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Sheryl Lane, Director of Partnerships and Policy, EARN, Sparking Savings and Financial Capability

Sheryl Lane from EARN presents on Sparking Savings and Financial Capability at Neighborhood Partnerships' 2016 RE:Conference

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Sheryl Lane, Director of Partnerships and Policy, EARN, Sparking Savings and Financial Capability

  1. 1. Sparking Savings and Financial Capability Re:Conference 11/15/16
  2. 2. Agenda  Introducing EARN  Who are we serving  What have we learned  What are the impacts 2
  3. 3. Introducing EARN 3
  4. 4. 4 EARN’s Mission and Impact Our mission is to create prosperity for working families by helping them save and invest in their futures. Since 2001, EARN has helped thousands of low-income workers save and invest over $7 million of their own money in 6,500 savings accounts. They’ve invested in assets such as emergency savings, small businesses, educations, and first-time homes.
  5. 5. 5 Boosting Saving and Assets: Individual Development Accounts (IDAs)  Opened IDAs from July 2002 – June 2013  Opened ~3,000 accounts lifetime Program Features  Savers deposit up to $2,000 of their own money  2:1 match, Savers receive up to $4,000 in match funds  1/2 of match comes from the federal gov’t, 1/2 from local sources  Monthly deposits required or Savers are kicked out of program  In-person fin. ed. workshops req’d, plus classes for home & biz savers  Match is only received when the Saver invests in a 1st home, small business, or higher education for themselves.
  6. 6. 6 Boosting Saving for Education Resources: EARN Children's Savings Accounts  SAFE Accounts - SAFE Accounts (paper implementation), Oct 2003 – Oct 2012 and TripleBoost Accounts (online model), July 2012 – Nov 2014  Opened ~2,800 accounts lifetime Program Features  Savers must deposit $500 of their own money  3:1 match, Savers receive $1,500 in match (all private funds, no gov’t)  Save for 6-24 months, workshops & monthly deposits are not required  One account per child (age 10-18 at sign up), up to 5 accounts per family  Match is only received when the Saver invests in child’s education.  Allowable expenses: tutoring, test prep, college tuition, enrichment activities (e.g. language or music classes), one computer & printer, and rollovers to 529 accounts.
  7. 7. 7 EARN’s Major Pivot: In 2011, after running savings programs for 10 years, we knew small-dollar savings had big impacts. We wanted to make our programs available to more people! Service Delivery Model Change: From a Case Manager approach to an online delivery model. Congratulations, you’re in Software Development!
  8. 8. 8 EARN Starter Saving Program A first step to lifelong savings EARN Starter Savings Program Individual Development Accounts Child Savings Accounts Retirement Plans Build Habits and Gain Confidence Invest in Wealth- Building Prepare for the Future
  9. 9. 9 Boosting Saving and accessibility EARN Starter Savings Program Keep Saving! After 6 months, you'll be able to claim your rewards and keep saving on your own. Earn For every month you reach your goal, you'll earn up to $10 in rewards. Connect Connect your savings account to EARN's secure online platform. 1. 2. 3. 4. Save Save at least $20 each month for 6 months. Launched pilot in 2014; Beta version in 2015 Opened to date ~1300 accounts throughout the United States
  10. 10. Who are we serving 10
  11. 11. 11 Who saves with EARN? 90% Self-identified as a person of color 71 % Women 73 % Parents 63%Do not have a bachelor’s degree 70% Are unmarried
  12. 12. Source: EARN Business Intelligence (IDA Saver Study: EARN Tripleboost Dashboard, data for Jan-Dec, 2013) and EARN_Innovation_Symposium Scaling_Savings_vF.pdf] and EARN Starter Savings Program early results, August 2016 12 EARN Savers can and do save Even with limited incomes, households using EARN’s programs are able to save, often through making spending changes. per month$21,100 Average annual household income at enrollment for all EARN accounts EARN Starter Savings Program average deposit $50 per month Savers on average deposit using our savings accounts amounting to 6% of their monthly incomes
  13. 13. 13 Geographic Reach We currently serve Savers in 35 states, D.C. and the US Virgin Islands.
  14. 14. What have we learned 14
  15. 15. Lesson: Building Long-Term Savings Habits Monthly deposit goals sustain the savings habit 15 18% 20% 25% 22% 32% 54% 60% 48% 21% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% IDA Post Program EARN Starter Post Program TripleBoost Post Program Post‐Program Savings Habits by EARN Program Non-Saver Sporadic Saver Consistent Saver
  16. 16. Lesson: Incentivize monthly deposits Incentives are important and can get people interested and motivate behavior change. Smaller incentives and match ratios are well received. We asked Savers an open ended question: Looking back, what do you most value about the IDA?  Learning how to save every month through thick & thin  Learning new things about finances  A new, can-do approach to their financial life  A more positive attitude about their financial future  Strategies for saving and budgeting  A sense of not being alone in their situation These impacts aren’t about the MATCH or the ASSETS, they’re about changed BEHAVIORS & ATTITUDES. 16
  17. 17. 17 Lesson: Savers succeed by changing spending habits Families saved through a variety of strategies, the most depositing money in small amounts and making spending changes.  68% of successful IDA Savers made spending changes  56% of all TripleBoost Savers made spending changes  85% of EARN Starter Savers are spending within their means Our Savers succeed through many different strategies, but this is the most common way Savers are able to make deposits
