# Presentation: 676332

## IDA Programs and the Workplace: Emerging Asset Building Partnerships

- St. Louis, Missouri
- November 7, 2007

## Using Research to Build IDA Partnerships with Employers

- Charles ShannonVice President, Mile High United WaySenior Consultant, United Way of America(303) 561-2340chuck.shannon@unitedwaydenver.org

## Conducted by United Way of America
Sponsored by the Office of Community Services of HHS & the Ford Foundation
Conducted between 2003 and 2005
Survey research
Legal research
Applied research (pilot sites)

- Conducted by United Way of America
- Sponsored by the Office of Community Services of HHS & the Ford Foundation
- Conducted between 2003 and 2005
- Survey research
- Legal research
- Applied research (pilot sites)

## Survey Research

- ISED Solutions a subcontractor for survey research
- Focus on IDAs but also related asset building
- Goal: test the receptivity of IDAs
- 50 local, regional and national employers
- Not random, but selective survey
- Conducted early 2005
- Questionnaire data in aggregate form, but individual employer data anonymous

## Industry Type of Employer

- Manufacturing					18%
- Food industry/restaurant				16%
- Health care					14%
- Financial services, banking, insurance	14%
- Social or human services			10%

## How would IDAs be offered?

- Externally only			62%
- Externally and internally		20%
- Internally only			 2%
- None – not interested		 4%
- Don’t know			12%

## Level of Funding Willing to Commit to Match* 

- $0 (funding from other sources)		18%
- $1-120						  6%
- $121-500						  4%
- $501-1,000					  4%
- $1,001-2,000					  4%
- Lump sum (dependent upon # employees)	  8%
- Don’t know 				           42%
- * Adds to 86% because of 7 no responses

## Level of Funding Willing to Commit to Program Operations* 

- $0 (funding from other sources)		16%
- $1-120						12%
- $121-500						 4%
- $501-1,000					 2%
- $1,001-2,000					 0%
- Lump sum (dependent upon # employees)	 8%
- Don’t know 					44%
- * Adds to 86% because of 7 no responses

## Consider Existing Benefit Funds or Redirecting Benefits for IDAs

- 				 	 Existing	Redirect
- Yes			        	       8% 	     14%
- No				       42%	     40%
- Maybe			       22%	     16%
- Don’t know		       14%             16%
- Did not answer                      14%             14%

## Likelihood of Involvement in IDAs

- Very likely		           26%
- Likely			20%
- Unlikely			14%
- Very Unlikely		  6%
- Don’t Know		34%

## Offer or Would Consider Adding Asset Building Products

- 				         	 	Existing     Consider
- Direct deposit			        90%	   6%
- No and low-fee banking products     60%        20%
- Financial educ./money manage.       42%        44%
- Outreach to EITC                              40%        44%
- Debt or credit counseling                  36%        40%
- Outreach to 529 Plans                      20%        32%
- Tax preparation services                  20%        34%

## Reasons Unlikely to Be Involved or Offer IDAs

- Can’t afford a new benefit			44%
- Other benefits more important			34%
- Wage increase is a higher priority		30%
- Would create administrative problem		28%
- Adverse impact on other benefits		26%
- Perceived lack of interest by employees	24%
- May stigmatize low-wage employees		22%

## Legal Research 

- Employees Retirement Income Security Act (ERISA)
- Taft-Hartley Act (Labor Management Relations Act)
- Gramm-Leach-Bliley Act (Privacy Act)
- IRS Rulings

## ERISA

- Research conducted by Parker & Brown, PC under contract with UWA
- Two-question test of applicability of ERISA
- Is the benefit offered by an employer?
- Is the benefit itself described in the Act?
- Five IDA models developed as possible applicability to ERISA

## Employer-CBO Partnership Models

- Employer Standalone
- Employer Standalone but contracts with CBO
- Community-based with Employer Funding & Quid Pro Quo
- Community-based with Employer Funding but no Quid Pro Quo
- Community-based Standalone

## Slide 16

| ERISA BENEFIT | Model I | Model II | Model III | Model IV | Model V |
| --- | --- | --- | --- | --- | --- |
| Home
Purchase | likely | likely | likely | possible | no |
| Education | likely | likely | likely | possible | no |
| Business | possible | possible | unlikely | unlikely | no |

## Labor-Management Relations Act

- Benefit Plans:
- Unilaterally administered by employer
- Unilaterally administered by union
- Jointly administered
- Independently administered
- Apprenticeship & training programs and educational scholarships covered by Act

