On April 19, The Community Foundation hosted a panel of national leaders for a discussion about how investments in Children’s Trust Accounts create a brighter future for communities. The event was part of the “In Pursuit of Economic Justice” Webinar Series –designed to bring together experts to explore innovative approaches to closing the racial wealth gap.
“We want young people to be able start their lives with the flexibility to pursue their dreams in any direction that they want to go,” shared The Community Foundation's Anna Hargrave. “By expanding the possibilities for an entire group of children, we can help forward our vision of closing the racial wealth gap across the Greater Washington region.”
“When you think about poverty, you often focus on income,” Dr. William Elliott a leading researcher and professor at the University of Michigan shared. “But income is dealing with the symptoms of poverty instead of the root cause of poverty. Poor people don't just have a lack of income; what they have is a lack of opportunity.”
“Children’s Trust Accounts are not just about money; it's about making sure that future generations are in a position to access the resources they need to be successful.”
Child Wealth Building Programs (such as a “Child Savings Accounts”, “Baby Bonds” or “Children’s Trust Accounts”) are growing increasingly popular in the philanthropic and public sectors. A private or public funder provides seed money to open a savings account for kindergarteners, which accrues value until the student graduates high school and can be used for different purposes.
In the case of Child Savings Accounts, funding is often restricted towards post-secondary education or training through a 529 state college savings plan. A Children’s Trust Account allows funding to go towards a wider range of wealth building opportunities, including trade school, homeownership, or entrepreneurship. The Community Foundation intends to launch a Children’s Trust Account pilot program at two elementary schools in Prince George’s County and Montgomery County sometime in the next year.
Dr. Elliott is the founding director of the Center of Assets, Education, and Inclusion, and recently authored a comprehensive report “Unleashing the Power of Children’s Savings Accounts (CSAs): Doorway to Multiple Streams of Assets”. The report outlines some of the biggest outcomes from child wealth building programs, including what Dr. Elliott calls “tangible hope.”
A mother participating in NYC Kids Rise's Child Wealth Building Program shares the impact the program has had on her son's learning.
“When you give a kid an asset, you're allowing them to begin to purchase some part of their future self,” Dr. Elliott explained. “It's a very valuable thing. It's concrete. It's not just ‘I hope one day they go to college.’ You’re giving them real, tangible assets so they can plan for their future in a way that they’ve never been able to do before."
“All of a sudden, college is possible; not just in a wishful thinking kind of way, but in a tangible, near-future, kind of way.”
“It's not just about having an asset accumulate and be able to gain on that early investment,” Leila Bozorg, Chief of Strategy and Policy at NYC Kids Rise added. “It's about the narratives that a kid is hearing from an early age and those expectations of success and support to meet those expectations.”
NYC Kids Rise started out in 2017 as a pilot program in New York City’s School District 30 (about 3,500 kindergartners). Six years later, the program has expanded city-wide – thanks to a partnership with New York City Public Schools – making it the largest such program in the country. Champions of the project included Maryland Governor Wes Moore, then CEO of Robin Hood, which invested more than $1 million towards the initiative.
Governor Wes Moore (then CEO of Robin Hood) talks about the importance of Child Wealth Building Programs.
While the financial partnership with New York City Public Schools has been a huge benefit to NYC Kids Rise, Leila says that it’s the existing infrastructure provided by the school system that has opened new windows of opportunity for students.
“What we've tried to do is not just build a vehicle for asset accumulation; we’ve engaged the entire ecosystem that impacts the long-term success of a child,” Bozorg explained. “We know that each part of that ecosystem can impact a child's economic opportunities in the future.”
NYC Kids Rise works with the school system to develop financial education curriculums for the classroom that can be personalized to each child – allowing them to develop financial literacy skills in real-time. They also provide workshops and resources for parents so they can create their own savings account – building the foundation of a culture of saving for the entire family that Dr. Elliott says is important to strengthen and encourage.
“Because of these programs, families are starting to have active conversations about their kids’ futures, well in advance – they’re catching a glimpse of a financial future that they didn’t have the capacity or resources to see before. Over time, they begin to develop and adopt long-term habits for financial success.”
Community Leader Claudia Coger talks about their community investment in the NYC Kids Rise community scholarship program.
When asked about secrets to success, Bozorg added that community involvement is key. Early on, NYC Kids Rise set up community scholarships – allowing anchor institutions and community groups to make direct contributions to child wealth building programs rather than contributing through more traditional scholarship programs. Dr. Elliott noted that this format allows funders to have a greater impact on students, since their investment multiplies the impact of the child’s savings account.
“Any investment can make a difference in a child’s life,” Bozorg said. “But we’ve found that the real growth happens when communities and community partners take the lead in committing to a generation’s future.”
When asked about lessons learned from such a program, Bozorg had just one word to say: “Patience.”
“These are long-term, legacy-changing programs that can have major impacts on institutions and on people's lives. That change isn't going to happen overnight.”
“We're trying to change minds and cultures around saving,” Dr. Elliott added. “It's one thing to have this platform and provide this resource; it's another to help them access it and see the value in it.”
That being said, both were highly optimistic about the prospects for The Community Foundation to launch a Children’s Trust Account pilot program.
“I think your program will be a good marker,” Dr. Elliott remarked. “Not only for the Greater Washington Region, but for the whole country to better understand what happens when we make larger investments in our children’s future over time.”
Click here to view a recording “In Pursuit of Economic Justice: A Primer on Children’s Trust Accounts. For additional information on Children’s Trust Accounts and other economic mobility initiatives, visit www.thecommunityfoundation.org/strategic-plan.