Demonstrating
Opportunity
A Compendium of
Practical Experience
and Lessons Learned
from the SEED Initiative
By Bob Friedman, Liana Humphrey, Carl Rist, Barbara Rosen,
Leigh Tivol, Rochelle Watson and Katie Wright
About SEED (Savings for Education,
Entrepreneurship and Downpayment)
The SEED Initiative is a 10-year national policy, practice and
research endeavor to develop, test, inform and promote
matched savings accounts and financial education for
children and youth. SEED is led by CFED, the Center for
Social Development, the Initiative on Financial Security
of the Aspen Institute, the New America Foundation,
the University of Kansas School of Social Welfare, RTI
International, state and community partners, and a growing
number of national funders. Visit seed.cfed.org for more
information.
About CFED
Established in 1979 as the Corporation for Enterprise
Development, CFED is a nonprofit organization that
expands economic opportunity by helping Americans
start and grow businesses, go to college, own a home
and save for their children’s and their own economic
futures. We identify promising ideas, test and refine them
in communities to find out what works, craft policies and
products to help good ideas reach scale, and develop
partnerships to promote lasting change. We bring together
community practice, public policy and private markets
in new and effective ways to achieve greater economic
impact. CFED works nationally and internationally through
its offices in Washington, DC; Durham, NC; and San
Francisco, CA. Visit www.cfed.org for more information.
— Page 2 —
Table of Contents
Acknowledgements .............................................................................................................................................................................................................................. 6
Section A: Overview of SEED Initiative
Introduction ............................................................................................................................................................................................................................................ 12
Overview ................................................................................................................................................................................................................................................. 14
History and Rationale ....................................................................................................................................................................................................................... 19
Section B: Profiles of SEED Community Partners
Introduction ............................................................................................................................................................................................................................................ 28
Beyond Housing/Neighborhood Housing Services ........................................................................................................................................................... 29
Boys & Girls Clubs of Delaware ................................................................................................................................................................................................. 32
Cherokee Nation ................................................................................................................................................................................................................................. 36
Foundation Communities ................................................................................................................................................................................................................ 40
Fundación Chana y Samuel Levis ................................................................................................................................................................................................ 44
Harlem Children’s Zone .................................................................................................................................................................................................................. 48
Juma Ventures ........................................................................................................................................................................................................................................ 52
Mile High United Way ...................................................................................................................................................................................................................... 56
People for People ................................................................................................................................................................................................................................ 60
Sargent Shriver National Center on Poverty Law ............................................................................................................................................................ 64
Southern Good Faith Fund ............................................................................................................................................................................................................ 68
Oakland Livingston Human Service Agency ......................................................................................................................................................................... 72
Section C: Lessons from SEED Practice
Introduction ............................................................................................................................................................................................................................................ 80
Recruitment ............................................................................................................................................................................................................................................ 81
Financial Education .............................................................................................................................................................................................................................. 84
Account Options ................................................................................................................................................................................................................................. 89
Asset Limits ............................................................................................................................................................................................................................................. 93
Account Incentives .............................................................................................................................................................................................................................. 96
Financial Aid ............................................................................................................................................................................................................................................ 99
Working with Community-Based Organizations .............................................................................................................................................................. 103
Account Oversight ............................................................................................................................................................................................................................ 107
Working with Foster Youth .......................................................................................................................................................................................................... 110
Working with High School-Aged Youth ................................................................................................................................................................................ 113
Working with Financial Institutions .......................................................................................................................................................................................... 116
Working with Young Children ..................................................................................................................................................................................................... 120
— Page 3 —
Section D: Appendices
Appendix A: SEED Learning Agenda ....................................................................................................................................................................................... 130
Appendix B: SEED Site Visit Protocol ...................................................................................................................................................................................... 132
Appendix C: SEED Community Partner Performance Standards ............................................................................................................................ 138
Appendix D: SEED Request for Proposals ........................................................................................................................................................................... 147
Appendix E: Rollover of SEED Accounts ............................................................................................................................................................................... 173
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Acknowledgements
The following individuals and organizations all played important roles in the practical demonstration of matched savings
accounts for children and youth as part of the SEED Initiative. Contributing in different ways and at different times, all were
critical to the ultimate success of the SEED Initiative. To them, we will be forever grateful.
SEED Community Partners
Beyond Housing/
Neighborhood Housing
Services (NHS)
Amy Elliot, Chris Krehmeyer
Foundation Communities
Melissa Garcia, Julian Huerta
Karen Lyons, Walter Moreau
Lisa Reyes Mason, Inesia Robinson
Linda Thomson, Eric Zegel
Boys & Girls Clubs of
Delaware
Fundación Chana y
Samuel Levis
Phil Arendall, Diane Jefferson
Liza Gallardo, Iris Medina
George Krupanski, Francine McGriff
Mariely Rivera, Ana Rodriguez
Cherokee Nation
Harlem Children’s Zone, Inc.
Anna Knight, Gina Martinez
Caressa Singleton, in memoriam
Julie Skinner, Alice Smith
Suzette Burgess, Geoffrey Canada
Shay Smith, Crystal Washington
Jazmine Credell, Betina Jean-Louis
Serina Moya, Rachel Severs
Kate Shoemaker
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 6 —
and Lessons Learned from the SEED Initiative
Juma Ventures
Vini Bhansali, Mimi Frusha
Gabe Mello, Maria Sison
Marc Spencer, Doris Tseng
Oakland Livingston
Human Service Agency
(OLHSA)
Don Jones, Susan Mosqueda
Eric Muschler, Tamara Orza
Genevieve Pajulio, Tameka Ramsey
Nancy Ward, Contessa Washington
Mary Wiltrout, Traci Wooley
Mile High United Way
Kippi Clausen, Julie Hegge
Barclay Jones, Philippe Marquis
Tori Myers, Beth Phillips
Chuck Shannon, Bart Wilke
Sargent Shriver National Center
on Poverty Law
John Bouman, Lorri McClinton-Powell
Dory Rand, Rick Rand
Jami Schlafer
Southern Good Faith Fund
People for People, Inc.
Rev. Herbert Lusk, Dennis Mann
Angela Duran, Mindy Maupin
Ramona McKinney
Andrea Padron, Frank Robinson
André Williams
— Page 7 —
National Partners
Montana
CFED
Rural Dynamics, Inc.: Karen Heisler, Will Kinder
Aspen Institute Initiative on Financial Security: Lisa Mensah
Center for Social Development at Washington University
in St. Louis: Margaret Clancy, William Elliott III, Jin Huang,
North Carolina
Action for Children North Carolina: Barb Bradley,
Alexandra Forter Sirota, Sorien Schmidt
Elizabeth Johnson, Johnny Kim, Youngmi Kim, Soda Lo,
Vernon Loke, Lisa Reyes Mason, Yunju Nam, Margaret
Oklahoma
Sherraden, Michael Sherraden, Bob Zager
Oklahoma Policy Institute: David Blatt, David Reisdorph
New America Foundation: Ray Boshara, Reid Cramer,
Texas
Justin King
Center for Public Policy Priorities: Don Baylor,
RTI International: Ellen Marks, Bryan Rhodes
Celia Hagert
University of Kansas School of Social Welfare: Deborah
Adams, Sondra Beverly, Toni Johnson, Ed Scanlon, Angela
SEED Financial Institution Partners
Sellami, Jennifer Wheeler-Brooks
Artisans’ Bank
Bank of Oklahoma
Other Research Partners
Carver Bank
University of Michigan: Trina Shanks
Citibank
College Choice Indiana 529 Savings Program
State Policy Partners
Commerce Bank
Compass Bank
Arkansas
Doral Bank
Southern Good Faith Fund: Angela Duran, Mike Leach,
JP Morgan Chase
Kimberly Reeve DeLong, Michael Rowett, Matt Price
Michigan Education Savings Plan
California
People for People Credit Union
Assets Policy Initiative of California/Earned Assets
Southern Bancorp
Resource Network: Sunaena Chhatry, Ben Mangan,
TIAA-CREF
Stephanie Upp
Young Americans Bank
Illinois
Voices for Illinois Children: Anne Courter, Jerry Stermer
Sargent Shriver National Center on Poverty Law: John
Bouman, Karen Harris, Andrea Kovach, Dory Rand
Heartland Alliance: Chris Giangreco, Gina Guillemette
Kentucky
Office of the State Treasurer: Angela Burton,
Jonathan Miller
Secretary of State: Kristin Bradley, Trey Grayson
Michigan
Community Economic Development Association of
Michigan: Don Jones, Tony Lentych, Eric Muschler
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 8 —
and Lessons Learned from the SEED Initiative
SEED Advisory Board Members, 2002-2009
Annie E. Casey Foundation: Irene Skricki
Center for Social Development: Margaret Clancy,
Michael Sherraden
CFED: Bob Friedman, Carl Rist
Charles Stewart Mott Foundation: Benita Melton
Citi Foundation: Brandee McHale, Leslie Meek-Wohl,
Ellen Tower
Ewing Marion Kauffman Foundation: Andres Dominguez
Ford Foundation: Frank DeGiovanni, Kilolo Kijakazi,
Mitty Owens, Johannes Cleary
Initiative on Financial Security, Aspen Institute: Lisa Mensah
Jim Casey Youth Opportunities Initiative: Leonard Burton,
Gary Stangler, Josh Verville
Lumina Foundation for Education: Jill Wohlford
New America Foundation: Ray Boshara, Reid Cramer
Realize Consulting Group: Rick Williams
Richard and Rhoda Goldman Fund: Eric Sloan
UCLA: Duncan Lindsey
University of Kansas: Deborah Adams, Ed Scanlon
CFED
Fiona Adams
Jennifer Brooks
René Bryce-Laporte
Lisa Buckley
Chris Campbell
Rosalyn Crain
Cecilia Cuthbert
Laura Ewald
Bob Friedman
Liana Humphrey
Jan Huneke
Lisa Kawahara
Kevin Keeley
Kristin Lawton
Andrea Levere
Michael Liburd
Camille Palacio
Ida Rademacher
Sarah Rankin
Carl Rist
Barbara Rosen
Funders
Leigh Tivol
Ford Foundation
Jerome Uher
Charles and Helen Schwab Foundation
Rochelle Watson
Jim Casey Youth Opportunities Initiative
Carol Wayman
Citi Foundation
Katie Wright
Evelyn and Walter Haas, Jr. Fund
Ewing Marion Kauffman Foundation
Charles Stewart Mott Foundation
Richard and Rhoda Goldman Fund
Lumina Foundation for Education
Metlife Foundation
W.K. Kellogg Foundation
Edwin Gould Foundation for Children
Special Thanks
We would like to thank Rick Williams, president of Realize
Consulting Group, for doing a masterful job of coordinating
the work of the national partners in the SEED Initiative.
In addition, we congratulate our partners and colleagues
who welcomed new children of their own during the
course of the SEED demonstration. More than two dozen
baby “SEEDlings” arrived throughout the initiative – happy
Advisors/Consultants
reminders of our shared goal of opening the doors of
Mark Constantine
opportunity to every child. Most importantly, we would like
Anne Stuhldreher
to acknowledge and salute all of the SEED accountholders
Christine Robinson
and their families who helped to demonstrate that SEED
accounts can make a difference in the lives of young people
and are worthy of investment by our nation.
— Page 9 —
— Page 10 —
Section A:
Overview
of the SEED
Initiative
— Page 11 —
A
Introduction
Demonstrating Opportunity: A Compendium of Practical Experience and Lessons Learned
from the SEED Initiative
Launched in 2003, the Savings for Education, Entrepreneurship and Downpayment (SEED) Initiative is a 10-year, multimillion-dollar national policy, practice and research endeavor to develop, test, inform and promote matched savings accounts
and financial education for children and youth. SEED was designed to set the stage for universal, progressive American
policy for asset building among children, youth and families. SEED is led by a number of organizations that are leaders in the
asset-building field, including CFED, the Center for Social Development at Washington University in St. Louis, the Initiative
on Financial Security of the Aspen Institute, the New America Foundation, the University of Kansas School of Social Welfare
and RTI International.
SEED was conceived to address a number of key issues
Terminology
about matched children’s savings accounts, such as:
n
The psychological, social, behavioral and economic effects
of SEED accounts;
The term “SEED accounts” is used to describe the
matched savings accounts that were established for
n
The best way to engage working-poor families;
SEED participants. Child Development Accounts
n
The most effective roles of the public, private and
(CDAs) is a similar term that has come into wide
nonprofit sectors in this area;
n
usage among advocates and researchers and that
The public programs most likely to garner support of this
effort; and
n
saving money and to distinguish these accounts from
The systems able to deliver accounts effectively to millions
of children.
other products, such as unmatched accounts offered
to children by commercials banks. Other widely used
With these issues and other questions in mind, SEED was
designed as an integrated, multifaceted effort consisting of:
n
emphasizes the value of these accounts beyond
Community practice: Twelve community partners from
across the United States and its territories were engaged
to test and document specific aspects of children’s savings
terms also in use include Children’s Savings Accounts,
Kids Accounts and Lifetime Savings Accounts. As
long as they embrace the core values and design
principles of universality, lifelong, progressivity and
asset-building, we treat these terms synonymously.
programs.
n
Research: Rigorous research is being conducted to assess
outcomes through account monitoring, in-depth interviews, cross-sectional surveys, impact studies and other methods.1
n
Policy: Federal and state policy development, research and advocacy efforts were initiated to establish progressive
universal systems of accounts and protect children and families from asset penalties and other benefit penalties.
n
Market development: Product and market development efforts were initiated to design and implement efficient and
profitable accounts.
Central to SEED was a community practice “demonstration” that established more than 1,300 SEED accounts at 12
community partner sites across the country. Each of these partners established a specific number of matched savings
accounts for children or youth, and each engaged a different age cohort, utilized slightly different savings incentives, delivered
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 12 —
and Lessons Learned from the SEED Initiative
financial education and worked with financial institutions to deliver accounts.2 This compendium encompasses CFED’s
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experience with this practical element of SEED, as demonstrated in the 12 community partner sites.
This compendium was created by CFED to serve as an historical record of the work completed by the community partners
in SEED, and as a reference that presents lessons learned from both the work of the community partners and CFED’s
efforts in organizing and leading this community practice demonstration. The compendium is intended for use by CFED staff,
SEED community partners, funders and other nonprofits, researchers and community practitioners who are interested in the
details of implementing this community practice demonstration.
The lessons in this compendium are based on careful examination and analysis of the experiences of the SEED community
partners. This knowledge was gained through frequent site visits, regular reports from the community partners, and semiannual gatherings of SEED national and community partners. At these gatherings, numerous issues related to SEED were
discussed and debated in great detail. In addition, other lessons were drawn from a careful examination of CFED’s role in
organizing and leading the community practice demonstration in SEED, conducted by an external consultant.
Some of the lessons and recommendations compiled here have been documented in publications produced and
disseminated by CFED during the course of SEED; others were recorded in internal memos and other documents that have
not been shared externally. With this compendium, we have attempted to compile this vast body of knowledge into one
comprehensive reference on the community practice component of SEED.
This compendium is meant to be descriptive of our experience in conducting the community practice demonstration of
SEED, prescriptive of how the lessons from SEED should influence public policy design, and informative of how one might
organize and conduct a similar national demonstration. While we have included a large amount of lessons and detailed
information on SEED practice based on our experience, this compendium is not a “nuts and bolts” toolkit with worksheets,
templates and step-by-step instructions. For lessons and guidance on how to operate a matched children’s savings account
program, readers should instead consult a separate publication available from CFED, From Piggy Banks to Prosperity: A Guide
to Implementing Children’s Development Accounts. This compendium is also not a summary of the formal research findings in
SEED. For those findings, readers should consult a forthcoming synthesis of SEED research that will be released jointly by
the SEED national partners.
This compendium is composed of three main sections. The first section provides a brief overview of SEED, including a more
detailed description of its key components and primary partners, along with a brief history of the initiative and its rationale.
The second section provides detailed descriptions of each of the 12 SEED community partners, including the basic design
and unique qualities of each site, along with key achievements and lessons learned. The third section is a compilation of the
numerous lessons that CFED and the community partners gathered during the community practice phase of SEED, ranging
from lessons about recruiting participants and delivering financial education, to working with financial institutions and special
populations, such as foster youth.
Finally, SEED would not have been possible without the inspiration, dedication and hard work of the SEED community
partner organizations and their staff. We would like to take this opportunity to acknowledge the crucial role of our
community partners in SEED and our indebtedness to them.
Section A: Overview of the SEED Initiative
— Page 13 —
A
Overview
Vision and Goals
Research and practice suggest that possessing even a few thousand dollars in assets gives people an economic foothold.
Asset ownership connects individuals to the economy, raises their economic expectations and helps shape their futures.
Moreover, research and experience from matched savings programs for adults demonstrates that – given opportunity and
support – even those living well below the federal poverty line will save, build assets and participate in the mainstream
economy. While assets are important to adults, they are even more powerful earlier in life, when aspirations, knowledge and
savings practices are forming.
Launched in 2003, the Saving for Education, Entrepreneurship and Downpayment (SEED) Initiative is a 10-year national
policy, practice and research endeavor that was designed to develop, test, inform and promote matched savings accounts
and financial education for children and youth. SEED was initiated to help set the stage for universal, progressive American
policy for asset building among children, youth and families. The purpose of SEED has been to answer a simple question:
What would happen if every child in America grew up knowing that he or she had a nest egg to go to college, buy a home
or start a business?
The objectives of SEED include helping policymakers, practitioners, funders, researchers, child advocates and asset-building
experts learn about:
n
The psychological, social, behavioral and economic effects of SEED accounts;
n
The best way to engage working-poor families;
n
The most effective roles of the public, private and nonprofit sectors in this area;
n
The public programs most likely to garner support of this effort; and
n
The systems able to deliver accounts effectively to millions of children.
Key Components
With these and other issues in mind, SEED was designed as an integrated, multifaceted effort consisting of multiple
components, including community practice, research, federal policy, state policy, communications and market development.
Community Practice
At the heart of SEED was a community practice, or demonstration, component. Launched in 2003 and completed in 2008,
this consisted of 12 community organizations nationwide that tested and documented specific aspects of children’s savings
programs. These community partners established more than 1,300 accounts, engaged different age cohorts and financial
institutions, and made use of a variety of financial education approaches and savings incentives. The community partners
provided not only practical knowledge about what worked best in the implementation of SEED accounts, but also valuable
evidence, stories and images. Eleven of the community partners established smaller programs, offering about 75 accounts
at each site. One larger community partner in Michigan, the “pre-school demonstration and impact assessment,” established
almost 500 accounts in a quasi-experimental design that included a roughly equal number of participants in a comparison
group.
Demonstrating Opportunity: A Compendium of Practical Experience
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and Lessons Learned from the SEED Initiative
Research
One key component of SEED has been rigorous research conducted by the SEED research team to assess outcomes
through account monitoring, in-depth interviews, cross-sectional surveys, impact studies, and other methods. All aspects
of SEED practice have been and are being evaluated. There are six separate research studies in SEED that provide both
qualitative and quantitative analysis on the effects of SEED accounts. Research on the quasi-experimental site in Michigan
includes treatment and comparison groups, and is rigorously evaluating the benefits of matched children’s development
accounts set up through the state’s 529 plan and delivered through a community organization. The 11 community partners
were evaluated via surveys, an account monitoring study, focus groups and in-depth interviews.
The final component of SEED research is the SEED for Oklahoma Kids (SEED OK) experiment. SEED OK is an
experimental test in a full population – with no selection bias – regarding the efficacy of a universal system of CDAs
provided at birth. SEED OK has opened accounts for 1,360 children across Oklahoma, with an initial $1,000 deposit, and
research will run through 2014.
By combining the evaluations of the various SEED demonstration efforts, knowledge has been and continues to be
generated about the benefits of SEED accounts for children and families. For more information on the six research studies
in SEED and the various papers and reports produced by the SEED research team, see
http://csd.wustl.edu/AssetBuilding/SEED/Pages/Default.aspx.
Federal Policy
Another component of the SEED initiative, largely led by the New America Foundation, included federal policy
development, research and advocacy to establish progressive universal systems of accounts and protect children and families
from asset and other benefit penalties. Through SEED federal policy efforts, multiple pieces of legislation were introduced
or proposed to further children’s savings policy. The Americans Saving for Personal Investment, Retirement and Education
(ASPIRE) Act is the most ambitious of these legislative proposals that has been introduced to date, and would create
universal, progressive CDAs for every American child at birth.
Another critical component of SEED federal policy has been documenting and seeking resolution on policies that impede
the progress of CDAs, including public assistance asset tests. In particular, though not successful, CFED sought resolution of
assets tests for which full responsibility lies at the federal level, including assets tests for households with disabled children or
adults who qualify for Supplemental Security Income (SSI).
State Policy
Additionally, the SEED Initiative has included state-level policy development, research and advocacy to establish children’s
savings initiatives. SEED state policy development and advocacy has included a variety of complementary strategies, including:
n
Conducting research and seeking resolution of state policies, such as asset limits, that impede the progress of children’s
savings in states with SEED community partners;
n
Selecting, supporting and managing state policy partners that are working to design and implement model SEED policies at
the state level, and the public programs most likely to garner support; and
n
Synthesizing SEED data and concepts into public policy models and messages targeted toward state governments.
Additional complementary strategies have included monitoring the nation to identify and track the progress of innovative,
SEED-like policy models at the state level; forming and supporting state coalitions for CDAs; and educating advocates while
Section A: Overview of the SEED Initiative
— Page 15 —
A
working with key opinion leaders in state agencies and legislatures to elevate the profile of asset building for children and
A
youth.
Communications
In order to build awareness and support for children’s savings programs, SEED also included a large communications
component. This included producing messages, materials, tools, event support and other efforts to advance SEED and CDAs,
developing the capacity of the SEED community partners to communicate about CDAs and gather stories and images of
accountholders, and conducting research on the language and messages most effective in communicating about CDAs. In
addition, separate outreach about CDAs to the mainstream media on a national level was coordinated by the New America
Foundation.
Market Development
The final component of SEED was product and market development to study, design and implement efficient and profitable
CDAs. In SEED, financial institutions collaborated with each of the community partners to deliver SEED accounts. State 529
programs delivered accounts at the Illinois SEED site, in the Michigan pre-school demonstration and in SEED OK; banks and
credit unions delivered accounts at the other SEED sites.
National Partners
Because of its ambitious nature and scope, SEED relied on the cooperation and engagement of numerous partners to
achieve its goals. Six national partners joined together to lead SEED efforts:
CFED
Founded in 1979 as the Corporation for Enterprise Development, CFED works to expand economic opportunity by helping
Americans start and grow businesses, pursue education, own a home and save for their children’s and own economic
futures. As a leader in economic development, CFED works at the national, regional, state and local levels in collaboration
with numerous partners. CFED is driven by the belief that expanding economic opportunity to include all people will bring
together social equity, alleviate poverty and lead to a more sustainable economy for all. CFED brings together community
practice, public policy and private markets in new and effective ways to achieve greater economic impact.
In SEED, CFED was primarily responsible for managing and supporting the SEED community partners; state policy, including
proactive efforts to achieve state policy breakthroughs and defensive efforts to protect accountholders from asset penalties;
and leading and coordinating the SEED Policy Council. In addition, CFED shared responsibility for communications, federal
policy and market development activities.
The Center for Social Development
The Center for Social Development (CSD) is part of the George Warren Brown School of Social Work at Washington
University in St. Louis. CSD is a research and policy center that promotes innovation and the study of social development
in building assets of individuals, families and communities; investing in people and increasing labor force participation and
productivity; enhancing social skills and family stability; promoting strong communities, active citizenship, mutuality and
interracial harmony; and creating responsive and effective community organizations. CSD has a multipurpose agenda that
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— Page 16 —
and Lessons Learned from the SEED Initiative
encompasses social theory, research, policy innovation, projects in the community and teaching. Projects connect academic
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and applied interests, and build bridges across public, nonprofit and private sectors.
In SEED, CSD has been primarily responsible for: leading SEED OK and account monitoring research; collaborating on
other SEED research studies; researching and developing inclusive 529 policy and practice at the state level; and providing
training and support to the SEED community partners in the use of Management Information System for Individual
Development Accounts (MIS-IDA). CSD also shares responsibility for convening and facilitating the work of the Research
Advisory Council.
The University of Kansas School of Social Welfare
The University of Kansas School of Social Welfare (KU) educates students, conducts research and performs community
service in order to enhance the well-being of individuals and communities. KU supports research and policy development
through its offices of Child Welfare Research and Development, Aging and Long-Term Care, Adult Mental Health, Social
Policy and Community Development.
In SEED, KU was primarily responsible for several components of SEED research, including the pre-school demonstration
and impact assessment at OLHSA, the parent survey and the in-depth interviews with parents and youth. In addition, KU
shares responsibility for convening and facilitating the Research Advisory Council.
The New America Foundation
The New America Foundation is an independent, nonpartisan, nonprofit public policy institute that was established in 1999
to support a new generation of public intellectuals and public policy thinkers to address the next generation of challenges
facing the United States. Described by The New York Times as “breaking out of the traditional liberal and conservative
categories” and by Newsweek as “a hive of state-of-the-art policy entrepreneurship,” New America’s mission is to produce
solutions-oriented research and writing on our nation’s most difficult policy challenges. With an emphasis on big ideas,
impartial analysis and pragmatic solutions, New America invests in outstanding individuals whose ability to communicate to
wide and influential audiences can change the country’s policy discourse in critical areas, bringing promising new ideas and
debates to the fore.
In SEED, New America was responsible for researching, developing and drafting federal policy proposals for progressive
universal CDAs. As part of the SEED communications efforts, New America was responsible for communication with the
mainstream media about federal and national policy to support CDAs.
The Initiative on Financial Security
The Initiative on Financial Security (IFS) at the Aspen Institute is the nation’s leading policy program that uses a businessdriven approach to create smart solutions that help Americans save, invest and own. Its mission is to examine solutions
to America’s asset crisis so more Americans can own homes, finance college and prepare for a secure retirement. In
collaboration with business leaders, IFS is exploring and recommending financial products and policies that create assetbuilding opportunities for the tens of millions of Americans who currently lack access to tax advantages or employer
subsidized savings vehicles.
Section A: Overview of the SEED Initiative
— Page 17 —
In SEED, IFS provided advice for delivering inclusive systems of CDAs using private sector financial institutions’ expertise and
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capacities, and helped organize financial sector support and advocacy for inclusive account systems.
RTI International
RTI International is one of the world’s leading research institutes, dedicated to improving the human condition by turning
knowledge into practice. RTI has more than 3,800 professionals providing research and technical services to governments
and businesses in more than 40 countries in the areas of health and pharmaceuticals, education and training, surveys and
statistics, advanced technology, international development, economic and social policy, energy, and the environment.
In SEED, RTI has been responsible for several research aspects, including conducting interviews for the impact assessment of
the quasi experiment at OLHSA and leading the process survey, as well as conducting the baseline and follow-up surveys
for SEED for Oklahoma Kids.
Additional Support
The SEED Initiative was supported by generous contributions from numerous charitable foundations, including the Ford
Foundation, the Jim Casey Youth Opportunities Initiative, the Charles and Helen Schwab Foundation, the Citi Foundation, the
Ewing Marion Kauffman Foundation, the Charles Stewart Mott Foundation, the Richard and Rhoda Goldman Foundation, the
MetLife Foundation, the Evelyn and Walter Haas Jr. Fund, the W.K. Kellogg Foundation, the Lumina Foundation for Education
and the Edwin Gould Foundation for Children.
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and Lessons Learned from the SEED Initiative
History and Rationale
A
As the 1990s drew to a close, researchers and asset-building advocates began to comprehend the importance and promise
of inclusive asset-building in an effort to combat poverty, expand and stabilize the American middle class and secure the
future of the economy. The 2,364 low-income families participating in the American Dream Demonstration (ADD) (19972002)3 had established that – given the opportunity – low-income and even very poor families save, start businesses, buy
homes, pursue higher education, save for retirement and craft their futures. Individual development accounts (IDAs) had
become a national field, comprising tens of thousands of accounts, hundreds of community-financial institution partnerships,
and supportive public policies in most states, at the federal level, and increasingly, at the international level. If the creation of
the economic and social safety net was the great contribution of the 20th century to combating poverty, we began to think
of the building of the economic ladder – the creation of an opportunity state – as the policy horizon for the 21st century.
Initial Planning
Although the idea of CDAs had surfaced a decade or even centuries earlier,4 it was in the first years of the new millennium
that CSD, CFED and other asset-building leaders began to focus on a progressive system of CDAs as the most likely route
to a meaningful foundation for saving, education, entrepreneurship and downpayments for homeownership in America. As
evidence mounted, practice was refined and policy advanced during ADD, it became clear that additional steps would need
to be taken if the United States were to design and implement a progressive, universal savings and investment system for all
Americans. The Growing Wealth Working Group, a dynamic collection of innovative thinkers and opinion leaders gathered
by CFED in the early years of the new millennium, repeatedly identified the centrality of CDAs as a foundation for a simple,
inclusive, progressive, participant-centered and enduring asset-building system.
In early 2000, several dozen experts met to discuss and ultimately endorse the importance of pursuing a demonstration
and suggested it would be possible to model a 20-year development path by simultaneously examining different age cohorts
during a four- to five-year period. Based on the positive findings of this initial work, the Ford Foundation and Fannie Mae
Foundation funded an extensive research and planning effort in 2001.5
During the next few years, the scope and size of SEED expanded; then, after September 11, 2001, contracted. In 2003,
the SEED Initiative began with eight community partners, 450 accounts, core research studies and modest policy and
communications efforts. A Ford Foundation grant allowed the SEED national partners to add an additional quasiexperimental site in Michigan. In 2004, the Ford Foundation made a $19 million commitment to SEED, which allowed the
initiative to assume its full proportions and aspirations.
In the meantime, CDA practice, policy, markets and research have spread around the world to the United Kingdom, Canada,
Singapore, Uganda, Hungary, Mongolia, Korea, China, India and beyond.
Section A: Overview of the SEED Initiative
— Page 19 —
Timeline
A
The following timeline is the historical, current and projected trajectory of SEED by calendar year:
2000
Initial planning and conceptual convening
Intensive planning begins
2001
SEED proposal developed and distributed (October-December)
Fundraising and planning continue
2002
SEED Advisory Board approves “build-from-the-core” strategy
2003
One experimental partner and eight community partners selected to begin SEED community practice component
(a ninth community partner does not pursue its involvement) (June)
National public launch event on Capitol Hill
Children and families begin to open accounts at some sites
2004
CFED and national partners invited to propose SEED expansion (January-June)
Three additional community partners recruited (July-December)
Ford Foundation grant funds for expansion received (September)
National partner roles clarified and distinguished
Baseline surveys and interviews at experimental site completed (November)
469 out of target 1,300 accounts opened
ASPIRE introduced
2005
Community partner sites achieve full enrollment
State policy partners begin work on state-level innovations in CDAs
Planning for Universal Model launched
2006
Children and families save into accounts, without risk of tax and asset penalties
Focus group research undertaken to help clarify attitudes and messaging around CDAs
Oklahoma chosen as site for Universal Model
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 20 —
and Lessons Learned from the SEED Initiative
2007
First cohort of seven sites prepare for rollover by year-end
Polling work undertaken to gauge public opinion on CDAs
SEED OK (the new name for the Universal Model) accounts to be opened
2008
Second cohort of four sites plus pre-school experiment continue to work with families; prepare for rollover;
First cohort of sites completes rollover
2009
Second cohort of sites completes rollover
Research reports on community and pre-school demonstrations completed
National partners collaborate on and prepare to issue synthesis report
CFED holds National Conference on Children and Youth Savings
2011
First Impact Survey on SEED OK
2013
Second Impact Survey on SEED OK
A
The Rationale for CDAs
Research on asset-building accounts for adults, IDAs, has proven that:6
n
Given the opportunity, even very poor people will save. In fact, in ADD, the poorest decile of accountholders saved about
the same amount as the less poor, but at four times the rate.
n
Asset accumulation does, in fact, “change people’s heads,” increasing their confidence, goal orientation, initiative taking and
employment.
n
Asset accumulation changes the dialogue and dynamics of individuals and families and spreads financial skills and economic
orientation to others.
n
Matched savings and financial education lead to high-return investment in education/training, business start-up and
homeownership.
A universal, progressive system of asset-building accounts, established at birth for all children, could be a more economically,
socially and politically potent form of IDAs. Because accounts would be established at birth, these accounts could exert
their particular power to inspire, discipline, guide and grow with children in their early and most impressionable years.
Furthermore, because CDAs grow during the course of decades, they take full advantage of the “miracle” of compound
interest and may require lower levels of public investment. And like IDAs, bipartisan political support could be quite strong,
especially because children are particularly compelling beneficiaries.
A national, publicly-seeded children’s savings policy would likely impact:
n
Child welfare: Compared with other developed nations, the United States invests relatively little in our children. Full
implementation of the CDA concept could begin to reverse this trend and – over successive generations – reduce
Section A: Overview of the SEED Initiative
— Page 21 —
the intergenerational nature of poverty transmission, thus addressing one of the root problems leading to disadvantage
A
among children.
n
Education attainment: According to the College Board’s 2008-2009 report on trends in college pricing, from 20032004 to 2008-2009, the total cost of college at a four-year public institution rose more rapidly than published prices.
During this same time period, incomes rose more quickly for moderate- and upper-income families than for lower-income
families, making it even more difficult for lower income families to afford the rising costs of higher education.7 CDAs
address both the real challenge of financing higher education as well as the “sticker shock” of paying for college that tends
to reduce expectations. Research compiled and analyzed by Ed Scanlon and Deborah Page-Adams8 shows that holding
assets can change educational performance. For example, Scanlon and Page-Adams find that:
n
Homeownership promotes educational attainment among children, and
n
Savings and investment income promotes educational attainment among children.
n
National savings: According to Economic Security 2000, 60% of all Americans have less than $1,300 in savings, and “a
nation which does not save and invest will not grow and will not pass on a better standard of living to its children.”9 By
their nature, CDAs promote and reward savings and investment. Over generations, this could become common American
practice.
n
Debt reduction: A system of children’s accounts could be expected to reduce the need for borrowing, while increasing
the ability to distinguish “constructive credit” from destructive borrowing.
n
Wealth gap: While it increased for the upper quintile, net worth among low-income families declined significantly in the
1980s and the 1990s.10 The United States employs policies that promote asset building for the non-poor, but penalize
asset building by the poor. CDAs that facilitate asset accumulation for all American children will help to ensure that lowincome people are part of the public policies that support wealth-building.
n
Racial inequality: People of color own only a fraction of wealth compared to the wealth owned by their white
counterparts.11 CDAs facilitate asset accumulation for all American children and will help to ensure that people of varying
ethnicities are not denied entry to the economic mainstream.
n
Community renewal: Many public programs aim to more actively involve citizens in revitalizing their own communities.
Studies show that owning assets provides motivation for people to invest not just dollars, but time, effort and other
resources in creating more dynamic neighborhoods.12 CDAs provide incentives and make ownership possible for many
who may otherwise not be able to achieve it.
n
Family development: The family plays a powerful role in providing economic education and instilling financial values in
children. The intergenerational nature of both wealth and poverty highlights the importance of asset-building strategies
that engage parents and children. When established for children at birth, CDAs can engage family members at age- and
educationally-appropriate levels and restore families as participants in the financial sector.
n
Financial and economic inclusion and education: A universal, progressive system of children’s development accounts
could provide a connection to the mainstream financial and economic system for every child, and eventually, every adult
in the society. Moreover, such a system would provide a platform for financial education and understanding which could
lead to the introduction of basic financial education into the K-12 curriculum.
n
Hope and focus on the future: While quantifiable cause and effect is difficult to determine, anecdotal evidence suggests
that despair and lack of hope are key in many of the poor choices made by young people. Universal, progressive CDAs
would enable all children to look toward the future, a future in which they would be able to invest in themselves.
Children would be free to dream. Better, they would have the means to begin pursuing their dreams.
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 22 —
and Lessons Learned from the SEED Initiative
The Importance of Building Assets for Children
A
The SEED Initiative was grounded in a fundamental understanding of the financial security challenge faced by too many
children. For example, the Children’s Defense Fund reported in 2008 that 5.8 million American children, almost 1 in 13
children, live in extreme poverty. Of this group, young children, rather than school-aged children, are more likely to live in
extreme poverty.13
Viewed purely through an assets lens, the 2006 Survey of Income and Program Participation indicates that:14
n
27% of households with children are asset poor
n
49% of black households with children are asset poor
n
39% of Hispanic households with children are asset poor
n
19% of white households with children are asset poor
Additionally, per the U.S. Census Bureau, 2006 American Community Survey, 18% of children under 18 were income poor
(lived in households with income below the poverty line).15
As Michael Sherraden noted in his seminal work Assets and the Poor, assets matter. They determine in no small part overall
economic life chances.16 When people begin to accumulate assets, their thinking and behavior change as well. They think
more about their future and participate more in their communities. Research compiled and analyzed by Ed Scanlon and
Deborah Adams17 shows that assets can have an important impact on the well-being of children. For example:
n
Homeownership promotes educational attainment among children.
n
Homeownership decreases intergenerational poverty transmission.
n
Homeownership promotes more healthy and satisfied parents, which likely benefits children.
n
Savings and investment income promotes educational attainment among children.
n
Savings and investment income – above earned income – reduces intergenerational poverty transmission.
n
Savings have psychosocial benefits for adults, which likely enhance the well-being of children.
The hopes of children and parents, the data, the theory and the research strongly suggest that it is vitally important to
strengthen the financial base of America’s children. Marian Wright Edelman, president of the Children’s Defense Fund, says,
“strengthening the economic future of young families with children must become a priority for every sector of society.”18
For the organizers of the SEED Initiative, endowing all children with a CDA was one important way to achieve that goal.
Section A: Overview of the SEED Initiative
— Page 23 —
Endnotes
A
1
This compendium will refer to findings from SEED research – in particular, where those findings inform the practice of delivering matched children’s savings accounts
– but this publication is not designed to be a summary of SEED research findings.
2
The SEED for Oklahoma Kids (SEED OK) experiment, the final component SEED, encompasses elements of research, policy and practice. (Go to
http://csd.wustl.edu/AssetBuilding/SEEDOK/ for more information.) However, because the program is still underway at press time, this compendium does not include
lessons from the practical aspects of SEED OK.
3
ADD was a five-year demonstration and a more than seven-year evaluation of the efficacy of IDAs in expanding economic opportunity. Designed and coordinated
by CSD and CFED, and supported by 12 national funders, ADD was the first real and rigorous test of the efficacy of IDAs.
4
The first modern proposal for CDAs dates to Michael Sherraden’s seminal work, Assets and the Poor, A New American Welfare Policy. M.E. Sharpe: Armonk, NY. 1991.
5
See SEED Planning Report, 2001.
6
These lessons are drawn from experience with working-poor, adult accountholders. See CFED Background Paper “Lessons of ADD for SEED.” Washington, DC: CFED.
7
For more information, see http://professionals.collegeboard.com/profdownload/trends-in-college-pricing-2008.pdf.
8
Scanlon & Page-Adams. See also Zhan & Sherraden.
9
Problems and solutions. A national savings crisis. (2001). Economic Security 2000. Retrieved from www.economicsecurity2000.org/es/pr.asp.
10
Wolff, E.N. (2001). Assets and the tax code. In Shapiro, T.M. & Wolfe, E.N. (Eds.) Assets for the poor: The benefits of spreading asset ownership. New York: Russell Sage
Foundation.
11
Conley, D. (1999). Being black, lining in the red: Race, wealth, and social policy in America. Berkeley, CA: University of California Press.
12
Page-Adams, D. & Sherraden, M. (1996). What we know about the effects of asset holding: Implications for research on asset-based anti-poverty initiatives. (Working paper
no. 96-1). St. Louis: Center for Social Development, Washington University.
13
“State of America’s Children.” (2008). Washington, DC: Children’s Defense Fund.
14
“Survey of Income and Program Participation.” (2004 Panel, Wave 6). Washington, DC: U.S. Department of Commerce, Census Bureau. Calculations by Beacon
Economics.
15
U.S. Census Bureau, 2006 American Community Survey.
16
Sherraden, M. (1991). Assets and the Poor. A New American Welfare Policy. Armonk, NY: M.E. Sharpe.
17
Scanlon, E. & Page-Adams, D. (2002). Effects of asset holding on neighborhoods, families, and children: A review of the research. In Boshara, R. (Ed.), Building Assets.
Washington DC: CFED.
18
Oliver, M. & Shapiro, T. (2006). Black wealth, white wealth: A new perspective on racial inequality. New York: Taylor & Francis Group, LLC.
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 24 —
and Lessons Learned from the SEED Initiative
A
Section A: Overview of the SEED Initiative
— Page 25 —
— Page 26 —
Section B:
Profiles
of SEED
Community
Partners
— Page 27 —
Introduction
At the heart of SEED was the practical demonstration of SEED accounts in 12 communities across the United States and
its territories. This “SEED Practice” component was designed to demonstrate proof of concept of CDAs and to provide
B
guidance on best practices in designing and delivering them. Between late 2003 and the end of 2008, the SEED community
partners performed a variety of functions, from strategy and planning, outreach and enrollment, account management and
reporting, to offering financial literacy classes, and more.
SEED could not have existed or succeeded without these community partners. The following section is composed of
profiles of each of them. This section is designed to provide a comprehensive record of each site, what it did and what it
accomplished. More specifically, each profile will include the following components:
n
mission and brief history of the site,
n
distinguishing features,
n
basic program design,
n
savings outcomes,
n
accomplishments,
n
challenges, and
n
key lessons
The information in this section was compiled from a number of sources, including basic information about each community
partner from the SEED Web site, internal and external reports about the partners, data on savings outcomes from the
SEED Account Monitoring Research conducted by CSD, and the input of the community partners themselves.
With respect to the savings data, it is important to note that, while the demonstration phase at the seven sites that began
operations in late 2003 ended December 31, 2007, the SEED programs in the second wave (Mile High United Way,
Fundación Chana y Samuel Levis, People for People, Cherokee Nation and OLHSA) continued through December 31,
2008. Consequently, the savings outcomes data reported here reflect data collection through December 2007, the final
date of saving for many, but not all sites. Moreover, it should also be noted that every site, except the Boys & Girls Clubs
of Delaware and the Sargent Shriver Center on Poverty Law, was included in the Account Monitoring study. For these two
community partners, savings outcome data is based on Management Information System for IDA data reviewed by CFED.
As a result, the savings data for these two sites is not comparable to that reported for the other 10 sites.
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 28 —
and Lessons Learned from the SEED Initiative
Beyond Housing/Neighborhood Housing Services (NHS)
St. Louis, Missouri
B
About the Organization
Since 1974, Beyond Housing/NHS has offered programs
to transform the lives of residents in the St. Louis region.
It integrates rental housing, community building and
homeownership services to create a comprehensive
and holistic approach to helping individuals, families and
communities. The Beyond Housing/NHS SEED Initiative was
part of its I Can Save program, a unique university-community
partnership dedicated to increasing financial assets among
families and improving the conditions for academic
achievement among low-income children. It offered SEED
accounts to local elementary school students from 2004 to
2007.
