Leveraging the Tax Moment WITH JPMC (1)

Leveraging the Tax Moment
to Build Financial Capability
June 9, 2016
2-3:30pm ET; 11am-12:30pm PT
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Welcome
Fran Rosebush
Deputy Director, Field Engagement
CFED
Who We Are
Our mission at
CFED is to make
it possible for
millions of
people to
achieve financial
security and
contribute to an
opportunity
economy.
www.cfed.org
@CFED
/CFEDNews
cfed.org/blog/inclusiveeconomy
How do we do it
We push to expand innovative practical solutions that
empower low- and moderate-income people to build wealth.
We drive policy change at all levels of government.
We support the efforts of community leaders across the
country to advance economic opportunity for all.
www.cfed.org
@CFED
/CFEDNews
cfed.org/blog/inclusiveeconomy
Taxpayer Opportunity Network
Members…
• Participate in learning and
advocacy opportunities
• Learn about the latest
developments in the field
• Access valuable resources for
volunteers, program managers and site coordinators
• Get discounts to Taxpayer Opportunity Network
convenings
To join or learn more, go to: cfed.org/programs/taxpayer_opportunity_network
Leveraging the Tax Moment
Service Integration = Intentionally bringing services
together to capitalize on key moments and better help
individuals achieve their goals
Financial
Capability
Services
Other Program
Services
(e.g., workforce,
housing, education,
community health)
Many different types of services are
being integrated into the tax moment
• Savings:
• Account opening
• Financial Coaching &
Counseling
• Incentivized/Matched Savings
• Financial Education
• myRA
•
Workshops
• Credit:
•
Educational materials
• Counseling/ Report Screening
• Credit Repair/ Building
• Benefits Access
•
Federal & State Benefits Screening &
Enrollment
•
ACA Navigation & Enrollment
• Financial Access:
• ChexSystems Report Screening
• Prepaid Debit Card
•
FAFSA Assistance
• Assistance with Balances Due
•
e.g. IRS Withholding Calculator
Many different pieces of this work
to consider at tax sites
Aligning
organizational
mindset and
clarifying
mission and
goals
Understanding
taxpayer needs
& selecting
financial
capability
services
Recruiting &
training
volunteers &
staff
Marketing &
messaging at
the tax site and
throughout the
year
Designing client
flow at the tax
site
Assessing internal and external resources to support this work
Capturing data
to evaluate
services and
demonstrate
impact
What’s in store for today?
•
Welcome from our Co-Sponsors
§ JPMorgan Chase
§ EITC Funders Network
•
Exploring Research: Large scale studies and findings
§ Center for Social Development
§ Consumer Financial Protection Bureau
•
Sharing lessons from the field: Practitioner Perspectives
§ Center for Economic Progress
§ University of Missouri Extension
§ Boston Tax Help Coalition
•
Connecting to additional resources and next steps
Welcome from Co-Sponsor: JPMorgan
Chase
Colleen Briggs
Executive Director
Office of Corporate Responsibility and Global Philanthropy
JPMorgan Chase & Co.
Importance of Promoting Financial Health
OUR
COMMITMENT
Across
the U.S. and around the world, too many people lack the tools and resources to
manage their daily financial lives, weather unexpected emergencies, or plan for the future.
They face daunting financial challenges, including:
Difficulty saving for
emergency and long-term
financial needs and
managing unexpected risks
Low credit score or limited
credit history, impeding asset
building
Significant monthly volatility
Lack of access to products
and services designed to
address their needs
n Instead, they rely on costly non-bank financial services, such as payday loans or check cashing outlets,
resulting in billions spent in fees and interest each year. These services are riskier and often more
expensive.
n The impact goes beyond households. Financial health is a key element of inclusive economic
opportunity and growth. Research shows that financial inclusion helps individuals start and expand
businesses, invest in education, better manage risks and weather unexpected emergencies. It also boosts
productive investment and consumption, helps reduce poverty and inequality, and catalyzes inclusive
economic growth.
Need for Financial Capability Strategies
OUR
COMMITMENT
Traditional
approaches assume financial illiteracy is the root cause of financial insecurity.
These approaches focus on
providing information
about predatory lending
practices and the benefits of
conventional banking.
