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From Demonstration Project to Statewide Program: The Banking Challenge
by Martha Shirk
Among the most daunting challenges that the Jim Casey Youth Opportunities Initiative local sites face in taking their work statewide is creating partnerships to improve outcomes for young people transitioning from foster care. Nationwide, there are approximately 24,000 young people who are about to leave or have already left, foster care. The Jim Casey Youth Opportunities Initiative works to help these youth make successful transitions to adulthood.
One of the challenges of taking the Opportunity Passport™ (a key element in the Initiative's Increased Opportunities strategy) statewide is finding a banking partner for the Individual Development Accounts (IDAs) that young people receive as part of the Initiative. Banks are in business to make money, and few are eager to make the accommodations necessary to serve thousands of young people in foster care.
One local site, The Metropolitan Atlanta Youth Opportunities Initiative (MAYOI), an initiative of The Community Foundation for Greater Atlanta, faced this challenge last year – just as the worst banking crisis in America since the Great Depression was unfolding. MAYOI emerged from the search with a banking partner that was not only willing to serve the banking needs of youth in foster care, but also was enthusiastic about it. The partner is SunTrust Bank.
The lessons MAYOI learned in its search for a new banking partner can help guide other Jim Casey sites as they make the transition from operating small-scale demonstration projects to offering the IDAs statewide.
Washington Mutual was MAYOI's original banking partner when it first offered matched savings accounts to Atlanta-area youth in 2003. During the demonstration phase of the initiative, about 225 foster youth opened IDAs, and today Washington Mutual continues to maintain 43 accounts of remaining youth in the program. Although Washington Mutual was an excellent partner, the bank had little presence outside the Atlanta metropolitan area. It was known from the start that an additional banking partner with a statewide service.
MAYOI began its search for a statewide banking partner in 2006 as it began transitioning the various components of the Opportunity Passport™ to other community partners. When it became clear last September that Washington Mutual would be acquired by JPMorgan Chase & Co., the quest took on more urgency. Unlike Washington Mutual, which had experience with IDAs even before its association with MAYOI, JPMorgan Chase did not have an IDA program or any plans to develop one.
"It wasn't easy finding a banking institution that could serve youth who live in 159 counties across Georgia," says Tyronda Minter, director of Regional Impact for The Community Foundation. "Identifying a banking partner was made more complex both because few banks have branches throughout Georgia and because of the nature of the Opportunity Passport™ clientele."
Although people who work regularly with youth in foster care appreciate their strengths and resilience, bankers are more likely to focus on their challenges. For instance, many youth in foster care have grown up in families without banking relationships, so they have little understanding of what banks do or how they work. Many will have multiple addresses in the next few years because of the impermanency of foster care placements. And their deposits are likely to be irregular and small, because most will not have jobs.
"It was a long journey," says Minter. "We worked with multiple partners, like the Federal Reserve Bank, which helped us do an analysis of several banks. We looked at what banks already had relationships with local communities and with the state child welfare agency. There were only just a few that could handle a statewide effort, and SunTrust Bank emerged at the top of the list. They don't have branches in all 159 Georgia counties, but they have branches that are close to them all."
SunTrust agreed to open IDAs for all 14- to 21-year-old youth in foster care in Georgia – about 5,000 youth. One of the largest banks in the Southeast, SunTrust has 302 branches in Georgia. Ninety branches can be found in stores like Wal-Mart, which have extended hours and perceived by many to be friendlier to young account holders. Among SunTrust's other benefits was its previous experience with IDA programs and its long history of partnering with nonprofit organizations.
"It's very fulfilling to be able to help students who are interested in their futures make that personal commitment to save money for a goal," said Lynette Bell, first vice president and Central Group Community Development manager for SunTrust Bank, Inc. "We knew what IDAs were about and understood the challenges very well," Bell said. "These are not accounts we make any money on. Offering them is pretty much a public service thing. It's important for us to be a good community partner."
Among the challenges for SunTrust, says Bell, was "getting our personnel trained about IDAs again." SunTrust had previously offered IDAs to adults saving to purchase homes, but many current employees had no experience with IDAs.
While the commitment to partner with SunTrust was finalized last October, MAYOI's work was far from over. "It took a lot of systems development, discussions, negotiations and training in order to get where we are now," Minter said. The first SunTrust IDA was opened in May.
According to Minter, the successful banking transition in Georgia demonstrated the importance of securing partners who share the vision of the Jim Casey Youth Opportunity Initiative. Beyond that, she gives the following tips to other Jim Casey sites that will soon be managing the transition to a statewide program:
- Get and keep youth involved throughout the process.
- Ensure that the bank has a statewide reach.
- Secure a commitment from the bank's leadership to train bank branch staff about the particular needs of youth in and exiting foster care.
- Develop a memorandum of understanding with all partners to ensure that all are on the same page and want the same outcomes.
- Deposit funds in the partner bank to assist with program operations.
The Georgia Department of Human Services now administers the Opportunity Passport™ through a contractor, Catalyst for CARE, Inc. While the IDAs belong to the youth, Catalyst for CARE is the named custodian and must approve withdrawals. Each account is seeded with $100 after youth complete orientation and a survey. As youth complete each of the eight financial literacy-training modules, they receive a $25 stipend – half to spend as they wish, and half to be deposited into their account. When youth are ready to make a withdrawal, each is eligible for a $1,000 match to his or her savings.
According to Angelishea Ferrell, director of Georgia programs for Catalyst for CARE, 24 IDAs had been opened as of August 21 and more than 300 other youth have completed the orientation and training sessions necessary to open accounts.
The FDIC Money Smart curriculum serves as the basic training, and asset-specific training is provided based on the asset youth desires to purchase. Eligible assets include education, housing, transportation, medical or dental insurance, microenterprise or investments. During the demonstration phase, most youth saved for vehicles.
A complete description of Georgia's IDA program can be viewed on the Catalyst for Care Web site.