Basic Program Design
Number of Participants: 741
Account Used for SEED: Savings
Distinguishing Features at this Site:
n
At enrollment, worked with entire kindergarten and first
grades, ages 5-7, at Delmar-Harvard Elementary School,
modeling universal participation.
n
Demonstrated SEED accounts within public school system;
financial education was delivered in the classroom and at
Financial Institution: Commerce Bank
At End of SEED, Accounts Converted to: Missouri
529 college savings accounts with parent as
custodian
Age Cohort: 5-7 year olds
after-school club.
n
Ownership Structure: Custodial
Additional research component (with separate funding)
looked specifically at SEED accounts and academic
Target Population at Enrollment: Entire K-1 grades at
Delmar-Harvard Elementary School
performance.
Financial Education
Offered to
Offered to children/ Parent
parents?
youth?
curriculum
Yes
Yes
Your Credit
Financial Fitness
Counts Challenge for Life
Account Incentive Structure
Initial deposit Match rate
Program match limit
$500
1:1
Youth
curriculum
$1,250
Section B: Profiles of SEED Community Partners
Schedule/location of financial
education
Youth had lessons in class weekly; some also
attended an after-school club
Benchmark incentives2 Total incentive funds
$2503
$2,125
— Page 29 —
Benchmark Incentives
Number of benchmarks
5
B
Total Value
Low/high value
Examples of qualifying events
$250
$1/$75
Attending after-school club or parent workshops,
maintaining good grades
Examples of Benchmark Incentives at this Site
Event
Amount
Parents attend at least two financial education
workshops in one school year
Children earn $1 each time they attend the after-school
I Can Save Club
Parent and child participate in at least one family civic
engagement event in one school year
Parent completes annual research interview with
researchers from the University of Missouri - St. Louis
Timing/notes
$80
$20/year
$80
Up to $20/year
$40
$10/year
$150
$25/interview in first three years; $75 in year four
Deposit of benchmark payments into accounts was mandatory. All benchmark payments were matched. The University of
Missouri-St. Louis provided some support for benchmarks related to research.
Accomplishments
n
The I Can Save Club had a dedicated core group of participants who attended every week for four school years and made
monthly trips to the bank to deposit their savings and incentives.
n
The children learned some important concepts through the financial education classes, including the idea of “opportunity
cost,” which several children were able to describe effectively.
n
The program in St. Louis came the nearest to a universal design of any of the community partners in SEED, enrolling all but
a few children from each eligible grade at the start (K-1).
n
Because students at Delmar-Harvard Elementary encompass a wide range of socioeconomic backgrounds, both lowerincome and higher-income families were represented at this SEED site.
n
Beyond Housing also came closest to modeling the delivery of financial education in the classroom, where it was either
taught by the teachers or by the SEED coordinator.
“We are the grassroots face
of the campaign to accumulate
assets in America.”
– SEED staff from Beyond Housing
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 30 —
and Lessons Learned from the SEED Initiative
Savings Outcomes4
Savings outcome
Mean
Total SEED
accumulation per
participant
Total SEED
accumulation per family5
Average quarterly net
savings per participant6
Average quarterly net
savings per family
Median
Minimum
Maximum
$1,376
$901
$529
$4,571
$1,435
$918
$529
$4,571
$20
$3
$0
$162
$21
$4
$0
$162
B
Number of participants
making unmatched
withdrawals
Percent of participants
making unmatched
withdrawals
Number of participants
who made positive
net contributions to
accounts
Percent of participants
who made positive
net contributions to
accounts
3
4%
52
71%
Challenges
n
Given the wide range of income levels among families, designing a program (e.g. materials, curriculum and incentives) that
worked for everyone was challenging. Some of the more affluent families felt that the information presented at workshops
was too basic or not relevant to their situation.
n
Although Beyond Housing was successful in getting the teachers to deliver financial education during classes in the first year,
they were unable to sustain this system as the children moved into new grades and were taught by different teaching staff.
By the end of the initiative, the SEED coordinator was going into the various classrooms on a weekly basis to teach the
material.
n
About 30% of the children left Delmar-Harvard Elementary by the end of the SEED program and either moved to other
schools in the city or moved out of the area. This created a challenge for program delivery and regular communication with
these participants.
n
Despite having a bank branch in the neighborhood where local families could make deposits, other features of the account
did not facilitate saving. For example, families were unable to use direct deposit, despite the fact that there was considerable
interest in this option.
Lessons
n
Any savings account should allow direct deposit so that families can automate saving.
n
As with the SEED site at Fundación, it is essential to get buy-in from both the principal and from every teacher in order
to implement financial education widely in the classroom. As there is turnover in teaching staff, additional training and
information will need to be provided to new teachers.
n
A universal design makes some things easier (e.g., providing the same financial education to every child in a school)
and some things harder (e.g., providing relevant, meaningful information and programming to families in a wide range of
circumstances).
Section B: Profiles of SEED Community Partners
— Page 31 —
Boys & Girls Clubs of Delaware
Wilmington, Delaware
B
About the Organization
The Boys & Girls Clubs of Delaware is part of a nationwide
movement to inspire and enable all young people, especially
those from disadvantaged circumstances, to realize their
full potential as productive, responsible and caring citizens.
Established in 1931, the Clubs provide a safe place to
learn, grow and have fun; participate in character and value
development experiences; and enjoy opportunities for family
and community involvement. Administered through the
Clarence Fraim Boys & Girls Club, SEED focused on middle
Basic Program Design
school students.
Number of Participants: 71
Distinguishing Features at this Site
n
Account Used for SEED: Investment accounts and
Modeled delivery of SEED accounts using a local Boys &
Girls Club
n
Ownership Structure: Custodial
One of only two sites working with middle-school-age
Financial Institution: SmithBarney (investment
cohort
n
standard savings accounts
accounts); Artisans Bank (savings accounts)
Strong state policy support; actively supported by state
treasurer
At End of SEED, Accounts Converted to: Michigan
529 college savings accounts with parent as
custodian
Age Cohort: 10-13 year olds
Target Population at Enrollment: Middle school-aged
members of the Clarence Fraim Boys & Girls Club
(and other Delaware Boys & Girls Clubs)
Financial Education
Offered to
Offered to children/ Parent
parents?
youth?
curriculum
Yes
Yes
Finding Pathways
to Prosperity
Account Incentive Structure
Initial deposit Match rate
Program match limit
$375
1:1
$1,300
Youth
curriculum
Schedule/location of financial
education
Financial Fitness
for Life
Weekly for students at Club; parents took
8-12 hour standard course at Nehemiah
Gateway for IDA and other programs
Benchmark incentives
Total incentive funds
$325
$2,000
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 32 —
and Lessons Learned from the SEED Initiative
Benchmark Incentives
Number of
Total value of
benchmarks
benchmarks
4
$325
Low/high value
Example of
qualifying events
Deposit
requirements
$10/$75
Volunteering at Club
(parents or children)
Half paid in cash; half
deposited
Examples of Benchmark Incentives at this Site
Event
Amount
Parents’ financial education
Children’s financial education
$75
$200
Timing/notes
After completion of six hours of financial education
$50/year
Accomplishments
n
Despite significant challenges related to the account structure and management (see following section), Club staff eventually
succeeded in maintaining relationships with many SEED families, due in large part to persistent, steady outreach.
n
In addition, notwithstanding these challenges, the Club’s average per-participant accumulation in SEED was actually slightly
above the SEED average of $1,518.
n
The Club made an important contribution to federal children’s savings policy by identifying and preparing a SEED
accountholder to speak at a congressional forum on children’s accounts on Capitol Hill. Jamar Nembhard, a 10th-grade
SEED participant, shared a persuasive description of his experience in SEED with a group that included several members of
Congress and other high-profile thought leaders.
“One of the most successful and rewarding
aspects of our program is our outreach
work with families to discuss financial
management, savings, and personal issues.
We believe that the phone calls and
one-on-one meetings we hold with families
have greatly impacted their quality of life
and likelihood for future success.”
– SEED staff from the Boys & Girls Clubs of Delaware
Section B: Profiles of SEED Community Partners
— Page 33 —
B
Savings Outcomes
Altogether, SEED participants at the Club saved $58,393 and accumulated a total of $110,349, with an average perparticipant accumulation of $1,554.7
B
Challenges
n
The structure of the account was both one of the greatest opportunities and biggest challenges for the Club. Unfortunately,
the investment account structure that was originally devised did not work for the data management and reporting
requirements in SEED. Although this was discovered fairly soon after enrollment had begun, a solution to the problem was
not agreed upon for some months. Participants then had to open new savings accounts at another financial institution. The
changes led to confusion, frustration and mistrust among accountholders, which may have negatively impacted participation
at this site.
n
The management and monitoring of SEED accounts, particularly given the complexity of the investment account platform
and the subsequent transition of most participants to a savings account, was extremely burdensome for the Club. SEED
coordinators at the Club – who were not financial managers by profession – struggled to manage this complicated, timeconsuming process.
Lessons
n
Choosing the right account platform at the outset is absolutely essential.
n
Once the sense of trust between a program and its accountholders is diminished, it can take a great deal of time to correct
and repair the damage.
n
Community-based organizations with a focus on direct services may not be well equipped to manage the technical, “backoffice” aspects of account management.
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 34 —
and Lessons Learned from the SEED Initiative
B
Section B: Profiles of SEED Community Partners
— Page 35 —
Cherokee Nation
Tahlequah, Oklahoma
B
About the Organization
Cherokee Nation is a federally recognized tribal government,
with jurisdiction in a 14-county area of northeastern
Oklahoma. The Cherokee Nation’s mission statement is
“ga du gi,” working together as individuals, families and
communities for a quality of life for this and future generations
by promoting confidence, the tribal culture and an effective
sovereign government. The Cherokee Nation offered SEED
accounts to Cherokee Nation foster youth and American
Indian students attending the tribally operated Sequoyah
Basic Program Design
High School (SHS).
Number of Participants: 758
Distinguishing Features at this Site
n
Only site that worked with native youth and one of two
Ownership Structure: Youth-owned
with a significant foster care population (26 accounts).
n
Account Used for SEED: Savings
Majority of accounts were held by students at SHS, a tribal
boarding and day school which attracts students from the
local area and across the nation.
Financial Institution: Bank of Oklahoma
At End of SEED, Accounts Converted to: Asset
purchase or rollover into Roth IRA or 529 college
n
Rural site in northeastern Oklahoma.
n
Oklahoma was the site of three SEED initiatives – a
savings account
community partner site, a state policy partner and SEED
Age Cohort: 13-18 year olds
OK – with the potential for collaboration and greater
Target Population at Enrollment: Rural Native
impact in the state.
American youth, including SHS students and foster
youth from the Indian Child Welfare System (ICW)
Financial Education
Offered to
Offered to children/ Parent
parents?
youth?
curriculum
Yes
Yes
Building Native
Communities
Account Incentive Structure
Initial deposit Match rate
Program match limit
$1,000
1:1
$750
Youth
curriculum
Schedule/location of financial
education
Building Native
Communities
Classes are held at SHS and in the
community
Benchmark incentives
Total incentive funds
$250
$2,000
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 36 —
and Lessons Learned from the SEED Initiative
Benchmark Incentives
Number of
Total value of
benchmarks
benchmarks
16
$250
Low/high value
Example of
qualifying events
Deposit
requirements
$12.50 each
Achieving academic
goals, participating in
educational workshops
and entrepreneurial
activities
Mandatory
Examples of Benchmark Incentives at this Site
Event
Increase ACT scores or complete ACT prep course
Obtain/maintain 2.0 GPA
Volunteer 25 hours/year
Discipline benchmark (different for SHS and ICW participants)
Complete Cherokee history course
Complete a “life book” (ICW only)
Attendance benchmark (SHS only)
Parents complete economic literacy course
Complete career counseling or homeownership or
entrepreneurial development training
B
Amount
Timing/notes
$12.50
$12.50
$12.50
$12.50
$12.50
$12.50
$12.50
$12.50
$12.50
Once a year
Must maintain GPA throughout program
Once a year
Once a year
Once during program
Once during program
Once a year
Participants could complete up to five benchmarks per year.
Accomplishments
n
Cherokee Nation was successful at developing after-school enterprises and a series of fundraisers for youth to make
deposits to their SEED accounts. Youth at Cherokee Nation developed two after-school businesses: Rising Spirits – Raising
the Spirits of Native Athletes, in which they promoted school pride by selling fan products, such as noisemakers, seat
cushions, buttons and other merchandise during SHS football and basketball games; and selling SHS Athletic Calendars.
The youth learned how to prepare a successful business plan and the skills for managing a small business, and raised nearly
$1,700 for their SEED accounts. Rising Spirits and SEED were featured in The Oklahoman and Native American Times.
n
Cherokee Nation also held a wide range of fundraising activities to help savers in the foster care system earn money to
deposit into their SEED accounts. Through a series of car washes, candy sales, jewelry auctions and garage sales, the foster
youth raised more than $3,200 in SEED deposits.
n
Based on the lessons learned from SEED, Indian Child Welfare will implement a similar matched savings program geared
towards foster youth in tribal custody.
Section B: Profiles of SEED Community Partners
— Page 37 —
Savings Outcomes9
Savings outcome
B
Total SEED accumulation
per participant
Total SEED accumulation
per family10
Average quarterly net
savings per participant11
Average quarterly net
savings per family
Mean
Median
Minimum
Maximum
$1,507
$1,492
$1,050
$2,997
$1,571
$1,501
$1,050
$3,867
$9
$1
-$3
$100
$10
$1
-$3
$100
Number of participants
making unmatched
withdrawals
Percent of participants
making unmatched
withdrawals
Number of participants
who made positive
net contributions to
accounts
Percent of participants
who made positive
net contributions to
accounts
0
0%
30
41%
Challenges
n
It was difficult to motivate families to participate in the program. A significant number of factors contributed to low
participation rates, such as primarily targeting the youth for program participation and not engaging parents during the
enrollment process or communicating early with parents about the importance of making regular deposits.
n
It was also difficult to obtain a local banking partner for the majority of the participants given the widespread rural area
covered. The financial institution selected was 20 miles from SHS, which required youth to either mail their deposits or
depend on the SEED coordinator to deposit their funds. Unfortunately, only a handful of youth and parents opted to use or
had access to direct deposit.
“I wasn’t sure if it was possible
to pay for college on my own
and I had almost given up hope.
However, now, thanks to the
SEED program, I am well on my
way to saving for college.”
– Dena Jo Squyres, SEED participant
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 38 —
and Lessons Learned from the SEED Initiative
n
Geography was also a barrier to maintaining consistent contact with families and accountholders, especially for foster youth.
n
Maintaining engagement of foster youth in state custody, versus Cherokee Nation custody, was a significant challenge.
Cherokee Nation case managers for youth in tribal custody maintain constant contact with the youth and foster families;
however, case managers for children in state custody have little to no direct contact with the children, and were unable to
engage state workers in efforts to transport these children to events or teach financial education. It was not possible to
maintain contact with children in state custody once they were returned to their families or adopted.
Lessons
n
It is critically important to have direct lines of communication with all program participants. Without direct access,
maintaining the necessary contact and providing encouragement, information and support can be challenging or impossible.
n
Benchmark incentives can be an important element of building savings, particularly for accountholders without income
to deposit. Children and youth in rural areas often have fewer opportunities for employment due to transportation, job
availability issues and home life obligations.
n
Do not underestimate the extent to which geographical barriers can hinder participation. Children’s savings programs in
rural areas may find it essential to design their initiatives with special care and creativity in order to offset the challenges of
distance.
Section B: Profiles of SEED Community Partners
— Page 39 —
B
Foundation Communities
Austin, Texas
B
About the Organization
Foundation Communities is a nonprofit providing affordable
rental housing, asset-building opportunities and educational
services to low-income families and individuals in Austin and
northern Texas. Founded in 1989, it has developed a model of
service-enriched housing that enables low-income individuals
and families to permanently improve their educational
and economic standing. Building on its services for youth,
including school readiness, after-school and teen programs,
Basic Program Design
Foundation Communities offered SEED accounts to
Number of Participants: 6912
elementary school students.
Account Used for SEED: Savings
Distinguishing Features at this Site
n
Worked with predominantly Latino population.
n
Strong organizational track record as one of the most
Ownership Structure: Custodial
Financial Institution: Compass Bank
successful American Dream Demonstration partners.
n
At End of SEED, Accounts Converted to: Texas 529
Modeled delivery of SEED accounts through housing
college savings accounts
services.
n
Age Cohort: 6-10 year olds
Many parents also had IDAs through Foundation
Target Population at Enrollment: Residents at
Communities’ adult IDA program.
Foundation Communities sites, particularly
participants in Foundation Communities’ after-school
program
Financial Education
Offered to
Offered to children/ Parent
parents?
youth?
curriculum
Yes
Yes
Foundation
Communities’
standard course
for IDA and
other programs
Account Incentive Structure
Initial deposit Match rate
Program match limit
$500
1:1
$1,000
Youth
curriculum
Schedule/location of financial
education
Practical Money
Skills, Hands on
Banking
For children, one hour a month during
school year in an after-school program,
plus summer camp. For parents, 10-hour
financial literacy class in evenings (already
part of Foundation Communities’ programs,
required for SEED parents)
Benchmark incentives
Total incentive funds
$500
$2,000
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 40 —
and Lessons Learned from the SEED Initiative
Benchmark Incentives
Number of
Total value of
benchmarks
benchmarks
13
$500
Low/high value
Example of
qualifying events
Deposit
requirements
$10/$100
Participating in
financial education,
achieving academic and
extracurricular goals
Initially optional;
subsequently changed
to mandatory
Examples of Benchmark Incentives at this Site
Event
Parents complete money management class
Children make honor roll, complete financial education, meet
savings goal or conduct volunteer service
Children make honor roll, complete financial education or meet
savings goal
Family completes community service project
Parent completes investment training
Amount
Timing/notes
$100
$100
Year One
Year Two
$100
Year Three
$100
$100
Year Four
Year Four
Accomplishments
n
Foundation Communities made it especially convenient for children and parents to participate in financial education by
holding the classes in community centers at each of the apartment complexes they managed. The familiar territory and
proximity to families’ homes removed an important barrier to attendance.
n
To address low savings rates, the SEED coordinator came up with creative ideas for increasing deposits, including a start-ofyear bank visit with the children and children’s business activities, such as an entrepreneurship summer camp. In their most
successful fundraising venture, SEED savers and their parents sold snacks to clients waiting for tax preparation services at
Foundation Communities’ busiest VITA sites.
“What a fantastic opportunity to have
seen this project from its inception to
close out. I am extremely proud of all
my families that participated. They are
grateful for the chance to give their
kids a better chance at life!”
– Melissa Garcia, Foundation Communities
Section B: Profiles of SEED Community Partners
— Page 41 —
B
Savings Outcomes13
Savings outcome
B
Total SEED accumulation
per participant
Total SEED accumulation
per family14
Average quarterly net
savings per participant15
Average quarterly net
savings per family
Mean
Median
Minimum
Maximum
$1,705
$1,605
$0
$5,596
$2,240
$1,850
$0
$5,596
$26
$11
-$23
$231
$34
$13
-$40
$231
Number of participants
making unmatched
withdrawals
Percent of participants
making unmatched
withdrawals
Number of participants
who made positive
net contributions to
accounts
Percent of participants
who made positive
net contributions to
accounts
11
16%
61
91%
Challenges
n
Despite frequent reminders and encouragement from the SEED coordinator, many accountholders did not submit the
necessary documentation to receive benchmark incentives that they had earned. Only in the closing days of SEED, through
extensive outreach from the SEED coordinator before the final deadline, did families finally claim these incentives.
n
Although the SEED accounts at this site were set up as custodial accounts that required Foundation Communities’ approval
for any withdrawals, a handful of accountholders were permitted by the financial institution to make unauthorized withdrawals.
Subsequently, the bank strengthened its systems and implemented additional safeguards to prevent further such incidents.
Lessons
n
Entrepreneurial activities can be an effective way for children earn funds to deposit to their accounts, and not need be
elaborate to be successful.
n
Even if the administrative process for claiming benchmark incentives is not complicated, families may be unlikely to complete
the process without significant encouragement from program coordinators. For this reason, a more automated system of
benchmark incentive delivery may be more cost-effective and result in greater participation.
n
Even in a custodial account structure, it may be necessary to put in place multiple safeguards to protect against
unauthorized withdrawals, particularly when accounts are held at financial institutions with multiple branches where bank
employees may not all be familiar with the program.
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 42 —
and Lessons Learned from the SEED Initiative
B
Section B: Profiles of SEED Community Partners
— Page 43 —
Fundación Chana y Samuel Levis
San Juan, Puerto Rico
B
About the Organization
Founded in 1998, Fundación Chana y Samuel Levis is a
community development foundation focused on education
and homelessness. It promotes the social, economic and
cultural well being of Puerto Rico by investing in initiatives
that empower the people of the island. It operates and
funds model pilot programs and research to endow children
with knowledge and experience necessary to contribute
to their communities and prepare them for an expanded
Basic Program Design
future. Fundación Chana y Samuel Levis worked with
Doral Bank and the Center for the New Economy to offer
Number of Participants: 8116
SEED accounts to Spanish-speaking first- and second-grade
Account Used for SEED: Savings
students.
Ownership Structure: Custodial
Financial Institution: Doral Bank
Distinguishing Features at this Site
n
Worked with Spanish-speaking population; provided
At End of SEED, Accounts Converted to: Basic
window to Latin America and the Caribbean.
savings account, co-owned by the parent and child
n
Strong policy partner in the Center for a New Economy.
n
Segunda Unidad Almirante Norte School (SUAN) in Vega
Baja, where the participants were recruited, is in a rural
and restricted from withdrawals until age 18
Age Cohort: 5-10 year olds
Target Population at Enrollment: Elementary school
location on the island.
students at SUAN
Financial Education
Offered to
Offered to children/ Parent
parents?
youth?
curriculum
Yes
Yes
Developed own
Spanish-language
curriculum
Account Incentive Structure
Initial deposit Match rate
Program match limit
$250
1:1
$1,200
Youth
curriculum
Schedule/location of financial
education
Developed own Classes were held at the school
Spanish-language
curriculum
Benchmark incentives
Total incentive funds
$550
$2,000
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 44 —
and Lessons Learned from the SEED Initiative
Benchmark Incentives
Number of
Total value of
benchmarks
benchmarks
9
$500
Low/high value
Example of
qualifying events
Deposit
requirements
$5/$112.50
Achieving academic
goals, completing
financial education,
celebrating a birthday
Mandatory
Examples of Benchmark Incentives at this Site
Event
Adult completes budget
Child passes grade
Child makes honor roll or has GPA of 3.5
Child’s birthday
Adult completes long-range savings plan
Adult and child participate in at least two community or school projects
More than three people make contributions to the account, not including father,
mother, child and any brothers or sisters living in the same household
B
Amount
Timing/notes
$100
$80
$80
$40
$100
$100
$50
Any time
$20/year
$20/year
$10/year
Any time
Any time
Any time
Accomplishments
n
Once trust had been established in the community, the SEED program was oversubscribed and ended up enrolling 81
participants.
n
Fundación created its own Spanish-language financial education curricula for children and adults.
n
Staff managed to maintain contact with all of the families during the four years of SEED, including several families who
moved to the continental United States.
n
Families regularly participated in program activities and events at high rates. For example, more than two-thirds of the
children completed the after-school financial education course.
Savings Outcomes17
Savings outcome
Total SEED accumulation
per participant
Total SEED accumulation
per family18
Average quarterly net
savings per participant19
Average quarterly net
savings per family
Mean
Median
Minimum
Maximum
$885
$669
$259
$4,215
$1,279
$923
$259
$4,215
$26
$14
-$1
$241
$37
$24
-$1
$241
Number of participants
making unmatched
withdrawals
Percent of participants
making unmatched
withdrawals
Number of participants
who made positive
net contributions to
accounts
Percent of participants
who made positive
net contributions to
accounts
0
0%
70
86%
Section B: Profiles of SEED Community Partners
— Page 45 —
Challenges
n
Turnover in the coordinator position early on made it more difficult to build trust with families. The cancellation of some
program activities further eroded trust between families and SEED staff.
n
B
Fundación faced challenges in integrating financial education into the school curriculum. The logistics were complex, and the
costs of copies and other materials were high. In addition, some teachers were not fully comfortable teaching the material,
or simply did not make a strong connection with the program.
n
The process of claiming and distributing benchmarks was complex, making it more difficult for participants to receive
benchmarks for which they were eligible. For example, at one point in the initiative, parents had to fill out a form in order
to claim the benchmark for their child having passed the grade, even though this information was accessible through the
school and payment could have been automatic. Fundación later found ways to streamline this process for some of their
benchmark incentives.
Lessons
n
Trust is hard to build and easy to erode.
n
Financial incentives should be easy to administer and the process of earning and receiving such incentives should facilitate
rather than create barriers to payment.
n
In order to achieve implementation of financial education in the classroom, you need the buy-in of both teachers and the
principal.
“SEED contributes by opening up opportunities
and possibilities they [SEED participants] might not
have been aware of, or might have assumed were
unattainable before. The activities that the SEED
program puts on help to instill a sense of pride and
belonging for the participants and their families.”
– Iris Medina, Fundación Chana y Samuel Lewis
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 46 —
and Lessons Learned from the SEED Initiative
B
Section B: Profiles of SEED Community Partners
— Page 47 —
Harlem Children’s Zone, Inc.
New York, New York
B
About the Organization
Founded in 1970, the Harlem Children’s Zone (HCZ) is a
community development organization dedicated to supporting
and promoting the well-being and healthy development
of children in some of New York’s most devastated
neighborhoods. The emphasis of its work is not just on
education, social service and recreation, but on rebuilding the
very fabric of community life. HCZ intentionally develops
programs where other agencies are not located and poor
Basic Program Design
children and families have nowhere else to turn for help.
HCZ administered SEED accounts to children in its Harlem
Number of Participants: 7520
Gems Universal Pre-Kindergarten programs.
Account Used for SEED: Savings
Ownership Structure: Child-owned
Distinguishing Features at this Site
n
n
HCZ President and CEO Geoffrey Canada is a nationallyknown figure with extremely deep connections in the
At End of SEED, Accounts Converted to: Will be
realm of children and youth policy.
held by HCZ in custodial New York 529 college
Both HCZ and Carver Bank are organizations with AfricanAmerican leadership and a history of serving the AfricanAmerican community.
n
Financial Institution: Carver Bank
HCZ provides programs for children from birth through
savings account until children reach age 18
Age Cohort: 4-5 year olds, preschool
Target Population at Enrollment: Participants in
college with additional coordinated programs to support
Harlem Gems (HCZ’s pre-kindergarten) and
families; modeled delivery of SEED accounts in early
kindergarteners at Promise Academy (HCZ’s charter
childhood.
school)
Financial Education
Offered to
Offered to children/ Parent
parents?
youth?
curriculum
Yes
Yes
Curriculum
provided
primarily by
Carver Bank
Account Incentive Structure
Initial deposit Match rate
Program match limit
$500
1:1
$750
21
Youth curriculum
Schedule/location of financial
education
Curriculum provided
by Carver Bank
Quarterly sessions for parents were
held at Harlem Gems
Benchmark incentives
Total incentive funds
$750
$2,000
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 48 —
and Lessons Learned from the SEED Initiative
Benchmark Incentives
Number of
Total value of
benchmarks
benchmarks
5
$750
Low/high value
Example of
qualifying events
Deposit
requirements
$25/$50
Attending meetings
or workshops, grade
promotion, child’s
birthday
Mandatory
Examples of Benchmark Incentives at this Site
Event
Birthday Club
Completion of financial literacy (parents)
B
Amount
Timing/notes
$25
$35
Annual benchmark
Accomplishments
n
Because HCZ works with children and their families from birth through college, the personal relationships between SEED
staff and SEED participants were extremely strong. In addition, despite the high mobility of many families, HCZ managed
to maintain updated contact information for every accountholder throughout the demonstration, which allowed them to
maintain their close connection with SEED families.
n
Despite high levels of poverty among HCZ participants, not a single unmatched withdrawal occurred throughout SEED.
n
Over the course of SEED, families demonstrated substantially improved skills in the area of financial literacy. Staff observed
increased confidence and significant shifts in SEED families’ understanding of financial products.
n
HCZ was showcased in a prominent 60 Minutes profile that featured a SEED accountholder.
n
HCZ provides additional matching funds for accountholders for five years beyond the end of the SEED matching period.
“The most important lesson we have learned
is that the parents really want this to work
… The parents want a better future for their
children and having a financial nest egg will
allow them to compete with their peers from
middle- and upper-class households.”
– SEED staff from Harlem Children’s Zone
Section B: Profiles of SEED Community Partners
— Page 49 —
Savings Outcomes22
Savings outcome
B
Total SEED accumulation
per participant
Total SEED accumulation
per family23
Average quarterly net
savings per participant24
Average quarterly net
savings per family
Mean
Median
Minimum
Maximum
$1,864
$1,517
$761
$4,503
$1,915
$1,586
$761
$4,654
$21
$6
-$1
$130
$21
$6
-$2
$130
Number of participants
making unmatched
withdrawals
Percent of participants
making unmatched
withdrawals
Number of participants
who made positive
net contributions to
accounts
Percent of participants
who made positive
net contributions to
accounts
0
0%
54
72%
Challenges
n
Midway through SEED, HCZ discovered that instead of a custodial structure in which HCZ owned the SEED accounts on
behalf of participants, the bank accounts had been set up in the name of the child only. This meant that neither parents
nor children could access the funds in the account until the child reached age 18. HCZ and Carver Bank developed a
memorandum of understanding for parents to sign that permitted HCZ to open a New York 529 account on behalf of
each child, and to become the custodian of the account until the child reached the age of 18. At first, some families were
reluctant to agree. However, as they realized that HCZ was simultaneously committing to a long-term partnership with
parents wherein HCZ would invest additional HCZ matching funds in these accounts after the end of the SEED initiative, all
parents ultimately agreed to the new plan.This transition required a significant investment of time and outreach from HCZ.
n
During SEED, HCZ received a ruling from the state of New York that SEED accounts could be subject to asset limit rules
unless the funds in the accounts did not come from the earnings of a parent on public assistance. This meant that families
receiving public benefits were not permitted to save their own funds in the SEED account. However, others could still
contribute to the accounts on behalf of the child.
Lessons
n
Deep relationships with families, built and nurtured over the long term, can be invaluable in ensuring strong savings
behaviors in a children’s savings initiative.
n
Account structure and ownership can have significant implications for the implementation of a children’s savings program,
and should be carefully designed from the start. Converting to a new account structure can be confusing for accountholders
and time-consuming for practitioners.
n
Asset limit policies in some states are still creating a fundamental barrier and disincentive to saving and asset building among
low-income children and families who receive public benefits.
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 50 —
and Lessons Learned from the SEED Initiative
B
Section B: Profiles of SEED Community Partners
— Page 51 —
Juma Ventures
San Francisco, California
B
About the Organization
Since 1993, Juma Ventures has helped youth from San
Francisco’s lowest-income neighborhoods to gain the work
experience, exposure to opportunities and preparation they
need to position themselves for advancement into postsecondary education and career-oriented employment. In
addition, Juma Ventures provides youth with a solid economic
foundation by teaching them financial skills and offering
Basic Program Design
them tools to build personal assets. With the oldest and
one of the largest youth IDA programs in the country, Juma
Ventures used its experience to provide SEED accounts to
Number of Participants: 8125
high-school-aged students.
Account Used for SEED: Savings – escrow accounts
Ownership Structure: Custodial
Distinguishing Features at this Site
n
One of the oldest, largest and most successful youth IDA
programs currently operating in the United States.
n
At End of SEED, Accounts Converted to: Asset
Many participants had strong earning potential due to their
participation in Juma Ventures’ youth employment program.
n
Financial Institution: CitiBank
Provided opportunity to learn about asset purchases
purchase or rollover into California 529 accounts or
IRAs
Age Cohort: 14-18 year-olds; high school
during the initiative, including computer purchase.
n
Modeled online delivery of financial education.
Target Population at Enrollment: Youth in JUMA
n
Only site on the West Coast.
programs, students at Burton High School, and
participants in OpNet, GirlSource and San Francisco
Conservation Corps programs
Financial Education
Offered to
Offered to children/ Parent
parents?
youth?
curriculum
No
Yes
N/A
Youth curriculum
Schedule/location of financial
education
MoneySkill (online
curriculum)
Two 2-hour orientations at start
of program, 36 online modules
completed at independent pace
(remotely or at Juma), attendance at
two monthly Investor Clubs
Participants were required to attend two Investor Club sessions specific to asset purchase. Additional training required for small
business and first-time home purchases.
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 52 —
and Lessons Learned from the SEED Initiative
Account Incentive Structure
Initial deposit Match rate
Program match limit
$0
1:1
$1,500
Benchmark Incentives
Number of
Total value of
benchmarks
benchmarks
3
$500
Benchmark incentives
Total incentive funds
$500
$2,000
Low/high value
Example of
qualifying events
Deposit
requirements
$25/$300
Completing financial
education, graduating
from high school
Mandatory
Examples of Benchmark Incentives at this Site
Event
Amount
Complete financial education pre-test
Financial education
$25
$175
High school graduation
$300
Timing/notes
$175 at completion of 36 online MoneySkill modules,
about $5/module
Accomplishments
n
Juma’s youth had the highest average savings balance of any of the SEED sites. Their average per-participant accumulation
in SEED was 58% higher than the SEED average of $1,518. This may be attributed to many of the youth participating in the
organization’s successful employment training program and having earned income.
n
Many youth began transactional banking for the first time in conjunction with SEED, opening additional accounts to manage
their finances.
n
Because Juma worked so closely with youth to provide ongoing support throughout the initiative, the personal relationships
between SEED staff and youth were strong.
n
Savers’ club classes were extremely successful as a supplement to financial education classes. Youth suggested topics based
on their interests, and guest speakers kept them motivated to attend classes.
Savings Outcomes26
Savings outcome
Total SEED accumulation
per participant
Total SEED accumulation
per family27
Average quarterly net
savings per participant28
Average quarterly net
savings per family
Mean
Median
Minimum
Maximum
$2,626
$1,688
$0
$8,260
$2,762
$1,688
$0
$12,844
$69
$34
-$23
$294
$73
$34
-$23
$365
Number of participants
making unmatched
withdrawals
Percent of participants
making unmatched
withdrawals
Number of participants
who made positive
net contributions to
accounts
Percent of participants
who made positive
net contributions to
accounts
13
16%
69
85%
Section B: Profiles of SEED Community Partners
— Page 53 —
B
Challenges
n
Many of the accountholders who worked for Juma’s enterprises at the beginning of SEED were no longer active employees
at the end of the program. As a result, it was more difficult for Juma staff to make regular contact with these individuals.
Additionally, these participants may have had less reliable sources of income to use for SEED deposits.
B
n
Juma staff also experienced difficulty incentivizing youth to make incremental deposits versus large, lump-sum deposits.
Often, youth would save their money in other accounts and would only make a large deposit into their SEED account just
before making a large withdrawal.
n
In addition to recruiting from within their existing programs, Juma also relied on referral agencies to recruit participants
to the program. Staff did not have as close ties to these youth and it was a challenge to encourage their participation
throughout the duration of the program.
Lessons
n
CDA programs are strengthened when they are linked with complementary support services for the same cohort of youth
with the same savings timeline.
n
Provide ongoing motivation and encouragement to youth that help them define and plan for their long term goals. Be
creative with ways to put savings in the consciousness of youth. Understanding values and motivations of youth matters.
n
Find ways to recognize incremental successes to praise youth in the short term, while encouraging them to identify and plan
for long-term goals.
“One of my objectives in joining this program is to learn more
about concepts that are related to financial responsibility and
financial literacy. I would like to pursue a career in financial
accounting, with the hopes of one day opening my own business
in a community that needs financially literate people who want
to give back and use the knowledge they gain to help benefit
their community. The classes I attend will help me acquire
knowledge I need to reach this goal.”
– Vanessa Serpas, SEED participant
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 54 —
and Lessons Learned from the SEED Initiative
B
Section B: Profiles of SEED Community Partners
— Page 55 —
Mile High United Way
Denver, Colorado
B
About the Organization
Mile High United Way (MHUW) is the first United Way in
the nation. Established in 1887, it has served the residents of
Denver, Colorado, for more than a century to unite and focus
the community’s resources to help people help themselves. It
envisions a community working together to make life better
for everyone. MHUW offered SEED accounts to high schoolaged foster youth through its Bridging the Gap program,
Basic Program Design
which was jointly supported by the Jim Casey Youth
Opportunities Initiative (JCYOI) and CFED.
Number of Participants: 15029
Distinguishing Features at this Site
n
Account Used for SEED: Savings
Only site working solely with youth transitioning out of the
foster care system.
n
Joint partnership with JCYOI and CFED ensured that youth
Ownership Structure: Custodial
Financial Institution: Young Americans Bank
received not only an account, but also a range of other
At End of SEED, Accounts Converted to: MHUW will
wrap-around services as part of their treatment.
continue to hold accounts until participants reach age
n
Modeled accounts using United Way infrastructure.
n
Financial partner is the first and only state-chartered, FDIC-
24
insured, commercial bank designed exclusively to serve
Age Cohort: 14-24 year-olds; high school
Target Population at Enrollment: Denver-area foster
young people.
youth
Financial Education
Offered to
Offered to children/ Parent
parents?
youth?
curriculum
No
Yes
N/A
Account Incentive Structure
Initial deposit Match rate
Program match limit
$0
1:1
$1,000 per year of
participation30
Youth curriculum
Schedule/location of financial
education
Young Americans Bank
Youth IDA curriculum
Young Americans Bank
Benchmark incentives
Total incentive funds
$1,000
$2,000-$11,000,
depending on the age
of the accountholder at
enrollment
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 56 —
and Lessons Learned from the SEED Initiative
Benchmark Incentives
Number of
Total value of
benchmarks
benchmarks
26
$1,000
Low/high value
Example of
qualifying events
$5/$100
Participating in program Half paid in cash; half
activities, reaching
deposited
various life goals
Examples of Benchmark Incentives at this Site
Event
Deposit
requirements
Amount
Completing financial education training
Graduating high school, vocational school or college
Completing vocational training certificate
Holding a job for 90 days
Making six deposits per year
Completing grade level
Completing life skills assessment
$100
$100
$75
$30
$20
$15
$10
Accomplishments
n
Along with the 150 accountholders who participated in SEED, MHUW enrolled nearly 200 additional savers during the
duration of SEED, and extended its reach to 14 Colorado counties. MHUW developed a broad and highly creative range of
support and engagement strategies to keep accountholders connected and encourage them to save, including developing a
youth leadership council, offering fun opportunities for learning and dialogue and very deliberately cultivating an accepting,
youth-friendly atmosphere.
n
MHUW leveraged its exceptionally strong connections with corporations, other nonprofits and state and local governments
to recruit mentors and other volunteers, raise funds, link savers to other services and resources, and generate positive
media about their accountholders.
Savings Outcomes31,32
Savings outcome
Mean
Total SEED accumulation
per participant
Total SEED accumulation
per family33
Average quarterly net
savings per participant34
Average quarterly net
savings per family
Median
Minimum
Maximum
$1,272
$527
$0
$6,529
$1,403
$536
$0
$9,547
$47
$5
-$31
$363
$51
$6
-$31
$460
Number of participants
making unmatched
withdrawals35
Percent of participants
making unmatched
withdrawals
Number of participants
who made positive
net contributions to
accounts
Percent of participants
who made positive
net contributions to
accounts
30
40%
62
83%
Section B: Profiles of SEED Community Partners
— Page 57 —
B
Challenges
n
Youth exiting the foster care system face a multitude of challenges, which are often exacerbated by a lack of financial
resources to meet even basic needs such as food, shelter, transportation and health care. At MHUW, this meant that some
accountholders simply did not have funds to save.
B
n
The high mobility of youth in foster care sometimes made it difficult for program staff to keep track of accountholders’
whereabouts. MHUW used a number of creative strategies in an effort to stay connected to their accountholders, including
youth-friendly communications tools like Facebook, MySpace, Twitter, and text messaging.
n
MHUW’s simultaneous participation in two major national youth savings demonstrations (SEED and JCYOI) brought a
number of important benefits, but also meant that staff had to juggle the requirements and demands of two separate,
complex initiatives.
Lessons
n
For accountholders facing significant economic, social and emotional barriers, “success” may not be simply about account
balances, but rather may need to be more broadly defined.
n
It is essential that the tools, strategies and goals of any matched savings program be relevant to the target audience – in this
case, youth aging out of foster care. Thoughtful program design at the outset can go a long way toward ensuring improved
long-term engagement and participation.
“Although most young people in Bridging the Gap are between
the ages of 16 and 20, many had never been to a bank. A key
role served by the professional staff and our banking partner has
been to help a highly transient, financially insecure population
gain comfort and confidence in depositing the few dollars they
have to their name into a bank. Although the savings process
may be slow, participants have continued to grow in confidence
and understanding of the importance and benefits of savings.”
– SEED staff from Mile High United Way
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 58 —
and Lessons Learned from the SEED Initiative
B
Section B: Profiles of SEED Community Partners
— Page 59 —
People for People
Philadelphia, Pennsylvania
B
About the Organization
People for People is a faith-based organization founded in
1989 to promote community revitalization through renewed
entrepreneurial energy and educational and enrichment
opportunities for parents and their children. It also encourages
the personal betterment of low-income residents of the
North Central Philadelphia area through educational and
training opportunities. The People for People Charter School
and the People for People Community Development Credit
Basic Program Design
Union partnered to deliver SEED accounts to fifth and sixth
Number of Participants: 7536
grade students.
Account Used for SEED: Savings
Distinguishing Features at this Site
n
Ownership Structure: Jointly owned by parents and
Modeled delivery of SEED accounts through a faith-based
organization.
n
Financial Institution: People for People Credit Union
Charter school had unique focus on entrepreneurship,
with extensive financial education built into the school
At End of SEED, Accounts Converted to: Pennsylvania
curriculum.
529 guaranteed savings plan and credit union
n
Organization had its own credit union on-site.
n
One of only two sites that worked with the middle school-
Age Cohort: 9-10 year-olds; middle school
Target Population at Enrollment: Students in the
age cohort.
n
the organization
People for People Charter School
Rev. Herbert Lusk, the founder and CEO of People for
People, is an opinion leader in the faith-based African
American community.
Financial Education
Offered to
Offered to children/ Parent
parents?
youth?
curriculum
Yes
Yes
Bank of America
curriculum
Account Incentive Structure
Initial deposit Match rate
Program match limit
$500
1:1
$1,200
Youth curriculum
Schedule/location of financial
education
Charter school
had own existing
entrepreneurship
curriculum
Entrepreneurship classes were taught
once per week
Benchmark incentives
Total incentive funds
$300
$2,000
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 60 —
and Lessons Learned from the SEED Initiative
Benchmark Incentives
Number of
Total value of
benchmarks
benchmarks
5
$300
Low/high value
Example of
qualifying events
Deposit
requirements
$5/$20
Completing financial
education, participating
in program activities
and fundraisers
Mandatory
Examples of Benchmark Incentives at this Site
Event
Making regular monthly deposits into accounts
Completion of parent financial education
Submitting a written story about themselves, their family,
neighborhood and experiences with the SEED program
Perfect attendance
Participating in fundraisers
Amount
Timing/notes
$5
$20/class
$10
Up to $20 per year
Up to $100 per year
One-time
$10
$10
Annual
Annual
B
Accomplishments
n
People for People was successful at developing fundraisers for youth to raise money for their SEED accounts. Youth sold a
variety of items such as candy, pretzels, greeting cards and healthy snacks throughout the school year. The success of these
events led to the entire student body participating in fundraisers to help SEED youth meet their savings goals. The youth
learned important concepts through the financial education classes, which resulted in their ability to openly discuss the
benefits of the program and saving for college. Each class focused on the connection between saving in each participant’s
account and post-secondary education.
n
Michael Harley, a SEED participant at People for People, participated in the accountholder plenary session at CFED’s 2008
Assets Learning Conference in Washington, DC. Harley challenged the audience to support legislation to create CDAs for
all American children.
n
The charter school formed a partnership with the state treasurer’s office and the Pennsylvania 529 college savings plan to
open accounts for every child in fall 2009, due in part to the success of the SEED program.