Research shows that basic
financial literacy education
does not improve
consumer decision-making
or result in
long-term behavior
change.1
Financial literacy efforts
must evolve and combine
timely information with
innovative tools that turn
knowledge into action.
New strategies must encourage financial capability, rather than financial literacy alone. These include:
Time the delivery of
products and
services to key
financial moments.
Pair relevant,
engaging information
with products and
services.
Employ choice
architecture.
Incorporate humancentered design.
Leverage
technologies to
increase reach and
improve efficiencies.
Fernandes, Daniel, John G. Lynch, & Richerd G. Netemyer, 2014, “Financial Literacy, Financial Education and Downstream Financial Behaviors.” Management Science.
Sherraden, Margaret S. 2010. “Financial capability: What Is It, And How Can It Be Created.” University of Missouri–St. Louis: Center for Social Development.
1
What big data say about moments to save: Tax refunds
Sources of volatility in aggregate per capita monthly income
Almost 80% of people receive a tax refund, and they are larger in
magnitude than the shocks from employment transitions
Frequency and magnitude of impact of tax-related transactions compared to
employment outcomes
Tax time as an opportunity to improve financial health
n Tax time allows us to meet consumers where they are and provide products and services relevant
to their financial lives. Not only do individuals receive a large lump sum of income, but they are
also already thinking about their finances.
n In addition to increasing awareness and maximizing tax refunds, free tax preparation services offer
a great entry for savings products and financial coaching to improve their financial health beyond
tax time.
n Many nonprofit partners are still forced to do more with fewer resources. There’s an opportunity to
understanding how to use technology and behavioral insights to increase reach, maximize impact
and create efficiencies.
Welcome from Co-Sponsor: EITC Funders
Network
Ami Nagle
Coordinator
EITC Funders Network
Who We Are
Goals
The goals of the EITC Funders Network include:
¨
¨
¨
¨
Increase communication among funders about
EITC-related projects across the country;
Our Members
¤
¤
Explore issues confronting the field;
Discuss ways to sustain and scale-up EITC work;
and
Leverage funding for EITC-related projects
Thematic Pillars
¨
Outreach and Tax Preparation
¨
Policy
¨
Benefits Access
¨
Financial Empowerment
Almost 300 members
Community foundations,
family foundations, public
charities, corporate
philanthropy
What We Do
¤
¤
¤
¤
¤
Meetings
Webinars
eNewsletter
Website
Consultation
EITC Funders Network * www.eitcfunders.org
Available Resources:
¨
On financial coaching (with a
funders' lens):
¤ Asset Funders
Network, Financial
Coaching: An Asset Building
Strategy. Defines financial
coaching in relationship to
financial counseling or education
and elaborates on the
relationship with building
financial capability. Also
provides examples of coaching
programs – including those at
VITA sites – and explores issues
of measuring success and the
role of funders.
¨
On financial coaching (metrics
and evaluation):
¤ Asset Funders
Network
Webinar: Financial Coaching –
Strategies and Outcomes for
Grantmakers. Webinar focusing
on the financial capability scale,
a standardized set of metrics
that organizations and funders
can use to measure the impact
financial coaching efforts.
¤ Urban Institute, An Evaluation of
the Impacts and Implementation
Approaches of Financial
Coaching Programs
EITC Funders Network * www.eitcfunders.org
Available Resources
¨
On the links between the EITC, VITA and FAFSA:
¤ CBPP’s
Get it Back Webinar: Navigating FAFSA and the EITC: How to
Connect Families to Help. Training on ways to connect tax credit outreach
with FAFSA assistance with an overview of the ways EITC, VITA and FAFSA
are connected.
EITC Funders Network * www.eitcfunders.org
Today’s Speakers: Research
Perspective
Janie Oliphant
Dave Sieminski
Project Manager
Center for Social Development
Washington University in St. Louis
Policy Analyst
Office of Financial Empowerment
Consumer Financial Protection Bureau
Today’s Speakers: Practitioner
Perspectives
Satori Bailey
Director of Asset Building Programs
Center for Economic Progress
Shatomi Luster
Mimi Turchinetz
Financial Education Specialist
University of Missouri Extension
Assistant Deputy Director
Mayor’s Office of
Financial Empowerment
Boston Tax Help Coalition
Poll
Who’s on the webinar with us today? Checkallthatapply.
