a National 

Demonstration 

of Child 

Development 

Accounts

SEED

LESSONS FROM
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Acknowledgments:

The authors gratefully acknowledge the funders who made the SEED initiative possible: Ford Foundation, Charles 

Stewart Mott Foundation, Lumina Foundation for Education, Charles and Helen Schwab Foundation, Jim Casey 

Youth Opportunity Initiative, Citi Foundation, Ewing Marion Kauffman Foundation, Richard and Rhoda Goldman 

Fund, MetLife Foundation, Evelyn and Walter Haas, Jr. Fund, Edwin Gould Foundation for Children, and W.K. 

Kellogg Foundation.

Our thanks also go to the SEED Partners, who made SEED happen on the ground and facilitated this research: 

Beyond Housing, Boys & Girls Club of Delaware, Cherokee Nation, Foundation Communities, Fundacion Chana y 

Samuel Levis, Harlem Children’s Zone, Juma Ventures, Mile High United Way, Oakland Livingston Human Service 

Agency (OLHSA), People for People, Sargent Shriver National Center on Poverty Law, Southern Good Faith Fund, 

& State of Oklahoma.

We are grateful, too, to the members of the SEED Research Advisory Council for their leadership and support 

throughout the SEED initiative and for their guidance, comments, and suggestions on this report: Benita Melton 

of the Charles Stewart Mott Foundation, Robert Plotnick of the Daniel J. Evans School of Public Affairs, Frank 

DeGiovanni and Kilolo Kijakazi of the Ford Foundation, Christine Robinson of Stillwater Consulting, William Gale 

of The Brookings Institution, Lawrence Aber of The Steinhardt School of Education, Duncan Lindsey of the UCLA 

School of Public Affairs, and Larry Davis of the University of Pittsburgh.

We also owe a huge thank you to Rick Williams, president of Realize Consulting Group, for his diplomacy and skill 

at keeping us on task throughout the initiative and during the writing of this report. 

Finally, we extend our gratitude to others who carefully reviewed this report and provided invaluable comments: 

Ngina Chiteji, Darrick Hamilton, Amy Locklear Hertel, Yunju Nam, Paul Ong, R. Varisa Patraporn, Deirdre Pfeiffer, 

Lessons from SEED, a National Demonstration of Child Development Accounts

Editors: Michael Sherraden & Julia Stevens

Authors: Deborah Adams, Ray Boshara, Margaret Clancy, Reid Cramer, Bob Friedman, Rochelle 

Howard, Karol Krotki, Ellen Marks, Lisa Mensah, Bryan Rhodes, Carl Rist, Edward Scanlon, 

Leigh Tivol, Trina Williams Shanks, & Robert Zager

September 2010
1

Executive Summa

In an April 2009 speech at Georgetown University, Preside

Barack Obama said: 

We cannot rebuild this economy on the same pile of 

sand. We must build our house upon a rock. We must 

lay a new foundation for growth and prosperity: a 

foundation that will move us from an era of borrow 

and spend to one where we save and invest. 

Saving for Education, Entrepreneurship, and Downpayment 

(SEED) is a policy, practice, research, communication, and 

market development initiative designed to test the efficacy 

of and inform policy for a national system of savings and 

asset-building accounts for children and youth. SEED is 

implementing and studying inclusive saving in the form of 

Child Development Accounts (CDA established as early 

as birth and ideally lasting across the full life course for all 

Americans.

SEED is demonstrating a strategy for saving and investing, 

with the long-term aim of fostering greater capability, security, 

and well-being for all American families. We believe that a

system of universal savings such as the one demonstrated in 

SEED would shift the economy away from an overreliance on 

credit. The goal would be to achieve a little less debt, a little 

more savings. In this period of economic adjustment and

transition, SEED may help to inform and achieve President 

Obama’s call for a “new foundation for growth and prosperity” 

for the “save and invest” economy. In that spirit, we offer the

experience, data, and insights in this report. 

This summary report on SEED is based on CDA experienc

with over 1,171 children and their families in 12 states and 

communities, as well as related state and federal policy, market 

development, and communications. Extensive, multi-method 

research has been conducted as part of SEED. The research 

ranges from in-depth interviews with a group of youth 

participants in a local SEED program to a large, statewide 

experiment with a control group. SEED research results offer 

insights to inform the design of an inclusive system of CDAs

Lessons

Key lessons from SEED experience and research include the 

following (not presented in order of importance):

1. CDAs appeal broadly to Americans across political and 

geographic lines.  national telephone survey (Peter D.

