Helping Low & Moderate-Income
Households to Save Money
Innovations In Saving
American Savings Education Council
Spring 2011 Partners Meeting
April 13, 2011
©2011 D2DFund, Inc.
Doorways to Dreams (D2D) Fund
 Mission: strengthen the financial
opportunity and security of low and
moderate income consumers by
innovating, incubating & stimulating
new financial products and policies
 Non-profit 501(c)3 headquartered in
Roxbury, Massachusetts
 Founded in 2000 by Harvard Business
School Professor Peter Tufano
 Focus on innovation,
scale & real-world
testing
©2011D2DFund,
D2DFund,Inc.
Inc.
©2010
Saving Policy / Product Design Spectrum*
Coerce
saving
Social
Security,
UK child
trust fund
©2011D2DFund,
D2DFund,Inc.
Inc.
©2010
Make it
hard not
to
Defaults,
bundling
Make it
Easier
Workplace,
tax time
saving
Bribe
People
Incentives
* Tufano and Schneider, 2008
Use
Social
Networks
ROSCAs,
peer
support
Make it
Fun
Prizelinked,
collectible
savings
Quick Poll – What’s More Exciting?
DEPOSIT SLIP
©2011D2DFund,
D2DFund,Inc.
Inc.
©2010
Gaming & Saving
38% of those with incomes below $25,000 USD think that
winning the lottery represents the most practical way for
them to accumulate several hundred thousand dollars.
- 2006 Consumer Federation of America study*
Lottery players may seek:
1) entertainment
2) financial planning / wealth building
Can we strengthen #2 without losing #1?
©2011D2DFund,
D2DFund,Inc.
Inc.
©2010
* http://www.commondreams.org/news2006/0109-05.htm
How about “Prize-Linked Savings”?
 Concept:
– Earn chance(s) to win by saving
– Forego part of return to fund prize(s)
 Why?
– Make saving fun, exciting, interesting
– Divert gaming dollars to saving
– Exploit our weakness for evaluating odds
 Consider:
– $60 billion in US lottery sales
– Average of $515 per US household
– 80% of gambling revenue from HH w/ income <$50k*
*Source: Tufano, Maynard and De Neve, Consumer Demand for Prize-Linked Savings.
©2011D2DFund,
D2DFund,Inc.
Inc.
©2010
International Precedent
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Argentina
Brazil
Denmark
Germany
Great Britain
Kenya
India
Indonesia
Ireland
Mexico
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New Zealand
Oman
Pakistan
South Africa
Spain
Sri Lanka
Sweden
Turkey
United Arab
Emirates
Noteworthy:
 $47B in UK “Premium Bonds” outstanding, 23MM holders
 Swedish “Lottery Bonds” program est. 1918
 Prizes range: $1.7M tax free (UK), Mercedes (Oman),
Motorcycle (Pakistan), DVDs (Mexico)
©2011D2DFund,
D2DFund,Inc.
Inc.
©2010
A Test
– Proof-of-concept in the US
+ Pilot in 2009 with 8 Michigan credit unions
+ $100,000 grand prize
+ $3.3K / month in smaller prizes
+ $25 deposit in 1 year Share Cert. = 1 chance to win
+ Max = 10 chances / month (120 per year)
©2011D2DFund,
D2DFund,Inc.
Inc.
©2010
Key Prize-linked Savings Questions
– Would people want it (demand)?
– Does “fun” work?
– Would it make a difference (impact)?
– New savers? New savings?
– Is it good business (sustainability)?
©2011D2DFund,
D2DFund,Inc.
Inc.
©2010
Save to Win Pilot Year Results (2009)
 Sales
– 11,600 accounts opened
– $8.6MM deposits
 Survey findings (n=~6k / 50%+)
– Household income < $60K: 67%
– Less than 40k: 44%
– Less than $20k: 16%
– < $2k in financial assets: 28%
– Less than a college education: 65%
– Spent on lottery / gambling in prior 6 months: 59%
– Racial / ethnic minority: 27%
©2011D2DFund,
D2DFund,Inc.
Inc.
©2010
Future of Prize-Linked Savings (PLS)
– Save to Win continued to grow in 2010
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Participating credit unions: from 8 to 36
Accounts: from 11,600 to 16,833
Average balance: from $734 to $1,673
Deposits: from 8.5MM to 28.2MM
Total winnings: 233k
– PLS growing elsewhere
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–
–
©2011D2DFund,
D2DFund,Inc.
Inc.
©2010
PLS bills passed in MD, ME & RI
Bills introduced in IA, MS, NE, NM & WA
CUs moving ahead in AL, FL, NC & NM
Two state lotteries studying PLS offerings
Saving Policy / Product Design Spectrum*
Coerce
saving
Social
Security,
UK child
trust fund
©2011D2DFund,
D2DFund,Inc.
Inc.
©2010
Make it
hard not
to
Defaults,
bundling
Make it
Easier
Workplace,
tax time
saving
Bribe
People
Incentives
* Tufano and Schneider, 2008
Use
Social
Networks
ROSCAs,
peer
support
Make it
Fun
Prizelinked,
collectible
savings
What Makes “Easy”?
–
–
–
–
–
–
Convenient
Timely
Painless (relatively)
Relevant
Simple
Someone available to help
©2011D2DFund,
D2DFund,Inc.
Inc.
©2010
An Easy National Saving Strategy
Tax (refund) Time...
$300,000,000,000+
+ U.S. Savings
Bonds
“Spend Some”
©2011D2DFund,
D2DFund,Inc.
Inc.
©2010
+ Refund
Splitting...
“Save Some”
Bonds Make It Easy
– A Presidential announcement (9/2009)
– Universal tax time savings infrastructure
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A campaign: Bonds Make It Easy
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Targets: gatekeepers & consumers
Goal: 50k users / $25MM (2011),
1MM / $500MM (2020)
Distribute message via partners, media,
social media & direct outreach
Educate tax prep industry, tax software
makers & public officials
Results: 1.6k buyers / $400k saved (2009)
25k buyers / $11MM saved (2010)
©2011D2DFund,
D2DFund,Inc.
Inc.
©2010
Contact Information
Timothy Flacke
Executive Director
D2D Fund, Inc.
[email protected]
www.d2dfund.org
www.bondsmakeiteasy.org
www.savetowin.org
617.541.9064
©2011D2DFund,
D2DFund,Inc.
Inc.
©2010