•
•
•
•
•
VITA provider
Financial capability provider
Funder
Researcher
Beginner learning more about this work
From the Field: Exploring Research
Refund to Savings:
x
Building financial security at tax time
Janie Oliphant
9 June 2016
All screenshots of TurboTax Freedom Edition are considered Intuit, Inc. proprietary
Tax time: A golden moment to save
But still, why tax time?
Tax time is a major financial event
– 147 million individual returns filed
– 79% of filers receive refund
– $2,719 average refund
IRS Data Book. FY 2014, pages 3, 4, and 20. https://www.irs.gov/pub/irs-soi/14databk.pdf
TY2013, Brookings calculation of IRS data: http://www.brookings.edu/research/interactives/eitc
Refund to Savings (R2S) Initiative
• Test behavioral economics techniques to
encourage LMI households to save at tax time
– Turbo Tax Freedom Edition as a platform to test innovations
– Using a sample size of over a half million households
• Develop low-cost, low-touch, and scalable
interventions
2015 Participant Characteristics
•
•
•
•
•
Age: 34
Claiming EITC: 42%
67% Single; 23% Head; 9% Married
Household Income: $15,055
Federal Tax Refund: $2,030
Relative Value of a Refund from 2014
Experiment
$2,000
2.5
$1,800
1.3 $
Mean Dollar Amount
$1,600
$1,400
$1,200
$1,000
$800
$600
$400
$200
$0
Federal Refund
1 mo Housing
1 mo Income
How did we encourage people to save?
Choice Architecture
Typical Check Out Line Choices
Healthy Check-out Line Choices
Choice Architecture
How would you like to get your federal refund?
Control group
Intuit, Inc. proprietary
Treatment groups
Choice Architecture
How would you like to get your federal refund?
Control group
Intuit, Inc. proprietary
Treatment groups
Three Prompts to Encourage Saving
Emergencies
Retirement
Goal
Interactive goal
Intuit, Inc. proprietary
Rate of Depositing Any to Savings
Vehicle
16.0%
14.0%
**
**
**
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
A: Control
B: Be
prepared
C: Interactive D: Interactive
goal
retirement
2015 IPO n = 646,116
Amount Deposited to Savings Vehicles
$300
**
$250
**
**
$200
$150
$100
$50
$0
A: Control
B: Be
prepared
C: Interactive D: Interactive
goal
retirement
2015 IPO n = 646,116
Sum of R2S Impact
21,012 more savers due
to R2S interventions
$35.6 million more deposited
to savings vehicles
$120
60,000
50,000
40,000
30,000
20,000
$ Millions to Savings
Number of Savers
70,000
$100
$80
$60
$40
10,000
$20
0
$0
R2S Added
Discussion & next steps
Discussion:
• We can increase saving at tax time for low-income households
• Low-cost, low-touch interventions work
• Choice partitioning and emergency messages were most powerful
Next steps:
• Household Financial Survey data
• Next tax season
Potential innovations for the field
• Moving beyond TurboTax Freedom Edition
– VITA sites
– Free File Alliance
• Offering other financial services at tax time
• Finding other golden moments to help
people improve their financial security
Acknowledgements
Contact information
Janie Oliphant
Project Manager
Center for Social Development
[email protected]
Refund to Savings web page
CFPBtaxtimesavinginitiative
Make the most of your tax refund
LeveragingTaxTimetoBuildFinancialCapability
CorporationforEnterpriseDevelopment
TaxpayerOpportunityNetwork
June 9, 2016
Disclaimer
This presentation is being made by a Consumer Financial Protection
Bureau representative on behalf of the Bureau. It does not
constitute legal interpretation, guidance or advice of the Consumer
Financial Protection Bureau. Any opinions or views stated by the
presenter are the presenter’s own and may not represent the
Bureau’s views.
This document was used in support of a live discussion. As such, it
does not necessarily express the entirety of that discussion nor the
relative emphasis of topics therein.
50
CFPB Mandate
Encourage wealth building and
access to financial services during
the preparation process to claim
earned income tax credits and
Federal benefits.