“The SEED program plays a part in
helping Joshua toward a brighter future.
It lightens the financial burden on us as
a family given the rising cost of college
tuitions in today’s world.”
– Parent of SEED participant Joshua Flores
Section B: Profiles of SEED Community Partners
— Page 61 —
Savings Outcomes37
Savings outcome
B
Total SEED accumulation per
participant
Total SEED accumulation per
family38
Average quarterly net savings
per participant39
Average quarterly net savings
per family
Mean
Median
Minimum
Maximum
$1,031
$905
$475
$2,726
$1,190
$1,008
$623
$3,356
$23
$17
-$2
$110
$27
$20
-$4
$110
Number of participants
making unmatched
withdrawals
Percent of participants
making unmatched
withdrawals
Number of participants
who made positive
net contributions to
accounts
Percent of participants
who made positive
net contributions to
accounts
4
5%
73
97%
Challenges
n
About 25% of the youth left the charter school by the end of the program and either transferred to other schools outside
of the city limits or out of state. This created a challenge for communicating with the youth and their parents on a regular
basis to continue saving and participating in the program.
n
Although fundraisers were successful at the charter school, the program struggled to increase sales once the Department
of Education mandated new food guidelines for schools. The program was faced with the challenge of finding “healthy”
treats to replace their candy and snack food sales drive.
n
The SEED coordinator’s time was divided working on other projects at the charter school, limiting the amount of time
spent on the program.
Lessons
n
It is essential to maintain communication with participants and their families on a regular basis. Staff should request changes
in mailing addresses and phone numbers using a variety of communication methods, including events.
n
It is important to adapt financial education materials, tools and communication methods to meet the diverse needs of
families. For example, programs should consider using Web-based financial literacy tools for families who relocate, but want
to continue participating in the program.
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 62 —
and Lessons Learned from the SEED Initiative
B
Section B: Profiles of SEED Community Partners
— Page 63 —
Sargent Shriver National Center on Poverty Law
Chicago, Illinois
B
About the Organization
The Sargent Shriver National Center on Poverty Law is
a national law and policy center that provides national
leadership in identifying, developing and supporting
innovative and collaborative approaches to achieve social
and economic justice for low-income people. The Shriver
Center’s Community Investment Unit (CIU) takes action
against poverty by advocating policies that expand assetbuilding opportunities for all. Through policy development
Basic Program Design
and effective advocacy, CIU helps communities avoid a
cycle of debt by creating asset-building opportunities,
Number of Participants: 8240
expanding ownership and protecting consumers. Established
Account Used for SEED: 529
in 1967, the Shriver Center brought considerable policy
expertise and practical experience to SEED. It partnered
Ownership Structure: Custodial
with the William M. and Charles H. Mayo Elementary
Financial Institution: Chase/College Choice Indiana
School in Chicago to deliver SEED accounts to students in
529 Savings Program41
kindergarten through fourth grade.
At End of SEED, Accounts Converted to: Account in
parent or guardian’s name (with either College Choice
Distinguishing Features at this Site
n
or the Illinois Bright Start College Savings Program)
Modeled delivery of SEED accounts via public school in
Age Cohort: 6-10 year-olds; K-4
large, urban setting.
n
Demonstrated policy expertise as organizer of statewide
Target Population at Enrollment: Students at Mayo
Elementary School in Chicago
Financial Links for Low-Income People coalition, key
partner in the Illinois Asset Building Group, and SEED state
policy partner.
n
Families saved directly into 529 college savings accounts.
Financial Education
Offered to
Offered to children/ Parent
parents?
youth?
curriculum
Yes
Yes
All My Money
and Your Money
& Your Life
Youth curriculum
Schedule/location of financial
education
Financial Fitness for
Life and Money Savvy
Generation, both
somewhat modified
Youth: eight hours per year after
school;
Parents: 10 hours/year (not
mandatory) at Chase Bronzeville
branch; classes three times a month
on evenings and weekends
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 64 —
and Lessons Learned from the SEED Initiative
Account Incentive Structure
Initial deposit Match rate
Program match limit
$1000
1:1
$1,000
Benchmark incentives
Total incentive funds
$875
$2,87542
B
Benchmark Incentives
Number of
Total value of
benchmarks
benchmarks
5
$875
Low/high value
Example of
qualifying events
$25/$100
Participating in program Optional; default option
activities, completing
changed from cash to
financial goals
automatic deposit
Examples of Benchmark Incentives at this Site
Event
Parents: Complete family budget
Parents: Participate in community school project
Parents: Complete 12 financial education workshops
Parents: Develop long-term savings plan
Children: Achieve age-appropriate competency level
Deposit
requirements
Amount
Timing/notes
$100
$100
$100
$100
$100
2003-2004
2004-2005
2005-2006
2006-2007
$25/level, one level each year
Accomplishments
n
Despite significant challenges with their account structure and staff turnover, families stayed in the program due in part to
selecting a new director who was already familiar with parents and their children, and was successful at building trust and
encouraging families to stay in the program.
n
The Shriver Center made important contributions to raising the public profile for CDAs. In partnership with the Illinois
Asset Building Group, the orgnization was successful at creating a task force to review and make recommendations
about children’s savings account program options in Illinois,43 and was instrumental in crafting a bill for CDAs in the state
legislature.
n
The Shriver Center received prominent media coverage on the SEED program, including a story in 2007 which made the
front page of the business section of The Chicago Sun-Times, “Sowing Seeds of Sense,” which included interviews with three
SEED kids and their parents.
n
The Shriver Center hosted a savings workshop, led by Xernona Woods, author of “Save That Penny for a Sunny Day,” a copy
of which was awarded to each SEED child. The book demonstrates numerous ways how to save, how to start a business,
marketing strategies, and how to form a business plan. This workshop gave SEED kids gave different options in regards to
savings. The Shriver Center also hosted a book signing at which Woods reminded the kids of the importance of savings.
Savings Outcomes
Altogether, SEED participants saved $64,170 and accumulated a total of $126,175 with an average per participant
accumulation of $984.44
Section B: Profiles of SEED Community Partners
— Page 65 —
Challenges
n
The site experienced significant challenges using an out-of-state, 529 college savings account product. Families faced several
barriers to saving, including using an unfamiliar, investment account with high commission and non-commission fees and
having the ability only to make deposits in amounts greater than $25. Families who were unbanked also had difficulties
B
making deposits to their accounts, since the 529 provider only accepted money orders, checks or electronic transfers to
make deposits.
n
SEED families were able to save, but not enough to satisfy the minimum deposit of $25.
n
SEED families were unable to make deposits at their neighborhood branch because of the structure of 529 plans.
n
SEED families’ parental responsibilities exceeded their income; this made saving challenging.
n
It was challenging changing SEED families’ mindsets regarding trusting financial institutions.
Lessons
n
It is critical for a program to build and maintain trust with participants on an ongoing basis.
n
Programs utilizing an investment vehicle for savings must adapt their financial education curriculum to include investment
topics to help families make informed decisions about their accounts.
n
Given their current structure, 529 college savings accounts may not be the most optimal account structure for all families. It
is important to know your participants and identify potential barriers to savings before starting a CDA program.
n
Saving is habit and to become the most optimal saver, one has to become totally committed, despite the potential obstacles.
“Through the program, I have learned
to save for college education, budget,
improve my credit, work with my
daughter on the information she is
learning in SEED class and think wisely.”
– Darlene Braboy, SEED parent
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 66 —
and Lessons Learned from the SEED Initiative
B
Section B: Profiles of SEED Community Partners
— Page 67 —
Southern Good Faith Fund
Helena-West Helena, Arkansas
B
About the Organization
The Southern Good Faith Fund (SGFF) is a nonprofit affiliate
of Southern Bancorp. Since 1988, it has worked to increase
the incomes and assets of low-income and low-skilled
residents of rural areas in Arkansas and Mississippi—one of
the poorest areas in the United States. SGFF partnered with
a range of community partners in Phillips County, Arkansas
to deliver SEED accounts to pre-school students. Partners
included early childhood programs, the local public school
Basic Program Design
system, faith- and community-based organizations and
Number of Participants: 7545
financial institutions.
Account Used for SEED: Savings
Distinguishing Features at this Site
n
Ownership Structure: Custodial
Rural site in the Mississippi Delta, where persistent poverty
provides a challenging test of the efficacy of children’s
accounts and a potentially compelling story.
n
Financial Institution: Southern Bancorp
At End of SEED, Accounts Converted to: Arkansas
Only site to conduct community-wide recruitment
529 college savings accounts
campaign.
Age Cohort: 3-5 year-olds; preschool
n
Streamlined financial institution model.
n
Strong track record with IDAs and policy development.
Target Population at Enrollment: Preschool children in
Phillips County
Financial Education
Offered to
Offered to children/ Parent
parents?
youth?
curriculum
Yes
Yes
Same curriculum
used for the
SGFF IDA
program
Account Incentive Structure
Initial deposit Match rate
Program match limit
$1,000
1:1
$1,000
Youth curriculum
Schedule/location of financial
education
SGFF’s own curriculum Adult classes are offered several
times per month
Benchmark incentives
Total incentive funds
$175
$2,000
46
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 68 —
and Lessons Learned from the SEED Initiative
Benchmark Incentives
Number of
Total value of
benchmarks
benchmarks
3
$175
Low/high value
Example of
qualifying events
Deposit
requirements
$25/$100
Saving Earned Income
Mandatory
Tax Credit (EITC)
refunds, making deposits
in piggy banks, attending
investment class
B
Examples of Benchmark Incentives at this Site
Event
Amount
Timing/notes
Saving EITC refunds
Making deposits in piggy banks
$50
$25
Attending investment class
$100
Parents were required to bring in proof of their EITC deposit
Parents and/or children were required to bring in their piggy bank to
receive the incentive
Parents were required to complete a class on investments
Accomplishments
n
The SEED coordinator built strong relationships with accountholders, which resulted in excellent participation rates in
program activities and a high level of trust among families.
n
SGFF was successful in advocating for a statewide match program for low-income families saving in Arkansas’ 529 college
savings plan. Since its inception in 2008, the Aspiring Scholars Matching Grant Program has paid out more than $243,000 to
469 families, some of whom were SEED participants.
n
SGFF had already developed their own financial literacy curriculum and had a regular schedule of workshops, which SEED
families were encouraged to attend. However, the curriculum did not discuss investments, such as 529 plans, so SGFF wrote
and piloted some new material for SEED, which was impressive and well-received.
Savings Outcomes47
Savings outcome
Total SEED accumulation per
participant
Total SEED accumulation per
family48
Average quarterly net savings
per participant49
Average quarterly net savings
per family
Mean
Median
Minimum
Maximum
$1,778
$1,276
$1,001
$4,201
$2,051
$1,308
$1,001
$6,008
$27
$3
-$10
$200
$31
$3
-$10
$200
Number of participants
making unmatched
withdrawals
Percent of participants
making unmatched
withdrawals
Number of participants
who made positive
net contributions to
accounts
Percent of participants
who made positive
net contributions to
accounts
17
23%
48
64%
Challenges
n
Recruitment was also a challenge for SGFF. The Delta region has a history of broken promises from outside groups.
Section B: Profiles of SEED Community Partners
— Page 69 —
Participants were very skeptical of the program in the beginning, even though SGFF had a strong presence and track record
in the area. The local recruitment partner, HIPPY (Home Instruction Program for Pre-School Youngsters), and the local
Head Start program did not deliver the support and resources they had promised, so much of the outreach fell to SGFF
staff. It took almost two years to enroll 75 families in SEED, longer than at any other site, although many additional families
expressed interest in the program after all of the slots were taken.
B
n
The economy in the area is weak and poverty rates are high. Families had a hard time finding money to save and sometimes
had to wait for windfalls such as their EITC refund to make a deposit in the account.
Lessons
n
In the recruitment process, it pays not to give up too soon. It takes time for information to spread by word of mouth and
to gain trust in the community. Use thought leaders in the community to help spread the word. Some of the most effective
spokespeople for a program are participants themselves.
n
Choose recruitment partners carefully and make sure they are committed to the program and have the necessary capacity
to perform the tasks outlined in the agreement.
n
Relationships are essential, particularly in a small, close-knit community.
“We have provided an asset-building
opportunity and some hope for families
that would not otherwise exist in the
Delta, where there are few programs
available that offer such a unique assetbuilding opportunity as SEED.”
– SEED staff from the Southern Good Faith Fund
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 70 —
and Lessons Learned from the SEED Initiative
B
Section B: Profiles of SEED Community Partners
— Page 71 —
Oakland Livingston Human Service Agency
Pontiac, Michigan
B
About the Organization
The Oakland Livingston Human Service Agency (OLHSA) is
a community action agency that has served the residents of
Michigan’s Oakland and Livingston Counties since 1964. Its
mission is to enable the low income, elderly and persons with
disabilities to become self-sufficient. OLHSA played a critical
role as a quasi-experimental SEED site. It partnered with the
Michigan Department of Treasury to offer nearly 500 postsecondary education SEED accounts to three- and four-year-
Basic Program Design
olds in its Head Start program. The accounts were held in
the Michigan 529 program managed by the state treasurer’s
Number of Participants: 49950
office.
Account Used for SEED: Michigan 529 college
savings account
Distinguishing Features at this Site
n
Ownership Structure: Parent-owned
OLHSA was SEED’s quasi-experimental research site for an
impact assessment study involving both Head Start children
n
with SEED accounts and similar Head Start children
At End of SEED, Accounts Converted to: Funds
without accounts.
remained in 529 account
Strong policy connection with support of the state
Age Cohort: 3-4 year-olds; preschool
treasurer’s office and use of Michigan 529 account with
Target Population at Enrollment: Participants in Head
state match for low-income families.
n
Financial Institution: TIAA-CREF
Relatively diverse population that generally mirrored the
Start and Michigan School Readiness Program
U.S. low-income population.
Financial Education
Offered to
Offered to children/ Parent
parents?
youth?
curriculum
Yes
Yes
Your Money &
Your Life
Account Incentive Structure
Initial deposit Match rate
Program match limit
$800
1:1
$1,200
Youth curriculum
Schedule/location of financial
education
OLHSA’s own
curriculum and Your
Money & Your Life
SEED sites held semi-annual family
financial education for participants in
addition to adult financial education
Benchmark incentives
Total incentive funds
$0
$2,000
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 72 —
and Lessons Learned from the SEED Initiative
Benchmark Incentives
Number of
Total value of
benchmarks
benchmarks
0
$0
Low/high value
Example of
qualifying events
Deposit
requirements
N/A
N/A
N/A
B
Accomplishments
n
Staff at OLHSA managed to enroll 499 participants from a very limited pool of eligible families. Subsequent efforts in SEED
OK have confirmed that recruiting participants for children’s savings programs is harder than expected, even with the
seemingly attractive offer of “free money.”
n
The economy in Michigan was already weak at the beginning of SEED, and only got worse during the course of the program.
Unemployment was rising and several SEED families suffered job losses. The local economic climate makes OLHSA’s savings
outcomes even more remarkable.
Savings Outcomes51
Savings outcome
Mean
Total SEED accumulation
per participant
Total SEED accumulation
per family52
Average quarterly net
savings per participant53
Average quarterly net
savings per family
Median
Minimum
Maximum
$1,457
$1,091
$222
$13,625
$1,678
$1,094
$222
$16,214
$29
$7
-$89
$1,419
$33
$7
-$89
$1,419
Number of participants
making unmatched
withdrawals
Percent of participants
making unmatched
withdrawals
Number of participants
who made positive
net contributions to
accounts
Percent of participants
who made positive
net contributions to
accounts
8
2%
147
30%
Challenges
n
Some of the structural issues of 529s created barriers to saving and participation for some families. For example, the $25
minimum deposit requirement in the Michigan 529 plan was more than some families could save at any one time. Indeed,
it quickly became clear that this was a barrier to enrolling families in the program and OLHSA began using the SEED initial
deposit to meet this requirement to open the account. Deposits could only be made by check through the mail, direct
deposit or payroll deduction. The lack of a local option for making deposits shut out many families from making regular
deposits.
n
SEED staff found it difficult to maintain accurate contact information for families, many of whom moved frequently
and rarely kept the same phone number for more than a few months. This made regular communication with families
challenging.
n
The majority of participants (about two-thirds) made no deposits in their account during the course of SEED. The only
accumulation was as a result of the initial deposit, state match and investment earnings.
Section B: Profiles of SEED Community Partners
— Page 73 —
n
The two-step enrollment process required by the research design meant that staff had to repeat many of their outreach
activities in order to sign families up for both the research study and the account. The Head Start centers were less engaged
in recruitment than expected, and OLHSA was forced to hire additional staff in order to complete enrollment.
B
Lessons
n
Make the enrollment process as streamlined as possible. If possible, combine this with existing enrollment processes, such as
that for Head Start, so the paperwork can all be completed in one sitting.
n
Though they have important benefits, the complexity of 529 accounts and plan requirements such as minimum deposits can
present barriers to saving for low-income families.
“A matched savings program gets you to
think about your child’s future and helps
by matching what you put in.”
– Parent of SEED participant Christian Riley
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 74 —
and Lessons Learned from the SEED Initiative
Endnotes
1
This number reflects the total number of participants in SEED. The savings outcome tables in this report reflect the number of SEED participants who also
participated in the SEED Account Monitoring study; therefore, the numbers and data in those tables may differ slightly from the number that is listed here.
2
Benchmark incentives are financial rewards that accountholders and their families can earn for participating in certain activities, reaching qualifying milestones or
achieving certain outcomes or “benchmarks.”
3
Beyond Housing participants who reached the $250 benchmark limit became eligible for additional benchmarks funded by other organizations.
4
Mason, L.R., Clancy, N., Loke, V., Kim, Y., & Nam, Y. (2009, March). SEED account monitoring research: Participants, savings, and accumulation. St. Louis: Center for Social
Development, Washington University in St. Louis.
5
Total SEED accumulation is defined as “the sum of account balances, matched withdrawals and total match” (Mason et al., 2009, 30). When measured per family,
families that have multiple children participating in SEED are included.
6
Average quarterly net savings is defined as “deposits plus interest net of fees, and less unmatched withdrawals, the initial deposit and benchmark incentives
deposited into accounts per quarter of participation in SEED” (Mason et al., 2009, 23).
7
Based on MIS IDA data review by CFED. Because of data issues, the Club’s savings data was not included in the SEED Account Monitoring study. Thus, limited
information is available about savings outcomes at this site.
8
This number reflects the total number of participants in SEED. The savings outcome tables in this report reflect the number of SEED participants who also
participated in the SEED Account Monitoring study; therefore, the numbers and data in those tables may differ slightly from the number listed here.
9
Mason, L.R., Clancy, N., Loke, V., Kim, Y., & Nam, Y. (2009, March). SEED account monitoring research: Participants, savings, and accumulation. St. Louis: Center for Social
Development, Washington University in St. Louis.
10
“Total SEED accumulation” is defined as “the sum of account balances, matched withdrawals and total match” (Mason et al., 2009, 30). When measured per family,
families that have multiple children participating in SEED are included.
11
“Average quarterly net savings” is defined as “deposits plus interest net of fees, and less unmatched withdrawals, the initial deposit and benchmark incentives
deposited into accounts per quarter of participation in SEED” (Mason et al., 2009, 23).
12
This number reflects the total number of participants in SEED. The savings outcome tables in this report reflect the number of SEED participants who also
participated in the SEED Account Monitoring study; therefore, the numbers and data in those tables may differ slightly from the number that is listed here.
13
Mason, L.R., Clancy, N., Loke, V., Kim, Y., & Nam, Y. (2009, March). SEED account monitoring research: Participants, savings, and accumulation. St. Louis, MO: Center for
Social Development, Washington University in St. Louis.
14
“Total SEED accumulation” is defined as “the sum of account balances, matched withdrawals and total match” (Mason et al., 2009, 30). When measured per family,
families that have multiple children participating in SEED are included.
15
“Average quarterly net savings” is defined as “deposits plus interest net of fees, and less unmatched withdrawals, the initial deposit and benchmark incentives
deposited into accounts per quarter of participation in SEED” (Mason et al., 2009, 23).
16
This number reflects the total number of participants in SEED. The savings outcome tables in this report reflect the number of SEED participants who also
participated in the SEED Account Monitoring study; therefore, the numbers and data in those tables may differ slightly from the number that is listed here.
17
Mason, L.R., Clancy, N., Loke, V., Kim, Y., & Nam, Y. (2009, March). SEED account monitoring research: Participants, savings, and accumulation. St. Louis, MO: Center for
Social Development, Washington University in St. Louis.
18
“Total SEED accumulation” is defined as “the sum of account balances, matched withdrawals and total match” (Mason et al., 2009, 30). When measured per family,
families that have multiple children participating in SEED are included.
19
“Average quarterly net savings” is defined as “deposits plus interest net of fees, and less unmatched withdrawals, the initial deposit and benchmark incentives
deposited into accounts per quarter of participation in SEED” (Mason et al., 2009, 23).
20
This number reflects the total number of participants in SEED. The savings outcome tables in this report reflect the number of SEED participants who also
participated in the SEED Account Monitoring study; therefore, the numbers and data in those tables may differ slightly from the number that is listed here.
21
HCZ participants who met the match cap were eligible to earn another $500 in matching funds from a pool established by HCZ’s trustees.
22
Mason, L.R., Clancy, N., Loke, V., Kim, Y., & Nam, Y. (2009, March). SEED account monitoring research: Participants, savings, and accumulation. St. Louis, MO: Center for
Social Development, Washington University in St. Louis.
23
“Total SEED accumulation” is defined as “the sum of account balances, matched withdrawals and total match” (Mason et al., 2009, 30). When measured per family,
families that have multiple children participating in SEED are included.
24
“Average quarterly net savings” is defined as “deposits plus interest net of fees, and less unmatched withdrawals, the initial deposit and benchmark incentives
deposited into accounts per quarter of participation in SEED” (Mason et al., 2009, 23).
Section B: Profiles of SEED Community Partners
— Page 75 —
B
25
This number reflects the total number of participants in SEED. The savings outcome tables in this report reflect the number of SEED participants who also
participated in the SEED Account Monitoring study; therefore, the numbers and data in those tables may differ slightly from the number that is listed here.
26
Mason, L.R., Clancy, N., Loke, V., Kim, Y., & Nam, Y. (2009, March). SEED account monitoring research: Participants, savings, and accumulation. St. Louis, MO: Center for
Social Development, Washington University in St. Louis.
27
B
“Total SEED accumulation” is defined as “the sum of account balances, matched withdrawals and total match” (Mason et al., 2009, 30). When measured per family,
families that have multiple children participating in SEED are included.
28
“Average quarterly net savings” is defined as “deposits plus interest net of fees, and less unmatched withdrawals, the initial deposit and benchmark incentives
deposited into accounts per quarter of participation in SEED” (Mason et al., 2009, 23).
29
Mile High United Way enrolled two cohorts of 75 SEED accountholders each; the first cohort participated in the SEED Account Monitoring Study, while the second
cohort did not. The Savings Outcomes tables below reflect the 75 Mile High United Way SEED participants who participated in the SEED Account Monitoring
study; therefore, the data in those tables differ from the number listed here.
30
Matching funds were provided through JCYOI.
31
Mason, L.R., Clancy, N., Loke, V., Kim, Y., & Nam, Y. (2009, March). SEED account monitoring research: Participants, savings, and accumulation. St. Louis: Center for Social
Development, Washington University in St. Louis.
32
See footnote 29.
33
“Total SEED accumulation” is defined as “the sum of account balances, matched withdrawals and total match” (Mason et al., 2009, 30). When measured per family,
families that have multiple children participating in SEED are included.
34
“Average quarterly net savings” is defined as “deposits plus interest net of fees, and less unmatched withdrawals, the initial deposit and benchmark incentives
deposited into accounts per quarter of participation in SEED” (Mason et al., 2009, 23).
35
While unmatched withdrawals were not encouraged, Mile High United Way did not strictly prohibit them, since all participants were youth aging out of the foster
care system and often faced unusually challenging circumstances.
36
This number reflects the total number of participants in SEED. The savings outcome tables in this report reflect the number of SEED participants who also
participated in the SEED Account Monitoring study; therefore, the numbers and data in those tables may differ slightly from the number listed here.
37
Mason, L.R., Clancy, N., Loke, V., Kim, Y., & Nam, Y. (2009, March). SEED account monitoring research: Participants, savings, and accumulation. St. Louis: Center for Social
Development, Washington University in St. Louis.
38
“Total SEED accumulation” is defined as “the sum of account balances, matched withdrawals and total match” (Mason et al., 2009, 30). When measured per family,
families that have multiple children participating in SEED are included.
39
“Average quarterly net savings” is defined as “deposits plus interest net of fees, and less unmatched withdrawals, the initial deposit and benchmark incentives
deposited into accounts per quarter of participation in SEED” (Mason et al., 2009, 23).
40
This number reflects the total number of participants in SEED.
41
Accounts were later moved to Illinois’ Bright Start 529 Plan due to high fees in the College Choice 529 program.
42
The Shriver Center offered $2,875 in account incentives, using leftover incentive funds as several participants withdrew before the end of the program. The Shriver
Center did not exceed $150,000 in incentive funds.
43
The Children’s Savings Account Task Force was originally supposed to be created in 2006; unfortunately, the governor failed to appoint the task force members. Thus,
another task force bill was introduced and passed in 2009. Task force members are expected to be appointed in 2009, with deliberations to begin thereafter.
44
Based on a MIS IDA data review by CFED. Because of data issues, the site’s savings data was not included in the SEED Account Monitoring study. Thus, limited
information is available about savings outcomes at this site.
45
This number reflects the total number of participants in SEED. The savings outcome tables in this report reflect the number of SEED participants who also
participated in the SEED Account Monitoring study; therefore, the numbers and data in those tables may differ slightly from the number that is listed here.
46
SGFF raised funding for benchmark incentives over and above the incentive funds that were available in SEED.
47
Mason, L.R., Clancy, N., Loke, V., Kim, Y., & Nam, Y. (2009, March). SEED account monitoring research: Participants, savings, and accumulation. St. Louis, MO: Center for
Social Development, Washington University in St. Louis.
48
“Total SEED accumulation” is defined as “the sum of account balances, matched withdrawals and total match” (Mason et al., 2009, 30). When measured per family,
families that have multiple children participating in SEED are included.
49
“Average quarterly net savings” is defined as “deposits plus interest net of fees, and less unmatched withdrawals, the initial deposit and benchmark incentives
deposited into accounts per quarter of participation in SEED” (Mason et al., 2009, 23).
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 76 —
and Lessons Learned from the SEED Initiative
50
This number reflects the total number of participants in SEED. The savings outcome tables in this report reflect the number of SEED participants who also
participated in the SEED Account Monitoring study; therefore, the numbers and data in those tables may differ slightly from the number listed here.
51
Mason, L.R., Clancy, N., Loke, V., Kim, Y., & Nam, Y. (2009, March). SEED account monitoring research: Participants, savings, and accumulation. St. Louis: Center for Social
Development, Washington University in St. Louis.
52
“Total SEED accumulation” is defined as “the sum of account balances, matched withdrawals and total match” (Mason et al., 2009, 30). When measured per family,
families that have multiple children participating in SEED are included.
53
“Average quarterly net savings” is defined as “deposits plus interest net of fees, and less unmatched withdrawals, the initial deposit and benchmark incentives
deposited into accounts per quarter of participation in SEED” (Mason et al., 2009, 23).
Section B: Profiles of SEED Community Partners
— Page 77 —
B
— Page 78 —
Section C:
Lessons
from SEED
Practice
— Page 79 —
Introduction
As the first large-scale, national CDA demonstration, SEED generated a vast array of lessons about the design and delivery
of matched savings accounts for children and youth. In this section, we summarize the most important lessons from 12
critical areas of SEED practice:
C
n
recruitment
n
financial education
n
account options
n
asset limits
n
account incentives
n
financial aid interaction
n
account oversight
n
working with foster youth
n
working with high school-aged youth
n
working with financial institutions
n
working with young children
Generally, each of these sections will include: 1) background on the topic, including a summary of the SEED experience in
this area, 2) lessons from SEED practice, and 3) implications for public policy.
The text in these pieces was derived from a number of sources, including the quarterly Growing Knowledge from SEED
bulletins that were produced during the SEED Initiative1, regular reports submitted by the SEED community partners, and
internal memos produced by CFED staff. These lessons also include findings from SEED research that relate specifically to
the practice of designing and delivering CDAs. For a complete summary of the research findings from SEED, readers should
consult a separate synthesis document, forthcoming in 2010, that will be released jointly by the national partners in SEED.
Each piece in this section has been updated as of the date of this publication to reflect the most current thinking with
respect to SEED practice and the status of public policies that impact or may be informed by SEED practice.
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 80 —
and Lessons Learned from the SEED Initiative
Recruitment2
Background and Summary of SEED Experience
Each SEED community partner had a goal of opening 75 accounts for children in a specific age cohort. The most common
recruitment strategy among SEED partners was a “targeted” approach that involved a clearly defined and limited pool of
participants and relied heavily on existing relationships between the participants and the SEED site, or a referring partner
organization. One site utilized a community-wide or “mass” recruitment strategy. Specific tactics included group meetings,
one-on-one approaches, media and publicity, word-of-mouth and written communications. The pace of recruitment varied
considerably across the sites. One community partner filled all 75 slots in three months, while another took almost two
years.
Based on the experience of the SEED community partners, key factors that seemed to affect the rate of enrollment
included:3
n
The degree of trust already established between the host organization and the target population.
n
The level of engagement by recruitment partners.
n
The timing of the enrollment process. (For parents of young children, the best time appeared to be at the beginning of the
school year when they were registering their children for other programs. Conversely, youth who signed up themselves
seemed to have more time over the summer.)
Lessons from SEED
A number of lessons emerged from the process of recruitment at the SEED sites that can guide the implementation of
asset-building programs for children and youth and help to inform the design and implementation of public policies to
support CDAs.
Get the message right and repeat it multiple times. Addressing perceived barriers and using positive messages often help
in recruitment. SEED partners learned that positive messages that appealed to parents’ desires to create more hopeful
futures for their children were more effective than those that described the mechanics of the account. And because families
are constantly bombarded with information and marketing materials, they found that it sometimes took a while to get their
attention. In general, having a variety of recruitment tactics was important and “hitting” targets multiple times was required.
Identify and address barriers to participation. Even with significant financial incentives, some families did not sign up for
SEED accounts. Reasons included the following:
n
Some families were wary of financial scams and felt that the program was “too good to be true.”
n
Even those who understood the program to be legitimate were distrustful of the banking system.
n
In some cases, there was a reluctance to provide personal and/or financial information.
n
Many parents believed that they lacked adequate resources to both pay living expenses and to save.
n
Withdrawals from SEED accounts are restricted, and some individuals were concerned about tying up money they might
need in an emergency. Some young parents, who were unclear about their own long-term goals, found it difficult to think
about and plan for their children’s distant future.
Section C: Lessons from SEED Practice
— Page 81 —
C
n
At sites where the savings goal was education, some parents expressed the belief that their children would not go to
college; others were convinced that their children would receive full scholarships.
n
Families receiving means-tested public benefits were concerned about losing them if they accrued assets above the set limit.
Use community leaders and word-of-mouth. A trusted individual speaking in support of a program can make a big
difference in recruitment. Traditional leaders (school principals, teachers and ministers) were persuasive at some SEED sites,
but word-of-mouth referrals from neighbors and friends were even more effective. As a practitioner at Southern Good
C
Faith Fund noted, “As people enroll in our programs and find them to be a positive experience, they share this experience
with friends, neighbors, etc. And the trust begins to build.”
Hold the accounts at a trusted organization. Holding the accounts at trusted organizations is particularly important in
attracting families who may be wary of financial scams and distrustful of the banking system. It is critical to determine
which organizations are viewed as trustworthy and credible. At Foundation Communities, the program director had trouble
with recruitment and did not understand why, until she overheard a conversation about how the bank holding the SEED
accounts had been the target of a series of robberies, which made participants reluctant to open accounts there.
Reduce barriers to enrollment. The more “hoops” participants have to jump through (i.e., going to the bank, filling out
applications, making an initial deposit, etc.), the less likely they are to enroll in the program. It helps to enroll families the
same time they sign up for other programs. This reduces the administrative burden to families and on recruiters alike.
OLHSA initially required parents to send in paperwork and $25 of their own money to open their accounts, before they
could receive the initial deposit of $800. Once OLHSA removed the $25 requirement and began opening accounts with
the initial deposit, the rate of enrollment increased dramatically.
Be aware that 100% participation is unlikely. Where 100% participation is the goal, a disproportionate amount of energy
will probably be spent on recruiting the “laggards,” who represent a small minority of the overall target population. Beyond
Housing/NHS had a goal of signing up every child in grades K-1 at Delmar-Harvard Elementary School in St. Louis. But five
out of 78 eligible participants refused to enroll in SEED despite numerous appeals from teachers, other parents and the
school principal. Most sites recruited a much smaller percentage of their target pools, highlighting the penalties, risks and
adverse cultural messages that work against even the best recruitment efforts.
Keep in mind that the quality, not the longevity, of relationships with partners is crucial. The commitment of partner
organizations is more fundamental to recruitment success than the length of the relationship with the partners. Several
SEED sites, such as the Sargent Shriver National Center on Poverty Law and Beyond Housing, demonstrated that newlyformed partnerships with committed partners (in both cases a public school with a supportive principal) can prove highly
effective in reaching target populations. It also is important to be wary of the opposite – newly-formed partnerships with
organizations lacking a solid commitment can consume a tremendous amount of staff time and energy with little result.
Implications for Public Policy
The experiences with recruitment at the 12 SEED sites provide a number of important lessons that can help to inform the
design and implementation of public policies aimed at establishing universal, progressive systems of asset-building accounts
for all children starting at birth.
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 82 —
and Lessons Learned from the SEED Initiative
“Opt-out” design is critical for universal coverage. The SEED experience indicates that whenever participants must
“opt-in” to a program, some percentage of people will not enroll, no matter how intensive the outreach efforts. Research
on 401(k) retirement savings plans certainly supports the idea of an opt-out design for higher participation rates.4 Therefore,
public policies should be designed so that everyone is included, and if necessary, include an option by which individuals can
actively opt-out. This principle is incorporated in the Americans Saving for Personal Investment, Retirement and Education
Act (ASPIRE), a proposal that would create a Lifetime Savings Account (LSA) for every child born. The ASPIRE Act calls
for LSAs to be opened automati­cally upon the issuance of a Social Security number.5 Other legislators have also put forth
similar proposals.
C
Offering more than a single provider may be necessary to overcome distrust of financial institutions. The SEED
experience and a similar initiative in the United Kingdom suggest it is important to hold accounts at more familiar, local
financial institutions. The United Kingdom’s Child Trust Fund, which provides every child with a long-term savings account at
birth, permits parents to open accounts by presenting a voucher at any one of 70 providers.6 This does not allow for the
cost efficiencies inherent in a single, national provider. However, given gener­ally high levels of mistrust or lack of familiarity
with financial institutions among low-income families – and given the experience that this can be overcome by local, wellknown, trusted and visible financial institutions – policymakers should consider allowing a variety of financial institutions to
hold accounts.
Section C: Lessons from SEED Practice
— Page 83 —
Financial Education7
Background and Summary of SEED Experience
Financial education, defined as training to help families acquire the information and skills necessary to take control of their
personal finances, can encourage saving behavior. Financial education was a core component of SEED for two main reasons.
C
First, children are more likely to develop strong, lifelong savings habits if they receive high-quality instruction that helps them
understand the importance of saving. Second, because research on adults indicates that financial education can result in
increased savings8, strong financial education in SEED was designed to increase the savings performance of accountholders.
In designing the financial education component of their respective SEED programs, each of the 12 SEED community
partners had to address four basic design areas:
n
Audience
n
Curriculum
n
Delivery
n
Encouraging participation
While SEED accounts were designed to encourage children and youth to save, most experts agree that parents play a
critical role in their children’s attitudes toward money. Given this, most SEED partners provided financial education to both
children and parents in their programs. Two partners, Juma Ventures and Mile High United Way, provided financial education
to their high school-aged participants only, not their parents. By comparison, partners with younger accountholders tended
to focus their financial education on the parents rather than children.
Most financial education curricula cover basic subjects, such as designing a family budget, finding ways to save, managing
credit wisely, understanding banking services, buying insurance and paying taxes. SEED partners used a variety of financial
education curricula in their programs. Some partners adopted third-party curricula in their entirety; others combined
elements from third-party curricula with one they developed themselves; and still others used only their own curricula.9
Three partners used Financial Fitness for Life (developed by the National Council on Economic Education) to educate their
youth and one also used it for adults. Two partners used Your Money & Your Life (developed by the University of Illinois
Cooperative Extension) for their adult participants. Overall, innovation and constant improvement were hallmarks of SEED
financial education efforts.
Financial education in the United States is primarily delivered through a network of community-based providers, such as
Cooperative Extension offices, community action agencies, churches and other nonprofits. Financial education in SEED
also was delivered mostly through community-based organizations. However, SEED partners tested at least two important
innovations – delivering financial education in the classroom and online.
Three partners delivered financial education in the classroom during the regular school day. At the People for People
Charter School in Philadelphia, all SEED participants received financial education from their classroom teacher during
the school day as part of the curriculum for all students. At the Delmar-Harvard Elementary School in St. Louis and
at Fundación Chana y Samuel Levis in Puerto Rico, all SEED accountholders regularly received financial education in a
classroom session taught by the SEED coordinators, rather than classroom teachers.
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 84 —
and Lessons Learned from the SEED Initiative
Juma Ventures in San Francisco and the Cherokee Nation in Oklahoma experimented with online financial education. Instead
of attending classes, for example, high school-aged accountholders at Juma worked through 34 MoneySKILL modules at
their own pace and Juma staff reviewed the students’ lessons and quizzes online. Juma helped make this delivery mechanism
work by providing a computer lab on-site. The self-paced aspect of this approach allowed students to move through the
lessons at a rate appropriate for their needs, instead of forcing a whole classroom of students to move at the same pace.
In SEED, nearly all of the community partners used some form of incentive to motivate accountholders and/or their parents
to participate in financial education classes. The incentive most commonly used in SEED was cash payments to participants
(or their parents, in the case of younger children). Some SEED partners encouraged participants to deposit these payments
into their SEED accounts, and others required participants to deposit their incentives. The amounts of the incentives were
substantial in some cases – up to $250 for classes at the Boys & Girls Clubs of Delaware – or minimal in others – $1 per
after-school club meeting at Delmar-Harvard Elementary School.
Four of the 12 SEED partners made at least a portion of their financial education services mandatory. Before SEED
participants could open their accounts, Fundación Chana y Samuel Levis required them to attend the first financial education
class. At Mile High United Way, participating foster youth were required to complete financial education before opening
accounts. At Cherokee Nation and Juma Ventures, which serve high school-aged youth, participants could not make matched
withdrawals until they completed their financial education. In comparison, at OLHSA in Michigan and the Southern Good
Faith Fund in Arkansas, financial education for parents and children was completely voluntary.
The chart on the next page summarizes the curriculum, incentives, and delivery of financial education at each SEED site:
Section C: Lessons from SEED Practice
— Page 85 —
C
Financial Fitness for Life
— Page 86 —
Building Native Communities Building Native Communities 90-minute class once per
month
Hands On Banking and
Practical Money Skills
Partner’s own Spanishlanguage curriculum
Cherokee Nation
Foundation Communities
Fundación Chana y Samuel
Levis
Partner’s own curriculum
abd Your Money & Your Life
Partner’s own
entrepreneurship curriculum,
including elements of the
REAL curriculum
Financial Fitness for Life and
Money Savvy Generation
(both modified)
Partner’s own curriculum
People for People, Inc.
Sargent Shriver National
Center on Poverty Law
Southern Good Faith Fund
Young Americans Bank; Youth N/A
IDA Curriculum
Mile High United Way
Oakland Livingston Human
Services Agency
MoneySKILL (online)
Juma Ventures
Partner’s IDA curriculum
All My Money and Your
Money & Your Life
Bank of America curriculum
Your Money & Your Life
N/A
Curriculum provided by
Carver Bank
Harlem Children’s Zone
Curriculum provided by
Carver Bank
Partner’s own Spanishlanguage curriculum
Partner’s IDA curriculum
(tailored for SEED)
Finding Pathways to
Prosperity
30-minute parent-child
workshops twice per year
15 classes over 8 weeks
One class per week during
the school year
90 minute parent-child
workshops twice per year
Two six-hour classes at
program start
Self-paced
Quarterly
12 classes over one
semester
One hour per month during
school year, summer day
camp
90-minute class once per
week for six weeks
30-minute class once per
week, one-hour after-school
club once per week
Boys & Girls Clubs of
Delaware
Your Credit Counts
Challenge
Financial Fitness for Life
Participant Frequency
Beyond Housing
Parent Curriculum
Participant Curriculum
Community Partner
Financial Education Delivered by the SEED Community Partners
30-minute parent-child
workshops twice per year
and two hour meetings
3-4 times per month
Four classes per year
Quarterly
90 minute parent-child
workshops twice per year
N/A
N/A
Quarterly
2-3 hours of individual
budgeting training
12 class hours,
Occasional (10 hours
total)
Once per week for six
weeks
Twice per year
Occasional
Parent Frequency
C
Demonstrating Opportunity: A Compendium of Practical Experience
and Lessons Learned from the SEED Initiative
4–6
5–10
10–12
3–4
14–21
14–18
4–6
6–8
6–12
14–18
11–14
5-6
Age at
Enrollment
Lessons from SEED
There is no “one size fits all” financial education curriculum for children and youth. One common thread that has
emerged from SEED is that the learning needs of participants in children or youth savings programs vary by age, language
ability and ethnicity – and that no single curriculum can meet them all.
Financial education for children is critical – but don’t forget the parents. Young accountholders must receive financial
education to best utilize CDAs. However, because parents play a key role in teaching children about money, their
involvement is also critical. This is especially true with younger children who lack their own source of income and rely on
their parents to contribute savings to their accounts.
Involving parents in financial education adds a layer of complexity. Involving parents in financial education can be
challenging since they have many other demands competing for their time and attention and may not be reached easily
through institutions that primarily serve children. Even if parents understand the importance of classes, their attendance still
may be sporadic.
Providing incentives for participation in financial education can help to increase attendance, but it is not a panacea. Most
SEED partners believed that incentives helped to substantially increase attendance at financial education classes, especially
among adults. However, incentives were not able to insure full participation at any one site. Moreover, some partners, such
as the Southern Good Faith Fund, reported significant adult participation in classes without incentives. Other factors that
appeared to encourage participation by adults are a high level of trust between the sponsoring agencies and the families;
topics that are initiated by parents and delivered at levels appropriate to the learners; high-quality classes scheduled with
parents’ needs in mind; availability of dinner and/or child care; and a familiar, convenient location.
