march 16 and 17, 2006 chicago, il. the aspen institute federal reserve system achieving...
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March 16 and 17, 2006 Chicago, IL
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THE ASPENTHE ASPENINSTITUTEINSTITUTEFEDERAL RESERVE SYSTEMFEDERAL RESERVE SYSTEM
Achieving
Sustainability, Scale, and Impact
in Community Development Finance:
EITC and Tax Preparation Organizational DesignFederal Reserve Bank of Chicago
March 16-17, 2006
Kirsten Moy, Greg Ratliff and Amy Brown
The Aspen Institute
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THE ASPENTHE ASPENINSTITUTEINSTITUTEFEDERAL RESERVE SYSTEMFEDERAL RESERVE SYSTEM
Supporters of this Meeting Conference Partner:
The Federal Reserve Bank of Chicago
Meeting Funder: The Annie E. Casey Foundation
Charrette Organizers: The National Community Tax Coalition & The
Center for Economic Progress
Forum Participants
You!
Thank you!
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THE ASPENTHE ASPENINSTITUTEINSTITUTEFEDERAL RESERVE SYSTEMFEDERAL RESERVE SYSTEMSupporters of the Conference
Series Conference Partner: The Federal Reserve System
Research Partners
The F.B. Heron Foundation
GE Consumer Finance - Americas
Deutsche Bank
Past Supporters
The John D. and Catherine T. MacArthur Foundation
The Fannie Mae Foundation
Forum Participants - you!
Thank you!
GE Consumer FinanceAmericas
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THE ASPENTHE ASPENINSTITUTEINSTITUTEFEDERAL RESERVE SYSTEMFEDERAL RESERVE SYSTEM
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THE ASPENTHE ASPENINSTITUTEINSTITUTEFEDERAL RESERVE SYSTEMFEDERAL RESERVE SYSTEM
Conference Goals• introduce a new framework for scale and sustainability for the field
of community development institutions
• explore the feasibility of new business models with potential for promoting scale and sustainability in the EITC/Tax Preparation field
• provide a forum where all stakeholders can participate in the exploration and design of business models and initiatives and share ideas about the future of the field including the role of the National Community Tax Coalition
• encourage dialogue leading to action on implementation of business models and initiatives where appropriate
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THE ASPENTHE ASPENINSTITUTEINSTITUTEFEDERAL RESERVE SYSTEMFEDERAL RESERVE SYSTEM
What is Scale?
More capital
More customers
More effectiveness
“Economies of scale” usually refers to the
development of mass markets and progressive cost reduction through
increased business volume. Can the industry groups assembled
achieve this kind of scale?
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THE ASPENTHE ASPENINSTITUTEINSTITUTEFEDERAL RESERVE SYSTEMFEDERAL RESERVE SYSTEM
Why Pursue Scale? To reach more people
To provide access to services to as many low income people and communities as possible on a permanent and sustainable basis
To tap into economies of scale
To become more sustainable
To have greater impact in low income communities
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THE ASPENTHE ASPENINSTITUTEINSTITUTEFEDERAL RESERVE SYSTEMFEDERAL RESERVE SYSTEM
But But … scale itself is not necessarily a suitable proxy
for success.
And the very characteristics - high customization and high touch - that helped make each group successful in the past are barriers to achieving greater impact because they lead to high cost delivery.
In other words, there’s no “economy of scale” if the cost to deliver the service goes up with increasing volumes.
So we need to better understand what scale is,
and the dynamics of getting to scale.
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THE ASPENTHE ASPENINSTITUTEINSTITUTEFEDERAL RESERVE SYSTEMFEDERAL RESERVE SYSTEM
Model for Taking an Innovation to Scale
Source: Alan Okagaki & Associates
IdeaIdeaExperiment-Experiment-
ationation(Innovation(Innovation
& Refinement)& Refinement)
EarlyEarlyReplicationReplication
(Innovation(Innovation& Refinement)& Refinement)
BestBestPracticePractice
InnovationInnovationat Scale!at Scale!
the fantasy short cutthe fantasy short cut
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THE ASPENTHE ASPENINSTITUTEINSTITUTEFEDERAL RESERVE SYSTEMFEDERAL RESERVE SYSTEMA Better Model for Taking an Innovation to
Scale
Source: Alan Okagaki & Associates
IdeaIdeaExperiment-Experiment-
ationation(Innovation(Innovation
& Refinement)& Refinement)
EarlyEarlyReplicationReplication
(Innovation(Innovation& Refinement)& Refinement)
BestBestPracticePractice
StandardizationStandardization InfrastructureInfrastructureBuildingBuilding
Wide ScaleWide ScaleRoll OutRoll Out
InnovationInnovationat Scale!at Scale!