Hart Research, 2007) suggests that no matter their political

ideology or geographic location, Americans like the idea of

universal CDAs. Specifically, those polled support a saving

account opened at birth for every child in the nation to be 

used for approved purposes. They also support accounts 

with an initial deposit made by the federal government that 

permits additional contributions and incentives for saving, 

and is allowed to grow tax-free. Close to seven out of every

10 respondents (69%)—and more than three-quarters of 

parents (78%)—articulate support for this idea (Peter D. 

Hart Research, 2007).

2. Outreach and enrollment in SEED is challenging when 

account opening is not automatic. All sites in SEED were

able to recruit their targeted number of enrollees, although 

many took much longer than expected to reach their targets 

and had to expand their reach beyond the organizations 

or groups initially identified in their proposals.  small

qualitative study carried out with parents who opted not to 

enroll their children in SEED (Williams Shanks, Johnson, & 

Nicoll, 2008) suggests that factors such as a general mistrust 

of financial institutions and government, reluctance to 

share financial information, and embarrassment about 

gaps in financial knowledge influenced their decision. It

may be that more information was needed by potential 

enrollees at times that were more convenient and in ways 

that were more conducive to resolving questions and 

addressing fears. Cultural competence may also have been

a factor, especially when there was ethnic diversity among 

participants and staff.

 In interviews and focus groups, parents who did enrol

in SEED indicated that staff members from their local 

programs played key roles in answering questions and 

easing their initial concerns about signing up for the 

program (Scanlon & Wittman, forthcoming; WheelerBrooks, 2008).

 In contrast to challenges in enrollment in SEED, enrollmen

in SEED for Oklahoma Kids, where account opening is 

automatic, has proceeded smoothly. Among those who

agreed to participate in the study and were randomly 

selected to receive an account, all except one of the 1,361 

participants accepted the account (Zager, Kim, Nam, 

A student from Beyond Housing’s SEED program makes a deposit into her 

SEED account. Students in SEED learned how to fill out deposit slips and 

read bank statements in financial education classes.

1. Child Development Accounts are also referred to as Child Savings Accounts, Educational Savings Accounts, SEED Accounts, KidsAccounts, Lifetime Savings Accounts, U

Savings Accounts, Individual Development Accounts in their original meaning, or other term.  Features of these proposals may differ, but, as long as they embody the core values 

universality, lifelong, progressive, and asset-building, this discussion of SEED lessons is applicable.
2

Clancy, & Sherraden, forthcoming).

3. Families of all income levels have saved and built assets 

for children and youth in SEED. Despite high levels of 

poverty and limited financial knowledge, a substantial 

percentage of SEED participants made deposits to their 

accounts. Participants saved an average of $30 per quarter 

over the course of the program. At the end of almost three

years, the average total accumulation, including incentives, 

for SEED participants was $1,500 (Mason, Nam, Clancy

Loke, & Kim, 2009). While levels of saving may seem 

modest, the average accumulation of $1,500 is sufficient to 

cover 60% of one year’s tuition at a community college. If

these averages were to be maintained from birth to age 18 

with modest returns, the nest egg for college would likely 

exceed $6,000—enough to cover two years of community 

college tuition and fees at current prices. 

4. Families have used innovative strategies to save in 

SEED.  cross-sectional survey with 165 parents in SEED

programs serving pre-school, elementary, and middle 

school students suggests that parents use innovative 

strategies to “find” and “make” new money for deposits into 

their children’s accounts. The findings suggest a pattern 

of attempting to make sacrifices and implement creative 

strategies to deposit money into children’s savings accounts 

in the face of serious financial resource limitations. 

5. Saving is not easy, especially for lower-income families.

While the overall data suggest positive savings for the 

account holders in SEED, saving is by no means easy for 

these participants. Economic barriers to asset accumulation 

were prevalent among families participating in SEED. 

Almost half of SEED participants were from families with

income below the federal poverty line, 10% from families 

that receive Temporary Assistance for Needy Families, an

41% from families that receive Food Stamps (Mason et al.,

2009). At some sites, economic barriers were more severe.

It appears that low-income families find it difficult to save

because of a variety of factors, including no slack in the 

household budget, high costs of food and energy, multiple 

children, short-term needs, predatory lenders and excessive 

borrowing, complicated financial products, and inaccessible 

financial institutions (Scanlon, Wheeler-Brooks, & Adams,

2006; Wheeler-Brooks, 2008; Williams Shanks, Johnson, 

& Nicoll, 2008). These patterns suggest that, without 

institutional supports, people may find it difficult to save. 

Moreover, without a progressive match structure, universal

CDAs could potentially increase wealth inequality, becaus

the rich would save more. 

6. SEED program and account features, or “institutional” 

characteristics, explain much about saving performance.

SEED account design and program arrangements—

“institutional” features—appear to facilitate saving for 

participants, especially those with very low incomes. 

