Asset Ownership in Illinois

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Asset Ownership in Illinois
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Illinois Asset Building Group
A diverse coalition working to build the strength
and stability of families and communities. IABG
began in 2004 to promote asset building as an
innovative approach to eliminating poverty and
creating opportunities for Illinois residents.

• IABG Goals Build Assets, Increase Savings
  Opportunities, Protect Existing Assets, and
  Promote Financial Literacy

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What Are Assets?
Assets help individuals and families live
securely, plan for the future, and pass wealth on
to the next generation

• Savings, Education, Homeownership, Small Business
• Assets strengthen communities by creating
  financial stability
• When individuals and communities are stable, the
  entire state benefits job growth, tax revenue

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What is Assets Poverty?
Households experiencing asset poverty do not have
enough cash reserves (savings, stocks, retirement
accounts, equity in a home or business) to get by
at the federal poverty level for three months
when their primary source of income is eliminated
through job loss or other disruption.

• How is asset poverty different from income
  poverty?
• Measuring net worth by considering assets and
  liabilities, as opposed to income alone, provides
  a more long-term and encompassing view of
  economic security and mobility. In Illinois
  26.9 of households are asset poor vs. 10.9 that
  are defined under income poverty.

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Illinois Asset Poverty Index
The Illinois Asset Poverty Index (IAPI) provides
data on asset poverty for counties and county
groupings across Illinois. Developed with help
from our partner organization in California, the
IAPI enables Illinois residents to ascertain
asset poverty rates for the communities in which
they live.
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IAPI County Clusters
Asset Poverty in Cook County
To view IAPI data for all of Illinois go to
http//www.illinoisassetbuilding.org/data/assetpov
erty/
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IAPI County Clusters
Asset Poverty in Cook County
To view IAPI data for all of Illinois go to
http//www.illinoisassetbuilding.org/data/assetpov
erty/
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IL Household Net Worth
15.4 of all Illinois households have zero or
negative net worth, meaning they may owe more
than they own.
Median Net Worth of Illinois Households by Race
in 2004 White 128,444 Minority 12,100
Illinois asset poverty has increased 6.4 since
2004
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Education as an Asset
As an asset, education has a cumulative life-long
impact in the form of higher annual incomes and
more money to put away into savings or
investments such as a home.
Illinois Educational Attainment, 2006
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Ways to Help Build Assets
Earned Income Tax Credit
Payday Loan Reform
Childrens Savings Accounts
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Earned Income Tax Credit
The Earned Income Tax Credit (EITC) is a
refundable income tax credit for low-income
working individuals and families.

• Because it is refundable the EITC is given as a
  tax refund payment when the credit exceeds the
  amount of taxes owed
• EITC is available on both federal and Illinois
  state income taxes
• In 2007 the maximum federal EITC for a
  individuals with two or more qualifying children
  was 4,716

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EITC in Illinois

• Last year nearly 777,000 low-income, working
  families benefited from the Illinois EITC with
  an average credit of about 100
• Most state EITCs are based on a percentage of the
  federal EITC
• Set at only 5 of the federal EITC, the Illinois
  EITC is among the smallest of all state EITCs
• Legislation, SB12, has been proposed to double
  the Illinois EITC

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Payday Loan Reform
Payday loans are small loans with high interest
rates that are most often provided by companies
with no ties to banks and are not regulated by
the FDIC.

• Payday lending fees costs Americans approximately
  3.2 billion annually
• There are almost 3 times as many payday licenses
  in Illinois than there are McDonalds restaurants

• How Payday lenders profit
• Astronomical APR rates
• Loan roll over
• Balloon payments
• Prepayment penalties
• Multiple loans to the same borrower

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Payday Loan Reform

• In the past payday loans normally had terms of
  approximately two weeks. After an Illinois law
  was initiated to regulate payday loans most
  lenders extended terms past 120 days as a loop
  hole to avoid this law. By doing so lenders can
  continue to provide loans with no consumer
  protections.

• How to Reform Payday Loans
• In order to eliminate loop holes, and reform
  payday lending once and for all, amendments must
  be made to the Consumer Installment Loan Act
• Amendments should include limits on charges
  fees, cap interest rates, restrict prepayment
  penalty and amortize all loans
• Legislation is being discussed in this session
  and will continue until the problem has been
  solved

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What Are Childrens Savings Accounts?

• Opened at birth for all children
• Seeded with an initial deposit
• Children families can contribute over the years
• Used for designated purchases educational
  expenses, homeownership, entrepreneurship when
  the child reaches least 18 years old

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Why Build Assets for Children?
Childrens savings accounts promote life-long
financial literacy and savings behaviors. Holding
assets raises aspirations of children and parents
for a better future.

• Saving for the future helps bring back the idea
  that education (and money) create new
  opportunities

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.. and When the Children Become Adults

• Creates opportunities for career advancement,
  skills development through increased education
• Provides family, individual stability through
  homeownership, small business ownership
• Increases lending eligibilities, helps steer
  clear of predatory lending, such as payday loans

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IABG Principles for a CSA Plan

• Inclusive so that all children can participate
• Seeded with an initial deposit so it creates a
  concrete asset at the onset
• Progressive in structure, providing higher
  initial deposits and/or matching funds for
  savings deposited by lower-income families
• Simple so that investment decisions are limited
  and easily understood
• Linked to age-appropriate financial education to
  build savings and investment skills
• Nondiscriminatory to families receiving public
  benefits
• Protected from use until the child is at least 18

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But Will This Really Fly?
Asset policy is a new approach to eliminating
poverty and creating economic security for all.

• Several factors make childrens savings
• accounts marketable
• Corporate, business leaders supportive of
  investment and savings
• Financial institutions see opportunities for new
  customers
• Children are particularly compelling
  beneficiaries for social programs

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How will CSAs become a reality in Illinois?
In 2007 legislation was passed that created the
Childrens Savings Account Task Force

• The goal of the Task Force is to form a strategic
  implementation plan to create a savings account
  at birth for every child born in Illinois to
  Illinois residents.
• The Task Forces plan will be the basis of
  advocacy led by IABG Task Force members in the
  future to create an Illinois CSA program

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What Can You Do to Help?

• Add your organization to the CSA list of
  supporters at www.illinoisassetbuilding.org/csa
• Talk with your community about asset building and
  CSAs
• Contact elected officials and let them know you
  support CSAs

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For more informationChris Giangreco773.336.607
3support_at_illinoisassetbuilding.org