Source: Section 1013(d)(2)(F) of the Dodd-Frank Act
51
Short and medium term goals
• Offer consumers who have low-incomes and/or low-wealth
more information and saving options
• Develop a deeper understanding of consumer decisionmaking and service provider capability
• Test the effectiveness of promising approaches in both the
nonprofit and commercial environment
• Quantify the consumer benefits of saving and share with the
field
• Learn how and where the CFPB can productively contribute
to increasing saving at tax time
52
Long-term goal
Make savings outreach and
education to consumers at tax
time universal across all service
and product platforms.
53
Learn from the VITA Field
5
4
Learning from research and innovation
• Refund To Savings / CSD and
Intuit
• SaveYourRefund 2015 (D2D)
• SaveUSA (mdrc)
55
CFPB report: Promising practices
• Developed from CFPB’s
2012-2015 tax time saving
pilots
• Purpose:
o To help VITA staff and
volunteers promote
saving
o To increase number of
taxpayers who save
56
Promising practices
1. Communicate with consumers
about saving before they come to
the tax site
2. Offer the saving option more than
once at the tax site
3. Make sure tax preparers know how to
help consumers save while filing
4. Dedicate staff or volunteers to
promoting saving
5. Use “anchoring” and prompts to
help consumers focus on a savings
goal
57
Promising practices
6. Make sure all staff and volunteers
commit to encouraging savings
7. Don’t overwhelm consumers with too
many different types of options
8. Provide incentives to encourage saving
9. Provide multiple options for saving
10. Make saving fun!
58
Support of community VITA 2016
•
Large scale pilot project in 41
communities serving more than 300,000
consumers
•
Enhanced training and materials using
promising practices
•
Report to the field Summer 2016
59
Direct to consumers 2016
• Insert with saving specific
message stuffed by Bureau of
Fiscal Services into
approximately 11 million
consumers receiving paper
checks
60
Collaborate with tax prep industry 2016
•
H&R Block savings research
collaboration Yr. 2
o Email (400K consumers)
o In person (2 dist. 50 stores)
o Gamefication (SaveYourRefund)
•
Follow up survey of savers and non
savers from first year of study
•
Report on results from year 1
Summer 2016
61
About myRA
Many people who live paycheck to paycheck do not feel
like they have any extra money to start saving for
retirement. But with the right mechanism available to
them, that may no longer be true. And many Americans
can open a myRA to take advantage of the tax-time
moment by depositing a portion of their refund into this
new account, which can help them save for both the short
term and the long term.
CFPB Director Richard Cordray
Financial Literacy Education Commission
November 18, 2015
62
Promoting myRA
Source: myRA.gov
63
CFPB Tools and Resources for Consumers
•
•
•
•
•
Ask CFPB:
http://www.consumerfinance.gov/askcfpb/
Complaints:
http://www.consumerfinance.gov/complaint/
Tell Your Story: http://help.consumerfinance.gov/app/tellyourstory
Publications:
http://promotions.usa.gov/cfpbpubs.html
CFPB Blog:
http://www.consumerfinance.gov/blog/
64
Visit our webpage:
consumerfinance.gov/empowerment
Contact us:
[email protected]
65
Q&A
What questions do you have?
Share them in the Questions box!
Poll
What do you think are the top challenges to leveraging
the tax moment at tax sites? Checkallthatapply.
•
•
•
•
•
•
Choosing the right type & number of services to offer
Designing & managing additional services beyond tax prep
Sufficient resources (e.g. additional staffing)
Ability to offer additional training to staff & volunteers
Buy-in from staff & volunteers
Other: Tell us in the comments.
From the Field: Practitioner Perspectives
From the Field: Center for Economic
Progress
Satori Bailey
Director of Asset Building Programs
Center for Economic Progress
Tell us a bit about yourself and your
program?
• Started at Center for Economic Progress (CEP) in 2014
• Funding: Private Philanthropy
• Assistant Site Managers dedicated time to Tax Time
Financial Capability; Volunteer Savings Coaches
How are you trying to build financial
capability?
