What's New
Youth from Foster Care Save and Build Assets in Their Opportunity Passports™
Given an opportunity to save and invest in assets, youth from foster care gain greater access to mainstream banking, maintaining accounts, making deposits, saving and building assets, according to a new report from the Jim Casey Youth Opportunities Initiative.
The Jim Casey Youth Opportunities Initiative released its first major evaluation of asset purchasing and saving over time by Opportunity Passport™ participants. The Opportunity Passport™ is an Initiative tool that provides youth with a matched savings account (also known as an Individual Development Account (IDA)) that matches savings for specific asset purchases, a personal debit account for short-term expenses and also connections to opportunities in the community, such as access to jobs, housing, and educational supports.
The 1,740 young adults deposited a total of $1.33 million in their Opportunity Passport™ with a mean deposit of $775. Opportunity Passport™ participants actually saved slightly more than low-income adults participating in American Dream Demonstration, a national IDA program; they saved $1.31 million.
But the report also notes that it is unlikely that a stand-alone IDA program will succeed for this vulnerable youth population. Instead, young adults' involvement in key supportive strategies, such as youth leadership boards, door openers and other supports are linked to successful saving and asset development, the report concludes. The report also analyzed progress in the five youth outcome areas: employment, physical and mental health, personal and community engagement, education and housing. Subsequent issues of this e-Update will explore each of those areas more in depth.
Opportunity Passport™ holders also are more engaged in mainstream banking. In a Midwest study of youth in foster care conducted by the Chapin Hall Center for Children at the University of Chicago, only 47 percent of 19-year-olds had a checking or savings account.
"Savings and assets are critical building blocks to economic success, but many young people are not able to build assets while in care and many do not learn financial management skills," says Gary Stangler, executive director of the Jim Casey Youth Opportunities Initiative. "The financial literacy training and IDAs in the Opportunity Passport™ teach youth aging out of care critical skills to becoming self-sufficient."
About 26 percent of the participants invested in at least one asset, with the most frequent purchase being a vehicle. The youth formerly in foster care also bought more assets than ADD participants, who bought 631 assets. Out of 715 assets purchased by Opportunity Passport™ participants there were:
- 363 for vehicles
- 144 for housing
- 119 for education
- 45 for investments
- 23 for medical expenses
- 21 for starting businesses.
"Our young people are using their saved funds and matches to invest in important needs that enormously benefit them in the long-run," Stangler says. "Cars help youth get to work and school. Homes provide safe environments for newly-independent youth. Education leads to better jobs. Each asset helps each youth get closer to a successful, independent future."
Participants who bought assets showed higher levels of employment and education than participants who did not buy assets. Asset purchasers also were more involved in the Initiative's sites' local youth boards than were non-purchasers. They also tended to be older and were Opportunity Passport™ participants longer. They also tended to be females and out of care.
Interestingly, there are no racial disparities among asset purchasers, even though racial disparities are prevalent in the child welfare system.
And also surprising: youth mothers who face more challenges than other youth aging out of care are saving and buying assets at a greater rate than the overall group. (See related story.)
Paradoxically, asset purchasers also both deposited and withdrew funds more often and in greater amounts than participants who did not purchase any assets. The "churning of funds," the report says, "may be an indicator that these young people are more involved and engaged in the banking process, leading to larger savings and more purchases of assets."
Around the nation, organizations, advocates and policy makers have become increasingly interested in asset-building and savings programs for low-income populations. On the forefront of serving youth aging out of foster care, the Jim Casey Youth Opportunities Initiative is pioneering the success of matched savings accounts for vulnerable youth.
Since 2004, youth in 10 sites are participating in the Opportunity Passport™ program: Nashville, Michigan, Atlanta, Des Moines, Maine, San Diego, Connecticut, Rhode Island, Denver, and Tampa.
