Durham Kids Save to seed post-secondary savings for Y.E. Smith students; 2-for-1 donation match today
A team of Durhamites has partnered with Y.E. Smith Elementary to bring a pioneering anti-poverty effort to the Bull City -- creating savings accounts for kindergartners in one of Durham's lowest-wealth schools to encourage families and children to plan ahead for their post-high school education.
And as part of the kick-off, donations made today (Tue., Dec. 1) are matched 2-for-1 by the 1:1 Fund, a national platform linked to the Corporation for Enterprise Development (CFED), a non-profit championing the model.
The idea stems from research that finds low-to-moderate wealth families who manage to save even small amounts for college -- as little as several hundred dollars for a student -- are several times more likely to attend and graduation from post-secondary educational programs as those with no savings.
And given that only one in ten children from low-income backgrounds graduate college by their mid-twenties, any innovation that increases access to this crucial opportunity is welcome.
Kids Save Durham, an initiative linked to the Mayor's Poverty Reduction Initiative and which is a program partner of the East Durham Children's Initiative, is aiming to raise $10,000 today -- seed funds that will be trebled to $30,000 thanks to the 1:1 Fund's matching pledge.
Donate up to $500 today via the 1:1 Fund's web site to help Durham Kids Save earn the maximum match: https://1to1fund.org/donate/dks/
With these funds, every kindergartner at Y.E. Smith, a school where every student qualifies for free or reduced-rate lunch, will receive a $100 deposit into a Self-Help Credit Union savings account earmarked for post-secondary education. Then, during each year through fifth grade, families will be encouraged to add their own savings to these accounts, with Durham Kids Save matching each child and family's deposits, up to $100 per year.
Unsought kudos to Durham's own Carl Rist, who works for CFED and whose advocacy for the concept of children's savings accounts has taken the idea from a series of demonstration projects to a family wealth-building mechanism that now finds more than a million low-income children having access to these accounts.
A CFED report on the concept notes the power of savings accounts (and the financial/savings education that eligible children and their families receive) in helping to keep college an achievable accomplishment and not a fantasy or dream. And, it also notes the importance of these programs in closing one of the gaps driving income inequality -- the disparity in savings rates between those in different economic strata, particularly galling given the subsidies we provide to encourage those with means to save:
Clearly, saving money is a struggle for most families in the United States. A detailed survey of financial capability released in 2009 by the FINRA Investor Education Foundation found that over half of Americans have trouble keeping up with monthly expenses and bills. If finding the money to save is difficult for most Americans, then it’s especially tough for poorer families, like Almedia’s, who have even less money – and slack – in their budgets.
Yet part of this savings challenge may be our understanding of how saving really works. The truth is that Americans can and do save money – when the price is right. For example, employer-sponsored 401(k) retirement plans frequently include matching contributions. According to a 2007 survey by the Employee Benefits Research Institute, nearly 82 million American workers (or 51.8%) worked for an employer who offered a retirement savings plan, and of those, 80.1% participated in the program. In addition, tax deductions, credits and matches for contributions to IRAs and 529 College Savings Plans, as well as the mortgage interest tax deduction – all provide direct and substantial saving incentives via the federal tax code.
All are examples of savings made not as a result of pluck or financial discipline, but rather through automated systems, be it a monthly mortgage payment or payroll deduction at work. In fact, academics have begun to revise their understanding of how saving happens and have developed a new “institutional” theory that suggests that saving occurs because of factors that increase savers’ information about accounts, provide access to accounts, or “facilitate” the act of making deposits. As Michael Sherraden of the Center for Social Development at Washington University in St. Louis points out, “individuals who have opportunities to participate in [these] asset accumulation programs are not simply ‘saving’ money due to their ‘propensities to save.’ Rather, they are accepting a good offer.”
We'd posit for your consideration that it's hard to think of a better "good offer" for the children at Y.E. Smith than the benefit of helping them get started saving for their own future -- the start of a saving opportunity that may just change their lives.