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THE ASPENTHE ASPENINSTITUTEINSTITUTEFEDERAL RESERVE SYSTEMFEDERAL RESERVE SYSTEM
New Innovationat Scale!
Source: Alan Okagaki & Associates
Idea
Experiment-ation
(Innovation& Refinement)
EarlyReplication
(Innovation& Refinement)
BestPractice
StandardizationStandardization InfrastructureInfrastructureBuildingBuilding
Wide ScaleWide ScaleRoll OutRoll Out
the keys to scale
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THE ASPENTHE ASPENINSTITUTEINSTITUTEFEDERAL RESERVE SYSTEMFEDERAL RESERVE SYSTEM
Our Process Research
Publications
Conferences
Interviews
y
z
Case Studies
Banknorth Group
7-11 VCOM
Visa
Ace Cash Express
Allied Capital
The Reinvestment Fund
Fannie Mae Self Help
ACCION
Dell
Unified Western Grocers
Carpet One
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THE ASPENTHE ASPENINSTITUTEINSTITUTEFEDERAL RESERVE SYSTEMFEDERAL RESERVE SYSTEM
Lessons from the
Case Studies
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THE ASPENTHE ASPENINSTITUTEINSTITUTEFEDERAL RESERVE SYSTEMFEDERAL RESERVE SYSTEM
Lessons1.Profitability was the primary driver of product
development. The ability to produce a diversified yet complementary set of products was critical to achieving scale.
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THE ASPENTHE ASPENINSTITUTEINSTITUTEFEDERAL RESERVE SYSTEMFEDERAL RESERVE SYSTEM
Lessons1.Profitability was the primary driver of product
development. The ability to produce a diversified yet complementary set of products was critical to achieving scale.
2.Demand for services or a clear market gap were the primary drivers in determining which products and services to scale up.
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THE ASPENTHE ASPENINSTITUTEINSTITUTEFEDERAL RESERVE SYSTEMFEDERAL RESERVE SYSTEM
Lessons1.Profitability was the primary driver of product
development. The ability to produce a diversified yet complementary set of products was critical to achieving scale.
2.Demand for services or a clear market gap were the primary drivers in determining which products and services to scale up.
3.Geographic expansion was central to generating sufficient volume of transactions to reach scale.
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THE ASPENTHE ASPENINSTITUTEINSTITUTEFEDERAL RESERVE SYSTEMFEDERAL RESERVE SYSTEM
Lessons1.Profitability was the primary driver of product
development. The ability to produce a diversified yet complementary set of products was critical to achieving scale.
2.Demand for services or a clear market gap were the primary drivers in determining which products and services to scale up.
3.Geographic expansion was central to generating sufficient volume of transactions to reach scale.
4.Infrastructure investments were crucial to growth. Investments often increased integration of operations and facilitated product development.
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THE ASPENTHE ASPENINSTITUTEINSTITUTEFEDERAL RESERVE SYSTEMFEDERAL RESERVE SYSTEM
Lessons1.Profitability was the primary driver of product
development. The ability to produce a diversified yet complementary set of products was critical to achieving scale.
2.Demand for services or a clear market gap were the primary drivers in determining which products and services to scale up.
3.Geographic expansion was central to generating sufficient volume of transactions to reach scale.
4.Infrastructure investments were crucial to growth. Investments often increased integration of operations and facilitated product development.
5.Technology investments often led to increased efficiency and cost savings.
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THE ASPENTHE ASPENINSTITUTEINSTITUTEFEDERAL RESERVE SYSTEMFEDERAL RESERVE SYSTEM
Lessons6. Companies partnered to gain specific knowledge
or expertise, or to access a needed component of the product or service.
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THE ASPENTHE ASPENINSTITUTEINSTITUTEFEDERAL RESERVE SYSTEMFEDERAL RESERVE SYSTEM
Lessons6. Companies partnered to gain specific knowledge
or expertise, or to access a needed component of the product or service.
7. Capital was raised several times; the volume of capital raised was tens of millions in every instance.
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THE ASPENTHE ASPENINSTITUTEINSTITUTEFEDERAL RESERVE SYSTEMFEDERAL RESERVE SYSTEM
Lessons6. Companies partnered to gain specific knowledge
or expertise, or to access a needed component of the product or service.