School-based delivery of financial education shows promise. Providing financial education at school is one obvious way
to solve the challenge of full participation. The experience of the SEED partners showed promise in integrating financial
education into an existing curriculum. However, this experience is still relatively new and the numerous demands facing
public schools, especially the requirements of the No Child Left Behind Act, could make implementation an up-hill struggle.
Online financial education can be an effective tool, especially for older youth. The experience at Juma Ventures, in
particular, indicates that online financial education should be explored further. However, this option requires a high level
of access to the Internet. Experience to date also indicates that online delivery can reduce, but not totally eliminate, the
need for face-to-face instruction. For example, Juma Ventures staff discovered that they still needed to augment their online
training with face-to-face workshops to insure full comprehension of the material.
Implications for Public Policy
The lessons from delivering financial education in SEED suggest a number of implications for the design and implementation
of public policies to establish a universal, progressive system of asset-building accounts for all children starting at birth.
Include financial education in any policy designed to create children’s savings accounts. Given the importance of financial
education in helping individuals acquire the information and skills necessary to take control of their finances, financial
education should be a component of any proposal for establishing matched savings accounts for children. The ASPIRE Act
Section C: Lessons from SEED Practice
— Page 87 —
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proposal, for example, calls explicitly for efforts to promote financial literacy among those who “contribute to and benefit
from these programs.”10
Include parents in financial education, especially for accounts established at birth or in the early years. Because parents
play such an important role in teaching children about money and in managing finances for minors, any proposal for creating
matched savings accounts for young children should include financial education for parents as well as children. Creating
incentives for parental participation may be necessary, but these should be simple and easy to administer.
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Incorporate financial education into the curriculum at school. Any proposal for universal or large-scale children’s savings
accounts will need a streamlined, cost-effective system for delivering financial education. While public schools already face a
wide range of requirements and mandates for educating children, the reality is that no other single institution could reach
as many children. Moreover, integrating financial education into the school curriculum is possible. Several SEED partners
experienced success with this and most states have included financial education in their public education standards (though
only seven make personal finance a requirement for high school graduation).11 As of 2007, all states include economics in
their standards, 40 states include personal finance – though only 17 states make economics a graduation requirement – and
seven states require students to take a personal finance course to graduate.12
Include community-based organizations in building systems to deliver large-scale financial education. While schools offer
a streamlined system to deliver financial education at scale, proposals for universal children’s savings accounts should make
provisions for community-based organizations (such as those involved in SEED) to provide financial education services
to families who need additional support. A report by Social and Enterprise Development Innovations in Canada argues
that community-based financial education providers are essential for making sure that the promise of universally available
matched savings accounts can be realized for all families, including those of low incomes.13
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 88 —
and Lessons Learned from the SEED Initiative
Account Options14
Background and Summary of SEED Experience
Central to any children’s savings program is a financial product or account. Ideally, such a product would be simple to use,
accessible to all children, provide restrictions that limit withdrawals to asset-building uses and offer the potential for deposits
to grow significantly before adulthood.
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In SEED, we sought to model these features as closely as possible in a small-scale, controlled demonstration. Given the
number of accounts in SEED (about 1,300 across the 12 community partners), it was unrealistic to expect a financial
institution to develop a new product for the purposes of the demonstration. At the start of the demonstration phase, the
types of accounts that were already available in the financial services marketplace and that were available to choose from
ranged from basic savings products – such as statement savings accounts, savings bonds and certificates of deposits – to
investment products – such as college savings plans (also known as 529 accounts or Qualified Tuition Plans) and IRAs. After
careful planning with their financial institution partner (for more on this, see Working with Financial Institutions), 10 of the 12
SEED community partners chose a statement savings account as their SEED account, while two chose to use their state’s
529 plan.15
During the planning phase (and later during the demonstration), as we began to plan for rolling over accounts at the end of
the demonstration phase into longer-term, more permanent accounts, we investigated a broad range of possible accounts
that were readily available in the financial services marketplace. We sought options that met many, if not all, of the key
design features previously noted. While none of these accounts met all of our design criteria for CDAs, several were more
promising and included many of these key features.
In particular, three types of accounts were noteworthy because each is a long-term savings and investment product,
provides some form of tax-preferred accumulation, is widely available and offers limited uses similar to those most
commonly proposed for children’s development accounts. These three are:
529 accounts/Qualified Tuition Plans are state-sponsored education savings plans that offer tax-sheltered savings for
educational expenses only. Each state offers its own plan through a designated financial institution; most states’ plans are
available to residents of any state, and plan details vary widely.16
Coverdell Education Savings Accounts (ESAs), formerly known as Education IRAs, are tax-shel­tered accounts originally
established by the Taxpayer Relief Act of 1997 (P.L. 105-34), and then subsequently – but temporarily – expanded by
the Economic Growth and Tax Relief Reconciliation Act of 2001, P.L. 107-16 (EGTRRA). Coverdell ESAs, which establish
the child as beneficiary of the account and the bank or financial institution as custodian, allow after-tax contributions and
tax-free growth. An adult, generally a parent or guardian, is designated as a “responsible individual” in charge of making
decisions about the account. Any individual whose adjusted gross income is less than $110,000 ($220,000 for joint filers)
can contribute to a Coverdell ESA, and total deposits are limited to $2,000 per year for each beneficiary. Contributions can
be made only for children under age 18, and the balance in the account must be spent or rolled over to another eligible
beneficiary by the time the beneficiary reaches age 30.17
Section C: Lessons from SEED Practice
— Page 89 —
The EGTRRA, in addition to increasing the maximum contribution limit from $500 to $2,000, also permitted qualified
distributions for K-12 expenses and provided greater leniency for distributions taken in the same year a Hope credit or
Lifetime Learning credit is claimed for the beneficiary. Unless Congress acts, these benefits will expire after 2010. Two bills
have been introduced in Congress proposing to extend or expand these benefits:
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The Education Savings Modernization Act of 2009 (H.R. 532) proposes to increase the maximum contribution limit for ESAs
from $2,000 to $4,000, annually adjust this revised limit for inflation and make permanent the additional changes made in
the EGTRRA.
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The 401Kids Family Savings Act of 2009 (H.R. 30) proposes to extend through 2015 the EGTRRA benefits, renames ESAs
to 401Kids Savings Accounts, expands the allowable uses of tax-free distributions to also include first-time home purchase,
and permits rollovers into Roth IRAs.
Traditional and Roth Individual Retirement Accounts are tax-sheltered savings instruments that are designed to provide
retirement income, but allow for early withdrawals for education, home purchase and other purposes.18
Lessons from SEED
Our exploration of these accounts suggests that, while 529s, ESAs and IRAs share some similar features, they also differ in
significant ways. Policymakers and community practitioners interested in establishing CDAs should consider these lessons
when evaluating each vehicle as a possible platform.
No account allows for all of the ideal uses of CDAs, but IRAs come closest. IRAs offer accountholders the most flexibility
in eligible uses, including post-secondary education, homeownership and retirement. ESAs and 529s permit a single use –
education. The main difference in allowable use between ESAs and 529s is that ESAs permit withdrawals for both secondary
and post-secondary education, while 529s allow withdrawals only for post-secondary education. If college education is the
only desired use for CDAs, then ESAs and 529s are equally good options. Both offer the potential for similar investment
returns. Unauthorized withdrawals are subject to income tax, plus a 10% penalty on the earnings in the account.
The earning potential of all three accounts is similar. If the goal is long-term asset growth with limited risk, 529s, ESAs and
IRAs are fairly similar. With each account, the accountholder or custodian must make choices about underlying investments
(e.g., stocks, bonds, mutual funds). When considering the underlying investments, the basic rules of investing apply – prices
and returns vary and investments are not insured. Generally, 529 plans offer a more limited set of investment options than
ESAs and IRAs. ESA and IRA options are based on what is offered by the sponsoring financial institution. More options
are not always preferable; the limited number of investment choices in most 529 plans can be beneficial in cases where
consumers may get overwhelmed by numerous investment options.
The tax benefits are similar, but 529s offer added benefits in certain states. The tax treatment of 529s, ESAs and Roth
IRAs is fairly similar.19 For each, contributions are made after taxes. Earnings and after-tax dollars put into savings are not
taxed as they accrue or at withdrawal, if spent for allowed uses. From a tax perspective, 529s are slightly preferable because
some states also allow participants to deduct contributions to 529s from state taxable income. The value of all tax code
preferences rises with income, so for most low-income accountholders and their families, it is likely that the overall tax
benefits of any of these accounts will be modest, especially in the short term.
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 90 —
and Lessons Learned from the SEED Initiative
Fees vary widely from one type of account to another. All of the accounts have certain fees associated with them. Fees
may be charged for enrollment, account maintenance and asset management. Fees vary from state to state (for 529s) and
from vendor to vendor (for ESAs and IRAs), making it difficult to generalize across account types. Some observers have
raised questions about excessively high fees in the 529 market.20 Careful attention should be paid to fees when choosing an
account.
IRAs receive the most advantageous treatment in calculating need-based financial aid; recent rulings clarify treatment of
529s and ESAs. Given that education is one of the most obvious uses for CDAs, understanding how these accounts impact
financial aid eligibility is a critical issue to consider when evaluating various account options. (For more detail on this issue,
see Financial Aid). Among the three types of accounts considered here, IRAs receive the most advantageous treatment from
a financial aid perspective. Because all pension assets are excluded from the calculation of a family’s available resources in
the formulas used to determine federal, need-based financial aid,21 assets held in traditional IRAs or Roth IRAs are excluded
from calculation of a family’s expected contribution toward college expenses (although withdrawals are counted as income
in the year in which they are made). Assets held in 529s or ESAs are included in the calculation of a family’s available
resources in the formulas used to determine financial aid, although recent rulings have reduced the level at which they are
assessed in calculating financial aid.22 Both 529s owned by children in custodial arrangements and those owned by parents
will, beginning in 2009, be assessed at a maximum rate of 5.64% – meaning up to 5.64% of the assets will be counted
toward the family’s expected contribution to college expenses.23 In addition, a U.S. Department of Education ruling24
determined that ESAs should receive the same treatment as parent-owned 529 accounts, mak­ing them subject to the 5.64%
assessment.
ESAs and 529s offer the best options for minimizing the impact on public benefits. In many states’ public benefit programs,
such as the Supplemental Nutrition Assistance Program (formerly known as Food Stamps), Temporary Assistance for Needy
Families and Medicaid, federal and state eligibility rules limit the amount of assets a family can hold and still qualify for
assistance. Experience to date in SEED25 indicates that the most effective way to prevent CDAs from affecting a family’s
public assistance eligibility is to hold the funds in an account that is inaccessible to the parents. ESAs and 529s offer the
best options for doing this. ESAs, by design, are custodial accounts and the custodian must be a bank or an entity approved
by the IRS; 529s may be established as custodial accounts with a community organization as the custodian. It is important
to note, how­ever, that this arrangement would oblige the organization to a longer-term commitment to the accountholder.
IRAs are less attractive in this regard since they may be owned only by a parent or minor and are thus accessible – and
therefore countable – for the purposes of determining eligibility for public benefits.
Implications for Public Policy
The lessons from examining account options in SEED suggest a number of implications for the design and implementation
of public policies to establish a universal, progressive system of asset-building accounts for all children starting at birth.
Ensure that CDAs allow a range of uses. None of the accounts described above permits withdrawals for entrepreneurship.
Owning a business is an important source of wealth for many American families and is often the route into the middle
class for many immigrants. Currently, there is no way to shelter savings for business purposes from taxes and/or financial aid
assessments.
Section C: Lessons from SEED Practice
— Page 91 —
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Broaden allowable uses for IRAs. Policymakers should expand the allowable uses of IRAs and other retirement savings
vehicles to include entrepreneurship.26
Ensure that any new account structure allows a business use. In designing any new children’s saving account policy
structure, policymakers should ensure that business development is an allowable use for the accounts.
Remove the earned income requirement for IRAs. IRAs offer the most flexible uses and receive the most advantageous
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treatment with respect to financial aid eligibility. However, under current rules, contributions to IRAs must come from
earned income of the account owner. This requirement makes them unsuitable for ownership by certain individuals, including
young children. Policymakers should consider removing the requirement that IRA contributions come only from earned
income of the account owner. The Kids IRA Act of 2009 (H.R. 2022) would allow Young Savers Accounts – Roth IRAs – to
be established for minors and allow contributions to these accounts from sources other than earned income of the account
owner, such as from parents or grandparents.
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 92 —
and Lessons Learned from the SEED Initiative
Asset Limits27
Background and Summary of SEED Experience
Mounting evidence indicates that asset building benefits families in a variety of ways, enhancing economic security, household
stability, physical health, educational attainment and civic involvement.28 Although public assistance programs have shown
greater recognition of this in recent years, many public benefit programs still limit eligibility to those with few (usually about
$2,000) or no assets. If individuals or families have assets exceeding the state’s limit, they must “spend down” longer-term
savings in order to receive what is often short-term public assistance. These asset limits, which were originally created to
ensure that public resources did not go to “asset-rich” individuals, are a relic of entitlement policies that in some cases no
longer exist. Cash welfare programs, for example, now focus on quickly moving individuals and families to self-sufficiency,
rather than allowing them to receive benefits indefinitely. Personal savings and assets are precisely the kinds of resources
that allow people to move off public benefit programs. Yet asset limits can discourage anyone considering or receiving public
benefits – including children and their families – from saving for the future. Penalizing financial savings through asset limits
communicates a “don’t save” message to financially unsteady families.
For some programs, such as Supplemental Security Income (SSI), the federal government sets the asset limits, while for
others, states determine many key policies. States have discretion in setting or eliminating asset limits for Temporary
Assistance to Needy Families (TANF), Medicaid and the Children’s Health Insurance Program (CHIP).29 In addition, states
have the authority to address asset limits for the Supplemental Nutrition Assistance Program (SNAP), formerly known as
the Food Stamp program.30
In SEED, it was critical that participating families be protected against the loss of public benefits, both during and after the
program. CFED worked with consultants at the Center on Law and Social Policy (CLASP) and the Center on Budget and
Policy Priorities (CBPP) to evaluate asset limit policies in each state where there was a SEED community partner and to
secure short- and long-term solutions to ensure that no SEED family lost public benefits as a result of saving in their SEED
accounts.
Resolution scenarios varied among the states and from program to program. Most commonly, state agencies issued
administrative waivers that would allow SEED accounts to be disregarded in determining eligibility for benefits. In other
states, advocates succeeded in advancing public policies that exempted broader categories of savings accounts.
Lessons from SEED
A number of lessons on asset limits and CDAs have emerged from the experience of working with the SEED community
partners and the research conducted by the Center on Law and Social Policy and others as part of SEED.
There is little consistency in the treatment of children’s savings by public assistance programs. A patchwork of asset
policies exists from state to state and even within states, differing with regard to dollar amounts, types of accounts, sources
of deposits and savings goals. In addition, many exemptions from asset tests carry some kind of restriction. For instance,
some states exempt CDAs – but only if designated for education. The complexity of these policies not only discourages
families from saving, but also increases the workload for caseworkers and results in significant administrative costs for states.
Section C: Lessons from SEED Practice
— Page 93 —
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Asset limits can create a disincentive for children’s savings. Most states exclude children’s earnings from income limits for
public benefit programs if the child is a student. However, once those earnings are placed in an account, they may begin to
count against asset limits. Even though the earnings are not counting against the family from an income perspective, they are
still treated as an asset to the family if they are not spent in the month in which they are earned. These policies can have
the counterproductive effect of encouraging youth to spend their earnings immediately, rather than aim for self-sufficiency
by planning for future needs, such as college education.
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Young children face the steepest barriers. In a related vein, those states that exempt CDAs from asset tests often require
that all deposits come from the child’s own earnings. This type of policy limits savings opportunities to older children who
are able to work, thus excluding those who could benefit most from starting young and allowing savings to grow over time.
Families receiving public benefits have few options for saving toward their children’s future. Depending on the state,
some asset protections are available for certain types of savings accounts, such as IDAs, restricted bank accounts, college
savings plans and trusts (accounts that are considered “inaccessible” to the family for everyday use). However, each type of
account has its own set of restrictions (for instance, the source or use of funds may be limited), and the protections for
low-income families who are saving in these accounts vary widely across states.
Implications for Public Policy
The lessons from protecting accounts in SEED from asset limits suggest a number of implications for the design and
implementation of public policies for CDA programs. In particular, there are three main ways to mitigate asset limits:
eliminate asset limits in public assistance programs, increase existing asset limits and exempt CDAs from asset tests.
The best option: Eliminating asset limits in short-term public assistance programs. Ideally, states should completely
eliminate asset limits in TANF, Medicaid and SNAP, which would by definition cover all types of CDAs. Since the mid1990s, when many programs began to more actively promote self-sufficiency and economic independence, 23 states have
eliminated Medicaid asset limits entirely; three states have eliminated TANF asset limits; and 24 states have eliminated SNAP
asset limits, with several more planning to do so in late 2009. States have accomplished this through both regulatory and
legislative processes, with positive results. Oklahoma, for example, found that eliminating asset tests in the Medicaid program
for families and children led to administrative cost savings of $1 million. In New Mexico, state officials anticipated that 38
more people would enroll in Medicaid per month (with an associated increase of $23,000 in direct costs to the state,
negligible in comparison with a $5.7 billion annual state budget).31 In Ohio and Virginia, the “early adopters” of TANF asset
limit elimination, caseloads decreased in the years following the change.32
Intermediate steps: Raising asset limits and excluding asset classes. The existence of an asset limit, no matter how high,
sends a signal to program applicants and participants that asset building should be avoided. However, if a state has not yet
eliminated asset limits entirely, it can take several intermediate steps to reduce disincentives to children’s savings:
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States can increase asset limits and/or index them to inflation, thereby lessening the likelihood that participants or applicants
will reach the limit. By increasing the asset limit to a more reasonable level, such as $15,000, families are at least allowed to
build and maintain a modest pool of savings for retirement and education. In 2008, Congress indexed SNAP asset limits.
Although a modest improvement, it is important to note, however, the existence of an asset limit still sends the signal to
program applicants and participants not to save.
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 94 —
and Lessons Learned from the SEED Initiative
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Setting high asset limits may be less desirable than eliminating the limits altogether, because it precludes the possibility of
administrative savings such as those Oklahoma experienced. A state that raises its asset limits must still maintain a process to
determine what assets families have and whether the assets exceed the limits.
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States can exempt important classes of assets from their asset limits, particularly in the TANF and Medicaid programs.33
Certain categories of assets, such as tax-preferred retirement accounts and education savings accounts, may be exempted
from counting toward an asset limit. For example, Congress exempted IRAs, 529s and Coverdells from SNAP asset tests in
2008.
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While most programs exclude some “illiquid” assets, such as a home or defined benefit pension, many other liquid holdings
often count against the asset limit in TANF and Medicaid. These include accounts that can be used for CDA initiatives, such
as retirement accounts, education savings accounts and IDAs. To encourage savings among children and youth, states can and
should exempt these types of assets.
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States can exempt classes of assets through “categorical eligibility.” Since 1999, 12 states have essentially eliminated Food
Stamp asset limits through “categorical eligibility.” This enables individuals to automatically qualify for a public benefit program
based on their eligibility for another. It expands the availability of public benefit programs for needy families. Policy advocates
should recognize categorical eligibility as a potential means to exclude children’s savings from precluding eligibility in public
benefits programs.
Since 1996, three states have substantially increased the asset limits in their Medicaid or TANF programs.34,35 The vast
majority of states have excluded at least one important CDA-related category of assets from TANF or Medicaid tests, but
much work still remains to be done to broaden and expand those exemptions.
Other policy considerations. Finally, when advocating for asset limit reform with respect to children’s savings accounts,
advocates should also consider the following policy recommendations, which may help to further reduce barriers to saving
for low-income children and families.
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Allow deposits from multiple sources. Currently, most states that provide exemptions for children’s savings require that
deposits be made from earned income. Allowing deposits from family members, including earned income and the Earned
Income Tax Credit; nonprofit organizations; and children’s earned and unearned income (such as birthday gifts) helps ensure
that children of all ages can participate and allows families, not simply the children, to participate in building a future for their
children through asset development. In addition, it allows children who have started saving later in their life to accumulate
savings faster.
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Establish reasonable savings limits. In a time of escalating home and college costs, encouraging deposits in children’s savings
accounts can further expand opportunity. In SEED, a few community partners found that aggressive accountholders saved
more than their goal because they understood that additional savings would make it easier for them to purchase their
assets, thereby demonstrating that setting higher limits enables and encourages greater goals.
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Set the same rules for applicants and recipients of public benefits. Some states have higher asset limits or allow more savings
by current public assistance recipients than by new applicants. Requiring families to divest any savings they have accumulated
for the future needs of their children in order to access public assistance is discriminatory and short-sighted.
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Restrict access to funds in CDAs. Restricting access to accounts ensures that funds are preserved for the long-term benefit
of the children. It also protects the accounts from being accessed by other family members or friends who are aware of the
children’s savings. Many SEED participants support this restriction. At Juma Ventures in San Francisco, SEED accountholders
noted that they felt the restricted access ensured that their savings were protected for the long term, rather than leaving
them subject to short-term needs and desires.36
Section C: Lessons from SEED Practice
— Page 95 —
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Account Incentives
Background and Summary of SEED Experience
Savings incentives are a central component of any CDA program. The basic assumption is that providing incentives to save
will encourage greater savings by participants and ultimately lead to greater asset accumulation. Savings incentives are also a
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way of supplementing participant contributions, particularly for those families who have less income. Incentives can also be a
source of deposits during particularly lean periods, keeping families motivated and ensuring they don’t lose hope when they
are unable to save. There are three main types of incentives: initial deposits, match incentives and benchmark incentives.
Initial deposits are made by a third party upon account opening. Having an initial amount in an account is reassuring to
participants and allows them to start thinking differently about their future. They can begin to imagine that going to college,
owning a home or starting a business might actually be possible.
An initial deposit also serves a number of important practical purposes. First, many financial products, such as savings or
investment accounts, require a minimum balance. Providing an initial deposit equal to or greater than the minimum balance
removes this barrier to participation. A related issue is that some financial institutions may be reluctant to offer certain
types of accounts if they are going to hold a small amount of funds and are therefore unprofitable. An initial deposit can
ensure that the account balance immediately reaches a minimum level that may reach the threshold of profitability for the
financial institution. Finally, in the absence of any other contributions to the account, an initial deposit ensures a degree of
adequacy of funds at the end of the savings period to be used toward an asset goal. This can be especially powerful if the
account is opened at birth and interest on the initial deposit compounds over an 18-year period.
Ten SEED community partners offered initial deposits ranging from $250 up to $1,000. Only two community partners
opted not to provide an initial deposit. Both were working with high-school-age and older youth who had the potential
for employment and would therefore be able to make more significant deposits of their own funds into the account.
These partners felt that higher levels of match (or a greater match cap) and benchmark incentives would provide greater
motivation to save. On a philosophical level, they also preferred that participants not get “something for nothing” and that
they earn their savings incentives. In almost all SEED programs, the initial deposit was made automatically on behalf of the
family. As a marketing strategy, a paper certificate was sometimes issued to eligible families with information on how to
redeem it by opening an account. This system is used by the UK Child Trust Fund, through which every child receives a
voucher shortly after birth, showing that he or she is eligible for an account and providing a means to track when and how
the account is opened.
Match incentives encourage participation by matching participant deposits in the account. The matching rate can vary
(for example, 1:1 or 2:1), and there is typically a cap on the contributions that are matched, either per year or over the
lifetime of the program. Offering a match can encourage people to save by setting a savings goal: the cap on the amount
matched sets a target that accountholders will try to meet.37 A perceived loss can often be a more powerful incentive than
a potential gain, so avoiding losing a potential match can be a very powerful incentive to sacrifice present consumption in
favor of saving.
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 96 —
and Lessons Learned from the SEED Initiative
The match can accrue virtually until a participant is ready to use the funds, be deposited in a separate account belonging to
the participant, or be commingled with the participant’s deposits. Depending on the Management Information System (MIS)
being used, there are important implications for program and account management in choosing one of these methods.
In SEED, all community partners used a match rate of 1:1; however, the total match funds available to each participant
varied considerably, from a high of $3,000 to a low of $750. Because there was no way to distinguish between participant
deposits and deposits of benchmark incentives in the account, both types of deposits earned a match incentive and were
counted toward the overall match limit.
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Benchmark incentives are financial rewards that accountholders and their families can earn for participating in desirable
activities, reaching qualifying milestones or achieving certain outcomes or “benchmarks.” For example, a parent might earn
$100 for participating in financial education, a child might receive $25 on his/her birthday or a youth might be paid $100
for graduating from high school. In SEED, the benchmark incentives varied depending on the accountholders’ ages and their
earning and savings potential.
Eleven of the 12 SEED community partners used benchmark incentives in their savings programs. The number, value, types
and deposit requirements of benchmark incentives varied considerably. While most were offered based on some achievable
outcome, not all benchmarks had to be earned. Some, such as a birthday benchmark, were gifts intended to provide general
encouragement and remind participants about the account and program activities.
As originally envisioned, SEED accountholders and their families would have had the option of receiving their benchmarks
as cash (in the form of a check made payable to the parent or youth) or depositing some or all of the incentive into their
accounts. In this way, researchers would be able to determine whether contributions to the accounts were truly voluntary.
However, many of the SEED community partners were concerned that accountholders would not deposit incentives paid
to them in cash. In an effort to maximize savings, most community partners instead opted to require accountholders to
deposit their benchmark incentives into their SEED accounts. A couple of the partners split the incentives, paying half in
cash and depositing the other half into the accounts. Both of the partners that initially gave participants the option of taking
benchmark payments as cash later changed their policies.
Benchmark incentives in SEED proved valuable in some ways, but also had important downsides. On the plus side, many
SEED families faced major economic barriers to saving,38 and benchmark incentives represented an opportunity to “earn”
funds to deposit that did not have to come out of a meager family budget. Indeed, in some cases, benchmark incentives
were the only source of deposits into participants’ accounts. Benchmark incentives were also a helpful strategy for
encouraging desirable savings habits, such as setting up direct deposit or directing a portion of a tax refund into a child’s
account. Finally, by offering benchmark incentives, SEED partners were better able to get families to participate in financial
education and other program activities that supported and encouraged their savings behaviors.
However, compared to initial deposits and savings matches, benchmark incentives were the most difficult and expensive
to administer, particularly for larger cohorts of savers or when many types of benchmark incentives were offered. The
paperwork and staff time required to process the many small benchmark-related transactions was burdensome and
complicated for community partners.
Section C: Lessons from SEED Practice
— Page 97 —
Lessons from SEED
The amount and blend of various types of incentives can impact savings and total asset accumulation. SEED research39
shows that the way that savings incentives are structured can measurably affect savings outcomes and the total amount of
assets accumulated. For instance, an increase in the match cap – the upper limit of participant savings that will be matched
– is positively associated with savings, suggesting that accountholders will “stretch” to meet the savings goal. However, a
higher match cap is not associated with total asset accumulation, meaning the total amount of savings and incentives in
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the account. Conversely, research shows that the amount of the initial deposit and the maximum amount of benchmark
incentives are positively associated with accumulation, but are not associated with savings. These findings may help inform
future program and policy design.
While benchmark incentives can be a helpful savings tool, they are relatively costly to administer and may prove
unworkable at scale. Benchmark incentives can be effective at rewarding partici­pation in children’s savings programs,
supplementing depos­its into the accounts and providing tangible, immediate benefits during a long-term savings period.
However, experience suggests that benchmark incentives as implemented in SEED are not read­ily scalable, and therefore
should not be a part of the design and implementation of any universal, progressive system of CDAs unless their delivery is
substantially streamlined to reduce cost and inefficiency.
Implications for Public Policy
“Automating” incentives may be one way to increase efficiencies at scale. One way to simplify incentives is to make them
automatic, thereby removing the need to document particular events or achievements. Indeed, researchers at the Center
for Social Development refer to this kind of automatic reward as an “additive” incentive and note that “additive incentives
may be easier to operate on a national scale.”40 Unlike savings matches, which require a parallel account structure, additive
incen­tives can simply be added to accountholder savings and do not require match calculations. One example could be a
benchmark incentive earned by the child each year on his or her birthday, similar to the birthday benchmark offered by
some of the SEED partners. Automatic bench­marks also could be savings-based, triggered by enrolling in direct deposit,
for example.41 Neither of these would require independent verification by a third party, thereby reducing the burden of
administration.
Because automatic incentives can act as a reminder of the potential of the account and spur new savings activity, they
should be offered at regular intervals over the accountholder’s childhood. For instance, the United Kingdom’s Child Trust
Fund currently includes provisions for both an initial deposit and for an additional government endowment, or “top-up
payment,” which would be deposited in each child’s account at age seven.42 This kind of periodic incentive may help to reen­
gage families over the course of their saving.
Don’t forget about community-based organi­zations. Even with a more streamlined, automatic approach to incentives,
policymakers should not ignore community-based organizations in building systems to deliver CDAs at scale. Indeed, it
may be beneficial for making sure that the promise of these accounts can be realized for all families, including low-income
families, to allow such organizations to provide additional “high touch” services, such as mon­etary or non-monetary rewards,
to encour­age targeted families to participate.43
Demonstrating Opportunity: A Compendium of Practical Experience
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and Lessons Learned from the SEED Initiative
Financial Aid44
Background and Summary of SEED Experience
Children and youth who participated in SEED saved for multiple purposes, but most intended to use their savings for higher
education. However, with the annual cost of attending a four-year public university reaching 71% of a low-income family’s
total income45 – and the price of higher education increasing at a rate faster than inflation – it is likely that most SEED
accountholders will need additional financial aid to pay for college.
Eligibility for need-based aid – whether federal, state or institutional – is usually determined by various factors, including the
assets of the student and his or her parents or guardians. Since assets play a role in calculating need-based aid, CDAs can
affect financial aid eligibility.
The formula used to determine need for financial aid assumes that a student and his or her parents will contribute from
their own resources to pay for higher education expenses. This estimated contribution is called the expected family
contribution (EFC). The gap between the price of attending the institution and the family’s EFC is considered the student’s
financial need. The dependency status of the student determines the rate at which the student’s and the parents’ income
and assets are assessed.
In addition to understanding the rate at which assets are assessed in determining the EFC, it is also important to
understand the extent to which assets are counted. In some circumstances, the formula used to determine the EFC assesses
all assets. In other cases, some or all assets and income are exempted from the formula. For example, parents of dependent
students and independent students with dependents are permitted an income protection allowance and an asset protection
allowance; only income and assets above these thresholds are taken into consideration in the EFC.
The asset protection allowance is intended to protect parents in case of emergencies and to allow them to save for
retirement. There are also two provisions in the EFC calculation that effectively exclude all assets from consideration.
The first is called the “simplified formula,” which excludes all assets from consideration. It is an option only for dependent
students who meet the following criteria:
n
the student’s parents filed or are eligible to file an IRS Form 1040A or 1040EZ, or the parents are not required to file any
income tax return;46
n
the student filed or is eligible to file a an IRS Form 1040A or 1040EZ, or he or she is not required to file any income tax
return; and
n
the parents’ income is below $50,000.
The second provision is called the “zero EFC.” Under this provision, the student and his or her family are not expected
to contribute any income or assets toward the cost of college. It is an option only for dependent students who meet the
following criteria:
n
the student’s parents filed or are eligible to file an IRS Form 1040A or 1040EZ, or the parents are not required to file any
income tax return; and
n
the student filed or is eligible to file an IRS Form 1040A or 1040EZ, or he or she is not required to file any income tax
return; and
n
the parents’ income is $30,000 or less.47
Section C: Lessons from SEED Practice
— Page 99 —
C
Lessons from SEED
As part of SEED, CFED conducted research to better understand the various potential CDA scenarios and their
implications for need-based financial aid. One of the main reasons CFED conducted this research was because the way
money in any children’s development account is treated when determining the EFC depends on the type of account, the
owner of the account, and the family’s or independent student’s financial and other circumstances. CFED’s primary interest
in conducting this research was to minimize or eliminate negative financial aid consequences for the lower-income children
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and youth saving in SEED.
However, this research also has implications for families with higher incomes. The research focused on the three kinds
of long-term savings and investment products that are currently available and that most closely approximate the desired
features of CDAs: 529 college savings accounts, Coverdell Education Savings Accounts (ESAs) and Individual Retirement
Accounts (IRAs).48 The following are important findings about CDAs and financial aid eligibility:
For most families with incomes below $50,000, all assets are excluded in determining the EFC. Because of asset
protection allowances, the simplified EFC formula, and the zero EFC formula, most lower-income parents are not expected
to contribute anything toward their children’s education expenses. If a family’s income is below $50,000, available assets
are not considered when calculating the EFC. However, if the income exceeds $50,000, 12% of the available assets will be
considered when calculating EFC. The typical family, depending on marital status and age, will see an asset protection limit of
$45,000. These provisions are intended to make it easier for low-income households to apply for aid and to ensure that a
greater portion of need-based aid does, in fact, go to low-income families.
In general, establishing CDAs in the name of the child may have financial aid consequences and should be done only
after careful consideration. Although structuring CDAs with children or youth as the owners may have the benefit of
empowering young people and in shaping aspirations, doing so may result in these assets being assessed at a higher rate for
financial aid purposes than they would be if the accounts were owned by the parents. Currently, 20% of the assets owned
by dependent students will be considered available to pay for higher education expenses.
Savings in traditional and Roth IRAs, which allow early withdrawals for post-secondary education, are completely
disregarded in determining the EFC. IRAs are tax-sheltered savings vehicles designed to provide retirement income.
However, they also allow for early withdrawals for certain other restricted uses. Funds can be withdrawn without penalty at
retirement (after age 59.5) or earlier if used for first-time home purchase, post-secondary education for the accountholder
or a close relative, and a few other uses. IRAs receive highly advantageous treatment in the calculation of eligibility for
federal need based financial aid. The EFC calculations entirely exclude pension savings, including IRAs, although withdrawals
are included in the calculation of income. Minors may own IRAs through a custodial arrangement. However, because of the
current requirement that contributions to IRAs come from earned income, their usefulness for CDAs is limited to older
youth.
Assets held in 529 accounts are included in EFC calculations. Named for the relevant section of the tax code, 529
accounts are state-sponsored education savings plans that allow for tax-sheltered savings for future post-secondary
educational expenses.49 These plans may be owned on behalf of a child by a parent or an organization. Minors also may
own 529 accounts, but only through a custodial arrangement. Assets in 529 accounts will be assessed at a maximum
of 5.64% for the purposes of calculating the EFC – regardless of the account’s owner.50 Furthermore, it may actually be
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and Lessons Learned from the SEED Initiative
advantageous for 529 accounts to be owned by the student if a family has more than one dependent child. All parentowned 529 accounts must be reported for EFC calculations (even though one or more of the accounts may be for the
benefit of a sibling), whereas a student-owned 529 account will be assessed only for the child who benefits from the
account. However, note that parents benefit from an asset protection allowance (see above for more detail) whereas
students’ assets do not receive such preferential treatment and are assessed at 20%.
Assets held in Coverdell Education Savings Accounts (ESAs) are included in EFC calculations. Formerly known as
Education IRAs, Coverdell ESAs are tax-sheltered accounts set up with the child as beneficiary and the financial institution
as custodian. An adult is designated as a “responsible individual” in charge of making decisions about the account. Qualified
distributions are limited to secondary and postsecondary education expenses. A 2004 U.S. Department of Education
ruling states that Coverdell ESAs should receive the same treatment as parent-owned 529 accounts in determining federal
financial aid, making them subject to the maximum 5.64% assessment.51 The ruling also states that qualified distributions from
Coverdell ESAs – those that are not subject to federal income tax – are not considered parent or student income and thus
are excluded from financial aid calculations.
Implications for Public Policy
The experiences with financial aid in SEED provide a number of important lessons that can help to inform the design
and implementation of public policies aimed at establishing universal, progressive systems of asset-building accounts for
all children starting at birth. There remain several areas for reform – both for resource-poor students who are saving
for college and will require additional financial aid and for the treatment of assets in EFC calculations in general. In order
to minimize or eliminate negative financial aid consequences for families saving in CDAs and increase access to higher
education, policymakers should consider the following recommendations to further reform the treatment of assets in EFC
calculations.
Re-think the treatment of assets, including CDAs, in financial aid calculations. The federal government has limited financial
aid resources. Faced with this shortage, some argue that the most appropriate use of federal dollars is to target it to those
with the greatest need. Yet, accurately assessing need or targeting aid has led to complex eligibility rules. This complexity
creates a barrier to the very low-income students the government is trying to reach. In a recent working paper, Harvard
University professors Susan Dynarski and Judith Scott-Clayton argue that the complexity of the federal system for distributing
student financial aid “disproportionately burdens those with the least ability to pay and undermines redistributive goals.”52
Using data from federal student aid applications, the authors show that a radically simplified aid process using income and
family structure, but dropping assets, produces results similar to those produced by the more complex current system for
calculating aid. For this reason, and because the treatment of assets in the aid formula creates “horizontal inequities” (i.e.,
identical households with identical lifetime earnings are treated differently, with less aid going to families that forego current
consumption to save for college), some higher education finance experts suggest the complete removal of asset tests in
determining financial aid eligibility. While removing asset tests might allow a small minority of families with sizeable assets
to qualify for increased federal financial aid, proponents of this simplified approach argue that the costs of such a process
would be more than offset by reductions in bureaucracy and increased ease in accessing the financial aid system. Thus, if
the primary goal is to increase the number of low-income individuals who attend college, then simplifying the financial aid
process may be the best approach.
Section C: Lessons from SEED Practice
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Expand asset protection for limited-resource families by re-crafting the simplified EFC and zero EFC tests to correct the
exclusion of some low-income students. The current rules for simplified and zero EFC calculations unintentionally exclude
some who should be eligible based on need alone. At present, families with incomes below $50,000 who are not eligible
to file IRS forms 1040A or 1040EZ do not qualify for the exclusion of assets from the EFC that applies to families that are
eligible to file these tax forms.53
Explore ways to amend the federal EFC rules so that the income and assets of independent students, including foster
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youth, are assessed at a more favorable rate. For low-income independent students – especially those without dependents
– the 20% assessment rate may still be too high a penalty for saving for college. In addition, the treatment of independent
foster youth is also of concern.54
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and Lessons Learned from the SEED Initiative
Working with Community-Based Organizations55
Background and Summary of SEED Experience
Recognizing the important role that community-based organizations (CBOs) can play in delivering asset-building tools and
services in low-resource communities, CFED and the national partners in SEED chose a total of 12 CBOs to participate as
“community partners” (see Section B) and deliver matched CDAs in SEED. Some had prior experience with asset building,
such as delivering IDAs or providing financial education; others had a strong connection to and knowledge of the target
community, but were new to delivering matched savings accounts.
With primary responsibility for the delivery of CDAs in SEED, the CBOs played a number of specific management roles,
including:
n
Planning: Working with CFED, each of the community partners worked to specify the goals and intended outcomes of
their particular program, understand the needs to be addressed, make decisions about organizational partnerships/roles,
and establish the guidelines and procedures that dictated how the program functioned.
n
Outreach/recruitment: One of the most important functions in SEED (see Recruitment) was recruiting participants. The
SEED community partners played a number of key roles in the outreach and recruitment phase, including organizing a
variety of activities designed to get participants aware, engaged and enrolled in the program. Specific activities included
marketing the program, conducting targeted outreach toward difficult-to-reach populations, answering questions/
addressing concerns about enrollment, helping participants complete paperwork, etc.
n
Account Management: Account management captures a number of activities that took place once the accounts were
up and running (see Account Oversight). In SEED, the CBOs:
n
Helped to administer the savings instrument selected for the CDA (either a savings account or 529 college
savings plan) by utilizing a management information system (MIS) to provide timely and accurate account
information to participants regarding savings and matching funds.
n
n
Tracked account activity and processed withdrawals, either for emergencies or to purchase one of the approved
assets.
n
Managed savings incentives, including initial deposits, benchmark incentives, and match funds.
Encouraging Saving: Each community partner engaged in a number of activities that might be described as “high touch”
support or “hand holding” activities designed to encourage participants to save. This kind of support relied on a personal
connection between the program staff and participants. In SEED, the services organized by the community partners to
promote saving included providing encouragement and guidance, facilitating peer support groups, organizing recognition
events, sending reminders to save and providing referrals to other agencies/organizations.
n
Financial Education: Providing participants with a basic level of financial literacy is also a key component of a CDA
program (see Financial Education). Depending on the age of the child participating and the program design, the SEED
community partners (in collaboration with other partners, such as financial institutions and schools) worked with the
parent, child or both to help them understand the concepts of saving, budgeting, money management, compound
interest, etc.
Section C: Lessons from SEED Practice
— Page 103 —
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Lessons from SEED
Building a sense of trust among low-income populations was one of the key strengths of the CBOs in SEED. One of
the principal barriers that had to be overcome at the beginning of the demonstration phase was a lack of trust. Qualitative
research from SEED confirms that a lack of trust was one of the key barriers that kept people from enrolling in SEED. For
example, mistrust and fears of systems, organizations and bureaucracies often discouraged enrollment; several participants
mentioned mistrust of the government, while others focused on the U.S. banking system.56 In regular reports to CFED,
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the community partners frequently mentioned a sense of trust and connection with the community as the key strength
their CBO offered in SEED. CDA programs involve participants in two of the most important aspects of their lives – their
children and their finances. Thus, building trust with participants was an essential pre-requisite for reaching the target
population envisioned for SEED.
The CBOs played a crucial role in recruiting SEED’s target population – primarily low-income children and youth. CBOs
played a central role in building program awareness and recruiting participants, which relies heavily on a strong connection
with the community. When asked by CFED about their contribution to SEED, nearly all of the SEED partners mentioned
outreach as one of their strongest roles in the program. Staff at one partner organization talked about CBOs being the
“salespeople” for the accounts; they were able to tailor the marketing of the program to make it more compelling and
applicable to the community they serve. The CBOs in SEED were all established “access points” within their communities
and, as such, had the opportunity to reach underserved populations who might otherwise have been less likely to
participate in CDA programs.
CBOs in SEED were well-suited to deliver financial education. The SEED community partners reported that teaching
participants the basic financial concepts (setting goals, budgeting, understanding compound interest, etc.) was an important
achievement during SEED. With their unique knowledge of the community, the partners were able to customize this financial
information to make it more relevant to the culture and context of participants, either by combining elements of existing
curricula to make them more appropriate to the age, language ability or ethnicity of participants, or by developing an
entirely new curriculum.57
CBOs also were essential to encouraging saving in SEED. In focus groups, parents related how staff answered questions
and eased concerns about signing up for the program, helped them to fill out confusing paperwork, encouraged them to
make deposits and helped them find ways to save when they had difficulty.58 As an example of the latter, parents reported
in focus groups that finding money to deposit into SEED was a persistent source of stress for them. Program-sponsored
fundraisers were cited by parents as a way that they would be able to make money for deposits.59
In another example, Juma Ventures, which operates concessions in the Bay Area’s sports stadiums, employed a number of
SEED participants as vendors selling food in the stands and from kiosks. Many of the participants looked forward to the
baseball season because they would have an opportunity to make deposits: “It’s starting up again and I was telling my mom
and she was, like, ‘you’re getting paid again, you’re gonna put it in your SEED account!’”60 For such families with limited
resources, supplementing income was sometimes the only way to free up money for saving.
