Business and Finance Week
June 10, 2010
EARN, the nation's leading provider of matched savings accounts for low-income workers, has partnered with the City of San Francisco and CFED on an ambitious Kindergarten to College (K2C) children's savings accounts program to begin pilot implementation in spring 2010. EARN will match the savings of every low-income family participating in the pilot program; details of this groundbreaking initiative were announced by Mayor Gavin Newsom at a budget unveiling event.
Designed to promote savings and economic mobility, children's savings accounts are universal, long-term, asset-building accounts established for children with public seed money that grows over time with additional deposits and earnings. San Francisco's K2C initiative promises to open a college savings account for every child entering kindergarten in the City's public schools, with an opening deposit of $50 from the City of San Francisco. EARN, the program's non-profit sponsor, plans on providing a $120K match-a $100 bump for each of 1,200 low-income students (defined here as eligibility for free or reduced priced public school lunch).
While Children's Savings Accounts is an untested social works concept in America, government-sponsored long-term savings accounts for children have been met with great success abroad. For example, the Child Trust Fund (CTF), a British initiative established in September 2002, grants eligible children £250 at birth and at age seven, with further payments of £250 available for the children of low-income families, and options for additional contributions until the child reaches age sixteen. Studies have shown that this form of "asset-based egalitarianism" level the competitive playing field and help smooth children's path to adulthood.
"Research shows that children with college savings accounts are seven times more likely to complete college," said EARN President and CEO Ben Mangan. "The spark being lit in San Francisco will have a profound impact on participating families and the choices they make to prepare their kids to attend college." About the Kindergarten to College Partnership Kindergarten to College is an initiative of the San Francisco Mayor's Office, Office of the Treasurer, the Department of Children, Youth, & Their Families and the San Francisco Unified School District. The Corporation for Enterprise Development is working closely with these agencies to develop a design and implementation plan. Partnerships with financial institutions, local and national nonprofits, and philanthropic individuals and organizations will be critical to the initiatives' success. About EARN EARN is an award-winning California-based nonprofit that gives low-income workers the power to create economic prosperity for their families for generations to come. Since 2001, EARN has helped tens of thousands of low-wage families through innovative financial products including matched savings accounts, checking accounts for the unbanked, micro-loans, and money management coaching. EARN's powerful combination of lasting assets and financial know-how enables families to build wealth and achieve life-changing goals such as saving for college, purchasing first homes, or starting small businesses. Through its policy and research arm, EARN evaluates its impact and reports on new data regularly, sharing lessons learned and best practices in order to transform the financial services landscape and to champion effective public policies. EARN's ultimate vision is that millions of well-informed, low-income American families will achieve financial success through proven strategies, fair public policy, and their own hard work. Visit www.earn.org or follow us on http://twitter.com/EarnOrg.