7. Capital was raised several times; the volume of capital raised was tens of millions in every instance.
8. Several organizations changed their legal structure to accommodate growth.
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THE ASPENTHE ASPENINSTITUTEINSTITUTEFEDERAL RESERVE SYSTEMFEDERAL RESERVE SYSTEM
Lessons6. Companies partnered to gain specific knowledge
or expertise, or to access a needed component of the product or service.
7. Capital was raised several times; the volume of capital raised was tens of millions in every instance.
8. Several organizations changed their legal structure to accommodate growth.
9. Regulatory changes often supported or enabled growth and expansion.
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THE ASPENTHE ASPENINSTITUTEINSTITUTEFEDERAL RESERVE SYSTEMFEDERAL RESERVE SYSTEM
Lessons6. Companies partnered to gain specific knowledge
or expertise, or to access a needed component of the product or service.
7. Capital was raised several times; the volume of capital raised was tens of millions in every instance.
8. Several organizations changed their legal structure to accommodate growth.
9. Regulatory changes often supported or enabled growth and expansion.
10.Different management skills were needed at different points in the growth process.
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THE ASPENTHE ASPENINSTITUTEINSTITUTEFEDERAL RESERVE SYSTEMFEDERAL RESERVE SYSTEM
Lessons6. Companies partnered to gain specific knowledge or
expertise, or to access a needed component of the product or service.
7. Capital was raised several times; the volume of capital raised was tens of millions in every instance.
8. Several organizations changed their legal structure to accommodate growth.
9. Regulatory changes often supported or enabled growth and expansion.
10.Different management skills were needed at different points in the growth process.
11.The ability to adapt to changing market conditions allowed organizations to continue growing.
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THE ASPENTHE ASPENINSTITUTEINSTITUTEFEDERAL RESERVE SYSTEMFEDERAL RESERVE SYSTEM
Product Innovation Organizational Innovation
Industry Innovation
Design for scale (e.g., standardization, simplification &
refinements)
InfrastructureTechnology
CapitalPartnering
ManagementNew organizational structures
Regulatory policyStrategic positioning
Industry intermediariesIndustry infrastructureNew sources of capital
imp
ac
tAchieving Scale
ac
tio
ns
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THE ASPENTHE ASPENINSTITUTEINSTITUTEFEDERAL RESERVE SYSTEMFEDERAL RESERVE SYSTEM
“Innovations for Scale and Sustainability in EITC Campaigns:
Lessons for Community Development from Two Years of Pilots”
By Amy Brown For the Annie E. Casey Foundation
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THE ASPENTHE ASPENINSTITUTEINSTITUTEFEDERAL RESERVE SYSTEMFEDERAL RESERVE SYSTEM
The 2005 Pilots
Chicago, ILLouisville, KYTulsa, OKAtlanta, GABaltimore, MD
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THE ASPENTHE ASPENINSTITUTEINSTITUTEFEDERAL RESERVE SYSTEMFEDERAL RESERVE SYSTEM
Lessons from the Pilot Innovations Lesson #1: It may be easier to borrow rather
than build the infrastructure for scale, but maintaining relationships is a constant challenge for partnership efforts.
Lesson #2: Successful partnerships with government or the private sector require a far greater understanding of those sectors than the field currently has.
Lesson #3: More research is needed to understand what services and products the market wants and how to best deliver them.
Lesson #4: A true calculation of program costs is a prerequisite to roll-out, and to be scalable, programs must reduce per-unit costs.
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THE ASPENTHE ASPENINSTITUTEINSTITUTEFEDERAL RESERVE SYSTEMFEDERAL RESERVE SYSTEM
Lessons from the Pilot InnovationsLesson #5: Roll-out will not be achieved by
good-will alone; partners will require a clear value proposition, backed up by data.
Lesson #6: Community agencies will need to increase their organizational capacity and sophistication in order to sustain partnerships and implement programs at scale.
Lesson #7: The size of the solution must match the size of the problem; small pilots, by their very nature, may never be able to point the way to scale.
