Selling Saving – A Hope Accounts Update

Community and Economic Development – Blog by UNC School of Government

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Selling Saving – A Hope Accounts Update

By CED Guest Author

Published January 26, 2011

Salli Benedict is the HOPE Projects Director at the UNC Center for Health Promotion and Disease Prevention and a CCP small grant recipient working in Lenoir County.

The UNC Center on Poverty, Work and Opportunity recently published a study called “Racial Wealth Disparity in North Carolina”.  Although income, both individual and household, is commonly used as one way to measure poverty, wealth is an equally important measure.Wealth—or assets—is the sum of tangible and intangible things that make a person or family better off.  Tangible assets include home equity, investment property, investments in a pension plan, the value of stocks, and any interest‐earning financial asset, savings, or checking account. Intangible assets can include health, education and social and political connections and the ability to “navigate the system”.  Like the familiar saying that states “the rich get richer, the poor get poorer,” it’s certainly true that wealth makes more wealth through investments, producing income and profit, and that it is passed from generation to generation.  Wealth also gives individuals and families a cushion against hardships and the stress and uncertainty of poverty

The statistics on racial wealth disparity in North Carolina are astounding. The study states that “Based on data gleaned from the Census Bureau’s Survey of Income and Program Participation, it finds, broadly, that national trends of harrowing racial wealth inequality are even more pronounced in North Carolina. Focusing…on disparities between white and African American households, it concludes that black households, at the median, claim only about 13 percent of the wealth and, stunningly, about 4 percent of the net worth of white households. Net worth comparisons border on the grotesque.”  Almost 50% of minorities in NC are asset-poor vs. 17% of whites.  A map of NC shows that asset poverty is concentrated in eastern NC where a high proportion of residents are African American; 29% or more of all households in Lenoir County are asset-poor.

These statistics might lead to the conclusion that one strategy that stands a great chance of making a difference is the alternative IDA program we employ in Hope Accounts for Women (Also see previous blog entries).  IDA’s are dedicated savings accounts designed to encourage low-income individuals to set savings goals and accumulate assets.  In our program, women can save up to $600 which will be matched 1-1 and can be used for job skills, education or business development.  Our program also includes financial literacy, group support and weight management/health promotion.  The program is designed to assist low income, minority women in building financial assets and moving out of poverty.

Those of us who developed the program—researchers and practitioners from the UNC Center for Health Promotion and Disease Prevention in partnership with our Community Action Council and community based staff—expected that enrolling women from Lenoir, Duplin, Sampson and Robeson Counties would be easy, and that we would have to turn participants away.  This has not been the case.  Why?  Why wouldn’t most eligible women want to take advantage of this opportunity?

A quick review of IDA program evaluations, participation in a webinar on IDA’s, and discussions with the NC Assets Alliance and UNC researchers sheds some light.  Here are a few lessons we’ve learned about IDA programs in general, and that have proven true in our program:

1. Recruitment for IDA programs is typically very difficult, staff intensive and very time consuming.
2. Retention is also a problem—many find it difficult to consistently attend the required sessions (e.g., issues with transportation, childcare, work or school schedules).
3. IDA programs often take longer to establish than expected—building relationships with banks, developing materials and recruiting take a lot of time.
4. IDA’s programs are not for everyone: a special combination of motivation, ability to participate (life circumstances) and willingness to trust both the program staff (from UNC) and mainstream financial institutions must be present.
5. Trust is a big issue: many have said the programs are “too good to be true” and believe there’s a catch. Many people are “unbanked” and not comfortable with the banking system; others do not want to provide their social security numbers, a requirement from banks and UNC.
6. The goals for IDA programs (savings for homes, education, businesses) may not be the most important goals for the participants we are trying to reach.  In one study, the goal most often listed was saving for children’s education—not something typically included in IDA programs, and not included in Hope Accounts.
7. Income limits: women’s savings may count against the assets limits set for government assistance—a regressive policy that makes it harder for low wealth families to save.

In spite of the frustrations we’ve encountered, we continue to believe in IDA’s and that HOPE Accounts for Women will make a difference.  We’ve recruited over 160 women in our 4-county area, a huge number compared to many programs that enroll 25-50 women.  But our research design and our National Institutes for Health funding dictate that we enroll 430 women.