The question of scale seems to be on everyone’s mind here, and it’s a favorite topic of mine, so I was glad we had an early foray into the topic with “Plenary II: Leveraging Leadership and Markets to Bring Asset Building to Scale.”
The panel members included:
Jeff Hayward, Senior Vice President, Fannie Mae
Andrea Levere recognized the conference sponsors, and asked the “scholarship” attendees (generally younger newcomers to the field) to stand up and be acknowledged.
She also gave a nice shout-out to me for my blog posts, and gave a top 10 exciting new things at this year’s conference: my blog came in at number 8 (not bad).
After going over a lot data from the new assets scorecard, she suggested that we borrow a term from the financial sector and think about advancing our work into “diverse asset classes.” We need to push the full range of asset-building opportunities (if you push the financial sector metaphor, diversifying our assets work might reduce risk for our field in situations when certain asset classes are performing poorly but others may be making gains — which is an interesting way of looking at it).
Andrea added that for many years, we (and many policy experts) have tended to focus on increasing the home ownership rate as the holy grail. But really we need to focus on the rightful role of home ownership within a broader strategy.
She feels we and our elected officials have systematically underappreciated the importance of small business ownership for asset building. In our current major policy efforts, the account structures do not encourage business investments to be made with matched savings, which is a real drawback. We have 4-6 million businesses operating underground. We need to use the tax code (that exciting Schedule C for self employment income) to bring those businesses aboveground and help them grow wealth. CFED has a new major initiative to change that.
Recognizing that “human capital development is the economic development strategy of the 21st century,” CFED is partnering with United Negro College Fund to match UNCF’s ability to organize scholarships with CFED’s ability to do financial education and manage savings and matching funds. CFED feels that these tools need to come together to have a significant impact on building aspirations. That combination is an interesting one.
She concluded by referencing a Jack Johnson song, “Better Together.” That’s what this conference is all about, she said. We should think of our wildest ideas and figure out how to make them happen. That’s what CFED wants to spur.
I’ll just hit on some highlights (for me) of the what other speakers discussed during this plenary:
1. Margaret McKenna of Wal-Mart Foundation said they’re about to announce a big program for veterans. 1.6 million returning vets need something to help them transition into careers. The new GI bill has money, but 90% of the returning vets who use it have been dropping out (really?). Their foundation wants to help them get the support they need to stay in school and make a successful transition. I hadn’t heard of the gravity of this problem, so that got me thinking.
Brian Gallagher, President of United Way of America, said a phrase he uses a lot is “We’re not going to social service our way to change in our country.” That’s definitely a statement that must shake up the United Way agencies around the country. (As a local United Way boardmember in charge of allocations, I’ll have to think about whether I can say that in front of a room-full of agency directors, many of them social service directors.)
Brian also noted that United Way’s EITC effort with Bank of America has resulted in $400 million more in EITC money for the communities in which the programs have operated.
Ken Wade of NeighborWorks America argued that we’re going to have to create a sustainable model for home ownership counseling for everyone, even in rural places. The mortgage origination process is just too complicated now for most people to navigate on their own. When it’s fee-driven, you can’t expect to get responsible advice all the time. Consumers need a trusted advisor, whether it’s a home purchase or a re-finance, which can be just as devastating. We need to figure out how to fund the availability of that trusted advisor for everyone, especially low-income families. This is an important point on the question of getting to scale.
Jeff Hayward of Fannie Mae noted the importance of their manufactured housing initiative. Manufactured Housing can be a source of really affordable, non-subsidized housing. But as a product it has some systematic flaws. Since the transaction doesn’t involve land, just the house, people weren’t able to get a standard loan. So they couldn’t take tax deductions, etc. But that’s changing. This new initiative is helping people to own their communities (the land underneath) with the help of ROC USA that formed out of the successful model created in New Hampshire. This is a model of wealth building that can be replicated around the country. Fannie Mae has made a $10 million commitment to make that happen (and apparently commitments like that aren’t threatened by the conservatorship in which Fannie Mae has been placed by the federal government)
Jeff also re-iterated that he believes savings is the absolute key for wealth. He seemed to echo some of the conversations going on around creating a culture of thrift, pointing out that we need to get back to a world in which people take pride in bringing their nickels to the bank. And that’s going to take a focus on education early, early, early in life.
Ken Wade of NeighborWorks said we really need to do a better job of understanding what motivates folks to make the decisions they make. We live in a highly consumer society, and the notion of savings runs counter to that environment. We need to understand what drives people to make financial choices, and try to work in alignment with their actual motivations. Sounds like another plug for behavioral economics.
Brian Gallagher of United Way is of the opinion that increasing incomes needs to be a priority that comes ahead of savings because people simply need more income before they can save. Personally, I agree that both areas need attention, but I haven’t seen as many promising strategies on the income question as on the savings/asset question, and I like the strategy of building on strength. I’d like to know who’s doing a great job of raising incomes in a particular community, and how they’ve done it, so maybe I’d have a better idea of what works. Brian didn’t get into specifics, so that may be a topic for some other conference.