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THE ASPENTHE ASPENINSTITUTEINSTITUTEFEDERAL RESERVE SYSTEMFEDERAL RESERVE SYSTEM
Next Steps in Pursuit of ScaleStructured negotiations to develop more
effective partnership agreementsUse of technology to minimize direct staff
involvement in service deliveryDevelopment of new products that
directly mirror popular fringe servicesAdoption of specific marketing techniques
to reach population subgroupsData collection to document program
costs and outcomes
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THE ASPENTHE ASPENINSTITUTEINSTITUTEFEDERAL RESERVE SYSTEMFEDERAL RESERVE SYSTEM
Next Steps in Pursuit of Scale Research to better understand the characteristics
of potential partners, the environment in which they operate and key sectoral trends that affect them, as well as identification of critical attributes to look for in establishing partnerships.
Market research to better understand the demand for financial products and services among low-income consumers, what services they use and why, and how best to market services to them.
Data collection to develop more sophisticated value propositions around the benefits of financial services to key potential partners, including employers, government, and specific corporate sectors.
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THE ASPENTHE ASPENINSTITUTEINSTITUTEFEDERAL RESERVE SYSTEMFEDERAL RESERVE SYSTEM
Issues Facing The EITC & Tax Preparation
Field
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THE ASPENTHE ASPENINSTITUTEINSTITUTEFEDERAL RESERVE SYSTEMFEDERAL RESERVE SYSTEM
Problem Statement
“The free tax preparation movement is clearly at a crossroads. If it is to continue growing as well as expand its impact……, it will need to systematically address…..some of its strengths and weaknesses…..determine whether it seeks to pursue more long-term and broad-based partnership opportunities…..(and) confront whether a scattered and highly variable approach to running programs….. is ultimately sustainable and has the potential to go to scale.”
EITC & Tax Preparation Concept Paper
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THE ASPENTHE ASPENINSTITUTEINSTITUTEFEDERAL RESERVE SYSTEMFEDERAL RESERVE SYSTEM
Key Challenges Identified in Concept Paper
Achieving scale and sustainability in free tax preparation programs, given funding limitations and issues associated with managing large on-the-ground operations
Achieving broader asset development goals by connecting clients with other products and services that can help them manage their finances and save for the future
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THE ASPENTHE ASPENINSTITUTEINSTITUTEFEDERAL RESERVE SYSTEMFEDERAL RESERVE SYSTEM
Questions for Consideration in the Charrettes
1. Can programs continue to grow w/o new resources (e.g., fee-for-service, dues, direct subsidies)?
2. Are there opportunities for partnerships and cross-subsidy through collaborations w/ financial institutions, tax software vendors and paid tax preparers?
3. Are there economies of scale achievable through shared infrastructure for hundreds of organizations offering free tax prep?
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THE ASPENTHE ASPENINSTITUTEINSTITUTEFEDERAL RESERVE SYSTEMFEDERAL RESERVE SYSTEM
Questions for Consideration in the Charrettes
4. How can EITC programs connect tax filing and asset development? Given limited success to date, is this a realistic goal? If so, what are more effective mechanisms?
5. Do existing financial products and services have the potential to achieve scale? What new products & services could help achieve asset development goals?
6. How might the National Community Tax Coalition and other national entities facilitate future growth and program efficiencies in the free tax preparation field?
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THE ASPENTHE ASPENINSTITUTEINSTITUTEFEDERAL RESERVE SYSTEMFEDERAL RESERVE SYSTEM
Special Considerations for the National Community Tax Coalition as an Industry
Intermediary
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THE ASPENTHE ASPENINSTITUTEINSTITUTEFEDERAL RESERVE SYSTEMFEDERAL RESERVE SYSTEM
CUSTOMERSCUSTOMERS INDUSTRY MEMBERS
INDUSTRY MEMBERS
TRADE ASSOCIATIONINDUSTRY
INTERMEDIARY
TRADE ASSOCIATIONINDUSTRY
INTERMEDIARY
INVESTORS & FUNDERS
INVESTORS & FUNDERS
POLICY MAKERS& REGULATORS
POLICY MAKERS& REGULATORS
Basic Model of Key Players
Industry leaders play a powerful role in setting standards and creating standardization in the industry.
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THE ASPENTHE ASPENINSTITUTEINSTITUTEFEDERAL RESERVE SYSTEMFEDERAL RESERVE SYSTEM
Industry Structure 1
CUSTOMERSCUSTOMERS INDUSTRY MEMBERS
INDUSTRY MEMBERS
TRADE ASSOCIATIONINDUSTRY
INTERMEDIARY
TRADE ASSOCIATIONINDUSTRY
INTERMEDIARY
INVESTORS & FUNDERS
INVESTORS & FUNDERS
POLICY MAKERS& REGULATORS
POLICY MAKERS& REGULATORS
Industry Structure 1: The Corporation -Customer Dynamic
In most industries, direct interaction between the customer and the industry member is a primary factor.
