Last week Ford Foundation President, Luis Ubinas, spoke at the opening plenary of the Corporation for Enterprise Development's 2009 Conference on Children and Youth Savings in Brooklyn, New York. Urbinas discussed how the recent economic crisis and other events have created a unique opportunity to combat intergenerational poverty by increasing access to economic opportunity for the most disadvantaged among us. In particular, he emphasized the powerful role that children's development accounts can play in accomplishing this important goal.
Urbinas highlighted the great current disparity in asset holding between the rich and poor in America and how few assets many low- and moderate-income Americans have. He also noted that despite the fact that the federal government provides several hundred billion dollars in tax incentives each year to promote asset building very little of this goes to low- and moderate income families. Children's development accounts would be an important step towards remedying this disparity, by helping all Americans build assets starting at birth.
The Ford Foundation has been working in the assets field for twelve years now and has made more than $60 million in grants to support various asset building initiatives, including the SEED Initiative. SEED is a ten year demonstration project that is testing children's development accounts at 12 sites throughout the country. Initiatives like these have shown that the poor can in fact save and that these savings can help them attain financial security and economic mobility.
The Foundation is now focused on taking lessons from demonstration projects like SEED and helping to turn them into policy that would provide a savings account at birth for all children born in the United States. New America's ASPIRE Actwould do this by establishing a Lifetime Savings Account for every newborn child. Each account would be endowed with a one-time deposit of $500. Children from lower income households would be eligible for an additional deposit of up to $500. Earnings would be allowed to grow tax-free and lower income families would be eligible for matched savings. Once the accountholder reaches the age of 18, withdrawals could be made for postsecondary education and later for homeownership and retirement. The ASPIRE Act was first introduced in Congress in 2004 and will reintroduced again later this year.
There is also interesting work on accounts at birth being done at the state-level in states like Maine, which recently began offering accounts at birth to all newborns in the state. The initiative is privately funded by the Harold Alfond Foundation and provides a 529 college savings plan with a $500 initial deposit to every newborn.
Many of the important findings and accomplishments in the asset building field would not have been possible without the support and leadership of the Ford Foundation. It is great to see this leadership continue and strengthen as the field works to turn important and promising research into potentially transformative state and federal asset building policy, like accounts at birth for all children.