small business and money management topics.

Join PolicyLink and a panel of experts discussing promising new developments in children’s savings accounts. This webinar will explore the ways that accounts not only contribute to saving for college, but also improve educational outcomes, and the odds that low-income students and students of color enroll in college.

Hear from Jose Cisneros, Treasurer for the City and County of San Francisco, about the nation’s first universal children’s savings account program for kindergarteners. He will be joined by Dr. William Elliott, Assistant Professor and Director of Assets and Education Initiative at the University of Kansas, Leigh Tivol, Director of Savings and Financial Security at CFED, and Reid Cramer, Director of the Asset Building Program at the New America Foundation. They will describe the latest research, models we’re seeing across the country and opportunities to support national policy advocacy.

To register for the webinar, click here.