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THE ASPENTHE ASPENINSTITUTEINSTITUTEFEDERAL RESERVE SYSTEMFEDERAL RESERVE SYSTEM
Industry Structure 2
CUSTOMERSCUSTOMERS INDUSTRY MEMBERS
INDUSTRY MEMBERS
TRADE ASSOCIATIONINDUSTRY
INTERMEDIARY
TRADE ASSOCIATIONINDUSTRY
INTERMEDIARY
INVESTORS & FUNDERS
INVESTORS & FUNDERS
POLICY MAKERS& REGULATORS
POLICY MAKERS& REGULATORS
Industry Structure 2: The Small Players Dynamic
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THE ASPENTHE ASPENINSTITUTEINSTITUTEFEDERAL RESERVE SYSTEMFEDERAL RESERVE SYSTEM
Industry Structure 3
CUSTOMERSCUSTOMERS INDUSTRY MEMBERS
INDUSTRY MEMBERS
TRADE ASSOCIATIONINDUSTRY
INTERMEDIARY
TRADE ASSOCIATIONINDUSTRY
INTERMEDIARY
INVESTORS & FUNDERS
INVESTORS & FUNDERS
POLICY MAKERS& REGULATORS
POLICY MAKERS& REGULATORS
Industry Structure 3: Subsidy Dependent
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THE ASPENTHE ASPENINSTITUTEINSTITUTEFEDERAL RESERVE SYSTEMFEDERAL RESERVE SYSTEM
In industries dominated by smaller players …
… industry networks and other forms of affiliation become more important as agents for successful scale and growth.
Access to common infrastructure can enable networks of organizations to work cooperatively to deliver greater volumes of product with increased efficiency
Networks can facilitate needed market research, product development and partnerships
Strong training and development efforts through network services support the development of management talent
Sufficient industry clout can create a more supportive legal, regulatory and policy environment and increase the availability of subsidy where needed
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THE ASPENTHE ASPENINSTITUTEINSTITUTEFEDERAL RESERVE SYSTEMFEDERAL RESERVE SYSTEM
Innovations Panel - Parts 1 and 2
Vaughan Cox, La Union del Pueblo Entero
Lee Davenport, FoodChange
Steve Neumann, Center for Economic Progress
Steven Dow, Community Action Project of Tulsa County
Dennis Campa, City of San Antonio
Mary Dupont, Nehemiah Gateway
Lauren Leimbach, Community Financial Resources
Peter Tufano, D2D Fund
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THE ASPENTHE ASPENINSTITUTEINSTITUTEFEDERAL RESERVE SYSTEMFEDERAL RESERVE SYSTEM
Achieving
Sustainability, Scale, and Impact
in Community Development Finance:
EITC and Tax Preparation Organizational DesignFederal Reserve Bank of Chicago
March 16-17, 2006Contact Information:
Kirsten Moy, Greg Ratliff and Amy [email protected],
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March 16 and 17, 2006 Chicago, IL
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Panel on Innovation :
La Union del Pueblo Entero
Presented by: Vaughn CoxLUPE Program Development Director
EITC & Tax Preparation Charette Achieving Scale, Sustainability and Impact
March 16-17, 2006Chicago, IL
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Description of Innovation High quality competitive services
Tax preparation & filing E-file & Direct Deposit (for those with bank account)
Mail-in returns tax due ITIN applicants
Bank products (commercially available) Refund transfer (for un-banked customers) RAL (for emergencies)
Priced to cover operating expenses
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Innovation Goals Service to members
More reasonable cost than commercial outfits More reliable in the event of a problem
Sustainability of the organization Services available all year Build confidence in organizational leadership
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Implementation Lessons
o Growing market share – takes time & investment
o Distribution of 10,000 flyers – minimal response
o Minimal radio advertising – not effective
o Loyal customers return when served well
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Potential for Scale Good potential with significant investment
Much larger volume of returns is possible
Non-profit approach to an important task Help customers at a reasonable price Continual contact & support throughout year
Open doors to financial literacy & wealth-building opportunities
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Implementing at Scale• Nationwide non-profit Tax-Prep franchise
outlets with competitive local advertising
• Local non-profits • Purchase license for nominal fee• Train & Certify staff• Collect and share preparation fees to cover
‘franchise’ expenses
• Local banks offer ‘RAL’ products through non-profit tax prep
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March 16 and 17, 2006 Chicago, IL
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Panel on Innovation:FoodChange
Presented by: Lee DavenportEITC & Tax Preparation Charette
Achieving Scale, Sustainability and ImpactMarch 16-17, 2006
Chicago, IL
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Staffing Innovations Volunteer Preparers (3 groups)
Paid Preparers (4 groups)
Paid Quality Checkers and Management
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FoodChange’s EITC Goals Decrease Errors
Respond to Demand
Upward Funding Spiral
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Lessons Learned High Staff Costs delivered Quality
Float needed for responsive funding
Changed staff sourcing models
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How big is the Scale? New Friends Partners Others
Rank Site Returns completed
# 1 Harlem 6,305
# 3 Bronx (Fordham Road) 4,245
# 4 Brooklyn (Downtown) 4,203
Leading Civilian Free Tax Sites in U.S.― 2005
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Transferability:Income Support Centers
Large Scale Sites lead network (T1)
