As the economy continues to recover and social movements directed at addressing inequality continue to gain steam, one field of philanthropy that is in ascent is asset building, which helps low income people build up savings to expand their economic opportunity.
For children, one feature of the asset-building strategy is child savings accounts, with the goal of getting more children to start saving and building a nest egg for the future.
Why should every child start saving by at least five years old? Lots of reasons, but if you want to go straight to the data, then here it is: because it makes you more likely to go to and complete college. In other words, it gets kids on board and buying into their own financial and educational future as early as possible.
Mind you: college may not look like what college looks like today by the time a lot of today’s five-year-olds get there. There’s likely to be a much stronger emphasis on STEM and manufacturing jobs, and much less emphasis on spending a ton of money and time to live away for four years in an expensive semi-sheltered environment. The idea here is to get kids invested in their own financial futures and in preparing now for higher education success. The research strongly suggests that one important way to do that is with child savings accounts.
So if you’re a development officer or a nonprofit professional that does work for kids, part of a government entity in the children and youth sector, or just a concerned member of the community who wants to help low-income families succeed, one partner you want to know about is the Corporation for Enterprise Development (CFED). It has backing from over 40 institutional funders, including a who’s who of major foundations and banks.
In fact, if you’re wondering where the asset building movement is getting its money, CFED’s list of funders offers a good snapshot of which funding players are in this game right now.
“The asset building field is in flux,” said Bob Friedman, Founder, Chair and Chief Counsel for CFED, in a recent interview with The Imprint, “but the overall trajectory is upward.”
The trajectory on child savings accounts is also upward. Leading cities such as San Francisco are establishing children’s savings accounts (CSAs) for every child entering kindergarten. More than 18,000 savers are now participating in San Francisco’s Kindergarten to College program. St. Louis will start a similar program this fall. States such as Maine, Rhode Island, and Nevada are launching similar efforts using their state’s 529/college savings plans.
To highlight this work, CFED launched The Campaign for Every Kid’s Future, which aims for 1.4 million child savings accounts by 2020, and an account for every child by 2025. Already, more than 40 organizations nationwide have pledged their support.
CFED also runs a fundraising and marketing platform called the 1:1 Fund, which uses an online portal “to make it easy for donors, large and small, to help kids save for college by matching their contributions in children’s savings accounts.” These programs are looking for as many social and private sector partners as they can find to get child savings accounts on the agenda in every community.
Another effort demonstrating how asset building focused on children is trending upwards: philanthropist Harold Alfond has devoted a whole foundation to giving every child $500, and the state of Maine will match savings contributions.
These new initiatives can add up to large numbers of the new generation being more future-minded when it comes to saving for higher education and adult financial stability. It’s really never too early to start.