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Children’s Savings Account (CSA) programs aim to help children and youth build savings and increase their postsecondary educational attainment. However, programs are implemented into a society with existing racial and societal inequities that make it harder for youth of color, and those from low-income or immigrant households, to achieve programmatic goals.
Equity is the absence of systematic differences between groups with different levels of underlying social advantage or disadvantage. “Equity,” which focuses on eliminating differences in outcomes for different groups, is not the same as “equality,” which focuses on treating everyone the same. Because inequity is common in the U.S. (e.g. the wealth disparity between Black and White households), providing the same resources – both financial and itemized – to everyone does not address underlying disparities. An equitable program accounts for the historical and ongoing discrimination certain groups face while providing different levels of resources to assist them in achieving the same goals as more advantaged groups.
Building more equitable programs and help all children complete postsecondary education means that CSA practitioners need to design and manage their programs in ways that account for the uneven playing field many children face. Prosperity Now has created a new resource, Designing Children’s Savings Account Programs with an Equity Lens, that offers CSA practitioners ideas, tools and strategies they can incorporate into the design, implementation and operation of their programs. This document supplements Prosperity Now’s CSA design guide, Investing in Dreams, by adding a layer of considerations around equity for key steps of the design process.
Bridging the wealth divide, especially by race, will take large, federal-level systemic policy changes such as baby bonds. However, while local and state programs may not be able to provide sufficiently large initial deposits and incentives to bridge the racial wealth divide, they can still promote equity through the ways their CSA programs are designed and operated.
Key principles for increasing equity include:
- Community-centered design – The design process should center community involvement, particularly focusing on low-income households and households of color—not as a gesture but as a genuine effort to create a program rooted in the values and preferences of the community.
- Accessibility and inclusivity – Each element of the program—from the eligibility rules to the account structure—should be accessible to and inclusive of children from all communities, especially children from low-income or immigrant households and children of color.
- Targeted deployment of resources – Programs should direct more financial and non-financial resources to communities that face structural barriers to economic advancement.
- Ongoing community engagement – Community input should not end with the program launch. The program manager should continuously gather feedback from participants and other community members to identify ways to improve the program.
Designing a CSA program with an equity lens is a multifaceted process—encompassing everything from the program’s design to the incentive structure to outreach after program launch. Designing Children’s Savings Account Programs with an Equity Lens provides CSA practitioners with concrete ways to promote equity and help ensure that more children have the opportunity to attend postsecondary education and have a successful future.
For additional resources on designing a CSA program, check out Prosperity Now’s CSA Starter Kit.
For more information on how you can support CSA initiatives nationwide, visit savingsforkids.org.
Every month, the Fund My Future Children’s Savings Account (CSA) program—which is open to all families in Allegheny County, Pennsylvania—conducts a raffle for families to win $50 or $1,000 for their children’s accounts. After drawing the winning tickets, staff members from Propel Schools, which runs Fund My Future, call the families that won.
But there’s a catch. In order to get the prize, the family must have made a deposit that month.
The idea behind this “regret raffle” is to tap into families’ sense that they have lost out when they learn that they could have won a prize had they made a deposit that month. In 2018 about 28% of CSA programs used some type of prize-linked savings initiative by which families can win prizes for adding to their accounts. In most programs, families receive an entry into the raffle drawing after showing they’ve made a savings deposit. Fund My Future, on the other hand, lets families know they have been selected for a prize before verifying if they’ve made a deposit.
The regret raffle encourages parents and caregivers to save into their CSA because of the chance to win the prize, according to Propel Schools Executive Director Jeremy Resnick. He said the raffle helps parents and caregivers develop a savings habit.
“Our belief is that when the parent makes the deposit, that is a critical step in building hope for the future,” Resnick said. “Our belief is that virtually all families can save and want to save. All we’re trying to do is make savings fun, top of mind and a little bit easier.”
One parent enrolled in Fund My Future, Kiara, won the raffle this past January. But she hadn’t made a deposit, and her daughter lost out on the prize money. When February rolled around, Kiara got another call. She had won the raffle again.
“This time I was able to claim the full prize since the account was open and a deposit was made,” she said. “I realized [making a deposit] was something I needed to do, and it made me question what I was waiting for. It has been amazing to me as a parent for accountability.”
Resnick said that the regret raffle offers numerous benefits for its CSA program. For one, it is more inclusive because families don’t need to make a large deposit to be eligible for the $1,000 prize. In fact, families can make a deposit of just $1 to be eligible for the monthly raffle. Savings matches, on the other hand, benefit families with higher incomes more because those families can save higher amounts and earn more matches.