## Factors Affecting Union Support 				for IDAs

- Relevance of IDAs to other benefits
- Capacity of union
- Capacity of CBO/CBOs
- Method of benefit plan management (employer, union, joint or independent)
- Method of IDA recruitment and selection of union members

## Brief on Gramm-Leach-Bliley Act 

- What data is confidential
- Protecting IDA program information
- Steps to protect participant data
- Privacy audits
- Special role of privacy in an employer-based IDA program

## IRS Questions Regarding IDAs

- Under what conditions can an employer take a federal income tax charitable deduction for contributing to an IDA program?
- Under what conditions can a participant accountholder (i.e., an employee) avoid paying taxes on matching funds?

## Relevant IRS Rulings

- 99-44: If program is essentially the same as an AFI program, then AFI regulations apply
- 79-131: If no preference is given to children of employees of a company that provides scholarships, then they are treated as members of the community-at-large

## Applied Research

- 16 pilot sites
- 8 sites (13 employers + 4 pending) as of end of research period
- AFI CBO models provide relevance for employers
- Employers provided a mix and range of match and operating support

## Business Case for IDAs

- Increase productivity: through financial stability, reduced absenteeism, reduced turn over and less training (use Federal Reserve Bank data)
- Demonstrate benevolence: do the right thing for your employees

## Strategies for Targeting Employers

- Cherry pick based on existing relationships
- Conduct industry sector analysis
- Select geographic target (e.g., neighborhood revitalization)
- Align with workforce development initiative

## Factors to Assess for CBO Involvement with Employer IDAs

- Appropriateness of workplace as recruitment venue
- Cost and revenue impact
- Adaptation, if any, in policies
- Reliability of organizational partners
- Staff turnover at CBO and employer
- Access to the workplace (on or off-the-clock) for related training and counseling

## Assessing Relative Interest in IDAs Compared to:

- Payroll services (e.g., direct deposit for paychecks, Stored Value Cards, 529 Plan deposits)
- EITC and/or free tax preparation
- Public benefits & use of benefit calculators
- Financial services (e.g., bill paying, loans)
- Credit counseling & financial education

## Competition or Alliance with IDAs?

- Employer-assisted housing
- Lifelong Learning Accounts (LiLas)
- Employee Assistance Plans
- Education, training & apprenticeship support

## Examples of Employer Involvement 

- Denver
- St. Louis
- Omaha
- Seattle
- Winston Salem
- Detroit
- San Antonio

## Overview of Employer Involvement in IDAs

- Participation level: up to 50 employees
- Funding support: varies considerably
- Recruitment: workplace is seen as another venue, not special case or circumstance
- Asset building appeal: attracted to products in addition to IDAs

## Similarities in Employer Involvement

- All collaborate with CBO or government models (there are no employer standalone models)
- Recruitment of employees takes place at the workplace
- All use some type of financial education and counseling through CBO or government
- All promote other asset building activities, not just IDAs

## Differences in Employer Involvement

- Not all three IDA uses permitted
- Varying funding for match and operations
- Some on site financial education and counseling
- Some “on-the-clock” financial education and counseling

## Examples of CBO Adaptation to and Innovation with Employers

- Denver
- McDonald’s: Amharic translation and banker for Ethiopians
- Denver Health: combined the IDA with education reimbursement costs from employer
- City & County of Denver: special rules for TANF participants & CDBG funds
- St. Louis
- McDonald’s: 6 month test as retention tool

## Examples of CBO Adaptation to Employers (cont.)

- Omaha
- Non-Profit Employers: local United Way provides 25% participant match
- Marriott: illustration of local partnership with international corporation
- Seattle
- Farestart: temporary employer linked with permanent employers of ex-homeless

## Examples of CBO Adaptation to Employers (cont.)

- Winston Salem
- Novant/Forsyth Medical Center & Wake Forest University: limited to homeownership through partnership with local housing program
- Detroit
- CVS: local partnership with national employer; major credit issues of employees
- Focus Hope: a non-profit organization that focuses on an AA degree for employees

## Concluding Perspectives

- Interested employers prefer a CBO model
- View the workplace as another appropriate venue, not a special case
- Concept is easy to sell, but cultivation of a commitment takes a lot of effort
- The appeal of IDAs is often as a fit with other asset building services and products
- Relevant examples & research to draw upon