TA and Direct Service to CBO Partners (T2)
Small CBO partners funnel clients (T3)
Referral Community (T4)
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Lee DavenportAssistant Director, Income Policy
FoodChange39 Broadway, 10th FloorNew York, NY 10006212.894.8053646.852.1485 (cell)212.616.4990 (fax)
www.foodchange.org
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March 16 and 17, 2006 Chicago, IL
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Panel on Innovation:Center for Economic Progress – Financial
Empowerment
Presented by: Steve NeumannEITC & Tax Preparation Charette
Achieving Scale, Sustainability and ImpactMarch 16-17, 2006
Chicago, IL
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Description of Innovation Concept - Provide financial services to low wage
workers through four local employers Services offered
Financial Education - 500+ individuals have participated in workshops over 2 years
Credit Union services - 600+ credit union members through the employers, nearly 200 new in two years
Free Tax Prep services - 170+ people served by free tax prep, saved $17,000+ in fees, returned $200,000+ in federal and state refunds
Services well received - 96% of individuals would recommend workshops and tax services to colleagues
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Innovation Goals Examine employers as channel to
reach low wage workers with needed financial services
Build employer buy-in for long term sustainability
Why Employers? Source of most key financial transactions Financial stress impacts job performance Regular opportunities to reach workers Financial institutions already partnering
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Implementation Lessons What worked best?
Strong take-up at employers where HR staff “bought in” Employers provided outreach, some paid time Employers went beyond the pilot – initiated own
financial literacy series, underwriting emergency loans What didn’t work?
Employers have not provided financial support HR staff turnover led to high project costs to simply
maintain the employer relationship Changes made
More focus on employers who are “bought in” Expanded to work with local workforce intermediary
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Potential for Scale Some potential for scale up
Tools are cheaply adaptable to multiple employers – outreach materials, curricula, tax prep services
Offering services through multiple employers in same geographical area drives down unit cost of delivery
Cast wide net to find receptive employers A few employers nationally are leading the way – paying
for tax prep and/or financial education onsite Cost to deliver services is lower when employer is
already bought in Inexpensive to add to what they may already be doing
Other possible benefits Potential for good measurement of outcomes among
employees - HR data, follow up surveys Increased employee retention / job stability
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Implementing at Scale Reach more employers through
intermediaries Large “bank at work” programs More partnerships with workforce intermediaries Credit Union associations – many staff who used project
services were also credit union members Centralize some aspects
Collection of data – attempts to measure long term impacts on employees and employers
Gathering and sharing of best practices Creation of tools
Customize application of services for each employer’s specific needs
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March 16 and 17, 2006 Chicago, IL
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Panel on Innovation:Providing benefits eligibility
screenings through commercial tax preparers
Presented by: Steven Dow,Community Action Project of Tulsa County
EITC & Tax Preparation Charette Achieving Scale, Sustainability and Impact
March 16-17, 2006Chicago, IL
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Description of Innovation Partnership between CAPTC and H&R Block
to offer benefits eligibility screening as part of the tax preparation process
HRB tax prep software identified likely clients
HRB tax professionals offered the screening service
CAPTC benefits eligibility specialists provided actual screenings
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Innovation Goals Maximize number of people screened for
benefits Utility: ID need/potential, focus resources
Informally compare alternative distribution channels—”free” vs. “fee”
Test deployment of re-branded BESO application in non-CAP site
Test ability to partner with perceived “competitor” and for-profit firm
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Implementation Lessons Clients behaved differently than expected
Less receptive, offer seemed “out of the blue” Strongly preferred later screenings, by phone
“Value proposition” less effective than expected Clients forgot about screening offer Not tied to specific economic value (benefit $)
Consequences of phone preference Workflow issues: loss of electronic advantage BESO not optimized for phone delivery
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Potential for Scale Conduct screenings by phone
Responds to preference of most clients Centrally located call-center—smoothes out
demand “bumps” Issues and caveats
How to reorient BESO for better phone delivery How to preserve/maximize electronic advantage
Potential for effectiveness CAPTC: 20,000 clients vs. HRB: 20M clients 1,000x order of magnitude leap
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Implementing at Scale Goal: maximize # of clients screened and enrolled