At some SEED programs, the financial education workshops were also a way to build peer support networks among
participants, which is another strategy to help encourage saving. In an interview with researchers, a parent at one site talked
about how her involvement in the workshops and interactions with other parents had led to greater self-efficacy: “When I
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and Lessons Learned from the SEED Initiative
come to the meeting, I’m serious … when I stand up in front of the parents and bring other information for the parents
to share … because I’m going to see them … it changes my behavior because I’m much more prepared, I’m much more
organized, I’m pre-planning. When you pre-plan and you have a strategy in place you’re so much more effective in life,
period, whether it’s your professional or your personal life.”61
Even so, some participants in SEED still had a lot of misinformation about the accounts, including how to use direct
deposit,62 highlighting the challenge of educating families about program features, particularly those who are unfamiliar with
banking and financial products.
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Account management was the “heaviest lift.” The SEED community partners reported that managing the accounts and
financial incentives was the biggest challenge during SEED.63 Most CBOs do not have the financial/MIS systems necessary
to process a large number of financial transactions and managing the accounts places a heavy administrative burden on the
organization. As one community partner noted: “Account management placed heavy stress on our staff capacity and is not
within our ‘sphere of expertise.’ If we were to ever participate in a program such as SEED again, we would focus our efforts
on preparing participants with financial knowledge and skills.”64
This was no surprise to the researchers and organizers of SEED, who had a similar experience with CBOs in the American
Dream Demonstration; however, with no other institution able and willing to take on this role at the start of SEED, CBOs
were asked to play a significant role in managing the accounts, and in particular, the financial incentives and matching dollars
for SEED.
“Hand holding” from CBOs can create unintended consequences. There is the danger that CDA savers can become
overly dependent on CBOs for advice and management of their savings and finances. Research in SEED found that, in
some cases, the community partner had become an intermediary for parents who were unable or had no desire to make
deposits with the financial institution holding the SEED account.65 One unintended consequence of this kind of hand-holding
might be to keep families unfamiliar with the banking system, especially those who are already unbanked.
Implications for Public Policy
As policymakers and practitioners move forward with various CDA models and proposals at the local, state and federal
levels, especially those that envision large-scale delivery of accounts, the experience from SEED suggests several key
recommendations regarding the ideal role of CBOs:
CBOs have an important role to play in ensuring broad-based participation in CDA initiatives. One potential downside of
proposals for universal CDAs is that the wealth gap could actually increase, if families with financial know-how participated
in large numbers and families with limited know-how did not. In SEED, which targeted mostly poor and low-income
households in disadvantaged communities, savings outcomes were modest, but impressive compared with a national savings
rate that frequently dipped into the negative range during the SEED demonstration phase (2003-2008).
Much of this success was due to the leadership and effort of the CBOs that led the community partner sites in SEED.
CBOs can play a critical role in the community economic development process by ensuring equal opportunity and
participation for all income levels in all facets of economic life, including participation in asset-building innovations, such as
CDAs. However, given limited capacity to deliver services and often specific demographic groups that serve as their target
Section C: Lessons from SEED Practice
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populations, it would appear that CBOs would be best suited to a targeted role, rather than a central role, in such largescale CDA initiatives.
In CDA initiatives, CBOs are best suited to providing information, shaping expectations and fostering a sense of
security for savers. In particular, CBOs should be utilized to help spread the word about CDAs, especially in low-income
communities. CBOs that are trusted in the community can provide a strong endorsement for a CDA program and help
conduct outreach to their constituents and communities. In addition, CBOs should be utilized to provide targeted support
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services and financial education to participants, provided these roles fall within the organization’s capacity. CBOs that have
existing relationships with families based on providing other complementary services, such as early childhood support, may
be particularly well-suited for this role.
Larger-scale CDA models or proposals should develop systems in which accounts and financial incentives are entirely
managed by financial institutions – not CBOs. While providing incentives to save is a role that CBOs can play and one in
which they can have a significant influence, the experience in SEED suggests that the particular role of managing account
information and financial incentives is not a strength of CBOs. Fulfilling this role in SEED was the area of implementation
that the SEED community partners struggled with the most and where there was the greatest inefficiency and cost. This is
reflected in some of the emerging, larger-scale CDA models that are being proposed or implemented at the city level, in
which the role of CBOs is limited to helping to raise additional account incentives.
CBO impact can be maximized by involving them in the planning and design stages of CDA initiatives. CBOs have the
knowledge and experience of working with diverse populations and may be able to anticipate some of the barriers to
participation and saving and suggest ways to overcome them. CBOs can also help create a “stream of services” to reach
underserved communities as participants move through different stages of life. While CBOs played a central role in the
design of CDA programs in SEED, this has not often been the case in some of the subsequent city-wide CDA efforts.
Municipal leaders and others involved in the design of public policies to support CDAs should be make sure to include
CBOs in the planning and design phase of any new CDA program or policy.
If a role for CBOs in supporting CDAs is envisioned, make sure to make provisions for providing the financial support
needed by CBOs. For example, incorporate the cost of CBO services, if deemed necessary, into legislative language and/or
annual budgets for CDA programs.
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and Lessons Learned from the SEED Initiative
Account Oversight
Background and Summary of SEED Experience
One of the key features of CDAs is providing incentives for accountholders to save, particularly progressive savings matches
and benchmark incentives or other lump-sum payments (for more on this topic, see Account Incentives). When account
incentives are provided, one important challenge is managing, tracking and reporting on these incentives. Doing so is
important for maintaining the trust and confidence of accountholders, ensuring the integrity of the program, and providing
targeted support and encouragement to families. Ideally, this function would be taken on by financial institutions, since they
already have sophisticated systems to manage various kinds of account activities.
However, because of the innovative nature of SEED and the relatively small size (about 1,300 accounts) of the
demonstration phase, CFED was unable to identify an existing structure or MIS available through financial institutions that
could sufficiently meet the needs of SEED. Therefore, the community partners in SEED were involved in two primary
areas of account oversight and management: tracking, recording and reporting account activity, and tracking, calculating and
distributing savings incentives. This function is similar to that played by most IDA programs. While we would not recommend
this structure for CDAs delivered at larger scale, we include our experience and lessons here for those who may choose to
implement CDAs on a smaller scale.
More specifically, the critical components of account oversight in SEED included:
Obtaining access to data. In order to track the savings incentives that each participant had earned and to know whether
savers were making progress, SEED community partners needed access to up-to-date information on participants’ savings
activity. In most cases, they achieved this by becoming the custodian of each child’s account. This gave community partners
access to all account-related information and allowed them to control account activity. In cases where the community
partner was not explicitly named on the account, they received parents’ permission to obtain “interested third party” status.
This allowed programs to receive copies of bank statements.
Using a Management Information System. A Management Information System (MIS) is essential for capturing participants’
demographic and savings data and generating reports for both internal and external use, including regular incentive
statements for accountholders. In SEED, community partners received monthly or quarterly account data from the financial
institution (usually in the form of printed bank statements) and then entered it into a specially designed “MIS IDA for
SEED”66 database. One site, OLHSA, made this process somewhat more efficient by setting up an electronic data-sharing
arrangement with its financial institutions.
Many SEED community partners struggled with finding a staff person with the appropriate background to manage a
database successfully. Program staff working on SEED were generally very adept at providing a wide range of support for
accountholders and their families, but rarely had training in or inclination toward data management. This made the use of
the MIS more challenging and burdensome for many community partner sites.
Tracking account activity. SEED community partners monitored and tracked all account activity, including deposits,
withdrawals, interest, and gains or losses on investments. They also managed withdrawals – either “unqualified” withdrawals
Section C: Lessons from SEED Practice
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made on an emergency basis prior to completion of the savings period, or “qualified” ones made to acquire an asset once
the participant was of age.
During SEED, the majority of community partners allowed emergency withdrawals of the participant’s own savings only (no
incentive funds could be withdrawn), based on a limited set of circumstances, and encouraged parents or youth to replace
the funds within a set period of time. Emergency withdrawals were approved in situations in which families were struggling
to avoid eviction, pay for necessary medical expenses or meet other urgent basic needs.
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Managing savings incentives. Account incentives in SEED included an initial deposit, matching funds, and/or benchmark
incentives. The initial deposit was placed in each participant’s account at the beginning of the program.67 Community
partners then used MIS IDA to track match funds separately from the savings deposits families made. Match funds were
held in a single pooled account, and accrued “virtually” to each accountholder; the funds were only transferred to the
accountholder at the time of a matched withdrawal (asset purchase) or at the end of the demonstration. MIS IDA tracked
the virtual match and allowed community partners to generate monthly or quarterly statements showing accountholders
the amount of match funds they had accrued.
Benchmark incentives proved to be challenging to track in SEED, particularly for community partners with many
accountholders or which offered a large number of benchmark incentives. Community partners were required to monitor
closely which participants earned incentives for which activities or achievements, when benchmarks were earned, and when
they were actually paid out to accountholders. MIS IDA did not have the capability of tracking benchmarks, so a separate
spreadsheet was used, which proved unwieldy and time-consuming.
Reporting to accountholders. In SEED, community partners were required to send families either monthly or quarterly
savings incentive statements in addition to the regular bank statements. Sending accountholders regular bank and incentive
statements encouraged consistent savings, informed them of the amount of match earned to date and reminded them to
make deposits.
Adhering to SEED performance standards. As part of SEED, CFED developed a list of performance standards based on
certification standards developed for the IDA field, but adapted to the aims and understandings of SEED. The performance
standards laid out a set of minimum standards for managing SEED accounts, such as the turnaround time for issuing
statements once a reporting period had ended and the enforcement of match limits and other caps on savings incentives.
Each community partner was held accountable for meeting and maintaining these fundamental standards.
Lessons from SEED
While the experience of the SEED community partners yielded many valuable insights about the techniques of account
oversight,68 perhaps the most important lesson is that the responsibilities of participant support and encouragement and the
responsibilities of account management require two very different skill sets, and that many community-based organizations
are far better equipped to manage the former than the latter.
The community-based organizations participating in SEED were extremely skilled at relationship-building, providing
information and support, and delivering financial education. Generally, they were less proficient at the back-office, technical
aspects of SEED, including managing financial transactions and the MIS IDA database. These components might have been
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and Lessons Learned from the SEED Initiative
more effectively managed by a financial institution or other entity with specific expertise in these areas, and in fact CFED
and its partners sought such an option at the outset of SEED. However, no institutions were able and willing to take on
this role. This meant that community partners were left having to play a significant role in managing the financial and data
requirements of SEED.
Organizations exploring the possibility of launching their own CDA programs should proceed with extreme caution in this
regard, particularly when considering a larger-scale initiative.
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Section C: Lessons from SEED Practice
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Working with Foster Youth69
Background and Summary of SEED Experience
Each year, as many as 25,000 teenagers “age out” of the foster care system when they turn 18.70 While many parents of
18-year-olds provide their children with emotional and financial support for years to come, the state has no legal obligation
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to provide assistance to youth in foster care once they reach the age of majority. These youth – who are more likely to
have been held back a grade, suspended from school or in trouble with the law than their peers71 – enter the adult world
to face the myriad challenges of adulthood, often without the crucial support of family, friends or community. To compound
these challenges, many foster youth lack the practical life skills that other adolescents their age have acquired over the years.
Many have missed the opportunity to, for example, observe an adult pay the bills or earn an allowance for doing chores
around the house.72 They may also carry the psychological and physical burdens of past abuse and neglect.
One of the important skills that many foster youth lack is the ability to understand and manage their own personal finances.
Given the daunting challenges these young people face at the age of majority, asset-building strategies present a unique
and compelling opportunity to support independent living by providing opportunities to learn practical financial skills and
accumulate savings for the future. Two of the community partners in SEED – Mile High United Way of Denver (MHUW)
and Cherokee Nation in Tahlequah, Oklahoma – worked specifically with youth who were or had been in foster care.
MHUW’s program was focused exclusively on foster youth, while Cherokee Nation’s program served a smaller subset of
foster youth within the larger SEED program. Between these two programs, more than 170 foster youth were involved in
financial literacy training and saving toward asset purchases, such as post-secondary education, housing, transportation or
small business start-up.
Lessons from SEED
A number of lessons have emerged from the experience of working with foster youth in SEED that can guide the
implementation of asset-building programs for children and youth and help to inform the design and implementation of
public policies to support CDAs.
Foster youth can save, and will make wise use of savings incentives. As of December 31, 2007, participants at MHUW
accumulated an average account balance of $1,27273 and made average matched withdrawals for asset purchases of $1,338
per participant. One example is a participant in the MHUW program who moved into a new apartment during SEED and
used $878 of the $1,480.51 she had accumulated in her SEED account to pay for first month’s rent, security deposit, utilities
and other move-in expenses. This was this participant’s second asset purchase after participating in the program for two
years. Participants at Cherokee Nation, inclusive of foster youth, hold an average SEED account balance of $1,507, and many
plan to make asset purchases once they reach the age of 18 and graduate from high school.
Foster youth have fewer options for making contributions to the account. Without the support of parents, who are the
largest source of deposits for most participants in SEED, it is challenging for foster youth to make contributions to SEED
accounts. Moreover, even while employed, most foster youth find it difficult to put aside funds into savings, especially once
they reach the age of majority and have exited the foster care system. Benchmark incentives can provide an opportunity
for accountholders to “earn” savings when they are unable to put aside their own funds because of financial constraints.
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and Lessons Learned from the SEED Initiative
Incentives also serve to reward participation in valuable financial literacy and community networking activities that can
bolster independent-living skills.
Support services are particularly important for foster youth. Because of their unique life circumstances, foster youth often
struggle to secure basic needs, such as food and housing, making it more difficult for them to commit to a savings program.
Thus, it is crucial that foster youth participating in any matched savings initiative or program also receive support services
that help them achieve a basic level of financial security so that they can engage and participate in saving. In order to
effectively engage and provide support to foster youth, coordination between nonprofit and government agencies involved
in foster care is essential. At MHUW, the SEED program’s extensive partnerships and collaboration with local agencies
enabled it to recruit its first 75 participants in less than six months (the average SEED site took more than a year to reach
full enrollment).
Providing online access to program resources helps to overcome the difficulty of communicating with very mobile foster
youth. Given the transitional living arrangements that many foster youth experience, it is important to provide program
resources that can be accessed via the Internet. Wherever possible, providing online account statements is advantageous;
bank statements mailed to foster youth at MHUW were often returned due to frequent changes of address or periods of
homelessness.
A wider range of eligible uses of accounts may be necessary to meet the unique needs of foster youth. For foster youth,
allowable uses should extend beyond the “big three” (home purchase, education and business development) to include
vehicle purchase, health care and rental housing payments. For many foster youth, these large purchases may be necessary
in order to attend school, obtain a job or find stable housing – making it possible for them to take the first steps toward
self-sufficiency.
Implications for Public Policy
The experiences from working with foster youth in SEED provide a number of important lessons that can help to inform
the design and implementation of public policies aimed at establishing progressive systems of asset-building accounts for all
children, including those in foster care.
“High touch” services are essential. The experience with foster youth in SEED has demonstrated the importance of
hands-on, highly personalized supports to help foster youth succeed in building assets. Within a universal system of accounts,
it will be essential to allocate adequate funding for community-based programs and public agencies that serve foster youth
to provide these wrap-around services, where necessary.
Take advantage of opportunities to leverage existing funding for foster youth. The Chafee Foster Care Independence
Program (CFCIP) supports “independent living” skills for foster youth aging out of the system. Among other things, CFCIP
makes available vouchers for postsecondary education and training to youth who have aged out of foster care.74 These
Education and Training Vouchers (ETVs) can provide up to $5,000 per year in funding for postsecondary education
expenses. ETVs can supplement a foster youth’s savings for college or training, or might free up these funds for alternative
asset purchases, such as buying a home or starting a small business.
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Think creatively about using Chafee and other funds for matched savings accounts. The Chafee program allows states a
great deal of flexibility in defining the population in need and in determining the design and delivery of state independent
living programs. Chafee funds can be used for a wide variety of services, including helping foster youth to prepare for postsecondary education and providing training in financial skills. Some states (such as Michigan and Iowa) have recognized
this opportunity and are already funding matched savings programs for foster youth with Chafee funds.75 States have also
leveraged Community Development Block Grant (CDBG) funds to provide a match for Individual Development Accounts.
Policy advocates should consider ways to incorporate or leverage CFCIP, CDBG and other funding when designing systems
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of matched savings accounts for foster youth.
Don’t forget asset limits. Asset tests are used to determine eligibility for public benefit programs at the state and federal
levels. These rules often have the perverse effect of penalizing those who save while receiving public assistance, thus
actively discouraging benefit recipients from accumulating assets. While it is important for asset limits to be eliminated or
raised to enable all low-income households to save, it is especially crucial for foster youth transitioning to independence, as
these young people frequently qualify for and rely on public assistance programs such as Medicaid, Supplemental Nutrition
Assistance Program (formerly known as Food Stamps), Supplemental Security Income (SSI), and Temporary Assistance for
Needy Families. Proposals for enacting CDAs should exempt these accounts from asset limits in public benefit programs.
Protect federal SSI benefits for foster youth with disabilities. The incidence of severe disabilities is several times higher
for children and youth who have been in foster care. Statewide percentages of children and youth in care who receive SSI
(federal benefits for disability) range from 4% to 20%.76 Meanwhile, SSI benefits can provide an individual with as much as
$856 per month in public assistance.77 Older foster youth who receive SSI and have a dedicated savings plan for educational
or vocational needs – post-secondary education or small business development – are eligible to save in a Plan to Achieve
Self Support (PASS) Account, which waives the $2,000 asset limit for SSI eligibility and benefits. Within a universal system of
accounts, it would be essential that caseworkers in the foster care system work with the Social Security Administration to
create PASS Accounts for youth who qualify for SSI.
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Working with High School-Aged Youth78
Background and Summary of SEED Experience
High-school aged youth were one of the four age cohorts of young people that participated in SEED. While older savers
do not have the full benefit of account growth through compound interest, there are a number of advantages to working
with this population. In particular, in comparison with savings programs that begin at birth, programs targeted toward high
school-aged youth have a savings period that is relatively short, making the program seem more relevant and urgent, and
involve participants who have the ability to earn their own income to make deposits.
SEED included three sites that delivered matched savings accounts to high school youth. Interestingly, all three of the high
school SEED sites – Mile High United Way (MHUW), Cherokee Nation and Juma Ventures – also operated youth IDA
programs in their communities. Through their SEED programs, MHUW served 150 foster youth aging out of the child
welfare system, while the Cherokee Nation served 75 accountholders, 25 of whom were in the foster care system. Juma
Ventures worked with 75 low-income youth in the San Francisco Bay area.
Lessons from SEED
Based on the experiences of the community partners in SEED that worked with high school-aged youth and the findings
from a roundtable discussion that CFED convened in May 200879 to discuss youth savings, a number of important lessons
have emerged about saving and financial education programs and strategies designed to serve youth.
Low-income youth can and will save and make productive asset purchases. As of December 31, 2007, after participating
in SEED for more than two years, high school-aged participants accumulated on average $1,507 at Cherokee Nation,
$2,626 at Juma Ventures, and $1,272 at Mile High United Way.80 Account incentive features such as initial deposit,
benchmark incentives and matching funds helped youth to leverage their own personal savings. Cherokee Nation, for
example, advertised the initial deposit as a program feature designed to help jump-start accounts. Staff at Juma Ventures
noted that youth who were stable, employed and asset-motivated were more engaged in saving and participating in SEED.
For those savers who made an asset purchase during the first two years of SEED, asset purchases went toward postsecondary education and housing; in addition, foster youth were able to make purchases toward vehicles, computers and
medical expenses.
Saving and accumulating wealth can change a young person’s mindset. Qualitative research in SEED has shown that savings
and financial education can help low-income youth to achieve increased fiscal prudence and financial knowledge, financial
security and future orientation, and can positively impact self-esteem.81 Furthermore, research suggests that college-qualified
high school students who believe that college is unaffordable, such as low-income and minority students, are less likely
to take the steps necessary to enroll in college, such as taking a college entrance exam.82 Financial education and savings
programs can help low-income students to realistically assess college costs and identify practical steps to finance their
education.
Youth respond well to programs designed at their own level. Experience in SEED indicates that program features and
communications that are youth-friendly and accessible worked well. The SEED program at MHUW, for example, used tools
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such as text messaging, MySpace and electronic banking to reach its population. For foster youth, in particular, short-term
permissible uses for savings (such as first month’s rent, security deposit on an apartment, etc.) allowed participants to build
stability and move toward asset purchases in a relatively short period of time. Electronic statements were useful, especially
given that participants changed mailing addresses on a regular basis.
Providing opportunities for youth to earn income can help them build savings and develop professional skills. Cherokee
Nation youth started a business at their high school selling “school spirit” items such as foam hands, calendars and
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noisemakers; the profit from this enterprise provided funds for participants to deposit into their SEED accounts. Similarly,
many youth involved with the Juma Ventures SEED program were enrolled in an employment program at AT&T Park in San
Francisco, where they sold Ben & Jerry’s ice cream and Tully’s coffee at Major League Baseball games.
Teaching multiple savings methods is beneficial. At some SEED sites, participants were able to save part of their earnings
through direct deposit. Through in-depth interviews, researchers found that while direct deposit was valued by many
participants at the Juma Ventures program, their savings typically wavered once seasonal employment ended, and some
youth did not know how to deposit funds without direct deposit in place. These findings point toward a need to provide
youth with financial education about multiple savings methods and strategies.83
Financial education should be hands-on, engaging and convenient. Incorporating real-life experiences and “teachable
moments,” especially in relation to the participant’s savings account, can help make financial education more relevant and
interesting for youth. It is important to ensure that meetings allow time for interaction and socializing among peers and
adults, so that participants develop relationships and support networks with other savers. Additionally, financial education
may make more sense to youth if both saving and consumption patterns are addressed, with time allotted to make and
revise future goals.
It’s possible to work just with youth, but parents can play an important role. Solid, supportive and consistent contact
with youth participants can help them to engage in the savings process. Juma Ventures staff felt that their program worked
best when they knew participants well and helped them stay focused on their goals by rewarding good behavior with
benchmark incentives (financial incentives for attending class, participating in the program, earning good grades, etc).
Parental involvement can provide increased savings as well as encouragement and “logistical” support for youth, such as
transportation to financial education or the bank.84 When parental figures are not available, mentoring programs can be
helpful.
Implications for Public Policy
The experiences with serving high school-aged youth in SEED provide a number of important lessons that can help to
inform the design and implementation of public policies aimed at establishing progressive systems of asset-building accounts
for all children starting at birth.
Integrate financial education into broader educational standards for high school-aged youth. Policymakers should consider
options for mandating financial education as part of existing guidance counseling and curricular standards.85 For high school
youth in particular, this could include integrating financial literacy concepts into college counseling programs and economics
and mathematics courses. Only seven states require students to complete a personal finance course in order to graduate
from high school.
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and Lessons Learned from the SEED Initiative
Consider targeting certain populations of youth. Starting out with a specific subset of youth (such as foster youth, youth
in the juvenile justice system, disabled youth, etc.) can make a savings policy more cost-efficient and politically feasible.
Such smaller-scale demonstrations often pave the way for larger-scale policy. For example, at the federal level, the Focusing
Investments and Resources for a Safe Transition Act, introduced in the 110th Congress, proposed providing IDAs to youth
aging out of the foster care system. These accounts would be seeded with an initial federal deposit and savings would be
matched, with post-secondary education and home purchase as eligible purchases.86
Link youth savings to existing state-level educational programs. Existing state funding sources for youth can be leveraged
by linking youth savings policy with job training and employment programs, college “promise” and aid funding sources,
and state 529 college savings plans. These programs should consider partnering with program administrators to integrate
a savings message into existing programming and outreach. Policymakers should also consider making state 529 plans an
eligible rollover vehicle for IDAs under the federally funded Assets for Independence Act.
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Working with Financial Institutions87
Background and Summary of SEED Experience
At the beginning of SEED, each of the 12 community partners formed a relationship with a financial institution of their
choice to set up their SEED accounts. Most of the sites (nine of 12) chose a commercial bank as their financial partner.88
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Two of the sites chose the provider of their state’s 529 college savings plan. One of the sites chose a local credit union.
Most of the community partners had a pre-existing relationship with the particular financial institution that was chosen,
usually based on the financial institution administering an IDA program, sponsoring a school-based or after-school program,
or managing the partner organization’s business accounts.
The majority of SEED sites (nine of 12) chose a regular savings account as their SEED account. These accounts earned a
low, fixed rate of interest (typically less than 1%) and were offered without any special features, such as an ATM card or
Internet access. Two community partners selected 529 accounts as their savings product, with market-based returns that
fluctuated depending on the investment option chosen by the parent or guardian. Finally, one SEED site, the Clarence
Fraim Boys and Girls Club in Wilmington, Delaware, initially offered SEED accountholders a money market account which
was designed to be converted to an investment product, such as a certificate of deposit or other insured note, once
the balances reached $1,000. Ultimately, this account structure did not prove workable with the framework of the SEED
demonstration, and these accounts were converted into regular statement savings accounts at a local bank.
One of the primary challenges for SEED was developing an account structure and MIS capable of tracking and reporting
accurately on the initial deposits, participant savings and savings matches in SEED accounts. During the planning phase of
SEED, the planning team assessed the advantages and disadvantages of various existing products, such as 529 accounts,
individual retirement accounts, trust accounts and their associated MIS systems. The findings revealed that no existing
structure or MIS system available through financial institutions could match both the programmatic and research needs of
SEED perfectly. Therefore (though not optimal), a dual account structure was implemented in which community partners,
using a slightly modified MIS IDA, worked with financial institutions to separately track savings deposits from accountholders,
with a parallel account for matched contributions. This is similar to the account structure and reporting system for most
IDA programs, in which the matching dollars are held in a parallel account which is inaccessible to participants.
In terms of account ownership, eight of the 12 community partners selected custodial accounts for their participants. In
such an arrangement, the nonprofit sponsoring organization acted as the custodian of the account, with the minor child as
the beneficial owner. Two community partners selected dual-signature accounts, in which the minor was the beneficial owner
and both the parent and SEED community partner were authorized signatories.
At two other SEED sites, a slightly different ownership structure was developed. At the Juma Ventures site in San Francisco,
Citibank established a business escrow account in the name of each accountholder; each escrow account was listed as
a sub-account under a larger account owned by Juma Ventures. At the SEED site in Michigan, OLHSA established a 529
account for participant savings, owned solely by the parents for the benefit of the child; a separate account with matching
funds was owned by the state.
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and Lessons Learned from the SEED Initiative
Lessons from SEED
A number of lessons emerged from the process of working with financial institutions in SEED to deliver CDAs. These
lessons may help to guide the implementation of asset-building programs for children and youth and inform the design and
implementation of public policies to support Children’s Development Accounts.
Based on an initial survey of the financial institution partners in SEED, CFED found that:89
n
Financial institutions will offer SEED accounts or matched savings accounts for the purpose of community engagement and
building future business relationships.
n
Financial institutions preferred to use an existing product which had already been proven to be cost effective, such as a
savings account, rather than developing a new product for the relatively small number of accounts established in SEED.
n
Financial institution partners took advantage of cross-marketing opportunities with the families of SEED accountholders as a
result of being a financial institution partner in SEED.
n
Financial institution partners in SEED encountered the challenge of adherence to privacy laws and consumer protection
while working with nonprofits responsible for managing the accounts.
In addition, a roundtable discussion with financial institution representatives that CFED and the Aspen Institute’s Initiative on
Financial Security (IFS) convened in February 2007 in conjunction with the Federal Reserve Bank of New York revealed a
number of additional insights from financial institutions about the market potential and operational challenges of delivering
CDAs.
At the roundtable, which included both SEED and non-SEED financial institution representatives, participants focused on
three primary reasons that motivated them to enter the CDA market:
Community loyalty: One reason that financial institutions enter the CDA market is as a result of having strong ties to a
nonprofit partner in the community. For example, Loura Gilbert from Commerce Bank, the bank partner for the SEED
site sponsored by Beyond Housing in St. Louis, mentioned that Commerce Bank became involved in SEED because of its
partnership with a neighborhood school which is in close proximity to the bank.
Financial education: For other banks, offering CDAs is an extension of efforts to promote financial education. Stacey
Cooper from North Fork Bank in New York mentioned her bank’s focus on financial education as a tool to reach out to
youth in underserved communities, which in turn could lead to the development of accounts marketed to children. In her
opinion, financial education classes offered in association with CDAs provide a venue to “get out in front of kids – kids
whose parents are using alternative service providers – and try to change behavior, to build wealth in their lives.”
Relationship building with new customers: Finally, some banks choose to offer savings accounts to children as a way to
build trust on the part of customers and lead to repeat and lifelong business. Gerald Nash from National City Bank in
Chicago discussed his bank’s desire to reach out to lower income families: “We have over 3 million consumer households,
so we want to be able to serve not just one income level. We want to serve all income levels. We want to be able to tout
our ability to help our consumer base, regardless of what [their] income level is, and make it easy.”
Financial institutions face three primary challenges in designing and delivering accounts within a business context: product
design, managing regulatory requirements and minimizing costs.
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Product design: A fundamental challenge for any financial institution offering CDAs is to design an account to meet the
needs of its target audience. Thus far in the U.S. context, banks and credit unions have utilized existing account platforms to
administer CDAs and have, in some cases, adapted product features according to program objectives. For the purposes of the
SEED Initiative, most financial institutions chose a regular statement savings account as the SEED account, though most of these
accounts were “rolled over” at the end of SEED into investment products such as Roth IRAs or 529 college savings plans.90
Another challenge in the design of the accounts is establishing fees for servicing the accounts. The financial institutions in
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the SEED initiative, except for the 529 providers, granted waivers for minimum balances and monthly fees. This is unlikely to
be the case in a large-scale market of CDAs. As Dory Rand from the Sargent Shriver National Center on Poverty Law (a
SEED community partner) noted, “We had an agreement with the bank to waive the fees that would normally be charged
to the 529 accounts. In a real program, in the private market, you’re going to have fees. And we have to have a way to deal
with that.“ In the United Kingdom, banks and other entities involved in the delivery of the Child Trust Fund share an annual
fee that is capped at 1.5%.91
Given the age of CDA consumers, roundtable participants paid particular attention to the ownership structure of the
account. In SEED, the majority of accounts were established as custodial accounts (with a local host organization serving
as custodian for the child as beneficial owner). In most cases, this was designed as a way to limit parental access and
protect the child’s assets. In a large-scale system of CDAs, this ownership structure would likely remain similar, with parents
as custodians, since this would allow the CDAs to be invested in securities or other investment-type products. The only
downside to this ownership structure is the potential impact on student financial aid.92
Managing regulatory requirements: Interest in offering CDAs is clearly affected by regulatory requirements. So-called
“Know Your Customer” guidelines under the Bank Secrecy Act and the Patriot Act provide the due diligence framework
for verifying the identity of account owners. Denise Durham-Williams from Citibank mentioned the importance of having
identification “[which] gives the bank the confidence that, when their regulators come in, they can say, we’ve assessed the
risk of this client.” Durham-Williams continued to note that high-profile cases of identity regulation “[have] had a chilling
effect on innovative activities.” In the case of young children, in particular, the availability of acceptable identification is difficult
to obtain and requires additional engagement on the part of parents.
Lisa Mensah from Aspen IFS noted that banks in the United Kingdom initially expressed concern about regulatory burdens,
but that this is no longer a primary concern, in part because the structure is simple and there is one regulatory agency.
In government hearings in the United Kingdom about the Child Trust Fund, only two regulatory issues came up. The first
was that using a physical voucher slowed down the process of opening accounts. The second was that the prospectus and
disclosure requirements seemed too complex for the general audience.
Minimizing costs: Participants shared their perspective on how to minimize the costs of entering the CDA market – one
that is still relatively small at the moment in the United States. The high costs associated with the development and delivery
of these accounts in the market led participants to suggest standardization of products and partnerships as key strategies
to minimize costs. Offering a standardized account with a menu of options, similar to college savings plans and the model
in the United Kingdom, is an important way to minimize costs. Partnering with community-based organizations and schools
provides banks and credit unions with a captive audience for the products and reduced marketing costs for the programs.
Another partnering strategy would be to share responsibility for retail and back office functions. In the United Kingdom, the
Child Trust Fund has largely developed along this model, utilizing existing retail locations, both bank and non-bank, to market
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and Lessons Learned from the SEED Initiative
the accounts and other financial institutions to provide servicing and recordkeeping. Margaret Clancy from the Center for
Social Development at Washington University provided an analogous distribution example from the state of Maine: “The
state of Maine uses what they call distribution agents for their 529 plan … Some are banks, and some are not even financial
institutions.”
Implications for Public Policy
Based on the experience from SEED and the ideas shared at the financial institutions roundtable discussion, a number of
important lessons emerged that can help to inform the design and implementation of public policies aimed at establishing
universal, progressive systems of asset-building accounts for all children starting at birth.
Keep it simple. Roundtable participants urged caution in the design of public policies to support CDAs and noted the
importance of establishing a legal framework that would be uncomplicated and make it easy for banks to design and
deliver accounts. For example, Loura Gilbert of Commerce Bank indicated a preference for a national-level policy with
standardized guidelines, rather than a series of state-level designs, each with its own particular guidelines. Gerald Nash from
National City Bank shared this opinion and noted that a universal, national program would facilitate easier implementation
and recordkeeping. In addition, to encourage broad participation from financial institutions, requirements regarding financial
education should be clear and unambiguous. Finally, if eligible uses of the account are to be restricted, the preferred way of
ensuring this would be to use existing language in the tax code that creates penalties for unauthorized withdrawals, such as
the language that already exists for retirement products, including IRAs.
Make delivery universal. Universal account delivery would be both a significant policy innovation and a catalyst for market
development. Lisa Mensah of Aspen IFS noted at the roundtable that “the fact that each kid has an account changes their
mindset.” Moreover, as Reid Cramer from New America Foundation observed, the transformative nature of this kind of
policy comes from its universality. For example, if everyone has an account, then savings and the account can be the subject
of discussion at school, even if this is not necessarily mandated as part of the enabling legislation. CDAs also provide longterm patient capital to the financial institutions that hold the accounts, providing a growing source of liquidity over nearly
two decades. Access to patient capital combined with a universal account structure would also create the impetus for
financial institutions to design products to serve this new market.
Build for the future. A key point of agreement at the roundtable was the importance of planning for the financial services
industry of the future in the design of public policies to support CDAs. Gerald Nash noted that virtual banking is going to
continue to grow and change quickly, and that this should be kept in focus, particularly with respect to proposals to deliver
public subsidies with a physical voucher, as is currently the method in the United Kingdom. Ideally, accountholders would be
able to open accounts online and manage them online from cradle to grave.
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Working with Young Children93
Background and Summary of SEED Experience
Early childhood (from birth to age 5) is a period that is critical to a child’s cognitive, behavioral and social development, as
well as his or her lifelong economic prospects. Recent research has shown that cognitive aptitude and ability are established
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early, and that investing in the human capital of young children results in the greatest rates of return (evidenced by high
school graduation rates and college attendance).94 During these early years, economic hardship can impede a child’s
cognitive development and ability to learn. What’s more, growing up in poverty also has consequences for long-term
economic prospects and mobility.
Given the importance of early childhood in the growth and development of children, SEED included a cohort of three
sites that worked with preschool-aged children. In New York City, the Harlem Children’s Zone (HCZ), a large community
organization that provides a comprehensive set of services to support children aged birth to 18 in a 97-block area of
Harlem, established 75 accounts for children in its Harlem Gems preschool program. In Arkansas, the Southern Good Faith
Fund (SGFF) established 75 accounts for preschool-aged children in a small town (Helena-West Helena) in the Mississippi
Delta. In Michigan, a large community action agency, OLHSA, established almost 500 accounts for preschool-aged children
enrolled in the federal Head Start program across two counties near Pontiac, Michigan.
Lessons from SEED95
Based on the experience of working with young children in SEED and conversations with early childhood experts, a number
of lessons have emerged that can guide the implementation of asset-building programs for children and youth and help to
inform the design and implementation of public policies to support children’s development accounts.
Having savings in early childhood helps to build future aspirations, especially for college. The expectations and beliefs
of parents have a powerful impact on a child’s future aspirations and academic achievement. A longitudinal research
study uncovered that children with mothers who had high expectations of them were more likely to have higher GPAs
and graduate from high school.96 Establishing wealth-building accounts at birth or in the early years can help parents of
young children to perceive college as a tangible goal for their child and also become engaged in savings and financial
management. Savings positively affect a child’s expectation of him or herself as well. Research from SEED has shown that
having college savings increases a child’s expectation that he or she will attend college.97 Research has also demonstrated
that savings have a real impact on a child’s academic achievement. For example, children with college savings, regardless
of income, scored four percent higher on tests measuring math knowledge.98 Establishing asset-building vehicles such as
CDAs in early childhood can help kids set early goals for college and motivate them at a young age to work towards those
goals. Moreover, even modest amounts of savings can produce these “asset effects.” Research by the Center for Social
Development indicates that, regardless of income, children from families with as little as $3,000 in savings had greater odds
of graduating from high school than children in families without savings.99
With proper support, families with young children can save and begin to accumulate assets. Research from SEED
demonstrates that low-income parents of young children can and do save. Despite some significant economic and social
network barriers,100 families at the three preschool sites in SEED had positive savings, with average quarterly net savings of
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and Lessons Learned from the SEED Initiative
$29 at OLHSA, $27 at SGFF and $21 at HCZ. Compared to the average across all SEED sites of $30 per quarter, this is
notable because of both the particular economic challenges facing parents of young children and the fact that the children
themselves were unable to deposit earned money as could older youth at other sites. Additionally, participation rates at
these SEED sites serving younger children were impressive. At the HCZ and SGFF sites, where program coordinators
worked closely with families and provided “high touch” services to encourage savings, 72% and 64% of families, respectively,
deposited to their CDAs. At OLHSA, where program coordinators offered less direct support and the economic downturn
was a significant factor, one-third of families still deposited in their accounts.
Expectations regarding family deposits should be modest. Low-income families with children face significant expenses – such
as the costs of housing, food and child care – that can make getting by difficult. In the face of these burdens, the average
SEED family did save. However, as mentioned previously, families with young children sometimes found it more difficult – twothirds of families at the OLHSA site did not contribute their own funds to their accounts. While the 30% participation rate at
OLHSA may seem low (and it was the lowest of the SEED sites), it is actually in line with participation in employer-sponsored
retirement accounts. For example, in 2006, the rate of participation by eligible employees in 401(k) plans was 36%.101 For
families with young children, expectations regarding how much they will save in asset-building accounts should be modest.
An initial endowment is important to help start asset accumulation for families with young children. Because expectations
regarding savings deposits should be modest for parents with young children (and because these children can’t make deposits
for themselves, as can youth savers), certain asset-building incentives, such as providing initial deposits to endow accounts for
children, are all the more important. Research from SEED finds that providing an initial deposit for a CDA is not necessarily
associated with saving, but is “positively and strongly” associated with accumulation in an account.102 In other words, even
if a parent never makes a contribution to a child’s CDA, a relatively large initial deposit of $500 to $1,000 will grow into a
substantial sum at age 18. A model created by the Aspen Institute’s Initiative on Financial Security predicts that an account
with an initial deposit of $500 at birth would yield approximately $1,300 at age 18, even if families contribute nothing over a
child’s lifetime.103 This is enough to pay the net cost104 of a semester of tuition at a four-year, public university.105
What’s more, endowing accounts for kids with initial lump sum endowments can lead to the kind of aspirational impacts on
educational motivation and achievement noted previously.
Designing developmentally appropriate “benchmark incentives” could enhance efforts to promote asset building in the
early years. In SEED, community partners made extensive use of benchmark incentives,106 intermediate rewards designed to
incentivize positive behavior and encourage continued engagement in a long-term savings effort. These kinds of incentives
are similar in concept to conditional cash transfer (CCT) programs that are operating in several developing countries, and
on a pilot basis in New York City. CCT programs provide cash incentives to poor mothers that, for example, use preventive
health services and/or participate in health education efforts. The ultimate goal is to have a positive influence on long-term
human capital for poor children. A number of positive outcomes have been observed among CCT participants since the
programs’ start in 1997, including improved nutritional outcomes for children and their parents.107
In SEED, benchmark incentives were used successfully in increasing participation by parents and children in activities
associated with savings behaviors.108 Specific “qualifying events” included participating in financial education meetings and
workshops, getting good grades in school, and signing up for direct deposit. While valuable in incenting savings behavior and
contributing to account growth, none of these benchmark incentives in SEED (even at the sites that worked with young
children) were designed with an eye toward important early childhood milestones. Creating benchmark incentives for
Section C: Lessons from SEED Practice
— Page 121 —
C
children’s savings initiatives that provide rewards for achieving important early childhood goals, such as immunizations and
well-baby visits – and that are deposited in an asset-building account – could be a powerful way to increase the impact of
asset building initiatives for children in their early years.
Implications for Public Policy
The experiences from working with young children in SEED and insights from early childhood development experts provide
C
a number of important observations that can help to inform the design and implementation of public policies aimed at
establishing progressive systems of asset-building accounts for all children starting at birth.
Make opening a nest egg account easy or automatic for busy parents of young children. Behavioral economics teaches
that people in general, not to mention new parents, are overburdened with demands on their time and resources and
fail to enroll in programs, even if offered incentives and rewards to participate. Moreover, when programs involve financial
institutions and products, potential participants – especially those with lower income – are even more wary of enrolling
due to a distrust of and unfamiliarity with the financial services industry.109 In SEED, the experience was no different. At the
SEED preschool sites in Arkansas and Michigan, many families had to be contacted multiple times over an enrollment period
that spanned years before agreeing to participate in the program. Both site populations had a general mistrust of financial
institutions, and outreach efforts by program staff were often unsuccessful. Just as the auto-enrollment or “opt-out” feature
of employer-sponsored retirement accounts has been credited with increasing 401(k) participation, employee satisfaction,
and long-term accumulation in the accounts, proposals for at-birth accounts should include provisions for easy or automatic
account opening to ensure that all children are included.
Include an initial deposit in any proposal for establishing accounts at birth or in the early years. In most of the more
well-known proposals or models for creating CDAs from birth, an initial deposit is part of the plan. For example, the
ASPIRE Act110 calls for an initial deposit of $500 ($1000 for low-income children) and the U.K.’s Child Trust Fund provides
every newborn with voucher for £250 (£500 for low-income children). Additionally, a municipal-based effort in San
Francisco, California, proposes to endow an account for each child entering public kindergarten with an initial deposit of
$50. However, while a substantial initial deposit is a typical feature of most proposals for establishing asset-building accounts
at birth, this is not necessarily a standard component in all CDA or CDA-like models. For example, attempts to modify
529 accounts to make them more accessible and beneficial to low-income children – for instance, by providing a match on
deposits – have not typically included providing initial deposits to the accounts. From the perspective of early childhood
advocates – given the research findings that point to the importance of initial lump-sum deposits in helping to ensure
accumulation in asset-building accounts and in helping to positively shape future aspirations – initial deposits should be an
essential feature of nest egg accounts established at birth or in early childhood.
Emphasize eligible uses that are relevant upon reaching adulthood, rather than at retirement. Most proposals for accounts
at birth emphasize the importance of the accounts being used for important lifetime investments, such as education,
home purchase, small business start-up, and also saving for retirement. The use of the accounts to promote retirement
savings has become particularly important in discussions about at-birth accounts at the federal level, where policymakers
are particularly concerned with retirement security. However, from the perspective of early childhood advocates, what’s
most important are the account uses that will help children achieve financial security when they reach adulthood. Thus, for
messaging and coalition-building purposes, early childhood advocates will be most interested in the “Big 3” uses of at-birth
accounts – education, home purchase and business start-up.