  18. 18. Online engagement works  Even without minimum monthly deposit requirement, ~75% of TripleBoost Savers deposited at least $21 month on average and EARN Starter Savers are depositing on average per month $50  Eliminated paper applications and surveys which reduced errors due to poor handwriting and reduced phone calls to busy savers  Savers no longer need to visit our office or call during business hours to get simple questions answered which makes it convenient and reduces transportation, childcare and related costs  Savers can access the program when convenient Features that meet Saver Needs  Allow Savers to access their savings in case of emergency without penalty on personal deposits.  Make minimum deposit goal a manageable amount  Consider a program length that is achievable from the outset and extend as needed 18 Lesson: Meet Saver Needs
  19. 19. EARN’s Impact 19
  20. 20. Post EARN Savings Program Results 20 83% of Savers continue to save after program incentives end 92% of Savers have a strategy for handling financial emergencies at program end 80% of Savers report an increase in confidence and self-esteem
  21. 21. Thank You 21
  22. 22. 2016 NEW ASSET CLASS PILOT RE:Conference | 15 November | Salem, OR Presented by Rebekah Barger Family Economic Opportunity Program Director
  23. 23. Pilot Projects •Vehicle IDA •Rental IDA •Retirement IDA •Manufactured Housing Replacement IDA
  24. 24. Program Modifications •Credit Builder •Debt Repayment •Small Business Employees
  25. 25. Pilot Project: Vehicle IDA Statute: The purchase or repair of a vehicle, as specified in the account holder’s personal development plan for increasing the independence of the person. Snapshot: 8 people enrolled Average savings goal $1900 Average age is 36 6 women and 2 men Average net worth $-24700 County Representation: 3 Clackamas, 4 Multnomah, 1 Lane
  26. 26. Pilot Project: Rental IDA Statute: The rental of a primary residence when housing stability is essential to achieve state policy goals. Account moneys may be used for security deposits, first and last months’ rent, application fees and other expenses necessary to move into the primary residence, as specified in the account holder’s personal development plan for increasing the independence of the person. Snapshot: 3 people enrolled Average savings goal $700 Average age 62 2 men and 1 woman Average net worth $-11220 County Representation: 1 Marion, 1 Lane, 1 Multnomah
  27. 27. Pilot Project: MFH Replacement CASA will be working with manufactured home parks that are resident-owned, and non-profit owned parks Replacing dilapidated homes with newer or new options, including costs associated with placing homes USDA and FHA are adapting to allow MFH in parks to be financed like single family homes (currently under development)
  28. 28. Pilot Project: Credit Builder • Recruits, enrolls, and coaches saversIDA Provider • Manages IDA accounts • Works with financial institutions to ensure loan transactions are accepted • Supports relationship between lender and saver Fiduciary Organization • Originates the credit-building loan and provides related transactional support • Reports loan payments to the credit bureaus • Provides credit coaching Lender
  29. 29. Pilot Project: Credit Builder • CDFI partner orients saver to the loan product. Submits loan application. Loan value does not exceed $360 and loan term will not be less than 6 months. • Saver opens IDA account. Each future deposit will consist of the scheduled IDA deposit (which is matched) and the loan payment (which is not matched). • CDFI funds the loan into the IDA via ACH transaction. These funds are not matched but sit in the account. CDFI takes an ACH payment from the IDA monthly • When IDA is fully funded the loan should be paid in full. Saver can not be matched on the loan proceeds at this time. • CDFI will report to credit monthly and provide coaching regularly, depending and the loan term.
  30. 30. Pilot Project: Credit Builder 11 ppl enrolled Average savings goal $1870 Average loan amount $222 Average loan payment $18 Average age 25 7 women and 4 men Average net worth $-15000 4 saving for Home Purchase 7 saving for Education County Representation: 1 Clackamas, 10 Multnomah
  31. 31. Pilot Projects: Debt Repayment & Small Business Employees Small Business Employees Plan to hire needs to be added to the business plan Allowed for new or existing savers Exploring whether it's a reimbursement for payroll, or actually paying employees Business plans include position descriptions, worker’s compensation and SAIF Questions include paying oneself and paying family members; recommendation to create employee handbook Debt Repayment Statute only allows medical and student loan debt No more than 30-50% of funds can be used Must demonstrate other resources for asset purchase First identify, validate, dispute or settle any debts before paying Debts must be old enough to appear on a credit report but not so old that they will fall off of credit due to statute of limitations
  32. 32. Karen Saxe Director of Asset Building Programs
  33. 33. IDA Successes  Special Populations  Survivors of intimate partner violence  Non-traditional microenterprise IDAs  Foster youth  High school students in Career Technical Education programs  Leveraging Dollars
  34. 34. Lessons Learned  Flexibility is key  Length of savings; asset goals  Supportive, wraparound services  Transitioning through goals with clients
  35. 35. 35 Asset Building Among the Incarcerated and Post- incarcerated Laura Locker, Ph.D. Mercy Corps Northwest Portland, Oregon Llocker@mercycorpsnw.org
  36. 36. -Providing IDAs in Oregon for 15 years - 1280 participants -IDAs for justice-involved individuals through our Reentry Transition Program and to youth incarcerated in the Oregon Youth Authority (OYA) system. MCNW: Working together to build more just, productive and resilient communities in the Pacific Northwest
  37. 37. Lessons Learned: -the importance of social capital -risk for participants -take small steps, favor reversibility, plan on surprises, and plan on human inventiveness. Through our programs, We demonstrate our belief that all people should have the chance to succeed and grow to their highest potential. We tackle poverty and injustice from multiple sides and meet our clients where they are in their life journey.

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