2013 MN Coalition for the Homeless Conference Workshop:

Financial Asset Building Through FAIM

WELCOME!

Who are we?Minnesota’s Community Action Network

Anoka County CAPArrowhead Economic Opportunity AgencyBi County CAPCommunity Action DuluthCAP of Ramsey & Washington CountiesCAP of Suburban HennepinHeartland Community Action AgencyInter County Community CouncilKootasca Community ActionLakes & Pines Community Action CouncilLakes & Prairies CAPMahube-Otwa CAPMN Valley Action CouncilNorthwest Community ActionPrairie Five Community Action CouncilScott Carver Dakota CAPSemcacSouthwestern MN Opportunity CouncilThree Rivers Community ActionTri -CAPTri County Community Action Tri-Valley Opportunity CouncilWest Central MN Communities ActionWestern Community ActionWright County Community Action

What is FAIM?

• Comprehensive program to reduce asset poverty & build financial capability

• Connects low income households with asset building opportunities through: Individual Development Accounts (IDAs), Financial education, 1:1 coachingAccess to other resources and services

Why build assets?

“Lack of Income means you don’t get by. Lack of assets means you don’t get ahead.”

Ray Boshara, Federal Reserve Bank St. Louis, former New America Foundation VP

“Assets are hope in concrete form”Michael Sherraden, Center for Social Development, “Assets and the Poor” (1991) launched asset building

initiatives

Importance of Savings & Assets

Savings & assets as foundation for economic stability:

Savings & assets as economic cushion Savings can lower costs Assets protect when social safety net fails Savings encourage future thinking Savings as gateway to self employment Savings key to higher ed & higher income

Impact on local economies

Asset purchases boost local economies:

• increased home ownership property taxes,

• newly created jobs,

• local small business purchases, and

• increased professional skills.

 

Asset poverty – what it looks like in MN

• Asset poverty: financial resources < 3 months to provide for basic needs

• 26% US households asset poor

• 21% Minnesotans asset poor

• MN asset poverty racial disparities:

58% African Americans, 43% Native Americans, 42% Latinos, 22% Asian Americans, 18% Whites

• ¼ HHs $37,741 - $59,604 asset poor

FAIM launched in 1999

• 1990s research and demo projects showed that low income people can save with the right support

• MN took part with FAIM 1999- 2004 with AFI grant, state appropriation, U of MN research. Success!

• IDAs one tool, but many are needed to help Minnesotans build assets

FAIM Partners

• MN Community Action Partnership • MN DHS - Office of Economic Opportunity• Bremer Bank & Bremer Foundation• Community Action Agencies• Emerge Community Development• City County Federal Credit Union• Leech Lake Tribal Government• University of Minnesota• Inver Hills Community College• Rice County Youth IDA project• Local partnerships

FAIM: How It works

• Eligible households with incomes below 200% FPL open savings accounts at local banks

• Can save up to 2 years to buy a home, launch a small business, or go to college

• Savings matched 3:1

FAIM: How It Works

Participant Savings: $480 / year ($40 month) for up to 2 years

Match Available:3 to 1

Participant savings = $ 960.00

Maximum Match = $2,880.00

Available funds = $3,840.00

Financial Education & Coaching

• 12 hours financial education +10 hours asset specific training

• 1:1 coaching “the invisible 4th dollar”

• Other resources & supports:Access to free tax prep/creditsLoans & grantsWork supportsSafety net servicesConsumer protection

Demographics of MN FAIM Savers

52%

31%

8%

4%2% 3%

Participants Racial background

Caucasian-52%

African Amer-31%

Asian Amer-8%

Latino-4%

Native Amer-2%

Other-3%

Gender

& Income:

• 78% female

• Most at or below 145% FPL

FAIM Results

• Nearly $3 million in savings deposited

• Over 3,100 people completed 12 hours of financial education

• Over 3,500 people used mainstream financial services

• Nearly 2,700 assets purchased

FAIM Results:ASSET PURCHASES

2,654 assets purchased

606 (23%)

1170(44%)

878(33%)

What does FAIM success look like?

http://minnesotafaim.com/

2012-13 research: U of MN Humphrey School & Gustavus Adolphus College:

• 326 FAIM graduates interviewed

• Small Business Asset Findings (130):

89% still in business after 2 yrs (national avg: 44%)

• Home Ownership Asset Findings (81)

No foreclosures. 97% still owned home.

• Education Asset Findings (115):

65% completed degree + 31% in pursuit

ROI Research

Impact of Financial Education and Coaching

Improved Credit

Reduced Debt

Increased Earnings/Savings

Next Steps

• Continue educating policymakers and funders about the importance of asset-building

• Support evolution of Asset Building Coalition

• Continue seeking funding to increase access

• Support IDA expansion, share training and technical assistance

For More Information

Kate Ouverson, Statewide FAIM Coordinator

West Central MN Communities Action

(218) 685-4486

kateo@wcmca.org

Pam JohnsonMinnesota Community Action Partnership

(651) 645-7425 x2

pamjohnson@minncap.org

QUESTIONS?

FOR ALL YOU DO!