Office of Financial Empowerment

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Innovations in Savings the aveNYC Account New
America Foundation April 21, 2009 Cathie Mahon
Executive Director and Assistant Commissioner
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• Office of Financial Empowerment (OFE)
• To educate, empower, and protect New Yorkers
  with low incomes.
• Launched by Mayor Bloomberg in December 2006 as
  the first program under the Center for Economic
  Opportunity.
• First local government initiative in the nation
  focused exclusively on anti-poverty and financial
  empowerment efforts for those with low incomes.

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• aveNYC Account Pilot Program
• Purpose
• ? Test a scalable, national model
  to increase
• savings among low-income individuals
• Program Structure
• Must direct deposit at least 100 from tax
  refund
• Obtain a 50 match (up to 250) on restricted
  savings account if
• participants save for at least for 1 year
• Can make additional deposits throughout the
  year, but account will
• close if participants deplete below initial
  contribution
• New Approach to Savings
• Non-Prescriptive
• Short-term
• Designed to be administered at low cost and easy
  scale

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• Even individuals with very low incomes can and
  will commit to saving if
  presented with a convenient, simple tax time
  vehicle.

• Participant average income 15,530
• 63 were working full time
• 73 have children

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? Match money offered through the aveNYC account
is a powerful motivator to save.
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• The aveNYC Account is already changing savings
  behavior. The aveNYC
  Account motivated even those with no track record
  of saving.

• 31 of participants were UNBANKED at program
  start
• 72 had less than 500 in savings when the
  program began
• 25 of respondents had no intention of saving a
  portion of their tax refund

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• The aveNYC Account is already changing savings
  behavior. Most aveNYC
  participants were able to save for the whole
  year.

• Participants intended to save for the long term
• 95 of respondents indicated they planned on
  keeping the account
• open long enough to receive the match
• Match money motivated majority to save for the
  full year
• 74 of 2009 SaveNYC participants kept their
  account for 1 year.
• 79 of those who received the match rolled over
  the account. Of those
• who rolled over 33 contributed again in
  2009.
• 57 of respondents who closed their account did
  so because of an
• emergency, childrens expenses, or job loss

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? aveNYC Account participants are saving for a
variety of non-frivolous short and long term
goals.
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Policy Implications

• Tax time represents a unique opportunity to
  encourage low-income individuals to save.
• Financial incentives, combined with trustworthy
  and effective implementers, can convince even the
  very low income and unbanked to save (even in
  difficult economic times).
• Asset-building policy must incorporate the full
  gamut of savings needs, including for short-term
  emergency funds. Short term savings can help
  reorient people towards longer-term planning and
  financial management.
• Cities and states can add to our knowledge base
  through experimentation with varied savings
  approaches.

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42 Broadway, 8th Floor New York, NY
10004 www.nyc.gov/ofe