Resnick said that the raffle also reduces administrative burden for the program. “We’re not sending you a ticket after you made a deposit,” he said. “We’re sending everybody a ticket. We don’t know if you made a deposit yet. We don’t have to keep track of accounts for matches. Everything is coming without that huge overhead.”
The biggest challenge Propel Schools has is helping families from low-income backgrounds set up their savings account, Resnick said. Propel Schools works with partner agencies already serving families with low incomes—including YWCA, South Hills Interfaith Movement and family support centers affiliated with the University of Pittsburgh—to help families open accounts.
“Often times, this is the first savings account families have set up,” Resnick said. “That’s where our work with partner agencies is critical.”
About 25% of program participants make a deposit into their account in any given month, Resnick said. But he said that it’s not the same 25% every month and he is encouraged by the number of low-and moderate-income families participating.
“We’re showing that if you create the right ecosystem and keep it top of mind, people will save,” he said.
For more information about CSA initiatives nationwide, visit savingsforkids.org.
As we note in Investing in Dreams, Prosperity Now’s comprehensive guide to designing Children’s Savings Account (CSA) programs, having an effective information system is critical for managing a CSA program. Regardless of program design, each program must have a reliable and user-friendly system to track account activity, manage incentives and report account balances to participants.
While working with communities on their CSA programs, our Children’s Savings team is frequently asked: what kind of account management system should we have in place and what kind of management information system (MIS) options are available to CSA programs?
To learn more about the landscape of CSA information systems, Prosperity Now and San Francisco’s Office of Financial Empowerment (OFE) hosted the CSA Information Systems Summit in San Francisco in March 2018. At the summit, experienced practitioners engaged with representatives from financial institutions and financial technology firms that partner with (or were interested in supporting) CSA programs. The summit offered an opportunity to do the following:
- Explore the primary information system needs of the CSA field and the CSA information systems that are currently available
- Discuss how information systems integrate with account products and the extent to which systems and account providers are meeting (or could meet) the essential needs of CSA programs
After the summit, the Children’s Savings team continued the conversation with individual practitioners, current information system providers, and firms interested in this space. The resulting conversations about information management, as well as the CSA program survey showing how programs currently manage their data, led to Zen and the Art of Information Management: The Current State and Future Evolution of Information Management Systems for Children’s Savings Accounts.
Here are a few of the key takeaways from the paper:
A Range of Management Information Systems Are Used Across the CSA Field
CSA practitioners use a variety of MIS to manage their CSA programs. These include everything from Excel spreadsheets, to software platforms that were designed generally for matched savings programs, to custom-built platforms designed by financial industry firms that serve their products. Four systems are outlined in the paper that offer unique features to their CSA program partners: Outcome Tracker (VistaShare), My529, InvestCloud and Citi Start Saving Platform.
Practitioners Are Looking for Additional Functionality in Their Systems
Based on an informal survey of summit participants that we conducted prior to the event, most respondents (72%) said that their current information system integrates well or moderately well with their current account program. However, respondents noted a range of functions that could enhance their MIS:
- Automated transfers of incentives upon completion of “milestones” by participants
- Linking accounts from multiple financial institutions to one MIS platform
- Increased ability to communicate with end-users, including mobile-friendly interfaces, push notifications or automated email messages
- Online customer interface available in the multitude of languages their families speak
- Dashboards for school administrators, financial institution partners and other users
Customization Across the CSA Field Benefits Participants, but a Lack of Standardization Makes Designing an Information System That Works for All Programs Challenging
One of the exciting trends in the CSA field is that the growing scale of CSAs—now more than 457,000 accounts across the U.S.—means that more communities are implementing CSAs at the municipal and state levels. Yet, as we learned at the summit, the lack of standardization across CSA programs presents a challenge for technology providers interested in designing appropriate products.
This paper is just one way that Prosperity Now is contributing to the growth of a more robust CSA marketplace, given that securing an appropriate, low-cost, user-friendly account platform continues to be one of the key barriers to starting a CSA program. Going forward, Prosperity Now plans to continue the conversation about information systems with practitioners and hopes to facilitate connections between potential partners in this space and CSA programs.
To learn more about information systems and some exciting partnerships between programs and technology providers, please join us on June 4 for a webinar on this topic.
Keep up with the latest information on our work in Children’s Savings and the field at large by joining the Campaign for Every Kid’s Future.
In 2017, Nevada’s legislature passed a bill that requires the 200,000+ households in the Nevada College Kick Start (CKS) Program—one of three statewide, universal Children’s Savings Account (CSA) programs that automatically enrolls participants—to take action to receive the benefits of participating in CKS. Although children were automatically enrolled in the program in kindergarten, each child’s family would now need to “claim” his or her CKS account before that child enters 5th grade to ultimately access its funds. This would require parents to sign onto a designated portal and input specific information (such as the student’s date of birth, zip code, and the email address of a parent or guardian) before they could access their account. Since then, Colorado, Illinois and Washington have introduced their own “claiming” provisions to proposed or final CSA legislation.