Integration with tax prep software Transparent to client, minimize add’l burden/resources Eliminate redundant questions and data entry by reusing info Requires software developers, tax preparation providers, and
various agencies The more local the benefits, the more complex the process
Utility, effective use of resources Assess likelihood of eligibility throughout process Eliminate questions that screen for benefits the client is clearly not
going to be eligible for Immediate, electronic application
Requires “data bridge” to many agency platforms Maximize # of eligible clients who ultimately receive benefits
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March 16 and 17, 2006 Chicago, IL
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Panel on Innovation:San Antonio Coalition for Family Economic
Progress
Presented by: Dennis J. CampaCity of San Antonio
Department of Community InitiativesEITC & Tax Preparation
Achieving Scale, Sustainability and ImpactMarch 16-17, 2006
Chicago, IL
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Description of Innovation
Shared leadership Coalition leadership comprised of
five diverse organizations External supporters include:
Other public entities Non-profits Financial institutions Community organizing groups
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Coalition PartnersUnited Way
Advertising, funding, and 211-hotlineCatholic Charities
Volunteer recruitment, personnel and logistics Annie E. Casey Foundation
Site management, grant maker and funderCity of San Antonio, Department of Community
InitiativesSite management, grant maker and funder,
technical assistance, facilitiesIRS
Software, technical assistance
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External SupportersFinancial Institutions
Grant making, banking products, loan refinancing
Competition to sponsor sitesLocal foundations
Grant making, volunteers, linkagesElectronic and print media
Led by City’s Public Information OfficeWeekly radio and print storiesSpanish language outreach
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Innovation GoalsChallenges: Low use of the EITCHigh use of paid tax preparers and RALsHigh number of unbanked taxpayers
Goals: Ensure taxpayers receive the maximum creditsIntroduce them to mainstream financial servicesConnect them with multi-benefit services
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Implementation Lessons
Coalitions take time, patience and constant nurturing
Keep steering committee small but find vehicles for greater inclusion
Clearly define roles and responsibilities
Remain flexible and adjust on the fly Always start with the future in mind
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Potential for Scale Scale might range from 50,000-60,000
returns or 33% of eligible EITC filers Create greater opportunities for bundling
services Change service delivery and open door for
new funding partners Allow for deeper embedding of Family
Economic Success principles Serves as a platform for multiple financial
product
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Implementing at Scale Significantly expands service delivery
opportunities based on the number of participants and their financial buying power
VITA co-located at: Municipal and County Courts Hospitals Utility customer service offices Financial institutions Investment clubs or cooperatives Public Libraries
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March 16 and 17, 2006 Chicago, IL
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Panel on Innovation:
DE EITC CampaignPresented by: Mary Dupont
EITC & Tax Preparation Achieving Scale, Sustainability and Impact
March 16-17, 2006Chicago, IL
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Description of Innovation
IT Experiments
3-credit courses
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2005 IT Strategy 2006 IT StrategySecure Terminal Server for 10 tax sites with 10 workstations each: 3 remote servers – 1 backup, 1 production server, 1 TaxWise terminal, and 1 Netilla Firewall to access terminal server
Peer to peer networks of 10 workstations with Taxwise on C drives for printing with back ups to a single computer
High Speed broadband Internet Connections through cable installed at each location
Broadband for downloads/updates and Wireless network cards
Centralized efiling De-centralized efiling and secure thumb drives for Site Managers
Peer to peer networks in the field with Taxwise on each C-Drive
Each site manager has their own transmitting computer
Mixed bag of equipment: laptops, desktops, borrowed from site hosts, IRS, supplied by Nehemiah
Equipment used exclusively for taxes
IT consultant volunteers IT Manager on call 24/7
Volunteers receive CD rom with training curriculum and Taxwise for practice
Volunteers receive CD rom with training curriculum and Taxwise for practice
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University PartnershipsGoal: Involve post-secondary institutions as strategic partners
in the Campaign by including it in their curriculum
Strategy: Meet with University presidents to “sell” idea
Concept Origination: Replicate Fred Gordon’s strategy of a 3 credit course composed of tax training and community service
Results: Three statewide universities adopted the course and 50 students enrolled and became volunteers
Future Goals: Increase number of students and universities
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Innovation Goals IT: Increase security, centralize the return
database without passing files back and forth, increase IT capacity and minimize IT issues in the field.