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 122 —
and Lessons Learned from the SEED Initiative
Endnotes
1
Growing Knowledge in SEED editions can be retrieved from http://cfed.org/programs/abc/research_resources/cda_resource_library/.
2
This section was excerpted from the October 2005 edition of Growing Knowledge from SEED and updated, as appropriate, based on additional experience and
findings from SEED research, policy and practice efforts. Growing Knowledge from SEED editions can be retrieved from
http://cfed.org/programs/abc/research_resources/cda_resource_library/.
3
For more information, see: Wheeler Brooks, J. Focus groups with SEED parents: How parents decide to join an asset building program, open children’s savings
accounts; and Shanks, T., Johnson, T. & Nicoll, K.L. Helping people to act on their hopes rather than their fears: Lessons from non-enrollees at the impact assessment
site. (2008, October). SEED Research Report. Lawrence, KS: University of Kansas School of Social Welfare.
4
C
Gale, W., et al (2005). The Automatic 401(k): A Simple Way to Strengthen Retirement Saving. Washington, DC: Urban-Brookings Tax Policy Center.
5
For a summary of the proposed bill from the New America Foundation, see www.newamerica.net/files/ASPIRE%20Act%202009%20Summary%206-09.pdf.
6
See www.childtrustfund.gov.uk/.
7
This section was excerpted from the November 2006 edition of Growing Knowledge from SEED and updated, as appropriate, based on additional experience and
findings from SEED research, policy and practice efforts. Growing Knowledge from SEED editions can be retrieved from
http://cfed.org/programs/abc/research_resources/cda_resource_library/.
8
Schreiner, M., Clancy, M. & Sherraden, M. (2002, October). Saving Performance in the American Dream Demonstration, A National Demonstration of Individual Development
Accounts: Final Report. St. Louis, MO: Center for Social Development, George Warren Brown School of Social Work, Washington University in St. Louis.
9
Many financial education curricula have been developed by nonprofit organizations, banks and universities. This paper refers to those publicly available curricula as
“third-party curricula.”
10
See www.newamerica.net/files/ASPIRE%20Act%202009%20Summary%206-09.pdf.
11
National Council on Economic Education, Survey of the States, March 2005.
12
For more information on financial education in the public school system, see www.edutopia.org/files/existing/pdfs/edutopia-bucks-stop-here-NCEE-survey.pdf.
13
See Why Financial Capability Matters: Synthesis Report on Canadians and Their Money from a national symposium on financial capability held on June 9-10, 2005 in
Ottawa, Ontario, Canada (www.sedi.org).
14
This section was excerpted from the August 2006 edition of Growing Knowledge from SEED and updated, as appropriate, based on additional experience and findings
from SEED research, policy and practice efforts. Growing Knowledge from SEED editions can be retrieved from
http://cfed.org/programs/abc/research_resources/cda_resource_library/.
15
The Boys & Girls Clubs of Delaware initially worked with a brokerage firm and chose as their SEED account a money market account that was designed to convert
to an investment product at a certain account size. Unfortunately, this account proved unworkable within the framework of the demonstration, and these SEED
accounts were transferred into statement savings accounts at a local bank.
16
For more information, see www.savingforcollege.com.
17
For more information, see IRS Publication 970, “Tax Benefits for Education.”
18
The difference between traditional and Roth IRAs is primarily in the tax treatment of deposits, earnings and withdrawals. In traditional IRAs, contributions are
deducted from income in the year of contribution (depending on income and employer retirement plan). Earnings grow tax-free while in the account; however, the
earnings are taxed at withdrawal. In a Roth IRA, contributions are not tax deductible, but the earnings grow tax-free and are not taxed at withdrawal. For more
information on IRAs or Roth IRAs, see IRS Publication 970, “Individual Retirement Accounts.”
19
Roth IRAs are distinguished from traditional IRAs here because traditional IRAs provide somewhat different tax benefits. In a traditional IRA, contributions can
be deducted from income in the year of contribution (depending on income and employer retirement plan) and earnings are tax-sheltered while in the account.
However, the proceeds from traditional IRAs are taxed at withdrawal.
20
Kerber, R. (2006, February 14). “Complaints mounting over college savings accounts: Tighter controls on plans proposed.” Boston Globe.
21
In calculating financial aid, the amount that students and families are assumed to contribute is called the expected family contribution (EFC). The EFC is based on the
student’s dependency status and the family’s size, income, expenses, number of family members enrolled in college or trade school and assets. When a prospective
student applies either for federal financial aid through the Free Application for Federal Student Aid or for institutional grants through an institution’s financial aid
office, the information reported is fed into a formula that calculates the applicant’s EFC. The gap between the price of attending an institution of higher learning and
the family’s EFC is the student’s financial need.
22
Some very low-income students qualify to use the “simplified EFC formula,” which excludes all assets from consideration. For more on this topic and the financial
aid implications of children’s savings accounts, see: Rist, C., Brooks, J. & Keeley, K. (2006, June). “Children’s Savings Accounts and Financial Aid: An Examination of the
Consequences of Children’s Savings Account Ownership on Financial Aid Eligibility [working paper].” Washington DC: CFED.
Section C: Lessons from SEED Practice
— Page 123 —
23
Note that although Congress’ apparent intention was for student-owned 529s to be assessed at 5.64%, what appears to be a drafting error created a loophole
allowing these assets to be disregarded in financial aid calculations. Higher education experts have suggested that this error will be corrected as soon as there is an
appropriate legislative vehicle. Because we expect that this loophole will not be permanent, we have assumed Congress’ intended treatment of student-owned 529
accounts for the purposes of this brief.
24
“Summary: Treatment of Coverdell Accounts and 529 Tuition Plans,” U.S. Department of Education, Information for Financial Aid Professionals Library, DCL ID: GEN04-02, posted January 22, 2004.
25
For more information on this topic, see: Removing Barriers to Saving: Lessons on Asset Limits for Children’s Savings Accounts. (2006, April). Growing Knowledge from
SEED. Washington, DC: CFED.
C
26
CFED recommends aligning 401k pre-retirement withdrawal rules with IRA rules. Streamlining these withdrawal requirements would provide both IRA and 401k
accountholders as much funds as needed in any given year for post-secondary education and permit up to $10,000 to be withdrawn for homeownership in a
lifetime. CFED also recommends easing the loan repayment requirements for 401k accountholders.
27
This section was excerpted from the April 2006 edition of Growing Knowledge from SEED and updated, as appropriate, based on additional experience and findings
from SEED research, policy and practice efforts. Growing Knowledge from SEED editions can be retrieved from
http://cfed.org/programs/abc/research_resources/cda_resource_library/.
28
Beverly, S., McDonald, T., Page-Adams, D., & Scanlon, E. (2001). Assets, Health and Well-Being: Neighborhoods, Families, Children and Youth. Research background paper
prepared for the Children and Youth Savings Account Policy Demonstration, School of Social Work, University of Kansas and Center for Social Development,
Washington University in St. Louis.
29
Only Oregon and Texas have asset limits in their CHIP programs.
30
Dean, S. (2002). The SNAP Program. 2002 Federal IDA Briefing Book: How IDAs Affect Eligibility for Federal Programs. Washington, DC: CFED and the Center on
Budget and Policy Priorities.
31
Smith, V., Ellis E. & Chang, C. (2001, April). Eliminating the Medicaid Asset Test: A review of state experiences. Menlo Park, CA: The Henry J. Kaiser Family Foundation,
p.14. Retrieved March 7, 2007 from www.kff.org/medicaid/loader.cfm?url=/commonspot/security/getfile.cfm&PageID=13750. New Mexico budget: Retrieved March 7,
2007 from http://legis.state.nm.us/lcs/lfc/lfcdocs/fy08%20lfc%20rec.pdf.
32
Parrish, L. (2005). To Save or Not to Save?: Reforming Asset Limits in Public Assistance Program to Encourage Low-Income Americans to Save and Build Assets. New America
Foundation.
33
The 2008 Farm Bill exempted many important classes of assets in the SNAP program, including retirement accounts and education savings accounts.
34
The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 gave states the flexibility to eliminate or raise asset limits for TANF and Medicaid and
to exclude certain types of assets from eligibility determination.
35
The Food, Conservation and Energy Act of 2008 exempted many important classes of assets in the SNAP program, including retirement accounts and education
savings accounts.
36
Scanlon, E. & Adams, D. (2005). In-Depth Interviews with SEED Youth: Profiles of Participants in a Pilot Study. Center for Social Development at Washington University in
St. Louis.
37
Schreiner, M., & Sherraden, M. (2006). Can the poor save? Saving and asset building in Individual Development Accounts. Piscataway, NJ: Transaction.
38
Beverly, S. & Barton, J. (2006). Barriers to Asset Accumulation for Families in the SEED Pre-School Demonstration and Impact Assessment. Lawrence, KS: University
of Kansas School of Social Welfare.
39
Mason, L.R., Clancy, N., Loke, V., Kim, Y., & Nam, Y. (2009, March). SEED account monitoring research: Participants, savings, and accumulation. St. Louis, MO: Center for
Social Development, Washington University in St. Louis.
40
Clancy, M., Johnson, L., & Schreiner, M. (2001, September). Savings Deposits, Incentive Structure, and Management Information Systems: Implications for Research on a
Children and Youth Savings Account Policy Demonstration. St. Louis, MO: Center for Social Development, Washington University in St. Louis.
41
Ibid.
42
For more details on the United Kingdom Child Trust Fund, see www.childtrustfund.gov.uk.
43
For more information on community-based organizations and children’s development accounts, see http://csd.wustl.edu/Publications/Documents/WP09-49.pdf.
44
This section was excerpted from the January 2007 edition of Growing Knowledge from SEED and updated, as appropriate, based on additional experience and
findings from SEED research, policy and practice efforts. Growing Knowledge from SEED editions can be retrieved from
http://cfed.org/programs/abc/research_resources/cda_resource_library/.
45
Trends in College Pricing 2003. (2003). New York, NY: The College Board.
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 124 —
and Lessons Learned from the SEED Initiative
46
There are instances where a family has an income that is less than $50,000 but cannot file the 1040A or 1040EZ form. For example, if a family either pays or
receives alimony, it must file a regular 1040 form. A model constructed by the Urban-Brookings Tax Policy Center suggests that a substantial share of tax filers with
adjusted gross income below $50,000 are not eligible to file the 1040A or 1040EZ, and therefore would not qualify for the corresponding exclusion of all assets
from financial aid tests.
47
The College Cost Reduction and Access Act (PL 110-84), increased this limit from 20k to 30k, effective July 1, 2009. This amount will be indexed annually for inflation.
48
For more on the primary account options for children’s savings accounts, see: Rist, C. & Humphrey, L. (August 2006). Choosing the right vehicle: A review of the
primary options for children’s savings accounts. Growing Knowledge from SEED. Washington, D.C.: CFED.
49
For more on 529s as a possible structure for more universal CDAs, see: Clancy, M., Orszag, P., & Sherraden, M. (February 2004). College Savings Plans: A Platform for
Inclusive Saving Policy? St. Louis, MO: Center for Social Development at Washington University in St. Louis.
50
Under the PL 110-84, 529 accounts owned by dependents are considered assets of the parent for purposes of calculating EFC (and thus are calculated at the
5.64% rate).
51
Summary: Treatment of Coverdell Accounts and 529 Tuition Plans. (2004, January 22). U.S. Department of Education, Information for Financial Aid Professionals
Library, DCL ID: GEN-04-02.
52
Dynarski, S. & Scott-Clayton, J. The Cost of Complexity in Federal Student Aid: Lessons from Optimal Tax Theory and Behavioral Economics. (2006, April). John F.
Kennedy School of Government Faculty Research Working Paper RWP06-013. Dynarski and Scott-Clayton found that this radically simplified aid process explains
86% of the variation in Pell grants and 84% of the variation in the EFC.
53
Regardless of income, if someone is not eligible to file a 1040A or 1040EZ, they will not qualify under the Simple Formula or the Zero EFC. There are specific
criteria (in addition to income) that would preclude this possibility. A fairly straightforward chart can be retrieved here: www.finaid.org/educators/needs.phtml.
54
Wolanin, T. (2005). Progressing to Higher Education and a Degree. Higher Education Opportunities for Foster Youth: A Primer for Policymakers (ch. 5). Washington, D.C.:
Institute for Higher Education Policy. Compared to their peers, foster youth are far more likely to be poor before entering foster care, during their stay in foster
care, and after leaving foster care. For the 2005-06 academic year, even if a foster youth received the maximum Pell Grant and maximum Education and Training
Voucher (ETV), he or she still would “not have enough grant money to pay for full-time study as a commuter at the average-price public community college.” Nearly
30 states offer aid specifically targeted to foster youth in addition to ETVs; many of these programs offer public college tuition remission for foster youth.
55
The information in this section was excerpted from a longer working paper on this topic published by CSD. For more on this, see Carl Rist and Liana Humphrey,
“City and Community Innovations in CDAs: The Role of Community-Based Organizations,” the Center for Social Development, Washington University in St. Louis,
CSD Working Papers No. 09-49, 2009. This paper has been accepted for publication by the Children and Youth Services Review and was made available online on
March 15, 2010, at http://dx.doi.org/10.1016/j.childyouth.2010.03.010.
56
Williams Shanks, T., Johnson, T., and Nicoll, K. 2008. Helping People Act on Their Hopes Rather than Their Fears: Lessons from Non-Enrollees in the SEED Initiative. SEED
Research Report. Lawrence, KS: University of Kansas.
57
Rist, C. and Harger, S. 2006. Learning to Save: Lessons on Financial Education. Growing Knowledge from SEED. Washington, DC: CFED.
58
Wheeler Brooks, J. 2008. How Parents Decide to Participate in SEED Programs, Open Child Savings Accounts, and Save. SEED Research Report Draft. Lawrence, KS:
University of Kansas.
59
Ibid.
60
Adams, D., Scanlon, E., Wheeler Brooks, J. 2006. How Young People Save Money: Findings from Interviews with SEED Participants. SEED Research Report. Lawrence, KS:
University of Kansas.
61
Scanlon, E. 2008. From Helena to Harlem: Perceived Effects of SEED participation at Two SEED Partners. SEED Research Report Draft. Lawrence, KS: University of
Kansas.
62
Wheeler Brooks, J. 2008. How Parents Decide to Participate in SEED Programs, Open Child Savings Accounts, and Save. SEED Research Report Draft. Lawrence, KS:
University of Kansas.
63
SEED Community Partners. 2007. SEED Community Partner Updates. Washington, DC: CFED.
64
Ibid.
65
Wheeler Brooks, J. 2008. How Parents Decide to Participate in SEED Programs, Open Child Savings Accounts, and Save. SEED Research Report Draft. Lawrence, KS:
University of Kansas.
66
In 1997, the Center for Social Development (CSD) at Washington University in St. Louis developed MIS IDA as a program management and research database
for the American Dream Demonstration (ADD). This Microsoft Access-based software became the first information system for managing adult IDA programs. In
2001, CSD recommended that future software development be focused on Web-based systems that could support larger, scaled-up matched savings programs, and
reported that it would not engage in future software development because this work was not a core organizational mission. However, for the purposes of SEED,
CSD agreed to adapt MIS IDA to track participant characteristics tailored for children and youth.
Section C: Lessons from SEED Practice
— Page 125 —
C
67
When SEED community partners made the initial deposit, MIS IDA for SEED would normally have treated it as a regular deposit and attempted to match it. To
avoid this unintended outcome, community partners deposited only half of the initial deposit into the participant’s account, allowed MIS IDA to treat the deposit
as matchable and raised the match cap in MIS IDA by the amount of half of the initial deposit. For instance, if the initial deposit was to be $500 and the cap on
matching funds for the participant’s own savings was $1,000 (for a total of $1,500 in incentives), the community partner deposited $250 into the account, and MIS
IDA matched it, thus bringing the incentives to $500. The community partner then raised the match limit set in MIS IDA to $1,250, so that the accountholder could
still have the opportunity to save another $1,000 of his or her own funds. The total incentive funds still totaled $1,500 – $250 in initial deposit in the participant’s
own account, $250 in match on that deposit, and $1,000 of match funds on the participant’s own savings.
68
Specific recommendations on account oversight and management for organizations wishing to launch their own CDA initiatives are included in From Piggy Banks to
Prosperity: A Guide to Implementing Children’s Development Accounts, retrieved from www.cfed.org.
C
69
This section was excerpted from the December 2007 edition of Growing Knowledge from SEED and updated, as appropriate, based on additional experience and
findings from SEED research, policy and practice efforts. Growing Knowledge from SEED editions can be retrieved from
http://cfed.org/programs/abc/research_resources/cda_resource_library/.
70
A few states allow youth to remain in foster care until age 21.
71
Courtney, M., Terao, S., & Bost, N. (2004). Midwest Evaluation of the Adult Functioning of Former Foster Youth: Conditions of Youth Preparing to Leave State Care. Chicago,
Illinois: Chapin Hall Center for Children.
72
Stangler, G. & Shirk, M. (2004). On Their Own: What Happens to Kids When They Age Out of the Foster Care System. Boulder, CO: Basic Books.
73
Average Total SEED Accumulation includes SEED account balances at a point in time (which includes any SEED initial deposits, benchmark incentives, other deposits
and earnings in accounts), participant matched withdrawals and total match. Comparisons of this descriptive statistic across SEED Community Partner sites may be
misleading because it does not take into account different populations, program designs, program sizes, levels of resources, timing of enrollment or other factors. For
more data on savings in SEED, see: Mason, L., Clancy, M., Loke, V., Kim, Y., Nam Y., & Lo, S. (September, 2007). SEED Account Monitoring Research: Participants and Savings
Outcomes at June 30, 2007. Retrieved November 1, 2007, from http://gwbweb.wustl.edu/csd/Publications/2007/RP07-22.pdf.
74
The National Child Welfare Resource Center for Youth Development Web site provides detailed information on the Chafee Foster Care Independence Program:
www.nrcys.ou.edu/yd/programs/chafee.html.
75
See CFED’s working paper Federal Chafee Funds and State Matched Savings Programs for Foster Youth (2007, April) for additional information.
76
Casey Family Programs. (2001). A Guide to SSI and Social Security Benefits for Children and Youth in Out-of-Home Care. Retrieved October 1, 2007, from
www.casey.org/NR/rdonlyres/E973E911-6A28-4AD8-BFA481F5075857BE/110/casey_ssi_and_social_security_benefits.pdf.
77
Key Senate Committee Passes Bill to Help Disabled Foster Youth. (2007, July 11). US States News.
78
This section was excerpted from the January 2009 edition of Growing Knowledge from SEED and updated, as appropriate, based on additional experience and
findings from SEED research, policy and practice efforts. Growing Knowledge from SEED editions can be retrieved from
http://cfed.org/programs/abc/research_resources/cda_resource_library/.
79
For more information, see: A New Generation of Savers: Helping Youth to Save and Build Assets. (2009, January). Growing Knowledge from SEED. Washington, DC: CFED.
80
Average Total SEED Accumulation includes SEED account balances at a point in time (which includes any SEED initial deposits, benchmark incentives, other deposits
and earnings in accounts), participant matched withdrawals and total match. Comparisons of this descriptive statistic across SEED partners may be misleading
because it does not take into account different populations, program designs, program sizes, levels of resources, timing of enrollment or other factors. See Clancy,
M., Kim, Y., Lo, S., Loke, V., Mason, L., & Nam, Y. (2007). SEED Account Monitoring Research: Participants and Savings Outcomes at June 30, 2007. St. Louis, MO: Center for
Social Development, Washington University in St. Louis. Retrieved December 17, 2008, from http://gwbweb.wustl.edu/csd/Publications/2007/RP07-22.pdf.
81
Adams, D., & Scanlon, E. (2006). Perceived Impacts of Financial Savings on Youth. Lawrence, KS: University of Kansas School of Social Welfare.
82
Hahn, R., & Price, D. (2008). Promise Lost: College-Qualified Students Who Don’t Enroll in College. Washington, DC: Institute for Higher Education Policy.
83
Adams, D., Scanlon, E., & Wheeler Brooks, J. (2006). How Young People Save Money: Findings from Interviews with SEED Participants. Lawrence, KS: University of Kansas
School of Social Welfare.
84
Ibid.
85
See: Tivol, L. (2007). Financial Education as a Potential Doorway to Children’s Savings Accounts: A Strategic Opportunity for State Policy? (CFED Working Paper Vol.
1, Issue 2). Washington, DC: CFED. See www.cfed.org/imageManager/_documents/SEED/financialed.pdf for more information, as well as the 2007 NCEE Survey on
Economics and Personal Finance Education in the U.S.: www.cfed.org/imageManager/_documents/NCEESurvey2007.pdf.
86
Individual Development Accounts for Youth Aging Out of Foster Care. (2007, November). Retrieved December 18, 2008, from
www3.capwiz.com/idanetwork/issues/alert/?alertid=10560001. This bill may be reintroduced in the 111th Congress.
87
This section was excerpted from the February 2006 edition of Growing Knowledge from SEED and updated, as appropriate, based on additional experience and
findings from SEED research, policy and practice efforts. Growing Knowledge from SEED editions can be retrieved from
http://cfed.org/programs/abc/research_resources/cda_resource_library/.
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 126 —
and Lessons Learned from the SEED Initiative
88
One of these sites initially chose an investment firm as the financial institution partner, but changed to a commercial bank during the course of SEED.
89
For more on this topic, see: Banking on SEED: Lessons from Financial Institutions in the SEED Initiative. (2006, February). Growing Knowledge from SEED. Washington,
DC: CFED.
90
For more on the existing financial products that could function as CDAs, see: Choosing the right vehicle: A review of the primary options for children’s savings
accounts. (2006, August). Growing Knowledge from SEED. Washington, D.C.: CFED.
91
In the United Kingdom, all children born after April 6, 2005 are given a voucher to begin their savings account through the Child Trust Fund (CTF). The account is in
the child’s name and cannot be accessed until they turn 18 years old. For more information on the CTF, see http://www.childtrustfund.gov.uk/.
92
For more on this issue, see: Children’s Savings Accounts and Financial Aid: Understanding the financial aid consequences of children’s savings account ownership.
(2007, January). Growing Knowledge from SEED. Washington, D.C.: CFED. Also see the Financial Aid section of this compendium.
93
This section was excerpted from the August 2009 edition of Growing Knowledge from SEED and updated, as appropriate, based on additional experience and findings
from SEED research, policy and practice efforts. Growing Knowledge from SEED editions can be retrieved from
http://cfed.org/programs/abc/research_resources/cda_resource_library/.
94
As compared to other societal investments in human capital, such as remedial training for older youth or job training for adults. Cunha, F. & Heckman, J. (2007). The
Economics of Human Development: The Technology of Skill Formation. American Economic Review, 97 (2).
95
The lessons and policy implications in this section are drawn, in part, from a roundtable discussion with experts from the early childhood development field that
CFED convened in May 2009 in partnership with the National Center for Children in Poverty at Columbia University. For more information on this roundtable, see:
A New Generation of Savers: Helping Youth to Save and Build Assets. (2009, January). Growing Knowledge from SEED. Washington, D.C.: CFED. Retrieved from
http://cfed.org/programs/abc/research_resources/cda_resource_library/.
96
Zhan, M., & Sherraden, M. (2003). Assets, expectations, and children’s educational achievement in female-headed households. Social Service Review, 77(2), 191-211.
97
Elliott, W., Sherraden, M., Johnson, L., Johnson, S., & Peterson, S. (2007). College expectations among young children: The potential role of savings. Working Paper No.
07-06. St. Louis, MO: Center for Social Development, Washington University in St. Louis.
98
Elliott, W. (2009). ‘At risk’ children’s college aspirations and expectations: The potential role of children’s development accounts (CDAs). Children and Youth Services
Review. 31(2), 274-283.
99
Zhan & Sherraden (2003).
100
See, for example: Beverly, S.G. & Barton J. (2006). Barriers to asset accumulation for families in the SEED pre-school demonstration and impact assessment.
Lawrence, KS: University of Kansas School of Social Welfare.
101
Retirement Plan Participation: Survey of Income and Program Participation (SIPP) Data. (2009). Washington, DC: Employee Benefit Research Institute. Retrieved
July 28, 2009 from http://www.ebri.org/pdf/notespdf/EBRI_Notes_09-20051.pdf.
102
Mason, L. R., Nam, Y., Clancy, M., Loke, V. & Kim, Y. (2009). SEED account monitoring research: Participants, savings, and accumulation. St. Louis, MO: Washington
University in St. Louis Center for Social Development.
103
Assuming investment in a lifecycle fund that is reallocated toward bonds and cash as the child ages, resulting in a projected 8% of return until age 6 and
decreasing thereafter, reaching a 4.6% return at age 18.
104
Net price is defined as tuition and fees less grant aid and tax benefits available.
105
Based on costs for the 2008-2009 school year and derived from the College Board’s 2008 Trends in College Pricing, retrieved from
www.collegeboard.com/html/costs/pricing/3_1_net_prices.html.
106
Funds paid to children or their families on achievement of some established milestone, which may range from a birthday to completion of financial education to
graduating from high school.
107
Glassman, A., Todd, J., & Gaardner, M. (2007). Performance-Based Incentives for Health: Conditional Cash Transfer Programs in Latin America and the Caribbean.
Washington, DC: Center for Global Development.
108
For more information on the use of benchmark incentives in the SEED initiative, see: Rewarding Savers: Lessons about using ‘benchmark’ incentives to
encourage savings. (2007, April). Growing Knowledge from SEED. Washington, DC: CFED. Retrieved from
http://cfed.org/programs/abc/research_resources/cda_resource_library/
109
In 2004, nearly 25% of families in the lowest income quintile had no form of financial account. Bucks, B.K., Kennickell, A.B., & Moore, K.B. (2006). Recent changes in
U.S. family finances: Evidence from the 2001 and 2004 Survey of high school seniors and college students. Federal Reserve Bulletin. A1-A38. Retrieved from
www.federalreserve.gov/pubs/bulletin/2006/financesurvey.pdf.
110
The America Saving for Personal Investment, Retirement, and Education Act.
Section C: Lessons from SEED Practice
— Page 127 —
C
— Page 128 —
Section D:
Appendices
— Page 129 —
Appendix A
SEED Learning Agenda
In addition to the formal research being conducted by our partners at the Center for Social Development, Kansas
University and RTI, CFED believes that there are a number of other opportunities to capture the lessons, stories, and
impact of SEED, and particularly the work of the community and state policy partners. This information can be used to
educate and influence other organizations, the asset-building field, policymakers, the media and other stakeholders. To the
extent that the lessons are documented and shared during the course of the initiative, we believe that there is also an
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opportunity to inform the work of our partners in order that they can make mid-course corrections.
At CFED, we refer to all of this work as the SEED Learning Agenda. Its components are (in alphabetical order):
Data on Public Opinion
By collecting baseline information on public awareness of and attitudes toward CDAs, and by testing messages, we can
sharpen the SEED message and strategy to ultimately inform state policy and federal policymakers.
Demonstration Lessons Learned
Given that national policy demonstrations are a large part of CFED’s business model, SEED presents an opportunity to
learn more about what it takes to run such initiatives successfully. The primary goals of this work are: to create a resource
for the next generation of CFED staff engaged in large-scale demonstrations, to form a template for CFED to assess the
potential of future national demonstrations, to provide a resource to other national intermediaries engaged in similar
work, and to support CFED’s communications with funders about the role of our organization in these initiatives. Areas
to examine include: working with community partners, working with funders, working with national partners, connecting
to the field, communications, and changing public policy. Lessons will be gathered at quarterly reflection meetings of SEED
staff, through interviews with SEED partners conducted by an independent consultant, and from reports and memos on
the progress of SEED and its elements. They will be documented in a series of quarterly memos, initially for internal use,
although at the end of the initiative, these may be distilled into a single publication.
Evidence of Impact on Public Policy
As changes are made to public policy, particularly at the state level, they help build the case for a universal system of CDAs.
Currently, these lessons are being compiled in a SEED state policy guide, which will be updated periodically to include the
latest developments in public policy. The primary audience for this guide will be advocacy organizations; however, elements
of the guide may be distributed to policymakers and media.
Participant Stories
These will be gathered by CFED staff throughout the initiative and shared on the web site and through a stories insert to
the SEED brochure. Written stories and photos will be supplemented by video clips taken by SEED staff at each of the sites
and by participants themselves. Stories provide the emotional hook that can get policymakers, media, and others interested
in SEED.
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 130 —
and Lessons Learned from the SEED Initiative
Program Lessons Learned
The primary vehicle for documenting lessons learned from the twelve sites about implementing SEED programs will be the
quarterly bulletin, Growing Knowledge from SEED. In this way, CFED can highlight best practices with SEED accounts and
translate lessons from practice into good policy. The content is drawn from practitioner reports, interactions at semi-annual
meetings, site visits, and occasional surveys and the audience includes policymakers, funders and practitioners interested in
furthering the idea and practice of children’s savings accounts.
Key features of SEED programs and questions for consideration in starting children’s savings programs will be documented
in a short “How To” guide. Although replication of community-based SEED programs is not an explicit goal of the initiative,
communities and organizations across the country have already shown an interest in starting their own, similar programs.
Experience has shown that these programs will be established with or without the advice of CFED and its partners. We
would prefer that they benefit from the lessons gathered during SEED on what works and, perhaps more importantly, what
does not work in relation to the creation and management of community-based children’s savings programs.
Section D: Appendices
— Page 131 —
D
Appendix B
SEED Site Visit Protocol
Site visits serve a number of important purposes within SEED. They are both a program management tool and a learning
opportunity, as well as a way to build relationships with local stakeholders. The idea is “to know sites better than they know
themselves.” Specific goals include:
Program Management
1. Ensure that program minimum standards are being met and create mutual expectations around performance and
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outcomes
2. Observe operations at the partner organization, in particular the SEED program, and provide feedback and share ideas
from other sites
3. Review account operations, accounting reporting and use of MIS-IDA, and remedy any weaknesses noted
4. Review savings rates and strategies to encourage and facilitate savings, and suggest additional ways to support assetbuilding
5. Troubleshoot any program problems or issues
Learning
1. Document how the SEED program is being implemented at the partner organization
2. Identify key challenges and opportunities at partner organization
3. Meet accountholders and collect their stories
4. Gather and share learning with SEED partners
Build Relationships with Key Stakeholders
1. Foster stronger relationships with staff at SEED partner organization
2. Make connections with local partners (e.g. financial institution, policy makers)
3. Conduct policy advocacy at the local and state level
4. Build alliances with individuals who can carry the message of SEED (e.g. CEO, board members)
Site Visit Team
Where possible, site visits will be conducted by more than one member of the SEED team at CFED. These members are:
Carl Rist, SEED Director
Bob Friedman, General Counsel
Liana Humphrey, Senior Program Manager
Rochelle Watson, Senior Program Manager
Leigh Tivol, Senior Program Manager
Barb Rosen, Program Associate
Fiona Adams, Senior Communications Associate
Jennifer Brooks, Policy Director
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 132 —
and Lessons Learned from the SEED Initiative
Primary responsibility for the 12 community partner sites has been assigned to the two Senior Program Managers as
outlined below. These individuals are responsible for maintaining regular contact with the partner, troubleshooting any
problems or issues, and scheduling quarterly site visits. They will likely conduct most of the visits, however, other team
members may substitute where necessary.
Liana Humphrey/Leigh Tivol
Rochelle Watson
Beyond Housing
Foundation Communities
Fundación Chana y Samuel Levis
Mile High United Way
OLHSA
Southern Good Faith Fund
Boys & Girls Clubs of Delaware
Cherokee Nation
Harlem Children’s Zone
Juma Ventures
People for People
Sargent Shriver National Center on Poverty Law
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Initial Site Visit
An initial site visit was conducted with each organization within the first year of operation.
Objectives for meetings with:
n
Organization head and other relevant organizational staff
n
Meet key organizational staff and learn about their backgrounds – where were they before organization, what brings
them to the work, etc.
n
Learn about overall organizational activities, strategy
n
Learn how they found out about SEED and how it fits into the organization as a whole
n
Meet and build relationships with key staff with responsibility for communications, policy and financial systems
n
Assess whether they have a policy-focused person on staff; if not, whether they have relationships outside the
organization that can help them with policy work; if not, whether they will need significant help from CFED
n
SEED staff
n
Gain a deep sense of operations of SEED program – staff roles, schedules, responsibilities. Go over program components,
calendar.
n
n
n
Sit in on financial education session if possible
Financial institution partners
n
Gain background understanding of financial institution and its staff
n
Understand relationship with community organization
n
Learn how they found out about SEED and what their motivation is for involvement
n
Learn about bank/site interactions from the perspective of the bank
n
Discuss SEED product and how it fits with business model
Accounts manager
n
Review account structure, financial institution relationship and reporting. Talk through the monthly/quarterly routine for
receiving and entering bank statements and for sending out MIS-IDA statements.
n
Review MIS-IDA setup, view participant records, run key reports, including QC.
n
Conduct spot-check audit of bank statements, MIS-IDA records and benchmark incentives to look for errors in
management.
Section D: Appendices
— Page 133 —
n
Discuss system for tracking and processing benchmarks. How do they know when a benchmark payment is due? How do
they track which have been paid? How do they track when they are deposited in accounts?
n
n
n
Any training or other partners (i.e. recruitment partners); visit school/SEED site
n
Understand any partners and their roles
n
Meet with as many partners as are available
Accountholders or accountholder families
n
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n
Accountholder and family’s relationship with SEED partner
n
How they found out about SEED
n
What motivated them to join
n
Some basic personal background – job, family size and structure, etc.
n
Savings habits and banking connection before SEED
n
What affects their savings during SEED
n
What aspects of the program they like and dislike
Take photos of accountholders
Any policy folks they think we should meet
n
n
Learn about:
n
n
Discuss account incentive request forms. Is the process clear? How do they go about filling out the form?
Gain a sense of policy potential at site, key potential partners
Communications staff
n
Collect examples of communications materials being used
n
Obtain waivers from participants
n
Review upcoming calendar of events
Planning Visit
We learned from our experience with the first cohort of SEED partners that it can be helpful to visit an organization
during the planning phase before any accounts have been opened. Planning visits were conducted with each of the SEED
partners added in August 2004. Some of the objectives for the planning visit were similar to those of the initial visit in
terms of meeting key staff and local partners; however, the main goal of the visit was to ensure that the design of the SEED
program was workable, met the needs of the target population, furthered the overall goals of SEED, and provided the best
chance of success. Issues addressed include:
n
Account structure
n
Incentive structure and tracking
n
Recruitment of accountholders
n
Enrollment materials
n
Roles and responsibilities of local partners
n
Delivery of financial education
n
Use of MIS-IDA
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 134 —
and Lessons Learned from the SEED Initiative
Quarterly Site Visit
Site visits will be conducted at least once per quarter, and provide an opportunity to monitor the progress of the SEED
program at the site. Using the performance standards that have been developed for SEED community partners and the
accompanying checklist, CFED staff will review a number of items at every visit, including:
n
Changes and modifications to the program
n
Program goals and work plan
n
Timely entry of account statements into MIS-IDA
n
Savings rates and strategies to increase savings and other asset effects (economic, behavioral and attitudinal)
At least twice per year (or more often for sites with a history of not meeting the performance standards) CFED staff will
conduct a thorough review of:
n
Account management systems and practices, including monthly/quarterly routine for receiving and entering bank statements
and sending out MIS-IDA statements
n
MIS-IDA setup and key reports (see below)
n
Spot-check audit of bank statements, MIS-IDA records and benchmark payments
n
Management of account incentives
n
Staffing and funding for the SEED program
Prior to a quarterly site visit, CFED will ask the site to run one or more of the following reports from MIS-IDA:
n
Cumulative Account Activity
n
Participant Account Statement Summary
n
Individual Account Statement
n
Matched Withdrawals by Use
In each case, identifying information (SSNs and last names) will be removed beforehand, when relevant. This can be
done by exporting the reports to Word or Excel and deleting the fields, or by blacking out the information on a hard
copy printout. The site may also be asked to share a copy of the benchmark tracking spreadsheet, again with identifying
information removed. During the site visit, CFED may ask the site to do the following:
n
Run the MIS-IDA QC Account Statement Cleaning Report
n
Generate an far or roll Down to confirm timely data entry
n
Pull individual participant files, including copies of bank statements and other account-related paperwork or incentives files,
such as bank account application forms or benchmark attainment records
For these reports/files, identifying information does not need to be removed ahead of time but the reports and files will
only be reviewed during the visit and will never be transported offsite.
These quarterly visits also provide an opportunity to go into more depth on one or more of the various aspects of the
SEED Initiative, including:
n
Practice
n
Identify opportunities for pre-emptive technical assistance
n
Discuss plans for rolling over accounts at end of initiative
Section D: Appendices
— Page 135 —
D
n
D
n
n
n
If applicable, discuss program expansion and how it fits with SEED
n
Observe program in action
Communications (see also SEED Communications Protocol)
n
Review communications plan for the site
n
Research and discuss media/communications opportunities in local markets
n
Discuss media training with participating families
n
Review web site content relating to SEED
n
Ask about the use of CFED-produced op-ends and giveaways
n
Review and obtain copies of photo waivers
n
Review stories that have been collected
n
Stage communications event
n
Meet with accountholders and learn about their experience with SEED
n
Take photos of accountholders and save to the CFED server upon return
Market Development
n
Meet with senior management at bank
n
Discuss profitability of SEED accounts from bank’s perspective
Policy
n
Review policy plan for the site
n
Meet with key policy figures
n
Participate in on-the-ground policy activities, such as providing testimony, making presentations/speeches, and other forms
of advocacy
In addition, CFED staff may provide technical assistance or coaching on a particular issue, either on a one-time basis or via a
series of visits. Topics include:
n
Account management and reporting
n
Fundraising
n
Increasing savings
n
Communications
n
Managing attrition
n
Providing financial education
n
Teaching entrepreneurship
n
Gathering stories
n
Developing a speaker’s bureau
n
Expanding SEED
n
Support on public policy activities
After each site visit, CFED staff will summarize the key issues and action steps that were discussed during the visit and share
these in a memo back to the site, and copied to CSD. The performance standards checklist will also be updated to reflect
strengths and weaknesses of the SEED program and areas for action or improvement.
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 136 —
and Lessons Learned from the SEED Initiative
Final Site Visit
A final site visit will be conducted during the quarter following completion of the rollover process. The purpose of this visit
is to ensure that the SEED accounts have been rolled over correctly and all savings and match funds properly disbursed.
Prior to this visit, the SEED site will have submitted their final account incentive request, along with the Participant Account
Statement Summary Report (as of program end date) and Matched Withdrawals by Use Report from MIS-IDA and a
copy of the benchmark tracking spreadsheet. In each case, identifying information (SSNs and last names) will be removed
beforehand, when relevant. With these reports, CFED will have confirmed the rollover option, final benchmark payments,
closing balance, and match funds for each participant.
During the final site visit, CFED will check all of this data against physical records on site. In particular, CFED will:
1. Confirm that all rollover accounts are open as stated
2. Check rollover account statements to confirm deposits of participant savings and match funds
3. Check SEED account statements to confirm the final closing balance, withdrawal of participant savings, and account
closure
4. Review records of savings bonds purchases
5. Discuss treatment of unclaimed accounts
6. Confirm accounts opened by CFED on behalf of SSI families
7. Reconcile match pool account
8. Review matched withdrawals in MIS-IDA
9. Take steps to exit participants in MIS-IDA (if appropriate)
Where a site has committed to retaining custodianship of the SEED accounts, either for a limited period of time or until
the participant is of age, CFED will also discuss policies and procedures for managing the accounts once CFED is not longer
providing oversight. An MOU may be drafted to ensure that all promises made to participants at the beginning of SEED
are kept after the demonstration phase is over.
Lastly, if the site is still in possession of a CFED video camera, it will be collected during this visit.
Section D: Appendices
— Page 137 —
D
Appendix C
SEED Community Partner Performance Standards
The SEED Community Partner Performance Standards are based upon IDA Partner Certification Standards developed
several years ago for the IDA field by a diverse set of stakeholders, adapted to the aims and understandings of the SEED
Initiative by incorporating pertinent elements of SEED community partner agreements, the SEED design as recently
expanded and the expectations expressed by SEED funders and the SEED Advisory Board. The expectations of SEED in
general and of community practice in SEED started high and have increased with the expansion of SEED in 2004.
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From its inception, SEED was designed to be the premier test of the efficacy of a progressive, universal system of children’s
savings accounts as an asset-building strategy. The SEED community partner programs are expected to demonstrate the
economic, social, and psychological potential of children’s savings accounts when combined with some of the best and
most innovative community organizations in the country. The mutual goal of all partners in SEED is for the 11 community
initiatives and the OLHSA Pre-School Demonstration and Impact Assessment to represent a best practice for communityintermediated programs throughout childhood and youth and to establish the potential of children’s savings accounts.
With SEED at the midpoint it seems appropriate to be explicit about the performance standards that we seek to achieve
and exceed. We hope that, through discussion and development, this document expresses the mutual expectations and
commitment of community, national and funding partners.
The performance standards cover 10 areas of performance:
1. Accounts
2. Funding
3. Staffing
4. Organizational stability
5. Savings facilitation and financial education
6. Reporting
7. Participation
8. Policy
9. Communications
10. Monitoring
CFED understands that some of these standards, while important, may not be directly in the partner’s control. However,
other standards, such as managing accountholder’s accounts accurately and reliably and reporting regularly, are absolutely
essential and within each partner’s control and represent a minimum and absolute standard which should be maintained at
all times.
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 138 —
and Lessons Learned from the SEED Initiative
1. ACCOUNTS
FULL DISCLOSURE AND AGREEMENT
An understandable, written agreement should be executed between accountholders and the SEED partner. Such an
agreement should clearly disclose the terms of the SEED partner, the nature of the initial deposit, savings match and
benchmark incentive promise, the risks and safeguards of the investment options and institutions, the conditions of an
emergency withdrawal or termination of the partner, and the commitment made by the accountholder. This agreement
should reflect the policies and procedures of the SEED partner.
SAFEGUARDING DEPOSITS
Deposits made by accountholders should be held in a separate savings or contribution account at a financial institution.
The accountholder’s name should be added as a beneficial owner on accounts where the SEED partner is listed as the
custodian.
Account incentives for each accountholder should be held in a separate pooled account until they are paid out during
the initiative. Accountholders should not have access to the matching funds. Account incentives should be used solely for
payments into the accounts of SEED participants and not used for any other purpose.
All funds (savings and match) should be held in institutions that are eligible under applicable federal rules – 26 USC, S408
(a) (2) – to hold an individual retirement account.
Note: The term “IRA-eligible institution” means any institution authorized to be a trustee of any individual retirement
account under section 408(a)(2). Examples of “insured investment” options include banks whose holdings are insured by the
FDIC, credit unions whose deposits are insured by the NCUA, etc.
MANAGING INCENTIVES
Half of the initial deposit allocated to each accountholder at the beginning of the initiative must be deposited into their
account, with the other half held in a pooled match account. MIS-IDA will calculate and report the match on the initial deposit.
Match funds must be held in a separate pooled account, unless otherwise approved by CFED. Benchmark incentives
(identified and agreed upon by both the partner and CFED) may either be paid out to accountholders or deposited
directly into their SEED account. If incentives are paid out directly to families, all payments should be made by check, unless
otherwise approved by CFED. The SEED partner must keep a record of all transactions using the benchmark tracking form
provided by CFED or similar system approved by CFED and submits timely quarterly account incentive request reports. This
report is essential to ensure that incentives are not overpaid to any accountholders. Any changes to benchmark incentives
must be approved by CFED.