Findings from 14 focus groups with 76 parents from SEED 

programs serving pre-school through middle-school 

children suggest that account features that made money 

less immediately accessible—such as direct deposit and 

withdrawal restrictions—facilitated saving. While some 

parents were unaware or skeptical of electronic banking 

mechanisms, a number of SEED parents used direct 

deposit successfully to save in their children’s accounts 

(Wheeler-Brooks, 2008). Looking at account incentives, 

research suggests that the initial deposit and other financial 

incentives may increase total SEED accumulation, while a 

higher saving match limit may increase savings (Mason et

al., 2009). 

7. In addition to financial savings, CDAs may have positive 

attitudinal, behavioral, and social effects. Suggestive 

findings from research at community-based SEED sites 

suggest the potential of CDAs to generate positive effect

beyond the savings account itself. In-depth interviews with

27 parents at two SEED sites found perceived impacts on 

well-being. These included perceived positive effects on: 

(1) self-esteem, (2) self-efficacy, (3) hope for the future, (4) 

future orientation, (5) sense of security, (6) fiscal prudence, 

and (7) interaction with children about finances and 

college. Parents also believed that they observed positive 

effects on their children including: (1) fiscal prudence, (2) 

future orientation, and (3) self-esteem.  qualitative study

with teens at one SEED site found similar perceived positive 

effects on (1) self-esteem (2) future orientation (3) sense of 

If these averages were to be maintained from birth to age 18 with modest 

returns, the nest egg for college would likely exceed $6,000—enough to cover 

two years of community college tuition and fees at current prices.

Rick Williams, a member of the SEED Policy Council and SEED Advisory 

Board, joins a Foundation Communities staffer and two students 

celebrating their graduation from Foundation Communities’ SEED program.
3

security (4) financial knowledge, and (5) fiscal prudence 

(Scanlon & Adams, 2009). The Michigan impact assessmen

showed that SEED had a significant, positive effect on the 

importance parents attach to a college education (Marks,

Rhodes, Engelhardt, Scheffler, & Wallace, 2009)

8. Community-based organizations play positive roles 

in implementing CDAs. Strong relationships with 

community-based agencies and personal relationships 

with agency staff were important in overcoming 

misgivings about participation in SEED, and played a key 

role in motivating program participation and assisting 

participants in making account deposits (Marks, Rhodes

Wheeler-Brooks, & Adams, 2009). Even with centralized

providers and automatic enrollment, public education and 

community outreach and programming will continue to 

be desirable to increase CDA understanding, participation

and performance. Community-based organizations may

represent the best opportunity for culturally sensitive 

and tailored interventions. In these ways, communitybased organizations may be beneficial for recruitment

and continued participation in a universal CDA progra

(Marks, Rhodes, Wheeler-Brooks, et al., 2009)

9. Full participation in financial education is challenging. 

Even with a range of incentives to encourage participation, 

none of the community partners was able to achieve full 

participation in their financial education programs. In any

effort to offer CDAs on a large scale, providing financia

education at school would be the most promising way 

to promote access. The initial experience of the SEED 

community partners shows promise in integrating financial 

education into an existing curriculum at school

10.There is potential for a national CDA policy that is 

universal, lifelong, progressive, and asset-oriented.

A national system of CDAs structured as investme

accounts is an opportunity to create an appropriate 

automatic investment structure that will mitigate 

market risk and serve as a means to deliver financial 

education on a meaningful scale. Prior to and ever since 

the launch of SEED, CDAs at birth have attracted bipartisan support, beginning with the KIDSave propos

of the early 2000s, the ASPIRE Act of 2004 (

beyond), the Baby Bonds and Young Savers Accounts o

2006, and continuing with the PLUS Accounts, 401Kids

and other proposals from the US Congress over the las

several years (Cramer, forthcoming) (See Appendix 6)

In fact, few multi-billion dollar ideas in recent memory

have brought Democrats and Republicans together as

well as CDAs, suggesting potential for enactment in th

future.

11.Savings plan structures, such as the federal Thrift 

Savings Plan or State College Savings (529) Plans, 

are potential platforms on which to build universal 

and progressive systems of CDAs. The Thrift Saving

Plan has features that would be desirable in a CDA

including a limited number of investments, low fees, 

and government administration with management by 

a private firm. However, while no savings policy or 

product is perfect, College Savings (529) Plans, available

in all states, may come closer to fulfilling the features 

of an ideal CDA. State 529 plans have a wide rang

of positive features that lend themselves to inclusion 

and cost containment. These include community

outreach, low initial deposits, low minimum deposits, 

centralized accounting and data, simple investment 

options, low-cost investment options, and streamlined 

consumer education. Plan structures can also operate 

with support from community-based organizations. 

