# Presentation: 359450

##  Asset-Building Strategies: Ramp Up Account Program

- Global Community Relations, Southwest Region
- Victor Ramirez, Community Relations Officer

## Citi’s Role in Community Impact 

**Developed Products and Services**
**CitiEscrow IDA Accounts**
**Access Accounts**
**Provided Citi Financial Education Program**
**Collaborated with United Way in Development  of Ramp Up Program**
**Supported Community Organizations that Effected Change**
**Provided Financial Resources**
**Provided Human Resources: Technical Assistance / Training, Program Development, Board Service**
**Provided Intermediary Resources: Capacity Building**

- Copyright © 2009 Citigroup Inc.

## Need a Continuum of Services

**2.**** Asset **
**Building**

**3.**** Building **
**Equity**

**VITA Programs**

**Marketing Campaigns**

**IDA Programs**

**Banking Services**

**Financial Education**
**Programs**

**Creating Linkages Between the Silos**

- Copyright © 2009 Citigroup Inc.

## Examples of Citi Partnering with United Way (UW)

- Copyright © 2009 Citigroup Inc.

_**2007 – 2008 Projects:**_
** “****The Unbanked Problem in Los Angeles (LA)” Report **
** ****Asset Building Collaborative with Federal Reserve**
** ****Online Asset Building Directory**
** ****Greater LA EITC Campaign Partnership **
** ****Ramp Up Pilot Programs –  IDA Partners & VITA Site**
_**Future Projects / Opportunities :**_
** ****Bank on LA Campaign  – City of LA **
** ****Asset Building Specialist Certification Program**
** ****Replicate Ramp Up in other Citi and UW markets**

**Notes:**
CSIP Report Outcomes: place-based strategy

## Saving for the American Dream IDA Program

**Part of UW of America Financial Stability Partnership focusing on Asset Building**
- EITC, VITA, Credit Building, Savings Programs, IDAs, Financial Ed, Access to Public Benefits, Workforce Development
**UW of Greater Los Angeles -  Saving for the American Dream IDA Program**
- Launched in 2001; one of nation’s largest IDA programs with nearly 1,700 accounts
- Only active IDA Collaborative in Los Angeles
- 18 Countywide Partners focused on Homeownership, Micro-enterprise, Post-Secondary Education
- Program and financial support, compliance monitoring for Federal grants, data collection, quality assurance, capacity building
- Used as a national model by other United Ways
- Outcomes: 85 Homeowners; 373 Business Owners; 20 Educational Investments

- Copyright © 2009 Citigroup Inc.

**Notes:**
Citi holds 20% of UW’s Accounts (300)

## Addressing Challenges of Savings Programs

**General Savings Programs**
- Ineffective incentives for opening new accounts (ie, upfront cash bonus)
- Unfunded or inactive savings accounts
- Inconsistent savings patterns (ie, short term vs. long term savings)
**Individual Development Accounts**
- High cost / High touch / Low tech IDA structure
- Discouragement factor when unable to acquire asset goal (ie, home purchase)
- Unused Federal and non-Federal match dollars (lost community equity)
- Restrictive eligibility guidelines for Federally-funded programs (ie. earned income, asset test limitations, etc.)

- Copyright © 2009 Citigroup Inc.

**Notes:**
Cost effectiveness of having Citi staff at VITA sites has been questioned
 Current Citi Systems and controls prohibit pregeneration of accounts

## Ramp-Up Savings Account Features

_**RAMP Up Pilot Program:**_**  Low-cost, flexible, “no-strings” savings program that provides higher subsidized interest rates as high as 21% APY as an incentive for consistent, long-term savings  **
-  15-month saving cycle (extendable)
-  No minimum balance requirement
-  No minimum monthly deposit requirement
-  15% to 21% APY subsidized interest rate on deposits with maximum incentive limits (tax-free)
-  Can withdraw full savings at any time for any reason with no penalty
-  Purchases not limited to asset-specific purchases
-  Transferable to other savings / investment products
-  Financial education is offered, but not required
-  Uses CitiEscrow Account platform to open accounts online

- Copyright © 2009 Citigroup Inc.

**Notes:**
Ramp Up is considered an IDA account in all respects, but not an AFIA IDA because not qualified asset purchases
Pilot program promoted at 4 agency partners (JobStarts, MHDC, MALDEF, PACE)

## Ramp Up Account Incentives at VITA Sites

**Interest Incentive Based on Initial Deposit and Monthly Savings Deposit**
**Example:**

| Initial Deposit Amount | Monthly Savings Contribution | Annual Percentage Yield | Total Savings + Interest (15 mos.) |
| --- | --- | --- | --- |
| $500 | $40 | 19.35% | $1312 |
| $700 | $50 | 15.1% | $1659 |

- Copyright © 2009 Citigroup Inc.