ACCEPTING DEPOSITS
It is important for accountholders and their families to relate to the bank directly to facilitate the practice of saving.
However, in the case where there is no bank branch nearby or if participants have not been making deposits, SEED
partners may accept deposits on behalf of families. A receipt must be given to record all deposits and the person accepting
deposits should be bonded by the organization delivering the SEED program (to protect the accountholder and the
organization). Deposits should be made within 48 hours. CFED does not endorse accepting cash deposits unless the
partner is bonded.
Section D: Appendices
— Page 139 —
D
BANK/MIS-IDA STATEMENTS
Accountholders should receive monthly or quarterly account statements directly from the financial institution holding their
account, unless otherwise approved by CFED. In addition to bank statements, each family must receive a MIS-IDA individual
account statement which confirms deposits, account balances, match funds earned, match funds remaining and, whenever
possible, encouraging notes. The MIS-IDA individual account statement should be mailed either monthly or quarterly, and
no more than 20 days after the statement end date (data input standards are 15 days after period end; thus, printing and
mailing should follow immediately). If the financial institution does not mail statements directly to accountholders, a copy of
the bank statement must be mailed along with the MIS-IDA individual account statement. Regular and accurate statements
are the essential core of the SEED program, and should never lapse. Partners should develop backup systems and capacity
to ensure regular receipt of account statements.
D
MIS-IDA REQUIRED
The SEED partner should operate MIS-IDA for the purpose of collecting accountholder demographics, entering bank
deposits, tracking account balances and matching funds, issuing either monthly or quarterly statements, tracking matched
withdrawals, and all other pertinent financial and operational aspects of the partner, unless otherwise approved by CFED.
Each partner must enter all bank statements into MIS-IDA within 15 days of the close of the statement end date. The
SEED partner should maintain timely and accurate information on all SEED accounts including period-ending savings and
interest balances, earned incentives, remaining incentives etc. Prior to issuing SEED participant statements, all partners should
execute a monthly quality control review as follows:
1. Run and review the MIS-IDA Cumulative Account Activity and Participant Account Statement Summary reports, to
ensure that all periodic account statements are entered and that matching funds are properly allocated.
2. Run and review the MIS-IDA QC Account Statement Cleaning and SEED Participant Cleaning reports.
3. Correct missing or inaccurate information identified by the above reports.
4. Export and back up MIS-IDA data by saving it externally.
5. Print and send SEED participant statements.
USES
Primary uses of matched funds should be for the purchase of durable, appreciating assets including one or more of the
following:
n
Postsecondary education or training
n
Homeownership
n
Business development
n
Retirement
Other asset-building uses are permissible (i.e. automobile, computer) so long as they are part of an asset-building strategy
and are approved by CFED.
INCENTIVE ADEQUACY
The incentive offered should be enough to make a significant contribution towards asset goals within the accumulated
savings period allowed by the savings partner. Each accountholder should have a targeted monthly or quarterly savings goal
to accumulate substantial matching dollars allowed by the SEED partner.
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 140 —
and Lessons Learned from the SEED Initiative
SEED partners should be aware of the costs of designated asset targets, notably the costs of higher education,
homeownership, or starting a small business, and should encourage accountholders to set realistic, achievable savings and
asset goals.
ASSET PURCHASE APPROVAL
SEED partners working with older youth should have a detailed, written plan which details how youth will make a matched
withdrawal for their asset purchase. The SEED partner must maintain adequate records and documentation to verify asset
purchase. Match funds should be released within sufficient time to facilitate asset purchase, but in no case longer than eight
business days from the time of the initial request. Match funds should only be released upon written approval of both the
accountholder and the SEED partner, which certifies an allowable withdrawal.
ROLLOVER
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At the end of the initiative, each partner should have a detailed plan for rolling over the accounts. Depending on the
specifics of the partner’s SEED program, this will involve either:
1. Rolling over the proceeds of the SEED account into a long-term savings instrument that maintains restrictions on
eligible uses;
2. Transferring ownership from the SEED partner organization to a parent(s), in the case of 529 accounts owned by the
SEED partner; or
3. Preparing a detailed plan for maintaining control over the SEED accounts, for those partners that will continue to be
the custodian of the account until the accountholder turns 18.
If the SEED partner intends to remain as custodian until the youth turn 18 years old, the rollover and management plan
should include fundraising for operating expenses, account and data management, continuing financial education classes,
parent participation, communications, and working with the youth before their 18th birthday to execute a matched
withdrawal.
2. FUNDING
MATCH FUNDS
SEED partners should maintain reserves of 100-percent for matched deposits. Match funds equal to not less than
100-percent maximum contingent liability for the lifetime of opened SEED accounts should be on deposit in a separate,
secure account or committed – in writing – prior to opening accounts. CFED certifies it holds such funds (up to $2,000
per account) until and unless transferred to the SEED partner on a quarterly basis upon submission of quarterly written
account incentive request report. The request should be based on the community partner’s estimated needs for account
incentives for the next quarter.
SEED partners should demonstrate they have on deposit or committed any account incentives in excess of the $2,000 per
account committed by CFED/SEED.
OPERATING FUNDS
The SEED partner should have at least one year’s operating funds banked or committed in writing. Such funds should be
adequate to sustain all services associated with running a quality SEED program and equal to at least a 1:1 match of the
Section D: Appendices
— Page 141 —
annual SEED operating grant. In-kind contributions—including volunteer services —count toward compliance with this
standard.
The SEED partner should have a fundraising plan to meet goals for subsequent years and a contingency plan for reduced or
lost funding.
3. STAFFING
ADEQUATE STAFF
SEED partners should have adequate staff to satisfactorily operate all phases of the program, including but not limited
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to recruitment, enrollment, financial education training and counseling for both accountholders and their families (where
applicable), assistance with account rollover options (where applicable), assistance in asset purchase (in the case of older
youth), fundraising, administration, data management, and reporting. There should be at least 1.25 FTE devoted to each
75-100 SEED accounts, with the SEED Director/Coordinator spending at least half of his or her time on SEED. A staffing
plan should indicate how each function is addressed. Volunteer services count toward compliance with this standard.
STAFF TRAINING AND CONTINUITY
Partners should develop and maintain a staff transition plan in the event of transfer of key staff to ensure continuity of
accountholder and program services. SEED partners will be expected to inform CFED of any change in staffing that has
bearing on the operation of the partner or may undermine the ability of the partner to conduct the program as planned.
Once new staff is hired, partners should inform CFED to set up an initial orientation meeting or call and to plan a site visit
by CFED staff to conduct additional training and orientation.
At least two representatives from each SEED partner should attend MIS-IDA training offered at the Center for Social
Development (CSD) at Washington University in St. Louis. In the event of staff turnover, each partner should notify CFED
and CSD upon hiring new staff to schedule a training date.
4. ORGANIZATIONAL STABILITY
ORGANIZATIONAL CAPACITY
The SEED partner or at least one organization within a SEED partnership/collaborative should have successful experience
operating initiatives in the same community and serving the same target population(s). The SEED partner will be expected
to inform CFED of any change in financial condition, management operations, or status as a tax-exempt 501(c)(3)
organization. The fiscal agent responsible for managing match funds should hold an unqualified, less-than-12­month-old, “no
loss” audit finding from an independent, certified public accountant.
PARTNERSHIP/COLLABORATIVE AGREEMENTS
SEED partners working with other organizations for program delivery should develop a written agreement between
all members of any partnership or collaborative. Such an agreement should specify the goals, roles, responsibilities, and
relationship of each member of the partnership or collaborative. CFED may ask for copies of MOUs executed between
local partners.
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 142 —
and Lessons Learned from the SEED Initiative
SEED PROGRAM PLAN
The SEED program should be governed by a comprehensive, written plan (as submitted in the original SEED proposal)
and by the contract that is renewed annually, assuming the SEED partner meets its contractual obligations. Such plan
should be accessible to all stakeholders and should address all material elements of the SEED program, including but not
limited to: target populations to be served; marketing to target populations; permissible uses for SEED savings and match
funds; structure of the SEED account and process for managing account incentives; procedures for opening, saving, and
accessing matching funds for accountholders; delivery of financial education training for accountholders and families; delivery
of asset-specific training for older youth; relationship(s) with financial institution(s); staffing patterns; fundraising plans; data
management and reporting for MIS-IDA for SEED; monitoring monthly savings patterns; counseling for families who are not
meeting savings goals; attrition and partnership/collaborative agreements.
D
POLICIES AND PROCEDURES
The SEED program should have comprehensive, written policies and procedures that state the rules of the program
and how such rules are administered. Policies and procedures should include but not be limited to: how potential
accountholders can enroll in the program; eligibility guidelines for accountholders; processes for deposits – including process
of deposit, location, frequency, minimum, etc.; targeted monthly savings goals and explanation of lifetime savings maximum
and match; earning benchmark incentives and frequency; sanctions for violating program rules; process for termination from
the program; financial education participation for accountholders; approval of emergency withdrawals (where applicable);
account rollover plan at the end of the initiative; attrition; and the dedication, monitoring of, and accounting of match funds.
It should be clear that funds dedicated for matching accountholder savings would not, under any circumstances, be used for
any other purpose.
ATTRITION
SEED partners should develop a plan to address attrition. In the event that accountholders move and are no longer in close
proximity to the SEED partner, the accountholder should not be exited from the program. Instead, the SEED partner should
do everything possible to remain in contact with the family and ensure that the accountholder is able to make deposits
remotely. This could include providing deposit slips and envelopes to make deposits by mail, or encouraging direct deposits.
CFED encourages SEED partners to update contact information at least every six months to avoid losing all contact with
families.
5. SAVINGS FACILITATION, FINANCIAL EDUCATION, AND SUPPORTIVE SERVICES
PROGRAM SERVICE PACKAGE
Each partner is expected to deliver a package of financial education, savings promotion, and facilitation, appropriate to the
age cohort, for accountholder families. It should be designed to engender understanding of the goals and means of saving,
and the returns to asset-building, especially higher education.
SAVINGS BENCHMARK
Each partner is expected to encourage families to deposit at least $100 per year or claim at least 25% of available savings
match and benchmark incentives, whichever is less. Families who exceed the minimum benchmark should be encouraged to
achieve the stretch goal of depositing $200 per year or claim 50% of the available savings match and incentives. This number
should be used as an internal benchmark to monitor savings performance only and should not be communicated to families
Section D: Appendices
— Page 143 —
as the absolute standard. Each accountholder should have a minimum targeted savings goal that should be discussed with
families with frequency to increase savings.
BASIC FINANCIAL EDUCATION TRAINING
The SEED partner should provide access to and encourage or require all accountholder families and children to participate
in appropriate financial education training. At a minimum, the curricula should emphasize the importance of saving in the
SEED accounts and maximizing matching dollars with a clear and consistent message for accountholders and their families.
Information on how to save and the expected returns to savings and building assets should be included. Each partner has
the discretion to select age appropriate materials for children and youth. Financial education for adults should be tailored
to their needs and interests. Each partner should also incorporate rollover options to assist families to make informed
D
investment options at the end of the initiative. CFED will assist all partners in need of assistance for account rollover.
Financial education should also include communicating with families about their bank and MIS­IDA statements, and discussing
the benefits of saving. Communicating with families about their account provides participants with a connection to their
financial institution, and is central to confidence and trust in the program. The Initiative anticipates positive SEED effects
when people can regularly “see” that they are building assets for the future.
ASSET-SPECIFIC TRAINING
The SEED partner should provide access to and encourage or require accountholders to participate in preparation related
to the specific asset to be purchased. For most SEED partners, the primary asset to be purchased is higher education. Each
partner should emphasize the costs and benefits of postsecondary education, and the relative advantage and disadvantage
of higher education savings plans (529, etc.). This training will vary, depending on the age of the accountholders.
MONITORING SAVINGS
Each SEED partner, through its designated financial partner, is required to track monthly or quarterly savings deposits for
all accountholders. It is critical for partners to contact families who do not meet their targeted savings goal. Partners are
encouraged to use reports from MIS-IDA to track monthly or quarterly savings, including both individual and cumulative
account statement summary reports.
6. REPORTING
Each SEED partner will be expected to submit regular semi-annual reports to both CFED and the SEED researchers,
including:
n
A narrative and financial report on SEED to be submitted on the 15th of February and the 15th of August each calendar
year of SEED. The narrative report will address challenges encountered, accomplishments, and lessons learned, based on
questions to be submitted by CFED. The financial report should provide an accounting of SEED income and expenses
and should be accompanied once per year by an updated, audited financial statement. This financial report should include
information about CFED grants and matching funds raised.
n
The transmission of MIS-IDA data to CSD no later than January 20th and July 20th during each calendar year of SEED. Prior
to sending MIS-IDA data to CSD, the partner must fully review and correct the data. CSD should be contacted in advance
of the data submission deadline with questions about correcting errors identified during a quality control review.
n
Account incentive reports to request matching funds and benchmark incentives for the next quarter, and reconcile deposits
made in the previous quarter should be submitted to CFED on the 15th day after the quarter ends, based on the following
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 144 —
and Lessons Learned from the SEED Initiative
schedule:
n
Quarter 1 (Report on October – December) – Due 15th day of January
n
Quarter 2 (Report on January – March) – Due 15th day of April
n
Quarter 3 (Report on April – June) – Due 15th day of July
n
Quarter 4 (Report on July – September) -Due 15th day of October
Any additional reports or information CFED needs for purposes of reporting to the funders of the SEED Program.
7. PARTICIPATION IN THE INITIATIVE
SEED partners are required to actively participate in the initiative in the following ways:
n
Semi-annual meetings – SEED partners are expected to send at least one representative to each semi-annual meeting of
SEED, concluding with the final meeting based on the end date identified in the partner’s contract. In addition, each partner
is expected to host one semi-annual meeting during the course of SEED.
n
Sharing Information – SEED partners are expected to share the lessons from SEED so that others can learn. SEED partner
staff should engage in regular exchange with others in the SEED community (i.e., through the SEED listserv, SEED working
group, semi­annual meetings, the national assets learning conference, state/regional conferences and workshops) as well as
with other practitioners, accountholders, policymakers, researchers and others.
n
Participate in conference calls and other learning activities organized between semi­annual meetings.
n
Research – SEED Partners are expected to cooperate with the research team beyond account monitoring for other specific
studies.
8. POLICY
All SEED partners are expected to assist in state and federal policy efforts required to ensure that SEED accountholders
are protected from the possibility of losing public benefits due to public assistance asset tests. It is the joint objective of
CFED and SEED community partners to achieve such protection within the term of the Initiative.
9. COMMUNICATIONS
Each community partner will be expected to make use of communications materials designed by CFED to support,
promote, and advance SEED, including, but not limited to, brochures, folders, fact sheets, and media materials. In addition,
each community partner will be expected to develop its own information materials, as needed, for describing and
communicating the details of its unique, local SEED program, including, but not limited to, brochures, web site links, flyers,
fact sheets, etc. On all materials developed by the local partner to promote SEED, the SEED logo should be prominently
displayed.
Section D: Appendices
— Page 145 —
D
10. MONITORING AND NOTIFICATION
ADHERENCE TO SEED PROPOSAL
The SEED program should be implemented as outlined in the original proposal and as agreed upon with CFED. Any partner
who deviates from their original SEED plan must disclose the change immediately. This includes any changes in the delivery
of financial education or curriculum for parents or accountholders, adding new partners to the program, changes in account
structure, or fees charged to the accounts, to name a few. The SEED partner must contact CFED to discuss any changes to
seek approval. If an approval is not granted, the partner will be responsible for remedying the change with the same priority
as other account issues.
NOTIFICATION
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If an issue arises with the SEED program, in particular related to the accounts, the SEED community partner is responsible
for notifying CFED and the researchers immediately.
SITE VISITS
CFED staff will visit all partners at least once per quarter to monitor SEED programs to ensure that all standards are met
(as listed in this document).
REMEDIATION
In the event that the SEED partner does not fulfill its obligation for meeting these minimum standards, particularly those
that are within the partner’s direct management control, CFED will contact the partner immediately to discuss the problem.
The partner will have 30 days to remedy the situation. If the problem continues to exist, CFED reserves the right to
withhold the operating grant for the next period.
Repeated violations of any standards listed in this document, especially account management and reporting which is
regarded as a critical program element, may result in termination of the SEED contract.
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 146 —
and Lessons Learned from the SEED Initiative
Appendix D
SEED
Saving for Education, Entrepreneurship, and Downpayment
A national policy and practice initiative to explore the efficacy of
long-term savings and investment accounts for all American children
D
An Invitation to Partners
Request for Full Proposals
Organized by
Corporation for Enterprise Development
Evaluated by
Center for Social Development—Washington University
School of Social Welfare—University of Kansas
Corporation for Enterprise Development
777 North Capitol Street, NE, #800
Washington, D.C. 20002
202.408.9788/phone 202.408.9793/fax
www.seed.cfed.org [email protected]
Section D: Appendices
— Page 147 —
Request for Proposals: SEED Policy & Practice Initiative
The Corporation for Enterprise Development (CFED) is issuing this request for proposals (RFP) to a select group
of highly qualified and interested applicants to identify six or more community partners and one or two larger experimental partners for an intensive five-year initiative to test the efficacy and policy potential of a national system of
incentivized savings accounts for children and youth. The exact number of partners selected will depend upon additional funding commitments expected in the next few months. The Saving for Education, Enterprise, and Downpayment
(SEED) Policy & Practice Initiative will launch in the fall of 2003 and close in 2007.
The information contained here includes everything organizations that have been invited to apply will need to complete their proposals. This includes:
D
•
•
•
•
A brief overview of the SEED Policy & Practice Initiative;
A basic outline of the nature of the partnership between CFED and community partners;
An overview of the application and selection process—including timetable; and
Detailed instructions, advice, and required forms for completing a full proposal.
Those who are interested in learning more about the SEED Policy & Practice Initiative are strongly encouraged to visit
sections of the SEED website, which contain:
• Background information on children’s savings accounts and other pertinent issues; and
• Frequently asked questions about the initiative and the proposal process.
In addition, applicants may find the following CFED publications to be helpful resources in developing their proposals: Building Assets: A Report on the Asset-Development and IDA Field ($35.00); Individual Development Accounts for Youth:
Lessons from an Emerging Field ($30.00); The State Asset Development Report Card (free online www.sadrc.cfed.org), and
Assets: A Quarterly Update for Innovators (free; also available online at www.cfed.org).
These and other publications can be ordered at www.cfed.org. A complete publication list and order form may be
requested by calling 202.408.9788.
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 148 —
and Lessons Learned from the SEED Initiative
Overview of the SEED Policy & Practice Initiative
Like seeds, savings grow. And with them grow confidence, competence, connections, and capital—the elements of
development. So—like seeds—what starts small and unprepossessing gradually becomes significant and profound.
What difference would it make if every child in America grew up knowing that (s)he had a nest egg to go to college,
buy a home, or start a business? What benefits would accrue to individuals, families, and society as a whole? How
would such a system be built?
CFED intends to find out.
SEED—Saving for Education, Entrepreneurship, and Downpayment—accounts are long-term savings and investment
accounts established at birth and allowed to grow over the course of a lifetime. Seeded with an initial public deposit of $250
to $1,000 and built by deposits from family, friends, and accountholders themselves, as well as augmented by other public
and private sources, SEED savings are restricted for the primary purposes of financing education/training, starting a small
business, buying a home, or financing retirement. Furthermore, accounts gain meaning as young accountholders and their
families engage in age-appropriate financial education.
More than just a savings product, SEED accounts have the potential to move the United States closer to progressive and
inclusive public policy in support of a universal savings and asset-building system for all Americans. SEED accounts can
increase the savings rate, ensure a greater level of investment in children, and increase the economic and social prospects for
each succeeding generation. In no small sense, SEED accounts should be viewed as an investment in the future of the economy.
What are SEED accounts?
•
•
•
•
•
•
•
•
Accounts established at birth for every child in America.
Include an initial public deposit of $250 to $1,000 to open each account.
Feature a progressively structured public match for savings of accountholders and their families delivered through a tax
deduction or refundable tax credit.
May offer additional deposits tied to specific achievements—passing a financial driver’s test, scholastic advancement,
community service, etc.
May hold deposits from any public or private source—family, friends, nonprofits, etc.
Restrict savings use for only education/training, small business development, home purchase, or retirement, and must
be held at least until age 18.
Include age-appropriate financial education that can be delivered by a variety of sources—financial institutions,
nonprofit organizations, youth development organizations, schools, etc.
Accounts held primarily in private financial institutions that will provide a limited set of investment options.
It is possible that an effective, universal, and progressive system of SEED accounts will emerge in the United States of its
own accord. But it is not very likely.
In 1997, through the Downpayments on the American Dream Policy Demonstration (ADD), CFED began to test the potential
for Individual Development Accounts (IDAs) to improve the economic and social prospects of low-income Americans.
Because of the rigorous and multifaceted evaluation of ADD’s 2,300 accounts, hard evidence now shows that—given the
opportunity—poor people can and will save, acquire financial skills and knowledge, increase their aspirations, and invest their
matched savings in high-value assets. At the beginning of the demonstration, it was hypothesized that “assets change people’s
heads.” The actual enhancement of confidence, competence, and connections among individual accountholders, however,
was greater than could ever be imagined.
So compelling has been the ADD experience and so significant the data, that most state and the federal governments have
promulgated important IDA policies. In no small part, as a result of these policies—and with a nod to ADD—more than
10,000 IDAs are open in more than 400 innovative community partnerships throughout the country. Federal legislation that
would reach nearly hundreds of thousands and potentially millions of accountholders is currently under consideration and
has the support of both major political parties in both chambers of Congress.
Section D: Appendices
— Page 149 —
D
Yet, however profound the impacts of ADD and IDAs prove to be, a SEED demonstration and SEED accounts could
have even greater power. A universal SEED policy could be a more economically, socially, and politically potent form of
IDAs. Because accounts are established at birth, SEEDs could exert their particular power to inspire, discipline, guide, and
grow with children in their early and most impressionable years. Further, because SEEDs grow over the course of decades,
they take full advantage of the “miracle” of compound interest and may require lower levels of public investment. And like
IDAs—but because children are particularly compelling beneficiaries—the bipartisan political support could be quite strong.
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At present little is known about the real potential of SEED accounts—about how they may be best structured and
supported; about their psychological, social, behavioral, and economic effects; about the policy structure most likely
to garner support; or about the system best able to deliver them effectively and efficiently. What is known is that people—even poor people—can and will save, given the right supports. And when they do, their growing assets change
attitudes and behaviors as well as economic and social opportunity. Experience shows that savings tools, community
practice, public policy, private markets, and political understanding evolve best when they evolve together.
The national SEED Policy & Practice Initiative is designed to bring together diverse partners that will simultaneously
explore and assess the potential of SEED accounts as a tool, practice, policy, system, and message.
The SEED Initiative will work with community partners to establish and evaluate 1000–1500 accounts for (mostly
poor) children across the country. Though the final number and composition of community partners will depend on
funding, it is expected that one or two of these partnerships will be large, experimental (500+ account) sites—one for
preschoolers and perhaps one for eighth graders. Another six, smaller community partnerships will each explore varying account structures across a range of ages (0-18), demographic, geographic, and organizational contexts.
Each community partnership will be evaluated through on-going monitoring and periodic outcomes surveys. The
large, experimental partnerships will be subjects of comprehensive longitudinal impact evaluations and in depth
interviews. The community partnerships will test and develop delivery systems and public policy approaches with
input and oversight from an initiative advisory board, the Growing Wealth Working Group (a separate body with a
children’s savings account subcommittee, whose ongoing recommendations will inform SEED and will, in turn be
informed by SEED), and a SEED policy council. As an outline for effective policy emerges, the initiative will also
support state and federal advocacy efforts.
The initiative will begin in full operation in 2003 and will span five years. The first year will be devoted to selecting
community partners, ramping up individual programs, completing development of systems and tools, and opening
first accounts. The following four years will be dedicated to operation, communication, research, evaluation, innovation, and advocacy. The final year will focus on compiling, assessing, and communicating the lessons of the initiative.
The Corporation for Enterprise Development (CFED)—a national nonprofit, nonpartisan, economic development
organization—will coordinate the initiative by:
• raising funds;
• managing finances;
• issuing a RFP from community partners;
• developing and advocating policies;
• managing the selection of community partners;
• promoting public education; and
• providing technical assistance;
• disseminating emerging lessons from the initia• fostering on-going communication;
tive online, in newsletters, and other publica• sponsoring semi-annual meetings;
tions.
The initiative will be researched by the Center for Social Development (CSD) of Washington University and the
School of Social Welfare of the University of Kansas (KU). A separate research organization will be chosen to conduct impact evaluations of the large sites.
This initiative will be the first large test of the efficacy and impact of the SEED account concept as a tool to promote economic independence in the United States. There are no guarantees that a universal, progressive savings and
investment system will be established, but the possibility is real and the potential impact, huge.
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 150 —
and Lessons Learned from the SEED Initiative
Nature of Partnership between CFED and SEED Partners
The SEED Policy & Practice Initiative is really a partnership between funders, CFED (as the organizer), CSD and KU
(as evaluators), and the community and experimental partners. A set of exchanges underlies this partnership.
CFED will offer selected partners:
• SEED account deposits, matches, and incentives up to $2,000 per accountholder over the four-year duration of
the operation (possibly $1500 in the experimental sites), to be divided among:
o An initial deposit of $250 to $1,000 per account opened.
o Savings matches of up to $500 per account annually for three/four years.
o Incentive grants of up to $125 per account per year for three/four years (not available to experimental partner).
• An annual operating grant of $25,000 per year for four/five years ($100,000 per year for experimental partners)
to cover both participation in the initiative and direct services to accountholders and their families;
• Access to the best available information on SEED accounts and asset building—including opportunities for peer
exchange and access to technical assistance;
• Access to comprehensive evaluation and learning assessments; and
• Assistance with policy advocacy, public education, and communications activities.
All partners will be asked to:
• Implement their initiative as proposed, subject to mutually approved adjustments over the course of the initiative;
• Raise sufficient funds to match the annual operating grants, provide adequate funding to fully participate in the
initiative, and offer services to accountholders and their families;
• Maintain a monitoring and information management system capable of supplying needed data and providing semiannual program and financial reports;
• Participate in the evaluation;
• Attend semi-annual meetings as well as share challenges, lessons, and practices candidly;
• Inform CFED of any change in financial or management condition that might undermine the ability of the partner to conduct the initiative as planned (audited financial statements will be required);
• Host one semi-annual meeting during the course of the initiative;
• Participate in efforts to develop/implement public policies that are supportive of SEED accounts; and
• Generate communication tools, including, but not limited to press releases, fact sheets, newsletters, etc.
**In addition, experimental partner(s) will be asked to implement the experiment as follows:
• Choose one site to receive funds to scale up with 500 new accounts for a low-income population of preschool children
(ages 0 to 5) and their parents or legal guardians. (If funding is available, an experimental site with a youth cohort
(ages 14 to 18) may also be implemented.) The large site(s) will have an experimental research design, using random
assignment to participant and control groups and survey methods of data collection. Each of the two groups will
consist of 500 accountholders. The research organization that carries out the experiment will assign respondents to the
participant or control group.
• Note: The participant group refers to members who receive SEED financial incentives (initial deposit, and match on
savings). The control group refers to members will not receive financial incentives but will be interviewed. Note that control
group members may receive services normally provided by the organization, but cannot be in any matched savings program.
• Surveys will be carried out by a research organization that will work in conjunction with CSD, KU, and the selected site. The survey will involve two or three waves of interviews designed to test effects of SEED participation
on the 1,000 accountholders. KU will also conduct in-depth interviews with a smaller sample (approximately 30
subjects) to add detail, examples, and understanding to the fixed format results. The first of interviews will take
place during the 2003-2004 academic year, with at least one subsequent wave of interviews in 2006-2007.
Section D: Appendices
— Page 151 —
D
Overview of the Application and Selection Process
Proposals will only be accepted from applicants that are invited to apply as a result of a strong Letter of Interest.
In addition to submitting proposals electronically, applicants must provide 12 hard copies the proposal and supporting materials. Applicants are very strongly encouraged to review all materials provided on this website. If questions
remain, they may be submitted to [email protected]. The website will feature an on-going list of questions and answers
as they arise; applicants should check back often for clarification. SEED technical assistance conference calls also will
be held regularly.
The timetable for the SEED application and selection process is as follows:
March 5, 2003 – Letter of invitation sent to all organizations invited to apply to the SEED Initiative.
D
**May 16, 2003 – SEED proposals due to CFED.
Final proposals will be reviewed by staff from CFED, CSD, and KU as well as members of the SEED
advisory board.
**June 20, 2003 – SEED community partners chosen, applicants notified.
**June 20, 2003 – SEED partner contracting process begins.
Fall of 2003 – SEED Policy & Practice Initiative launched.
Community partners are expected to attend the launch and the first of approximately 10 semi-annual
partners meetings. Key components of this meeting will be discussion of the six-month ramp up
period leading to the opening of the first SEED accounts in the latter half of 2003. Applicants
should schedule and budget for attendance.
To be considered, all applicants must submit the following information electronically by **May 16, 2003:
•
•
•
•
Proposal cover sheet
Proposal narrative
Commitments statement
Budget form
In addition, all applicants must submit to CFED a hard copy of their most recent audited financial statements (and
unaudited 2002 statements, if the last audit was earlier) postmarked by the proposal deadline.
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 152 —
and Lessons Learned from the SEED Initiative
What are the selection criteria for proposals?
Four major sets of criteria will be considered when selecting partners. In order to score final proposals, 10 points will
be assigned to each of the 12 sections of the proposal.1 Thirty additional points will be allocated according to fit, how
well the proposal complements the overall initiative, national applicability, and scalability.
Organizational Capacity
• Demonstrated ability to work with children, youth, and families in sponsoring organization/partner(s);
• Organizational commitment to asset building as a strategy for helping children and families achieve greater
economic self-sufficiency;
• Deep understanding of experience working with the target market and low-income families;
• Organizational stability;
• Demonstrated capacity to develop quality new programs;
• Complementary programs and activities;
• Appropriateness and reliability of partnerships; and
• Willingness/readiness to participate in intensive research (primarily for experimental site applicants).
SEED Program Design Quality
• Quality and soundness of proposed design (conformity with core design, completeness);
• Potential of the proposed design to have a significant impact on the target population;
• Innovativeness of program design (distinctive elements including approach and target group, involvement of
parents, rewards for passing age-appropriate financial education tests, etc.); and
• Scalability, applicability, and replicability of program design.
Likelihood of Successful Implementation
• Degree of organizational leadership commitment;
• Quality and reliability of staffing, budget, fundraising, and implementation plans; and
• Commitment of resources.
Fit and Contribution to Overall Initiative
Besides the discrete strength of individual applications, CFED is seeking a mix of community partners and
demonstration designs that maximize the learning and impact of the overall initiative. Therefore, CFED will be
looking for a combination of partners and designs that provide:
•
•
•
•
•
The ability to tell a distinctive and interesting story—that is, provide an interesting, distinct, and relevant program design;
Fit with other partners (i.e., geographic, demographic, approach, type of institution, distinct contribution);
A range of program designs similar enough to be comparable and different enough to test the relative effectiveness of varying approaches;
A range of different populations, including racial and ethnic groups, age cohorts, rural and urban areas; and
Potential of program designs and delivery systems to be replicated and scaled up.
The twelve main components of the proposal are: (1) Organizational capacity and partnerships; (2) Lessons from experience and planning; (3) Purpose/objectives/unique aspects/; (4) Target population and recruitment; (5) Accounts: deposits, matches, incentives, uses, match rates, thresholds, and caps; (6) Financial partner and account management; (7)
Orientation, financial education, training, and counseling; (8) Policy; (9) Information systems; (10) Fundraising plan; (11)
Staffing; and (12) Budget.
**1
Section D: Appendices
— Page 153 —
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Suggestions for Completing a Proposal
CFED is seeking to study an array of program designs and is eager to take advantage of the knowledge, experience,
and creativity of applicants. The proposal template provided here is fairly explicit about the substance and format of
information that must be provided for consideration (including information on the cover sheet, narrative sections,
and required forms).
The standard structure for all proposals may at times feel restrictive, but it is necessary to insure that all applications
are judged equally. While suggestions are provided here, the template does allow for various lengths in narrative sections to accommodate individual needs. But in any case:
D
•
•
Small community partner proposals should not to exceed 10 narrative pages total.
Large, experimental partner proposals should not exceed 15 narrative pages total and should include responses
to the additional questions indicated.
When preparing proposals, applicants should keep in mind:
• The more complete the plan the better, but do not be discouraged if some details are not final. CFED does not
necessarily expect final plans, full partnerships, or total committed funding at this stage of the application process.
•
If some basic parameters of the plan are not yet determined, do not remain silent on the issue. Discuss why decisions are not yet made and how determinations will be derived.
•
The text lengths for each section are suggestions only. Applicants may expand or write more concisely as they
desire, but are strongly cautioned not to exceed the page limit. Well-written bullet point lists are welcome.
Included here are things to keep in mind for each section. Applicants should not feel constrained by these suggestions, but should indicate why they feel differing specifications are advantageous.
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 154 —
and Lessons Learned from the SEED Initiative
Proposal Cover Page (may be online again)
Contact Information: Contact Person:
Initiative Director (if different from above)
Executive Director:
Board Chair:
Organization
Address
City, State, Zip
Telephone:
FAX
e-mail address;
website address (if available)
D
Type of Organization: (Drop Down menu) – check more than one, if applicable
Community or Neighborhood Development Organization
School
HeadStart Program
After-school Program
Community Development Financial Institution (specify: CDCU, microenterprise fund, community bank)
Faith-based organization
IDA Program
Girls and Boys Club
YMCA/YWCA
United Way
Family Service Agency
Social Service Agency
Foundation
Foster Care program
Financial Institution
Other: Specify
Target Group:
Age Cohort:
Pre-school (ages 0-5)
Elementary School Age (ages 6-10)
Middle-School Age (ages 11-13)
High School Youth (ages 14-18)
Demographics
Race: African-American, Latino, Native-American, Caucasian, Asian, Pacific Islander,
other
Location: Urban/Large City Area; Suburban/Small City Area; Rural Area
Accounts:
Number of Accounts to be opened: ____ (50-100)
Account incentives (allocate up to $2,000 per accountholder among the following three uses):
Initial Deposit $
Savings Matches $ per year x 4 years ==$
Benchmark Incentives: $ total **(not permissible at experimental site)
Permissible uses: (drop down)
postsecondary education, **(only permissible use at experimental site)
Section D: Appendices
— Page 155 —
business, **(not permissible at experimental site)
homeownership, **(not permissible at experimental site)
computer, **(not permissible at experimental site)
retirement, **(not permissible at experimental site)
other (specify)
Financial Institution Partner: (specify)
Accounting Partner/Approach:
• 529 Plan Provider (specify:)
• **MIS-IDA
• Other: (specify):
D
Diversity Table
Minority
Female
Male
Non-Minority
Female
Male
Total
Board of Directors/
Trustees
Professional Staff
Support Staff
Staff who will work directly
on Demonstration
Unique or Distinguishing Aspects of this Proposal: (3-5 bullets of most distinguishing features):
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 156 —
and Lessons Learned from the SEED Initiative
Proposal Narrative Template
1. Organizational Capacity and Partnerships (1-2 pages)
Describe the organization, its mission, commitment to asset building, target market, track record, capacity
to design/implement innovative programs, ability to initiate/manage scalable innovation, appropriateness or
readiness for this program, and commitment to undertake this initiative. Discuss how SEED accounts complement or are complemented or limited by current programs offered by the applicant organization. Explain
how SEED services will integrate with other activities.
Things to keep in mind:
• Applicants should indicate if they represent a larger potential delivery system (e.g. schools, after-school
programs, HeadStart programs)
• It is important to note sponsors’ and partners’ knowledge of and successful experience working with children, youth, and families. **(Note: useful guidelines for high-quality family support practice can be found
at Family Support America’s website at www.frca.org.)
• **It is also important to note the sponsors’ and partners’ experience and competencies in financial service
delivery and innovation.
• While any type of applicant is welcome, the sponsoring organization or at least one partner—who must
be designated as CFED’s grantee—must be a 501(c)(3) nonprofit organization, tribe, or financial institution capable of receiving grants.
• Applicants are strongly encouraged to find partners with core competencies in providing specific highquality services, such as financial education. CFED is interested in taking advantage of—not replicating—
community services.
• Audited financial statements will be required of applicants (must be mailed separately to CFED postmarked by the proposal deadline) and periodically throughout the initiative. The proposal should
describe the financial capacity of the applicant to undertake the initiative.
• **Include specific roles, responsibilities, and competencies of each partner. Discuss how they will be
involved in program development, implementation, and on-going activities.
**Applicants may also wish to develop a table, such as below, to portray (at a glance) the different partners and their respective roles.
Partner organization
Partner Organization Role
(Check if applicable)
Marketing Recruiting
Enrolling
Training
Managing Other
Participants Participants Participants Accounts
Signed
Letter of
Commitment?
(yes/no)
For experimental partner applicants only:
• Experimental partner applicants should also speak directly to their readiness to recruit and serve 500 participants and 500 controls and their comfort with informed random assignment (wherein potential participants are notified that they have only a 50% chance of actual enrollment in the initiative).
• **Keep in mind that, to the extent possible, processes should not change from the date that enrollment
begins and the same method should be used by all partners doing the same activity. For example, if multiple partners will be conducting financial education, all should use the same curriculum.
Section D: Appendices
— Page 157 —
D
2. Lessons from Experience and Planning (½ pages)
Describe any key lessons based on experience of the applying organization or gleaned through the planning
process that helped shape the design put forth in the proposal.
D
Things to keep in mind:
• The views, ideas, and opinions of children, youth, and families—especially potential accountholders—are
particularly valuable.
• Focus groups are encouraged.
3. Purposes/Objectives/Unique Aspects (½ page)
Discuss what the organization seeks to achieve by participating in the initiative. Compare and contrast these
to the overall objectives of the initiative as a whole. Highlight any interesting or distinguishing aspects that
may make the proposal different from others. Each community partner initiative should tell a distinct and
important story. **Especially important are ways in which the initiative proposed is scalable and applicable to
other communities across the nation.
For experimental partner applicants only:
• Describe how the proposal presents a streamlined and expandable initiative with relevance to the entire
country. **Highlight program elements that are cost-effective and relevant to large-scale policy.
4. Target Populations and Recruitment (1 page)
Describe the target population of the proposed SEED initiative, reasons for choosing this population, and
the nature of the applicant’s relationship with them. Estimate the size of the population in the applicant’s
service area and discuss the nature of services provided to them in the past. Offer a plan for identifying,
reaching, recruiting, and certifying the eligibility of potential accountholders. Include in this plan an assessment of the percentage of accountholders currently served by the applicant and what percentage will have to
be recruited as new clients. Also, discuss how the target population will be involved in the design of the final
program. Suggest any other implications that may arise as a result of the specific choice of target population.
Things to keep in mind:
• In addition to socio-economic (race, ethnicity, gender, and other characteristics) indicators, it is important
to identify the age cohort targeted. Applicants should target one of the four age cohorts below that are
the focus of the overall initiative.
Age Cohort
Ages
Preschool
0-5
Elementary
6-10
Middle School
11-13
High School
14-18
Who Deposits
Into Account
# of Community
Partners
Sample Types of
Institutions
Parents, Friends,
Relatives, Civic Institutions
Parents, Friends,
Relatives, Civic Institutions
2
Early Start, Head Start,
Pre-Schools
Schools, Boys/Girls
Clubs, Community
Groups
Schools, After-School
Programs, Community
Groups
Schools, After-School
Programs, Community
Groups
Parents, Friends,
Relatives, Civic Institutions
,and Youth
Parents, Friends,
Relatives, Civic Institutions
,and Youth
2
2
2
Applicants are cautioned against working with multiple age cohorts and program designs as it will complicate—
and increase the expense of—the development, delivery, and evaluation of the accounts in the initiative.
• Income should be factored in a way such that most matches provided by the initiative go to accountholders in low-income families; however target groups can mix above-poverty incomes as well. Indicate measure
for income eligibility—percent of poverty, median income, and adjusted gross income. Discuss the blend of
•
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 158 —
and Lessons Learned from the SEED Initiative
incomes the program will seek to achieve.
• A children, youth, or parent advisory board is encouraged.
• Outreach and recruitment is more difficult than generally assumed; pay careful attention to these issues.
**For experimental partner applicants only:
• For those working with the pre-school age cohort, Estimate what percentage of the children will be
between the ages of 0 and 2 and between the ages of 3 and 5.
• Experimental partners must describe in detail their ability and means to recruit 1,000 or more children
three years of age (500 participants/500 controls) in six to nine months after receiving funding. Include
the size of the population the organization currently serves and, if different, the size of the population
from which potential SEED participants will be recruited.
• Describe recruitment methods for potential SEED participants among populations the organization currently serves and, if different, for those not currently served by the organization.
• Share the organization’s vision of how enrollment might occur, either as a scale-up over time or assignment of all respondents at one time.
• If scaling up over time, describe the enrollment process including interviews, orientation, etc. that might
occur before respondents would be enrolled in SEED.
• If enrolling respondents at one time, describe the enrollment process including interviews, orientation,
etc that might occur before they would be enrolled in SEED. Discuss if it would be possible for this to
occur at the beginning of the academic year. An example of this method might be to recruit during the
summer months and to provide a list of willing respondents to the evaluator who would then make participant/ control assignments in coordination with school enrollment at the beginning of the academic
year.
• In describing the organization’s vision, develop an implementation plan that includes estimated time for:
recruitment, application processing, interviews and/or orientation, and account opening, as well as when
a list of potential participants would be submitted for random assignment to participant or control group.
The selected site would not do the random assignment; it will be conducted by the evaluator. Indicate the
earliest and latest date that all 1000 respondents are likely to be recruited.
• Discuss how this initiative will be described and presented to potential participants and controls, understanding that half of the group will not be allowed to participate in the SEED Initiative.
Note: The participant group refers to members who receive SEED financial incentives (initial deposit,
and match on savings). The control group refers to members will not receive financial incentives but will
be interviewed. Note that control group members may receive services normally provided by the organization, but cannot be in any matched savings program.
5. Accounts: Deposits, Matches, Incentives, Uses, Match Rates, Thresholds, and Caps (1-2 pages)
Describe the proposed SEED accounts, including but not limited to: number of accounts; permissible uses
(including acquiring postsecondary education, starting a business, buying a home, saving for retirement, or
other); amount of initial deposit; savings match rates; annual caps and requirements (if any); possible additional incentives (lump sum or matching payments made when an individual achieves certain milestones: i.e.,
completes a grade, makes honor roll, demonstrates financial and economic skills) whether monetary or inkind; accumulation periods; ownership by accountholder, parent, or other; and reporting. Explain any choices
that merit explanation. Also describe the procedures for facilitating deposits.
Recommendations in each of the above areas are described in more detail in Appendix 1. Also, see Appendix
2 for illustrative account management scenarios for different age cohorts. **Note that, in general, it is recommended that SEED partners use a parallel account structure wherein accountholders’, relatives’ and friends’
contributions and the initial deposit are kept, and establish a parallel account for savings matches. This should
be arranged with a state 529 account provider or with a financial institution using an IDA structure. The
Section D: Appendices
— Page 159 —
D
experimental site must use a 529 provider.