However, requiring families to claim CSA benefits is a bad idea that will undermine the purpose of CSAs. Before I explain why, let’s first examine why some states are adopting these provisions in the first place. Based on conversations with bill sponsors and advocates, there appear to be at least two reasons:
- Cost savings. As behavioral economics (or pure common sense) teaches, any requirement for action by program participants creates barriers that ultimately reduce participation. From a budgetary perspective, this results in some proportion of accounts that go unclaimed, which in turn reduces the total cost of the CSA program. For state policymakers considering large-scale or universal CSA programs, including a claiming provision can reduce the amount of funds needed to sustain a program over the long run.
- “Skin in the game.” From a more theoretical perspective, some would argue that if parents or guardians do not take action to engage with their child’s CSA (which could include claiming an account), then the child would not likely know that the account exists. This argument builds on research that points to the power of CSAs in building postsecondary educational expectations or “college-bound identities” among children and youth. According to this line of thinking, if a child does not know that a CSA exists for them, then how can the account change expectations?
But there are at least three problems with claiming provisions that will cause harm to families that should benefit from CSAs:
- Claiming provisions violate one of the key principles of the CSA movement: universality.Starting with the SEED Policy Council—the initial policy brain trust that helped to establish many of the core principles of the CSA movement—and continuing with the “Ten Key Policy Design Elements” outlined by the Center for Social Development in 2018, universal eligibility (ideally paired with automatic enrollment) has been a key principle for ensuring that all children enjoy the benefits of CSAs. Claiming provisions in CSA legislation essentially transform universal CSA programs with automatic enrollment into opt-in programs, contravening the key goal of broad inclusion in CSAs.
- Claiming provisions work against another key principle of CSAs: progressivity (the notion that more resources should be directed to children most in need). With claiming provisions, it’s almost inevitable that kids with the greatest need are also most likely to lose out and have college funds go unclaimed. For example, research by the Center for Social Development found that parents with more resources were more likely to participate in an opt-in CSA program that offered a $500 initial deposit for all parents who opened a 529 account for a child born in Maine. Specifically, parents with more education, other investments and/or a financial advisor were more likely to enroll their children in the program than parents with fewer financial assets.
- There is no consensus on how to define “claiming.” In Colorado, it means opening an account. In Nevada’s proposed regulations, it means signing up online. And in draft legislation in Illinois and Washington, it is not defined at all. CSA advocates should be worried that claiming provisions are, at best, vague and poorly defined, and at worst, a blunt instrument that is badly designed for its intended purpose. For example, if the goal of account claiming is to make sure that parents have skin in the game and are engaging their children in conversations about education beyond high school, what’s to say that parents who are unable to open an account (as in Colorado) aren’t having meaningful conversations with their children about college? As leading CSA programs across the country have demonstrated, there are better ways to promote parent and child engagement in CSA programs than simplistic claiming provisions.
CSA advocates across the U.S. should be aware of the recent advent of claiming provisions in CSA legislation and should be prepared to act in two ways. First, CSA advocates should work hard to make sure that account claiming language is not included in or added to any CSA legislation or program. Second, if claiming language is added to CSA legislation, regulations or program guidelines, despite strong efforts to oppose such language, advocates should act to make claiming periods as long as possible and the definition of claiming as broad as possible.
 Margaret Clancy and Michael Sherraden, “Automatic Deposits for All at Birth: Maine’s Harold Alfond College Challenge,” Center for Social Development, Washington University in St. Louis, CSD Policy Repot 14-05, March 2014.
The 1:1 Fund was launched in 2012 with a purpose of encouraging individual donors to match Children’s Savings Account (CSA) contributions made by young people. Now, the 1:1 Fund and its 17 partner organizations have passed the $2.5 million mark in fundraising--as highlighted in our recently released 2018 Impact Report.
The 1:1 Fund’s National Match Pool has given the overall fund the ability to match donations made to our 1:1 Fund partners during quarterly fundraising campaigns. The National Match Pool–funded primarily by large gifts from Prudential and the social savings app Kidfund—fulfills the vision of Prosperity Now founder Bob Friedman, who predicts that this match pool will affect multiple generations. Donors would provide matching dollars to leverage the savings of CSA participants, and the 1:1 Fund would provide matching dollars to leverage the generosity of those donors. It’s what the 1:1 Fund has done for the past six years.
Following a substantial matching success last year, the 1:1 Fund grew its online fundraising total by 21% from 2017 and boosted its donor base by 11%. Explicit results of this success includes a fundraising total of over $285,000 by 1:1 Fund partners, and almost $257,000 in matching dollars.