Four of the five state policy innovation projects in 

SEED have used the state 529 plan, and the state-wide 

experiment in Oklahoma, known as “SEED OK,” also 

uses the state 529 plan. Drawbacks to state 529 plans 

are that they officially allow savings to be used only for 

higher education (penalties for alternate use are small) 

and have not been adjusted to the needs and interests 

of low-income savers. Like IRAs and 401(k)s, 529 pla

are regressive; however, some states have taken steps to 

make 529 plans more progressive (Clancy, Orszag, &

Sherraden, 2004; Clancy & Sherraden, 2003)

Conclusions

Turning to conclusions, one of the strongest arguments for

children’s savings accounts is their potential to chart a path 

over time toward economic security. But this is not expected 

to happen quickly. Asset building is a long-term process. I

takes time for potential positive psychological, behavioral, and 

educational effects associated with account ownership to take 

hold. This means that strategies to support such outcomes will 

have to be in place over the long term. 

Purpose and presentation. While CDAs might be usefull

promoted as a potential solution to inequality, asset poverty, 

A student from Southern Good Faith Fund’s SEED program proudly displays 

the bank where he keeps his allowance between trips to the credit union.
4

low household and national savings, lack of opportunity, 

college affordability, and financial capability, and while CDA

may in fact address each of these issues to some extent, CDA

should be viewed foremost in simple terms as saving and 

investing for future economic security and development.

Inclusion in CDAs. As in all optional savings policies, optional

enrollment in SEED is challenging. This pattern has something 

in common with enrollment in 401(k) plans in workplaces, 

where it is challenging to get participation, and more so with 

lower-income workers. Automatic enrollment would be a

constructive response to this problem (Gale, Iwry, John, &

Walker, 2009).

Saving and opportunity. Most families did save and

accumulate assets in SEED, including the poorest families. 

The projected savings over 18 years would represent genuine 

opportunity. Moreover, a growing body of research suggests

that, controlling for many other factors, savings are positively 

associated with educational aspirations and achievement, 

including post-secondary degree completion (Elliott & Beverly, 

2010; Zhan & Sherraden, 2009, 2010).

Striving to save. Saving is challenging for many 

low-income families, and yet poor people do save. 

Impoverished people have dreams like everyone else

they want to do better, and especially they want their 

children to do better. Recognizing the challenges of saving

in low-income households, it is vital that CDA policie

are progressive, and that they are informed by empirical 

evidence regarding what makes saving successful.

More than individual endeavor. SEED research demonstrates 

that savings outcomes are explained by more than just 

individual characteristics. Instead, institutional features overall

are more predictive of savings outcomes than individual 

characteristics. As this body of empirical research on

institutional features and savings outcomes continues to grow, 

it can inform design of CDAs to maximize effectivenes

CDAs in community. SEED has demonstrated the importance 

of community-based agencies in recruitment, support, and 

financial education. Even with an efficient and centralized 

CDA policy structure, community context will matter a grea

deal in the meaning and success of CDAs “on the ground

Building a lasting CDA platform. Any large-scale effort to

create children’s accounts requires design of an institutional 

framework that provides broad access, low costs, regulation 

of investment practices, and a uniform set of rules to ensure 

equal protection. As the current financial and economic

crisis illustrates, management of accounts and stewardship of 

deposited financial resources is a particularly important task. 

A national system of CDAs is an opportunity to create 

automatic investment structure that will limit financial service 

risk, and provide sound choices for long-term investments. 

Looking Forward

SEED offers many valuable lessons, but cannot by itself create a 

universal and progressive system of CDAs. Considerable effo

has already gone into studying and designing CDAs, and mor

will be required. Fortunately, SEED is not alone in bearing this 

responsibility. Today, there is a growing array of CDA poli

innovations in the states, new federal proposals, research on 

saving and saving policies, research on effects of asset building, 

and CDA policy examples from other countries. In th

array, SEED plays a major role in modeling and informing a 

universal and progressive CDA for the United State

As the United States emerges from financial and economi

crisis, there is widespread recognition that the financial 

operations of households (as well as many businesses and 

governments) must rely less on credit and spending, and more 

on saving and building wealth. CDAs are well positioned t

contribute positively to this fundamental transition. 

Reflecting on SEED overall, it does not require very much

imagination to see a universal system of CDAs—leading t

lifelong savings accounts—as a cornerstone for more prudent, 

competent, stable, and productive financial lives for American

families. 

As the United States emerges from financial and economic crisis, there 

is widespread recognition that the financial operations of households (as 

well as many businesses and governments) must rely less on credit and 

spending, and more on saving and building wealth. CDAs are well positioned 

to contribute positively to this fundamental transition.