# Presentation: 731388

## Timothy Flacke
D2D Fund

Assets Learning Conference
September 19, 2006

- D2D Fund
- Assets Learning Conference
*September 19, 2006*

**Split Refunds***Building Savings at Tax Time*

## Agenda

- Overview
*Refunds to Assets* Pilots
- Implications

## Quick Quiz...

**Quick Quiz...**

**$25 million**

*Typical AFIA (IDA) annual appropriation*

**$4,280 million**

**$50 million**

*Proposed SWFA (IDA) annual cost*

*Proposed ASPIRE Act annual cost*

**$81,776 million**

*Tax refunds to filers w/ AGI <30k   **(2003)*

## Quick Quiz...

## Quick Quiz...

- You get the idea...
**$82 billion is a lot of money**

*to be to-scale, line would continue for about 30 more screens...*

*even a small slice devoted to saving could make a big difference*

## More on Tax Time...

- Consider:
- 55 million tax filers w/ Adjusted Gross Income <30k (28 million w/ AGI 10-25k)
- average of $1,482 ($1,851 for AGI 10-25k)
- by far, largest lump sum received all year
- up to 36% of household income
- ex: parent / 2 kids, 14.4k AGI: $4.4k EITC + $360 CTC
- amount variable, unpredictable
- therefore difficult to “pre-spend” with precision
- calculated in presence of tax preparer
***So, how do we capitalize on tax time?***

## What are Split Refunds?

**- OR -**

_**Before**_**: **Spend *or* Save** **(1 direct deposit)

_**Now**_**: **Spend *& *Save (2 or 3 DDs)

**- AND -**

## Why does that Matter?

- Splitting & tax time - powerful combination
- Convenience - one-stop / single decision
- Mental accounting - reflect on spending needs
- Pre-commitment - act on good intentions *now*
- “Inter-mediation” - (trusted) person there to ask
- Evidence from other arenas
- Social Security & 401(k)s
- one (or no) decision = lasting results
- “SMarT” program (commit to save future raise)
- 78% signed up; 80% stay with it through 4 raises

## Agenda

- Overview
*Refunds to Assets* Pilots
- Implications

## Nice Theory, but...

- Key questions
- does anyone want it?
- how much will people save?
- will it matter?
- To test theory: *Refunds to Assets *(R2A)
- TS 2004 w/ CAPTC
- TS 2005
- CAPTC (Tulsa)
- FoodChange (NYC)
- TS 2006
- seven sites
- H&R Block as partner

## R2A Pilot Sites, 2006

**United Way King County** (Seattle)

**Denver Asset Building Coalition**

**YWCA  **                             (San Antonio)

**FoodChange **            (New York City)

**Center for Economic Progress** (Chicago)

**ISEDVentures   **                      (Des Moines)

**Community Action Project of Tulsa County**

**R2A Pilot Sites, 2006**

- Wide variety of tax sites, models
- Used software, processing from H&R Block

## R2A Findings: Anyone Want it?

*Yes!*  (at least some)
- take up rates:
- 12+% (‘04)
- 5-8% (‘05)
- 0-8% (‘06)
- Those who use it, like it
- 100% would recommend to a friend (‘04)
- 97% plan to split again next year (‘04)
- reports of returning clients asking for it (‘06)
- Discovered need for savings accounts
- 76% have no or only 1 account
- 10% rejected by ChexSystems (‘04)

## R2A Findings:How much Savings & So What?

- Does generate savings
- initial deposits
- average $606 / 47% of refund (‘04)
- $602 / 45% (‘05)
- $969 / 47% (‘06)
- 3/4 reported no prior savings (‘04)
- 83% “service helped me save more” (‘04)
- So what?  Too early to know for sure
- In follow-up, 78% still saving or met goal (vs. 42% of comparison group) (‘04)
- 62% accounts open 7-8 mos later; avg balance of $27 after 9 mos. (‘04)

## Agenda

- Overview
*Refunds to Assets* Pilots
- Implications

## R2A Observations

- “Savings” resonates
- 31% surveyed planning to save already (‘05)
- 43% of decliners cite own saving strategy (‘06)
- Product is important
- 67% of splitters opened new accounts (‘04)
- 26% of hopefuls foiled by ChexSystems (‘04)
- simple may be best (no takers for CDs, 529s)
- Marketing matters
- multiple “asks”
- appears to be “point of sale” purchase
- Long term process?
- clients have asked for it in subsequent years
- if habitual, saving will occur when time is right

## Implications

- For CBOs
- means to fund existing accounts (e.g., IDAs)
- opportunity to promote saving more broadly (e.g., AmericaSaves campaign)
- suggest clients bring savings account info. to tax prep
- For financial institutions
- opportunity to gather deposits
- chance to drive LMI savings w/ viable initial deposits
- but must many LMI savers need on-site accounts...
- For policy advocates
- ‘plumbing’ on which to build (refundable savers cr)
- but we must demonstrate this works

## Shameless Advertisements

**Build Savings at Tax Time:***** Guide to Split Refunds for VITA Sites***
- “how to” guide for free tax prep sites
- D2D, UWA & NCTC partnered to produce
- available in early October
- www.splitrefunds.net
- companion to ***The Guide***
- late-breaking news
- forum to facilitate learning, idea sharing
- SavingsPoint
- Block & D2D’s plan to solve the account problem

## Questions / Discussion

**Questions / Discussion**

**D2D Fund, Inc.**
- www.d2dfund.org
- Timothy Flacke
- 617.541.9064