Other highlights from the 1:1 Fund’s 2018 Impact Report:
- Promise Indiana raised an astonishing $83,202 from more than 325 donors during the June Graduation campaign - the largest amount ever raised by a 1:1 Fund partner in a single, week-long campaign. In that same campaign, Inversant brought in a haul of more than $16,000 with an average donation of $352—the largest average donation size for a single campaign in 2018.
- Thirteen partners participated in #GivingTuesday last year and raised more than $110,000.
- Springboard to Opportunities held a 5K “Race for Our Community” in April with more than 200 Jackson, Mississippi-area residents, and raised more than $34,000 for initial deposits into CSAs.
- Two new organizations in Missouri—SEED Success and KC Scholars—joined the 1:1 Fund in the fall of 2018.
Continued success by 1:1 Fund partners is based on positive relationships. St. Louis Treasurer Tishaura Jones said, “The 1:1 Fund has been a wonderful partner for College Kids since shortly after I got started as St. Louis City Treasurer in 2013. With the 1:1 Fund’s help, more students have access to resources to achieve their dream of higher education.”
The success of the 1:1 Fund would not have been possible without the unyielding support of our individual donors and a multitude of partners, for which we are grateful. To learn more, view the Impact Report.
Editor's note: This piece has been updated to include a universal CSA bill in Colorado.
As demonstrated in our annual report on the growth of the children’s savings field, more than 457,000 children have a Children’s Savings Account (CSA), up from 382,000 children last year. That momentum is also evident in state legislatures around the country. During the 2019 legislative session, CSA-related legislation has so far been introduced in 11 state legislatures—a much larger number than in past sessions. Highlights include:
- Illinois – The Illinois House passed a bill on April 2 by a vote of 66-42 that would create an automatic, at-birth CSA program with a $50 initial deposit for all children born or adopted in Illinois. The bill is now being considered in the Senate. The legislation is championed by the Illinois Asset Building Group, a Prosperity Now Community Champion.
- California – Assembly Member Adrin Nazarian introduced a bill to create a statewide CSA program serving the nearly 500,000 children born each year in California. The bill passed the Assembly’s Education Committee, and is now with the Appropriations Committee. In a separate development, Governor Gavin Newsom requested $50 million in his budget proposal to support CSA pilots and partnerships with local governments and philanthropic organizations.
- Colorado – House Speaker K.C. Becker, Representative Leslie Herod and Senate Leader Stephen Fenberg co-sponsored a bill to create a statewide, universal CSA program. While children would be automatically signed up for the program at birth, parents would have to open a 529 account within five years to receive the $100 initial deposit—making it essentially an opt-in program. Automatic enrollment, which does not require any action by the parent or child to open or claim the account, is a best practice for CSA programs. The bill went up for vote in the House and was passed!
- Oregon – The proposed bill would create the Oregon Bright Futures Plan Task Force—a nine-member task force chaired by the state treasurer—to design a statewide CSA program. The bill passed the House Education Committee, and is now with the Ways and Means committee for consideration. Neighborhood Partnerships, a Prosperity Now Community Champion, is leading advocacy efforts.
- New Mexico – State Representative Andrés Romero introduced a bill that would create a CSA program with a $500 initial deposit for infants whose family income is at or below 200% of the federal poverty line. Although the House Education Committee recommended the bill move forward, it was not voted upon before the legislative session ended in March.
- Washington – State Rep. Christine Kilduff introduced a bill that would create a CSA program with a $100 initial deposit for low-income kindergarten students in the state’s public schools. While the bill made it out of the House Committee on College & Workforce Development—and a companion bill made it out of the Senate Committee on Higher Education—it did not make it through the Appropriations Committee before the fiscal cutoff.
We will continue to monitor the progress of all pending CSA legislation. While we do not expect most of these bills to pass this session, they will serve as a foundation for future efforts in those states. The heightened interest state legislatures have taken in CSA policies this year bodes well for the future of the children’s savings movement.
To receive updates, research and resources on the children’s savings field, sign up for the Campaign for Every Kid’s Future!
The California Student Aid Commission awarded several 1:1 Fund partners grants to strengthen their CSA programs as part of a one-time, $3 million state grant program to support local CSA programs. San Francisco’s Kindergarten to College program received more than $926,000, El Monte Promise Foundation won nearly $450,000 and Oakland Promise’s Kindergarten to College program received more than $400,000.
The grant money is designed to help CSA programs award incentive funds to their children’s CSAs, conduct outreach about their programs and support an established evaluation that synthesizes trends in the children’s savings field and develops best practices. Congratulations to our partners for receiving this financial boost!