Things to keep in mind:
• Most community partners are expected to manage between 50 and 100 accounts. Large, experimental sites
must support at least 1,000 accounts (500 participant and 500 controls).
• Account structure should be kept as simple as possible for management purposes as well as for understandability among children, youth, and families.
• It is a good idea to create mechanisms whereby parents, grandparents, friends, and others can make
deposits until the child is 18.
•
D
•
•
•
•
•
•
•
•
•
In addition to paying for postsecondary education, starting a business, buying a home, and saving for
retirement, alternate uses—such as purchasing a computer, acquiring auto insurance, or other age-appropriate development incentives that may be more achievable and attractive in the short term—may be
specified. Additions should be discussed in detail in the proposal.
The initiative will provide up to $2000 per accountholder (though this amount may be reduced to
$1500 per account in the experimental partner site) over the four-year duration of operations, allocated
at the partner’s suggestion among initial deposit, savings matches and benchmark incentives (Note:
Experimental partners will not be allowed to offer benchmark incentives. Applicants may—but are not
required to—augment these totals with locally raised funds.)
Initial deposits should generally range between $250 and 1,000. Justify the level chosen.
Annual savings matches should be at a rate of 1:1 between $100 and $250 per year for children up to 13,
and savings matches of up to $500 per year for youth aged 14 to 18. Match rates should generally be 1:1,
but may be more if justification is offered.
Innovative savings, financial education, and motivational incentives—monetary or in-kind—can be
offered in the community partner sites to increase the engagement of children, youth, and their families.
In general, it is recommended that these incentives be paid directly to accountholders or their parents/
custodians. These benchmark deposits must be tracked by community partners. If the accountholder or
parent/custodian subsequently deposits the benchmark incentive in a SEED account, it is eligible for
match. Specify benchmarks to be used. Outcome or achievement measures, which demonstrate some
proof of financial competencies, are preferred over process measures, which reward just participation or
attendance.
Accountholders should be eligible to save and earn matching funds and other incentives through the four
operational years of the initiative.
Applicants are neither expected nor required to augment the $2000 per accountholder provided, but may
choose to add local matches. If so, describe amounts, application, and rationale.
Withdrawals should not be allowed from the accounts until age 18 at earliest. Describe procedures for
educating and reinforcing this.
If accountholders in the organization’s initiative are in the youth cohort and likely to reach age 18 before
the end of the initiative, describe procedures for approving and controlling withdrawals.
If accountholders will not turn 18 within the time of the SEED initiative, indicate how accounts will be
maintained after the official end of the SEED initiative—rolled over into a restricted 529 account, Roth
IRA, or other.
**For experimental partner applicants only:
• Keep in mind that once program implementation has begun, program rules and methods cannot be
altered. It will be important to clearly detail all participation rules and guidelines, including savings goals,
match rates, and withdrawal procedures prior to program start. If any changes must be made, they should
be done in collaboration with the evaluator, and clearly and immediately documented.
6. Financial Partner and Account Management (½ page)
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 160 —
and Lessons Learned from the SEED Initiative
**As noted in the Appendix, it is recommended that SEED partners establish SEED accounts either as 529
accounts with a provider willing to and capable of holding and reporting on match accounts, or as a more
conventional savings account with a bank, credit union, or other financial institution eligible to hold IRAs.
It is ideal for financial institution partners to be willing to hold accounts, waive or reduce normal fees, and
report electronically at least quarterly to SEED partners.
Identify the organization’s financial institution partner, **the type of account to be established, any particular
terms under which the account will be opened (e.g. no or reduced fees), accessibility of the financial institution to the target group, and the financial institution’s willingness to report balances to both accountholders
and to the SEED partner. Also describe how deposits will be made; how funds in the account will be managed; and how funds will be withdrawn from the account at either the end of the SEED initiative or when
accountholders reach their goals. **Finally, if a rollover to a 529 account, Roth IRA or other account is considered at the end of SEED, be sure to note this.
Innovation in this area to better and more efficiently serve the applicant’s target group is particularly desirable. CFED is especially interested in financial institution relationships that can be easily translated into larger-scale delivery of SEED accounts. Refer to CFED’s Individual Development Account Program Design Handbook:
A Step by Step Guide to Designing an IDA Program for information on how to form partnerships with financial
institutions.
**For experimental partner applicants only:
• If applicants are currently working with the administrator of the state’s (or another state’s) 529 college
savings plan, describe this relationship. Also describe any plans to open SEED accounts as 529 college
savings accounts.
7. Orientation, Financial Education, Training, and Counseling (1 page)
**Describe the approach and content of age-appropriate orientation, financial education, and training for
accountholders and their families (if appropriate). Indicate objectives, content, curricula, training approaches
(including the number and type of activities and sessions), and specific age appropriate competencies, skills,
and behaviors participants should gain.
Things to keep in mind:
• For children aged 0 to 5, most education should be focused on parents/family.
• It is more important to provide a clear set of desired skills, knowledge, attitudes, behaviors, and expectations for accountholders than to provide detail for individual sessions, for example. Add reasons for suggesting those outputs and outcomes based on research or experience.
• **Cost-effective models are more attractive than labor-intensive program services. To that end, the initiative is interested in testing new technologies (i.e., self-paced training or Internet-based programs such
as those developed for youth by the American Financial Services Association) and peer-to-peer training
(i.e., accountholders and families provide support and services to one another), as well as more traditional
methods.
• Applicants should not feel obligated to develop and provide these services themselves; if there is an
appropriate partner available in the community, applicants are strongly encouraged to build relationships
with them.
For experimental partner applicants only:
Assuming the treatment and control groups are similar in every way except in having a SEED account (or
not), clarify what the control does or does not receive in the way of services, especially if the members
of the control are current clients of the organization. **It is critical that control group members do not
•
Section D: Appendices
— Page 161 —
D
•
•
•
•
D
receive any SEED-related services during the time of the experiment.
**Describe retention strategies for the participant group.
**Describe how the organization will maintain contact with control group members (this contact
will assist evaluators in conducting interviews during additional interview waves—see section on
“Commitments of Experimental Site”).
**Discuss strategies for minimizing interaction between the participant and control groups after random
assignment and strategies for limiting control group members from participating in other matched savings
programs.
**Describe other asset-building programs available to low-income households, including IDAs, that are
offered through the organization and in the geographic area.
8. Policy (½ page)
Describe any state or local public policies that might raise barriers to implementation (i.e., state Temporary
Assistance for Needy Families asset limits) and discuss any plans to overcome these barriers. Similarly,
describe any asset-building policies that might support the program (i.e., IDA-like programs). Discuss how
policymakers at the state and local levels may be involved with the SEED program.
Things to keep in mind:
• Applicants should investigate any policy reforms, waivers, or assistance that may be necessary to serve
accountholders—particularly those with low incomes—and provide preliminary thoughts on how to
structure the program to accommodate state and local laws and regulations.
• Replicability of program elements and sensitivity to policy concerns should be reflected in the design and
implementation of this initiative.
For experimental partner applicants only:
• Replicability and scalability are critical program components for the experimental site. Describe how proposed program features and implementation fit within a large-scale policy concept. Discuss the implications program implementation has for local, state, and federal policy.
• It is likely that the experimental site will receive a higher volume of press attention. Applicants should
include ideas for accommodating requests from as well as ways to highlight their program to policymakers
and other stakeholders.
9. Information Systems (1 page)
In order to properly meet the information needs of the various partners in the SEED Initiative, including
financial institutions, evaluators, SEED sponsoring organizations, and CFED, SEED community and experimental partners will have to insure that the following is accomplished (either directly or via partners):
• Collecting demographic data (using forms provided by evaluators);
• Establishing eligibility of participants;
• Tracking account balances, issuing quarterly statements and accommodating matches and incentive
contributions; and
• Providing semi-annual financial reports on income and expenses.
To do this, it is strongly recommended that community partners use the Management Information System for
IDAs (MIS IDA) as their information system unless they can arrange with a state 529 provider to hold and
account for the accounts. In the case of MIS IDA, some changes will be made so that it can accommodate
SEED accounts. Before the start of the initiative, changes will be made to MIS IDA so that it can accommodate SEED accounts and all partners will be trained to use the system. For more information on MIS IDA,
visit the CSD website at: http://gwbweb.wustl.edu/csd/
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 162 —
and Lessons Learned from the SEED Initiative
Things to keep in mind:
•
•
If benchmark incentives will be offered, describe the system that will be used to track these incentives.
CFED is very interested in a community partner that is able to collect data on the source of the deposits—accountholders themselves, parents, family, friends, other. Suggest an idea of how to do this and
describe how it might be accomplished.
**For experimental partner applicants only:
• Data collection is likely to be intensive unless the site can develop partnerships with a single financial
institution to receive periodic electronic account statement data. A partnership is encouraged with the
administrator of the 529 college savings plan to manage account information for the site. However, if
using MIS IDA, the use of the electronic data transfer file mechanism to obtain account information
from the institution is strongly recommended.
10. Fundraising Plan (1 page)
Identify potential sources for the additional funds needed to cover the budgeted expenses, both for operating
and account incentives. Note whether discussions have taken place and rate the likelihood of receiving the
funding.
Things to keep in mind:
• At least a 1:1 match of the annual operating grant should be provided through the SEED Initiative.
• Applicants should secure additional operating support as necessary to supplement SEED Initiative support and
to cover the full costs of participating in the initiative and providing quality services to accountholders.
• Full funding commitments are not expected at this point, but likely funding sources should have been identified
and discussions initiated.
11. Staffing (1/2 page)
Describe how the SEED Initiative will be staffed, including the number of staff, their roles, and percentage of
time that will be spent on the SEED Initiative. If possible, identify the SEED Initiative director. Also describe
plans for implementing staffing arrangements, listing tasks, and completion times based on months from notification by CFED. Finally, given the importance of learning throughout the SEED Initiative, address how staff
turnover, should it occur, will be handled to insure a proper transfer of knowledge between staff persons.
Things to keep in mind:
• A full-time position should be devoted to the role of SEED Initiative director.
• Another .5 full-time equivalents spread across a number of other staff, including the executive officer of the
organization is probably also necessary.
• Staffing should reflect the make-up of the target accountholders.
In addition, complete the tables below:
Staffing Table
Position:
Section D: Appendices
Responsibilities:
Percent time:
Name (if available):
— Page 163 —
D
**Key Implementation Dates
Milestone:
Staffing and planning complete
Begin recruiting accountholders
Open last account
D
# of months from notification of selection:
**For experimental partner applicants only:
• Because of the large respondent population, additional resources may be needed to recruit, manage
accounts, collect data, ensure data accuracy, and coordinate with evaluators. Include a plan for adding new
staff (if needed) and ensuring continuity of staffing and training.
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 164 —
and Lessons Learned from the SEED Initiative
Budget Form
Include a rough budget for the first two years of operation of the SEED Initiative using the form provided (to be
developed). Provide key operating expenses, including staff salary and overhead and travel and expenses for at least two
staff to attend each of the semi-annual partners meetings. Also include a budget for SEED account deposits, matches, and incentives. Community partners will be required to report semi-annually on actual revenues and expenditures
divided between costs of direct service to accountholders (account incentives, training and education, counseling,
etc.) and the costs of participating in the SEED Initiative (planning and design of the initiative, participation in semiannual partners meetings, reporting, etc.). **Indicate the organization’s ability to do so.
Suggested parameters:
• Most SEED Initiative local operating budgets to range between $50,000 and 100,000, excluding account incentives.
• Partners will be asked to distinguish the portion of the budget that is allocated to participation in the initiative (including designing and developing the initiative, curriculum, attending semi-annual meetings) and direct
services to accountholders and their families (account incentives, training, counseling, account statements).
Since most of the first year will be devoted to setting up the program, 50-75% will likely be spent on program
development and only 25-50% on accountholder services and incentives. In subsequent years the percentage
devoted to direct accountholder services and incentives will raise to at least 50% of the budget, even while
the cost of servicing each accountholder drops.
Section D: Appendices
— Page 165 —
D
Commitments Statement
Complete and submit the following statement, to be signed by the applicant organization’s executive director and
board chair.
We hereby certify to the best of our knowledge, all information contained in this proposal is accurate and complete as
stated.
If chosen as an applicant in the SEED Policy and Practice Initiative, ________________________[organization] agrees
to honor the following commitments:
D
1. We agree to develop the proposal as outlined here, with consideration of changes suggested by CFED, CSD
and KU.
2. We understand that this is a five-year commitment and will do all within our power to adapt to changes time
may bring so that we can bring this effort to a successful conclusion.
3. We will raise operating funds at least equal to the $25,000 per year ($100,000 per year for experimental sites)
provided by CFED to allow the delivery of the initiative as outlined in the proposal.
4. We will send at least two representatives, including the program director, to each semi-annual meeting of the
Initiative and budget for their travel and expenses.
5. We agree to host one semi-annual partner meeting during the initiative, including arranging local accommodations, a partner event, and a site visit.
6. We will develop and maintain information systems capable of producing semi-annual reports on accounts,
program and financial progress and will submit this information at least one month prior to each meeting.
7. We commit to share the lessons from our demonstration candidly and freely so that others can learn from our
efforts and we from theirs.
8. We will notify CFED immediately of any change in financial or organizational condition or leadership that
may affect our ability to conduct this initiative as mutually agreed.
Signed: Executive Director:
Board Chair:
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 166 —
and Lessons Learned from the SEED Initiative
**Addendum for Experimental Partners
For experimental partner applicants only:
In addition to the above statement, also sign the following commitments statement:
If chosen as an experimental site in the SEED Policy and Practice Initiative, ________________________[organization] agrees to honor the following commitments:
• Recruit interested participants using exactly the same procedures for all potential participants. The participants
will then be randomly assigned to participant and control groups. Clearly, recruiting 500 SEED participants and
500 controls will be a time consuming and challenging task.
• Facilitate evaluator access to SEED participants and controls, and ensure participation in the evaluation. Sites
should be prepared to enforce participants to complete all scheduled interviews as criteria for participation in the
demonstration.
• Keep careful track of changes in address and telephone numbers for both participant and control groups and use
the release of information forms that will be provided by the researchers to give researchers access to that information.
• Provide a permanent and equipped working space (with desk, phone, access to fax, and locked file cabinet(s)) for
evaluators who may be at the organization for extended periods of time. This space must be private enough so
that telephone and/or in-person interviews can occur in confidence and without interfering with operations of
the organization.
In short, the expectations of the SEED Initiative will remain in place, but additional commitments of time, particularly in
the recruitment and retention of participants, will be necessary. Additional staffing time will be necessary to provide the
administrative services for managing and maintaining 500 or more accounts.
Section D: Appendices
— Page 167 —
D
Appendix 1
Recommendations on Account Structure
The SEED initiative aims to test account structures that will inform how accounts can best be designed to serve millions of Americans under a national SEED policy. Ideally, in a universal system, SEED accounts would:
be universal,
be progressively funded,
begin at birth,
start with one or more lump sums deposited by
the U.S. Government,
• be administered as a spending program or
through the tax system, funded by a 100%
refundable tax credit,
•
•
•
•
D
• allow voluntary additional contributions,
• be single accounts,
• be housed in private institutions with a public
default (e.g. the Federal Thrift Savings Plan),
• be used for education, retirement or other possible uses, and
• include penalties to discourage nonqualified
withdrawals.
Research uncovered that no account system currently exists that meets this vision. Also, despite efforts, a comparable system that would be both customizable to the immediate needs of SEED and scalable could not be developed.
Therefore, the following account structures are recommended with an eye toward what is known to be workable,
based on experience with Individual Development Accounts. A paper will be released at a later date on a recommended account structure should a national SEED policy be adopted. The account structures applicants recommend and
pursue will be invaluable as recommendations are developed for a national SEED policy.
Type of
accounts
It is recommended that SEED accounts be held in:
1) savings accounts or IRAs at an FDIC-insured financial institution that is easily
accessible to SEED participants and their parents
2) 529 accounts that are administered through a state-sponsored College Savings Plan.
(Note: See www.savingforcollege.com for more information on 529 plans. At present, only
Louisiana, Michigan and Minnesota have 529 plans with matching provisions. In choosing a
529 plan, the account will only be able to be used for the SEED participant’s college or postsecondary training expenses.)
Number of
accounts
Most SEED community partners are expected to manage between 50 and 100 accounts.
The large experimental sites must support at least 1,000 accounts (500 participants and 500
controls).
Account
ownership
Usually, savings accounts can only be owned by someone who is 18 or older. Similarly, 529
accounts are usually opened and owned by a parent on behalf of a child. Therefore, in
most instances, it is expected that SEED accounts will be opened and owned by a parent
on behalf of the SEED participant (the child).
Account
Reporting
SEED community partners should ensure that their partner financial institution—a bank
or 529 provider, for example—sends monthly or quarterly reports that list all SEED
account balances and transactions. In the case of linkage with a 529 provider, this would
come from the financial institution. In the case of a conventional savings account, this
would come from the program based on electronic (preferably) feeds from the financial
institution, using an information system (such as MIS-IDA) to account for matching funds.
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 168 —
and Lessons Learned from the SEED Initiative
Partner
financial
Institutions:
Contributors to
accounts:
Whenever possible, the partner should minimize its financial institution partners. For
example, a site may partner with Bank ABC to hold accounts for the four years of the
SEED initiative, and then work with their accountholders to close out their savings
accounts and deposit their savings and earned matching funds into a long-term account,
such as a 529 plan provided by a 529 plan provider if they are saving for college. Or, if
they’re saving for homeownership, they may transfer their savings and matching funds
into a Roth IRA.
It is recommended that SEED participants, their parents, relatives, and friends be
encouraged to contribute to the SEED account. The amount that these respective parties contribute will vary by the age of the SEED participant. For three-year olds, their
parents will be the main depositors. For 14-year-olds, the students themselves may be
the primary depositors. Regardless of the age, relatives and friends of the SEED beneficiary should be encouraged to contribute to the SEED account. While they most likely
would not be able to directly deposit into the SEED account, they could make birthday
monetary gifts that parents or SEED participants could deposit into their accounts.
Eligible uses:
For the younger age cohorts, it is expected that most of the accounts will be used for
postsecondary education. For partners serving 14 to 18 year-olds, it is expected that students will be saving for education, and other uses, such as buying a first home, pursuing
some form of self-employment, buying a computer, first and last month’s rent, or other
uses that community partners believe will get the accountholder on the road to asset
building.
Initial deposits:
It is suggested that community partners help their accountholders jump-start their
SEED accounts with initial deposits in the range of $250 to $1,000. (Note: If using MIS
IDA, SEED finalists should remember that MIS IDA will match initial deposits at the same rate
that the SEED Partner is matching savings. Therefore, to create a $500 initial deposit, a community partner would start an account holder off with a $250 initial deposit which, assuming a 1:1
match rate, would then receive a $250 match from MIS IDA.)
Savings
matches:
Annual savings matches should be at a rate of 1:1, between $100 to $250 per year for
children up to 13, and savings matches of up to $500 per year for youth aged 14 to
18. Match rates can vary, but it is expected that most 1:1 and any other match rate
must be justified by the applicant. Research on match rates in the American Dream
Demonstration, uncovered the fact that accounts are being matched is more powerful
than the match rate. Thus, there is less interest in SEED in experimenting with differing
match rates.
Sites will apply and manage matching funds. It is strongly recommended that sites do
this using MIS IDA unless they are able to negotiate the provision of this service from a
529 provider.
Section D: Appendices
— Page 169 —
D
Savings Caps:
It is recommended that community partners establish annual savings goals
with SEED participants. These goals would reflect the amount of matching
funds a participant could receive each year. For example, a program might
state that a SEED participant could earn up to $250 a year in matching funds
if they save $250 in a year.
However, some programs may choose to establish savings caps that reflect the
three to four-year time period of the SEED program. For example, a program
might state that a SEED participant could earn up to $750 in matching funds
if they deposit $750 over three years.
From an accounting perspective, SEED will calculate match funds over the
three to four-year time period of the program (not annually).
D
Incentive awards:
Innovative savings, financial education, and motivational incentives can be
offered at the community partner sites—monetary or in-kind—to increase
the engagement of children, youth, and their families. In general, it is recommended that these incentives be paid directly to accountholders or their
parents/custodians. These benchmark deposits must be tracked by community partners (in an Excel spreadsheet, for example). If the accountholder or
parent/custodian subsequently deposits the benchmark incentive in a SEED
account, it is eligible for match. Examples of incentive awards include: monetary awards when a parent or child completes a financial literacy course, a
monetary bonus when a child increases her GPA, etc.
Accumulation period:
Accountholders should be eligible to save and earn matching funds and other
incentives for three to four years.
Transitioning SEED
accounts to longterm accounts at the
Initiative’s end:
In the case of SEED accounts held in savings accounts at local financial
institutions, the accountholders’ savings and earned matching funds should
be deposited into an appropriate long-term account when the SEED accountholder has completed the program. 529 accounts are recommended when the
savings goal is postsecondary education and Roth IRAs when the savings goal
is homeownership.
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 170 —
and Lessons Learned from the SEED Initiative
Appendix 2
SEED Account Scenarios
The following scenarios are intended to provide a sense of how:
1) money can be deposited into SEED accounts
2) funds can be managed in SEED accounts
3) funds can be withdrawn from SEED accounts
The recommended account structure is intended to test an account system for a universal SEED policy in which
every child in the United States would benefit from such an account. This universal system would include:
1)
2)
3)
4)
initial deposits that would be made by the U.S. government into SEED accounts when first opened;
matching funds that SEED participants would earn as they save and their family and friends contribute;
age appropriate financial literacy education;
a delivery system that is accessible and appropriate for low-income families.
The following scenarios are recommendations, not prescriptions for the pre-school and middle school cohorts.
Applicants will come up with their own solutions.
Preschool Children, Ages 0-5
Angelique is a three-year-old in the A+ HeadStart program in Fresno, CA. Angelique’s parents hear about SEED
from her teacher at A+, a partner in the SEED Initiative. At an early evening information session on SEED,
Angelique’s parents decide to participate in the initiative. They sign up to meet with a representative of Bank ABC,
where the SEED accounts will be opened. At their meeting with the bank representative, they decide to each have
$15 automatically withdrawn from their paychecks and directly deposited into a savings account, which will be their
SEED account. Also, the A + program administrator makes an initial deposit of $250 into Angelique’s account to
help her parents get started. A+ then matches this deposit at a rate of 1:1 so that Angelique’s college savings are jump
started with $500.
Every month, the HeadStart program administrator receives a statement from Bank ABC stating that the SEED
account has had $30 deposited into it (the $15 direct deposit from the paychecks of both of Angelique’s parents).
The HeadStart administrator then goes into MIS IDA, an information system that all SEED community partners may
use.1 Since the A+ HeadStart program matches parents’ deposits at a 1:1 rate up to $250 per year, the HeadStart administrator allocates $30 in matching funds to Angelique’s SEED account
Angelique’s parents also receive $100 from the A+ HeadStart program when they complete a financial management course.
Throughout the four years that A+ is managing the program, they have additional opportunities to earn $100 for participating in ongoing money management seminars. A+ directly gives Angelique’s parents a check for the initial $100 and later
incentive awards. It is up to them whether or not to deposit the $100 into Angelique’s account.
Angelique’s parents also tell family and friends about their savings plan for Angelique. Now her grandparents’ birthday present to her every year is a check made out to Angelique’s parents to be deposited into her college savings account.
By the end of four years, Angelique has $3600 in her account for college. A few months before the end of the four year
program, the A + administrator meets with all the SEED parents to explain how their savings and earned matching funds
will be transferred into a 529 account.2 After Angelique’s parents attend an information session with their A+ administrator
and Scholarshare, the California 529 plan operated by TIAA-CREF, they decide to open the 529 account. Angelique’s parents
1
2
For information on MIS IDA, go to CSD’s website at: http://gwbweb.wustl.edu/csd/.
529 plans are investment plans operated by a state designed to help families save for future college expenses. To learn more about 529 plans, visit SavingforCollege.com. Specific state 529 plans can also be found at this site.
Section D: Appendices
— Page 171 —
D
decide to keep saving by having money taken from their paycheck and deposited by direct deposit into their 529 plan for
Angelique. They aim to deposit $40 per month.
Several of Angelique’s uncles and aunts sign up at U Promise.com so that when they use their credit cards at thousands of
different companies, a small percentage of their funding will be directly deposited into Angelique’s 529 account.3
Middle School Youth, Age 11-13
Juan Perez hears about SEED from his math teacher during his first week of sixth grade at AOK middle school.
Even though he doesn’t know much about college and it’s a long way off, he knows it’s expensive, so he’s excited to
learn about this opportunity. His teacher gives him a flyer to take home to his parents.
D
At a PTA meeting later that month, Juan and his parents come early to attend a special session on SEED. They are
thrilled to learn that the school will help launch their saving by making an initial deposit of $125 into their account.
The school will then match it at a rate of 1:1, so that Juan’s savings are jumpstarted with $250. Juan and his parents
can then receive a 1:1 match for every dollar up to $500 per year for three years. Also, both Juan and his parents will
receive $125 each year for successfully passing a competency test on money management. They’ll be prepared for the
test by taking financial literacy classes. The school will offer one class for sixth graders after school and another for
parents at night.
At the PTA Information session, Juan and his parents receive information on how to activate an account at XYZ
Bank. When they meet with a representative of the bank, Juan’s father decides to have $25 automatically withdrawn
from his paycheck directly deposited into the savings account. Juan’s mother will deposit money each month as she
can. Juan decides he will deposit $2 a week from his allowance. The XYZ representative explains to Juan and his
mother how they can either mail their deposits to the bank or come to any bank location to make their deposits.
Every month, Juan’s school receives a statement from Bank XYZ stating the balance in the account. This amount is
usually around $50 ($25 from Juan’s dad via direct deposit, $20 from his mother sent via mail; and $6-8 from Juan,
who likes to go to the bank himself to make his deposits). The AOK school administrator then goes into MIS IDA,
the information system that all SEED sites may use. Since the AOK program matches parents’ deposits at a 1:1 rate,
$50 are deposited into Juan’s account.
By the end of four years, Juan has $3800 in savings and earned matching funds. A few months before the end of the
four year program, the AOK administrator meets with all the SEED parents to explain how their savings and earned
matching funds will be transferred into a 529 account. 4 After Juan’s parents attend an information session with their
AOK administrator and a representative of their state 529 plan, they decide to open the 529 account. Juan’s parents
decide to keep saving by having money withdrawn from their paycheck and directly deposited into their 529 plan for
Juan. They aim to deposit $40 per month.
Juan’s classmate, Julia, also participated in SEED. By the end of four years, Julia had accumulated $3200 in her
account. Julia’s parents weren’t sure if they would want to use these savings to pay for college or to allow Julia to purchase a home. So, they decided not to open a 529 plan, but rather take their $3200 to open a Roth IRA. 5
3
4
For more information, go to www.upromise.com.
529 plans are investment plans operated by a state designed to help families save for future college expenses. You can learn more about 529 plans through a
website called SavingforCollege.com. The site can also direct you to your state’s 529 Plan
5
Your bank partner can tell you more about Roth IRAs.
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 172 —
and Lessons Learned from the SEED Initiative
Appendix E
Rollover of SEED Accounts (Updated April 2008)
INTRODUCTION
This document outlines many of the key considerations and steps involved in rolling over SEED accounts as the community
partner programs in the initiative come to a close. Ensuring a smooth rollover process will be important for a number of
reasons:
n
To preserve SEED funds for the intended recipient;
n
To fulfill promises made to accountholders with respect to account incentives;
n
To maintain the trust and confidence of participants in SEED;
n
To ensure the integrity of the program data.
D
Many of the activities and steps outlined below are time-sensitive. Therefore, CFED will hold monthly calls with each site
during the six months prior to, and four months after, the savings end date to ensure that the rollover process is on track.
This is in addition to regular site visits from CFED staff.
Finally, answering each of the “Key Questions” highlighted throughout this document will be an essential part of your
rollover process. The earlier (and more thoroughly) your organization is able to answer these questions, the smoother
the rollover process is likely to go. CFED will work closely with each community partner to help you think through these
central questions, assess your options, and determine answers to each question.
ACCOUNT INCENTIVE RECONCILIATION
In order to confirm that the account incentive funds disbursed by CFED have been managed and deposited into SEED
accounts appropriately, the SEED team will conduct a review of all SEED accounts at each community partner site. This
reconciliation will include a review of MIS IDA reports and relevant financial records for each partner. Our goal is to
ensure that each partner has the correct amount of funds on hand to pay out the benchmark and matching funds
promised to each accountholder at the beginning of SEED. The SEED team at CFED will complete the account incentive
reconciliation for the remaining five SEED community partners – Cherokee Nation, Fundación, Mile High United Way,
People for People, and OLHSA – during regularly scheduled site visits in the first half of 2008.
During the reconciliation, CFED will determine if the total amount of account incentives paid to each partner matches
the amount accrued by participants in matching funds, and paid out for initial deposits and benchmark funds. If there is
a discrepancy of less than $500, no further review will be required, and CFED will cover any shortfall. If the discrepancy
is over $500, CFED will conduct additional review to identify the source, and will need access to MIS IDA reports, bank
records, and other organizational records during the scheduled site visit. Please note that CFED will adhere to established
confidentiality guidelines in reviewing MIS IDA reports.
Section D: Appendices
— Page 173 —
To start the process, community partners will be asked to submit three documents in advance of the site visit (all reports
should include data through the first quarter of 2008):
1. The Total IDA Accumulation Summary Report from MIS IDA;
2. An updated Benchmark Tracking Spreadsheet; and
3. A copy of the pooled match account statement.
Key Questions:
Who from your organization needs to be involved in the account incentive reconciliation process? Will accounting staff
be available during the process to answer questions and provide access to the organization’s financial records?
D
INTEREST EARNINGS
MIS IDA will include any interest earned on deposits in calculating the total match accrued by participants. CFED will
determine the amount of account incentives due to each SEED partner based on this figure. If your organization has not
been requesting interest on quarterly account incentive request forms, an amount owed for interest will be determined
during the account reconciliation process. From now on, all partners should include any interest earnings in the total match
earned by participants, when reporting to CFED.
If the pooled match account is also interest-bearing, each SEED partner will have additional funds on hand at the end of
SEED that are not earmarked for participant matches. These funds should be used towards SEED operating expenses.
They should not be divided between participants, since this will confuse the match calculations and payments.
SELECTING A ROLLOVER ACCOUNT VEHICLE
Several important criteria must be met in selecting a rollover account vehicle, particularly if the account is not restricted
to a particular type of asset purchase. For details on choosing an account vehicle, please see CFED’s March 2008 memo
entitled “Important Elements to Consider When Choosing Rollover Accounts.”
Key Questions:
Who needs to be part of the decision-making process for selecting your rollover vehicle (SEED staff, your Executive
Director, your Board, your financial institution)? Have you obtained approval from all key decision-makers? Don’t
underestimate how long this process may take – for instance, if you must obtain Board approval, will it be necessary to
wait until your organization’s next Board meeting?
n
n
Does the rollover account vehicle(s) you have selected…
Allow withdrawals to be made for all of the approved uses that were laid out in your original agreement with
participants?
n
Allow for additional deposits to be made to the account over time?
n
Provide market-based returns?
n
Include some form of restriction and/or “arm’s length” element?
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 174 —
and Lessons Learned from the SEED Initiative
OPENING ROLLOVER ACCOUNTS
If possible, rollover accounts should be opened, but funds not yet deposited, prior to the program end date. This will
ensure that there is a new account in place where participant balances and match funds can be deposited. If any problems
arise related to account opening, it also ensures that these deposits will not be delayed. If the new account requires a
minimum initial deposit or balance, ask your financial institution or provider if they can waive this requirement until the
SEED funds are transferred.
It will be important to emphasize with families that even though the rollover account may be open, they should not
make deposits in the new account until after the savings end date – otherwise, they will forfeit any eligible match on
those deposits. There are a couple of ways that you can decrease the risk of participant confusion over the two accounts:
1) by asking your financial institution or provider to suppress statements until after the savings end date (some will do this
anyway if there is a zero balance) or 2) by opening the rollover accounts during the last quarter of the year, since most 529
and investment accounts only issue statements on a quarterly basis.
If it is not possible to open the accounts without some form of payment, you should make every effort to collect
enrollment forms and other paperwork as early as possible, even though the forms will not be submitted until after rollover.
This will allow time for follow-up with families who may be unresponsive or difficult to locate. Check with your financial
institution or provider about having parents sign and date applications now for submission after rollover.
All enrollment forms and other paperwork related to rollover accounts should be submitted by the SEED partner on
behalf of families.
Key Questions:
n
Will your financial institution or provider permit rollover accounts to be opened with a zero balance prior to the program
end date?
n
Will your financial institution or provider allow parents to sign and date applications now for submission after rollover?
n
What will be the cut-off date for opening rollover accounts? How much time do you need to transfer balances and
match payments? Ideally, all rollover accounts should be open and fully funded by March 31, 2009.
MAKING FINAL DEPOSITS
All benchmark incentives must be deposited prior to the savings end date so that they will be included in the final
match calculations. Please check with your organization’s finance team regarding the amount of time you should allow for
processing and payment of benchmarks, and then communicate with families about the deadline for claiming benchmark
incentives.
Participants should also be aware of the deadline for making savings deposits. Ask your financial institution about the
cut-off date and time for deposits to post to the December statements and communicate this to families. Deposits that
appear after the cut-off will not be matched.
Section D: Appendices
— Page 175 —
D
Key Questions:
n
How long does it take for your organization to process and deposit benchmark incentives? Using this information, work
backward from December 31 to determine the final cut-off date for families to earn benchmark incentives. Have you
notified your participants of this deadline?
n
What time does your current SEED financial institution close on December 31? What time must deposits be made in
order to post for that day? Have you notified your participants of these deadlines?
n
What supporting documentation do you need to collect for final benchmark payments?
CLOSING SEED ACCOUNTS
D
SEED accounts should be closed as soon as possible after the savings end date, once final balances have been confirmed
using the December 31 statements. Reviewing statements will ensure that the most recent activity is accurate in terms of
savings deposits, benchmark incentive deposits, and any fees. Balances should be withdrawn on individual checks made out
to the rollover financial institution and include the name of the new account owner. The check amount, as well as the final
match payment, will be based on the matchable closing balance of the SEED account as of the statement or savings end
date, whichever comes first. Ideally, SEED accounts should not earn any interest after the savings end date, since it will not
be included in the match calculations in MIS IDA. Ask your financial institution or provider about the method they use
to calculate and deposit interest earnings and how you can avoid having a few pennies left in the account after rollover.
In some cases, there may be a compelling reason to keep the SEED account open after the program has ended, for
example, so that the family can maintain a transactional account in the child’s name. If the account is custodial, most likely
it will have to be closed, but we encourage you to work with families to ensure that they have the banking products and
services they need beyond SEED.
Key Questions:
n
How does your current SEED financial institution calculate and deposit interest earnings, and how can you work with
them to avoid having a few cents left in participants’ accounts after rollover?
DEPOSITING PARTICIPANT BALANCES AND MATCH PAYMENTS
Participant balances should be deposited in the rollover account as soon as possible after the closing balance has been
confirmed and the SEED account is closed. In some cases, the check for the participant balance may be used to open the
rollover account.
Match funds will be deposited in the rollover account separately from participant balances. Prior to making any match
payments, the SEED partner must submit an account incentive request to CFED to determine the final total incentives
earned and, based on previous estimates and disbursements, whether CFED owes funds to the SEED partner or visa-versa.
To reduce the risk of errors in how match funds are deposited, CFED strongly recommends that the SEED partner cut
individual checks made out to the financial institution, which include the account owner’s name and account number (if
possible), and submit these to the financial institution or provider to be deposited in each person’s account. Any changes to
this policy must be approved by CFED.
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 176 —
and Lessons Learned from the SEED Initiative
Sites that elect to hold SEED accounts beyond the rollover deadline must pay out match funds to each participant.
Participant balances and match funds should be commingled, or a separate match account must be opened in the
participant’s name at rollover.
Key Questions:
n
Have you talked with your organization’s finance team and your current SEED financial institution about the process,
timing and logistics of transferring funds from the SEED accounts to the rollover accounts?
CONFIRMING BALANCES AFTER ROLLOVER
It is important for CFED and the SEED partner to be able to confirm that rollover accounts were opened and SEED
savings and incentives were correctly deposited. Since the SEED partner will not be the custodian of the rollover accounts
and will have no automatic rights to account information, an agreement must be reached with the financial institution or
provider to provide some kind of statement confirming the presence of the account and the opening balance.
Ask your financial institution or provider if your organization can be listed as an interested third party on the rollover
accounts. As such, you will be able to receive copies of account statements for as long as you or the account owner
agrees to this arrangement. Even if your organization does not plan to work with families beyond SEED, you never know
when this kind of savings and contact information might come in useful. Typically, the owner of the rollover account will
have to consent to this sharing of information, either on the enrollment form itself or by signing a special form. Be sure to
have families complete this consent at the same time that they fill out the rest of the rollover paperwork.
If it is not possible for your organization to become an interested third party on the rollover accounts, at a minimum, you
should receive confirmation from the financial institution or provider that the account has been opened and that the
deposits of participant savings and match funds were made into that account. Since not all families may consent to the
third party agreement, this is a good backup plan to have in place.
Key Questions:
n
What type of documentation is required in order to secure “interested third party” status with the rollover financial
institution or provider?
n
How will your financial institution or provider confirm balances if interested third party status is not available, or if some
of your families do not consent to the third-party agreement?
n
Have you included the third-party consent form in the rollover materials you have provided to your participants?
CONFIRMING MATCHED WITHDRAWALS
At sites where participants have made matched withdrawals either before or during the rollover process, CFED will review
paperwork to verify that SEED funds were used for eligible uses.
Section D: Appendices
— Page 177 —
D
“UNCLAIMED” ACCOUNTS
The best way to avoid unclaimed accounts is to obtain rollover paperwork from every family in SEED. However, we realize
that some families may be impossible to locate. If you are unable to locate a family, the only option is to hold the SEED
account until the completion of your state’s “abandonment period,” or even beyond. After the abandonment period
has been met, accounts may be reported to the state’s Unclaimed Property Fund (except in the case of Colorado). More
information on unclaimed accounts is available in the July 2007 CFED memo entitled “Unclaimed Accounts at the End of
the SEED Savings Period.” Please review this memo and ensure that you are tracking all the necessary data to document
the abandonment period, per the requirements of your state.
D
SAVINGS BONDS FOR UNRESPONSIVE FAMILIES
Even if you have a good address and phone number for every family, it may be difficult to get them to complete the
rollover paperwork. For families who have not been “lost” but are simply unresponsive, you have the option of issuing a
U.S. Savings Bond for the accountholder – as long as certain requirements are met. Instructions and more information
on how to issue savings bonds on behalf of your participants are available in the December 2007 CFED memo, entitled
“Additional Options at Rollover - Savings Bonds and Entity Accounts.” Please review this memo before issuing any savings
bonds for your participants.
ASSET LIMITS
CFED and its partners have been working to ensure that families who receive public benefits are not penalized for building
assets during and after SEED. While most families are protected for the duration of SEED, careful attention must be paid
at rollover to ensure that families receiving benefits continue to have these protections even when the ownership and
structure of the accounts changes. State-Administered Benefits: For families receiving state-administered benefits such as TANF, food stamps, Medicaid and
SCHIP, CFED is working to identify state-specific solutions to the asset limit issue. We will be in touch with each community
partner to discuss the best strategies for protecting your accountholders who receive public benefits. As you work with
each family to complete rollover paperwork, please ask all of your accountholders if they currently receive any of these
public benefits. Even if they did not receive public benefits at the start of SEED, their situations may have changed.
SSI: CFED has provided individualized rollover recommendations for each family that we know receives federal
Supplemental Security Income (SSI). It will be extremely important to ensure that any affected accounts are rolled over
exactly as recommended to ensure that no SEED families lose their SSI benefits. It is also very important for you to ask
all accountholders about whether they currently receive SSI benefits so that we can provide personalized guidance to any
families who might have recently begun to receive SSI. Even if they did not receive SSI at the start of SEED, their situations
may have changed.
In most cases, families receiving SSI will be protected after rollover by structuring the rollover account so that the assets
are not deemed to the SSI recipient, i.e. by opening a custodial account or using a third-party owner. However, there may
be some cases where a family cannot find a trusted third-party owner. In these cases, CFED is willing to act as custodian
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 178 —
and Lessons Learned from the SEED Initiative
of the account until the SEED participant turns 18. For details, see CFED’s December 2007 memo, entitled “Additional
Options at Rollover - Savings Bonds and Entity Accounts.”
CFED has also created a brochure for SEED families with information that they may need if they apply for SSI in the future.
Please ensure that each family receives a copy of this brochure at rollover.
Key Questions:
n
Have you asked each of your SEED families about any state-administered public benefits (such as TANF, food stamps,
Medicaid, and SCHIP) that they currently receive?
n
Have you asked each of your SEED families about their current SSI status? If there are families who have recently begun
to receive SSI benefits, please contact CFED immediately so that we can help you determine the best way to structure
their accounts after rollover and protect their benefits.
n
What is the process for opening child-owned accounts with your rollover provider or financial institution? How are the
accounts set up? What forms need to be used?
Section D: Appendices
— Page 179 —
D
TIMELINE FOR ROLLOVER
(For Sites Ending in December 2008)
Date
Event/Action
Ongoing through December
Ongoing through December
Educate families about rollover
Enter savings data in MIS-IDA, either
monthly or quarterly, and mail MIS IDA
statements and savings reminders
Complete account incentive
reconciliation
May-August 2008
D
Comments
June 1, 2008
Finalize details of rollover plan
December 1, 2008
December 31, 2008
Complete all paperwork for rollover
accounts and open accounts, if possible
Savings end date
First opportunity in new year
Close SEED accounts
January 15, 2009
Enter final savings data in MIS IDA; run
QC
Send MIS IDA statements to participants
January 18, 2009
January 21, 2009
January 30, 2009
Submit xfer file to CSD
Submit account incentive request to
CFED
February 2009
Review bank statement showing
withdrawal of participant funds; enter
February statement and matched
withdrawal in MIS IDA, and exit
participant
Receive final account incentive payment
from CFED
Send match payments to rollover
accounts
Review statements for new accounts
Communicate with accountholders in
writing about their new accounts
February 15, 2009
February 28, 2009
April 15, 2009
April 20, 2009
April-July 2009
If adjustments are necessary, contact
CSD to discuss making changes in MISIDA
Ensure that all forms, materials are on
hand
Notify families using direct deposit to
stop payments as of 12/31/07
If possible, ensure that no new interest
accrues after this date; confirm statement
end date with bank
Review statements; withdraw balances
in the form of a check made out to
the rollover financial institution for each
participant, after confirming Dec. activity
Include insert informing participants
that it is their final MIS IDA statement;
highlight end balance which will be
transferred to rollover account
Submit Cumulative Account Activity
Report and Matched Withdrawals by Use
Report from MIS IDA
If you receive statements on a quarterly
basis for the SEED accounts, ask your
financial institution or provider about
receiving an interim confirmation
statement or other report
Submit individual checks for match
payments to financial institution
Confirm balances are correct
Include statement detailing the new
account balance and a reminder about
how to continue making deposits
CFED will conduct a site visit to review
paperwork on rollover accounts
Demonstrating Opportunity: A Compendium of Practical Experience
— Page 180 —
and Lessons Learned from the SEED Initiative