Universities: Insure an annual ongoing flow of qualified volunteers and identify other partners who may be willing to assume some operating responsibilities over time, ie. Recruit and train volunteers, host sites, fundraise to support operations.
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Implementation Lessons Lessons Learned:
IT: Terminal server will only work if the software is compatible IT: Full time IT support is needed to manage a large scale operation IT: IT consistency is required in the field to minimize unwanted operating surprises
Universities: Need to work from the top to get buy-in Universities: New course planning and implementation takes one year Universities: Students need discipline and coaxing in advance to motivate reliable
participation Classroom training should happen in January when students are back from break
What worked best: IT: Terminal Server didn’t work with Taxwise. New tax software is needed to be compatible with
terminal server. Univ: Once students get into the field they love the program.
What didn’t work: Terminal Server Training in December
Changes you have made:
New IT system as described in chart: sell Terminal Server Evaluation will take place with students and stakeholders at university. Will change training
dates, advertise course in curriculum guide for Fall 06, identify university liaison to motivate students to participate when tax season starts.
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Potential for Scale Scalable?
IT – yes, with money Universities - yes
How big do you think it could it get? IT: With funding for equipment (laptops, thumb drives,
broadband) can be implemented anywhere Universities: Automatic generation of hundreds of
trained volunteers
What other benefits could scaling up this innovation bring to the field? Both: Smoother site operations and more manpower allowing more returns
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Implementing at Scale National Roll Out:
IT: national partnership with Compaq, Dell, Microsoft for hardware & operating systems software distributed directly to coalitions and VITA programs at the local level. Handbook on IT solutions including ingredients needed and implementation strategies, potential bugs and work arounds. Web-based technical assistance for IT solutions. (similar to PowerUp which implemented 1,000 community based tech centers)
Universities: State universities and community colleges adopt the curriculum and buy in to the VITA portion of the program. Program becomes the service focus in college-based Accounting Fraternities.
E.g. Who would be involved in delivery? IT: IRS, NCTC, and local or state organizing entities Univ: Work through national post-secondary networks of state universities and
community colleges to disseminate.
What aspects should be standardized and what would be customized? All aspects should be customized to adapt to local needs while maintaining the
integrity of the basic systems.
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March 16 and 17, 2006 Chicago, IL
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Panel on Innovation:SVCs and Worker
CentersPresented by: Lauren Leimbach
EITC & Tax Preparation Charette Achieving Scale, Sustainability and Impact
March 16-17, 2006Chicago, IL
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Description of Innovation Distribute prepaid debit cards (SVCs)
through Worker Centers
Utilize community organizing model as a marketing outreach strategy
Leverage collective bargaining power to negotiate product features, pricing, and revenue share with suppliers
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Innovation Goals Why Prepaid Debit Cards (SVCs)?
Meets the market’s needs: virtual savings, purchase card, money transfer tool, bill payment, with options for phone minutes and picture ID
Basic ID requirements to open account Portable Convenient
Mitigating the impact of globalization Financial and social empowerment
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Implementation LessonsWhat Works The value of the community network
480+ interviews Focus groups to explore price points and messaging
Vendor cooperation
Challenges Training focus group moderators Foundation funding lead times vs. pace of
business negotiations
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Potential for Scale 8-site pilot program to create a roll-out
template with implementation options
140 Worker Centers have access to 3 million households
The larger the scale, the greater our power to negotiate consumer-friendly terms with business partners
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Implementing at ScaleThe Alternative Progressive Economy
Network of CDFIs and Credit Unions as the banking platform
Non-profit Middle-marketer card issuer CBO-based distribution network Add-on products & services:
Credit building, emergency loans, micro-finance
Leveraging remittance flows for Int’l economic development projects
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March 16 and 17, 2006 Chicago, IL