## Product Comparison

|  | Ramp Up | IDAs |
| --- | --- | --- |
| Savings Period Goal | Up to 15 months (Extendable) | 6 months to 5 years |
| Minimum Deposit Requirement | None | Min. Quarterly Deposit |
| Withdrawal Restrictions | None | Forfeits match if withdrawn before 6 months, or used for non-qualified purchase |
| Qualified Purchases | No Restrictions | First home, business, higher education |
| Financial Education | Encouraged, but not required | Required 10 hours training |

- Copyright © 2009 Citigroup Inc.

**Notes:**
UW trained by Citi on CitiEscrow product
UW keeps track of principal and interest in a spreadsheet that calculates interest earned

## Product Comparison    continued...

|  | Ramp Up | IDAs |
| --- | --- | --- |
| Subsidized Incentive | 15% to 21% APY on savings | 1:1 to 8:1 Match on invested savings |
| Maximum Incentive Cap | $250 | $6,000 per account (based on asset type) |
| Benefit Payout Restrictions | No Restrictions | Match only offered if savings invested in qualified asset purchase |
| Case Management | Low Touch | High Touch |
| Cost Factor | Low Cost ($300 per account) | High Cost ($1500 per account) |

- Copyright © 2009 Citigroup Inc.

**Notes:**
UW trained by Citi on CitiEscrow product
UW keeps track of principal and interest in a spreadsheet that calculates interest earned

## Variations in Ramp Up Structure

**Hybrid Ramp-Up / IDA Model**
- High interest on deposits and match on asset purchase
- Terminated / closed accounts still receive interest subsidy
- Partial use of original match to finance interest subsidy
**Flexible Program Design Based on Need and Population Served**
- Flexible eligibility criteria (AMI vs. Federal poverty guidelines)
- Flexible opening balance and deposit amounts
- Flexible purchase requirements
- Extendable savings periods
**Flexible Incentive Design**
- Interest subsidy only
- Interest subsidy combined with other incentives
- Scaling match on 1st deposit only, plus interest subsidy

- Copyright © 2009 Citigroup Inc.

**Notes:**
Cost effectiveness of having Citi staff at VITA sites has been questioned
 Current Citi Systems and controls prohibit pregeneration of accounts

## Ramp Up Pilot Outcomes 

**Pilot Project in 2007 : June 2007 – June 2008**
- 42 accounts opened in first 2 months
- Participants co-enrolled in IDA Program
- $12,000 in total deposits in first 90 days (average $300 / acct.)
- $23,970 in total deposits in 180 days (average $600 / acct.)
- 80% made regular monthly deposits
- 28% more savings than IDA savers during same time and similar group
- 9% Attrition rate vs. 26% Attrition for IDA savers
**Phase 2 in 2008 Tax Season at 1 VITA Site**
- 29 accounts opened at VITA / IDA site
- Average $500 from tax refund used for opening balance through direct deposit ($300 is opened with stimulus checks)
- Did not offer to co-enroll in IDA Program, but many are interested
- $10,427 in total deposits in 90 days (average $417 / acct.)
- Current total deposits: $29, 610
- 2 homeownership purchases using savings

- Copyright © 2009 Citigroup Inc.

**Notes:**
Cost effectiveness of having Citi staff at VITA sites has been questioned
 Current Citi Systems and controls prohibit pregeneration of accounts

## 2009 Ramp Up Expansion 

**Phase 3 Expansion**
- 4 new sites at VITA locations + 1 existing site
- Countywide outreach to 5 communities  that now include Boyle Heights, East LA, Pacoima, Koreatown, Pasadena
- Increased Goal of 175 new accounts opened by June 2009
- $500 Opening deposit using Split Tax Refund
**Next Steps**
- Statewide expansion
- National Demonstration Project

- Copyright © 2009 Citigroup Inc.

**Notes:**
Cost effectiveness of having Citi staff at VITA sites has been questioned
 Current Citi Systems and controls prohibit pregeneration of accounts

## Endnotes

- Citi (NYSE: C), the leading global financial services company, has some 200 million customer accounts and does business in more than 100 countries, providing consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, and wealth management. Citi’s major brand names include Citibank, CitiFinancial, Primerica, Smith Barney, Banamex, and Nikko. Additional information may be found at www.citigroup.com or www.citi.com.

- Copyright © 2009 Citigroup Inc.

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