•
•
•
•
•
•
Save Your Refund Savings Campaign
Savings Bonds
myRA Retirement Accounts
Bank Partners on Site
Community Financial Resources Prepaid Cards
Financial Coaching Referrals
What are you learning about this work?
What are you learning from your
taxpayers?
• People want to (and they can!) save at tax time
• Make savings fun!
§ Save Your Refund
§ Giveaways
§ Presentations and team work
What research do you still think needs
to be done in this space?
• Identifying optimal efficiencies and effectiveness
• Achieving full integration
What’s on the Horizon?
One take-away for the audience?
From the Field: University of Missouri
Extension
Shatomi Luster
Financial Education Specialist
University of Missouri Extension
Tell us a bit about yourself and your
program?
• 10+ years in financial education
• Funding: VITA Grant
• Volunteers: AmeriCorps VISTA + NCCC
How are you trying to build financial
capability?
• Meeting individuals and families where they are:
§ Teaching in community classroom setting environments
§ Traditional tax season outreach (i.e. surveys, prize link savings and
etc.)
§ Partnerships with community agencies (i.e. ACA navigators,
Libraries and etc.) and other government agencies (i.e. VISTA and
NCCC
§ Contributing to University curriculum development
§ Integration of other products and services within the tax process
What are you learning about this work?
What are you learning from your
taxpayers?
• Start with the basics
• Keep it simple: The easier for the taxpayer, the better.
§ If during the tax season, process needs to be seamless for
volunteers and clients
• Financial capability is personal: individuals and families need
trust before engaging in personal transactional
conversations.
What research do you still think needs
to be done in this space?
• Access: What can be incorporated within the tax process
that makes Financial Capability, extension, and benefits
obtainable?
What’s on the Horizon?
One take-away for the audience?
From the Field: Boston Tax Help
Coalition
Mimi Turchinetz, Esq.
Assistant Deputy Director
Mayor’s Office of Financial Empowerment
Boston Tax Help Coalition
Tell us a bit about yourself and your
program?
•
Boston EITC Coalition
§ Launched in 2001 – in conjunction w/ community partners, financial
institutions, the Boston Federal Reserve Bank and the Greater
Boston Chamber of Commerce with the former Mayor, now
supported by Boston Mayor Martin J. Walsh
§ 2002 = 400 returns at 12 sites; 2016 – 13,000 returns at 30 sites
•
Funded through both philanthropic dollars and the Economic
Development Industrial Corporation, a part of the City of Boston
How are you trying to build financial
capability?
§ Tax time can be an “Ah ha!” moment for taxpayers
§ “Financial Checkup” (FCU): An Intake, screening and credit
building tool = credit report, FICO score, one-year plan
§ 65 volunteer Financial Guides provided 3470 FCUs
§ 11 interns served as Guides with 4 paid Lead Guides
§ Savings Strategy added this past tax season as part of CFPB savings
pilot, offered myRA accounts
§ Continue to expand direct deposit, open bank accounts, and
encourage taxpayers to purchase US Savings Bonds
What are you learning about this work?
What are you learning from your
taxpayers?
•
Data + interviews demonstrate increase in credit scores, decrease in
debt and a change in agency
•
FCU makes taxpayers more confident about their capability to
understand and manage their money
•
How to offer services?
§ Clear on client flow – FCU must be done after preliminary
intake and before tax preparation
§ Credit reports and credit advising provided on site
with recommendations made on paying down debt as well as
providing taxpayers a one year plan
§ Transunion now allowing TP to keep their credit report
What research do you still think needs
to be done in this space?
•
Expand the efficacy of FCU
•
More experimentation to develop enhanced saving and credit
building strategies at tax time; developing best practices
•
Need to determine how many choices for the taxpayer
What’s on the Horizon?
One take-away for the audience?
Q&A
What questions do you have?
Share them in the Questions box!
Take-Aways
JOIN US FOR THE
September 28 – 30
Register at
www.assetsconference.org
Join the Network!
• Participate in learning and
advocacy opportunities
• Learn about the latest
developments in the field
• Access valuable resources for
volunteers, program managers and site coordinators
• Get discounts to Taxpayer Opportunity Network
convenings
To join or learn more, go to: cfed.org/programs/taxpayer_opportunity_network
Thank you!