René Bryce-Laporte^*

What difference would it make if every child in America grew up knowing that he or she had a nest egg to go to college, buy a home or start a business? We intend to find out. In October of 2003, CFED and its partners launched the Saving for Education, Entrepreneurship and Downpayment (SEED) Initiative. Capitalizing on the success of asset building for low-income, low-wealth adults over the last decade, SEED seeks to adapt the hope and promise of Individual Development Accounts (IDAs) to help children, youth, and their families invest in their futures.

Why SEED?

The experience of stakeholders over the past several years in the IDA field has shown that poor people if given the means, incentive, and structure to save and invest in their future will do so. In the course of building IDA programs many practitioners reported that their accountholders wished to save for the benefit of their children. Many children of the accountholders also became interested in the idea of saving for their own needs. A small number of youth IDA programs emerged, but none that we knew of that looked to serve children below middle-school age. Given the change in outlook that we routinely observed in adult IDA holders, would not the effects be even more compelling and bear even more lasting benefits for children and youth?

Some facts to consider:

• More than a 1/3 of the 4 million American children born each year - and more than half of minority children are born into families with negligible savings either to invest in their futures or weather emergencies. (1999 study of Income Dynamics)

• $1,000 invested for 18 years at a 6% rate of return yields nearly $3,000. Add just $100 per year and the sum jumps to more than $5,000.

• People with bachelor's degrees earn over 80% more on average than those with only high school diplomas. Typical costs to attend a 2 year college are below $2,000 per year; 4 year public college expenses are estimated to be just under $4,000 annually. Yet 2 in 5 American children will never complete even one year of college. (Kathryn Bradbury, "Education and wages in the 1980s and 1990s: Are all groups moving up together?" in New England Economic Review, 1st quarter, 2002.) (2003 Kids Count Data Book: State Profiles of Child Well-Being, The Annie E. Casey Foundation, Baltimore, MD, 2003).

How does SEED work?

CFED launched SEED with its partners, the Center for Social Development (CSD) and the University of Kansas, School of Social Work (KU), the support of several national foundations, and nine community partners working in the field in each region of the nation (see list). Given the difficulty in observing youth from birth to adulthood, we chose to mimic a childhood, by studying accountholders from different age cohorts (pre-school, elementary school, and high school). The idea being that we can gain a great deal of knowledge by observing the growth and savings habits of accountholders over a four year period and project that over an entire childhood.

Accountholders in SEED are selected by the community partners. Special SEED accounts are established in the accountholders' name. The accountholders receive an initial deposit to their SEED accounts and contributions to the accounts are made by family members, community members, and the accountholders themselves. Their savings are matched by the SEED community partners. Each program also has instituted benchmark savings that result in contributions by the SEED community partners. These benchmarks savings may include completion of a financial management course, earning good grades in school, or other desirable activities. As with IDAs, accountholders also participate in financial management courses.

What are the Goals of the SEED Initiative?

The SEED partners come from different regions and organization types. We hope to learn enough from their experiences to inform the development of legislation to create a nest egg for all American children that will ensure that all children go through their childhood with opportunity in sight. There has already been SEED-inspired congressional legislation introduced called the ASPIRE Act (S 2751/HR 4939). Lessons from SEED will be offered to inform advocates in Congress.

What are Special Issues Related to SEED?

It will be important as we move forward in SEED that we do not harm accountholders by pushing them above public benefit program asset-limits as we seek to help them by building their assets. We are mindful that asset limits and other restrictions in many federal benefit programs hold the potential to limit the use of SEED-type accounts by accountholder families. The disability community has a particular stake in this struggle as SSI benefits are particularly vital to survival of recipients. When recruitment of SEED accountholders has been completed, SEED will likely have several dozen SSI recipient families enrolled. Thus CFED is already exploring ways to protect SSI recipient families with an eye towards inclusion of such protections in any national SEED policy.

As SEED develops and grows, CFED and its partners will actively seek opportunities to share the progress of this initiative with various stakeholders, advocates, and the public at large.

SEED partners
Beyond Housing - St. Louis, MO
Boys and Girls Clubs of Delaware - Wilmington, DE
Foundation Communities - Austin, TX
Good Faith Fund - Helena, AR
Harlem Children's Zone - New York, NY
Juma Ventures - San Francisco, CA
Mile High United Way - Denver, CO
Oakland-Livingston Human Services Agency, Pontiac, MI
Sargeant Shriver National Center for Poverty Law, Chicago, Il

For more information on the SEED Initiative, see http://seed.cfed.org/

* Rene is a senior program manager at CFED. In his nearly six years at CFED, he has largely concentrated on work on individual assets including: direction of the American Dream Demonstration, coordination of the National IDA Learning conference, leading CFED's development of a sustainable infrastructure for the asset-building field and support of the SEED Initiative.