5 Questions With Dr. Robert Giloth
Keynote speaker for Day 1 of the NCTC National Conference answers questions and gives attendees a preview of what they can expect.
How has asset building changed during your time in this field?
When I arrived at Casey in the early 1990s there was a buzz and emergent practice about Individual Development Accounts IDAs) – matched savings accounts. Before IDAs, asset building primarily involved home ownership counseling, microenterprise, and community reinvestment policies to redress and prevent redlining. For the low income, asset disregard rules related to accessing public benefits recognized personal assets as a constraint or as something to be depleted, not grown. Michael Sherraden published Assets and the Poor in 1991.
The asset field has grown since then to become a diversified and sophisticated field. IDAs took off, federal legislation and widespread adoption, and the approach spread to children’s savings accounts and 529 educational savings plans. By 2000, recognition had emerged that IDAs did not work for everyone and that a wider array of asset-building tools and services were needed. Moving forward, we came to see the importance of being banked, the frequently implicit federal asset policies tilted towards upper incomes, and the startling and ever-evolving array of asset depleting or exploiting predatory financial policies and practices. States produced asset report cards and definitions of asset poverty; financial institutions offered new products; the role of credit scores became better understood; and there began to be experiments with financial coaching.
Today, tax credit campaigns are frequently asset-building campaigns as well; cities have organized to promote financial empowerment; foundations are networked to promote asset building; more sophisticated research is underway about the importance of saving and assets; and federal policy advocacy has a much wider agenda.
What do organizations find particularly challenging about confronting mistakes and using them as a building block?
The nonprofit world is dominated by a success culture and an underinvestment in ongoing learning, continuous improvement, and adaptation. I think this state of affairs basically derives from the behaviors of investors – public, private, and philanthropic. Nonprofits are generally afraid that they will be punished if they talk openly about things that did not work—that is, their grants will not be renewed and they will lose the reputation needed to gain future resources. Investors frequently do not see themselves as partners with nonprofits for achieving specific outcomes and hence hold themselves harmless while blaming the implementers when things do not turn out right. In a broader sense, skepticism about the nonprofit sector, and the impact of occasional meltdowns of high-profile nonprofits, has encouraged nonprofits to keep a low-profile unless they have hit a home run.
But nonprofit leadership bears some responsibility as well. Many high-performing nonprofits and their leaders view themselves as only about success and discourage external sharing about internal flops. This does not mean these organizations do no learn from mistakes; rather, it means that they do not do it in a public manner in which others can easily benefit from their learning. Nonprofit leaders also respond to market feedback about their being successful. Why rock the boat if they are hitting all benchmarks of success set by investors.
Another challenge facing non-profits in this arena is the lack of forums to reflect and discuss their mistakes. Most training and conferences focus on success, and provide little attention to what didn’t work and how to learn from the experience.
Finally, nonprofits have to scramble to obtain the flexible resources to produce useful and timely data about their operations and programs. And even when that function is financially supported, they generally lack the time to reflect upon the data and engage their staff fully in mining the lessons from mistakes.
Yet many nonprofits have overcome these challenges and resource constraints and grapple with their mistakes as a way to improve performance and impact. Not surprisingly, they are the leaders in the field. Think about Engineers without Borders in Canada that issues an annual Failure Report.
How has this idea been implemented in the community tax preparation and/or asset building field? Are there unique challenges?
Unfortunately, no database of mistakes or mistakes learning exists in the nonprofit field so we really do not know what is out there. I always talk about an untapped treasure trove of mistakes to fuel our learning. But I’m afraid at this point that this mostly happens one mistake at a time, the result of courageous leadership. So, we probably are losing out on a lot of useful learning
I suspect that a lot of groups do reflect on mistakes as a part of practice but do not necessarily talk about them publicly. They may call it something else – midcourse corrections, do-overs, peer learning, refining practice. Some groups are just allergic to the words mistakes or failures but in fact are quite committed to improving practice through learning.
The tax prep and asset building fields face the additional challenge that they are dealing with people’s finances and public expenditures. While the vast majority of errors in EITC and financial counseling are committed by the private sector, concerns about errors are legitimate and the tax prep/asset building fields have stepped up their own vigilance in important ways. Mistakes learning from zero tolerance implementation, (i.e. air traffic control, health care, tax prep) differs from mistakes learning that is a part of free-spirited innovation. Doing both at once is a real challenge for any organization, nonprofit or otherwise
The tax prep/asset building fields have benefited trial and error experimentation. Two aspects of this evolution come to mind. First, the field has acknowledged that everyone is not ready for an IDA, especially if they are in debt, out of a job, or very low income. One size does not fit all. Similarly, the field discovered that a linear asset building pathway did not capture how people actually moved ahead – it is much messier and people do not simply move from debt reduction and transactional services to wealth building
Three other mistakes related to the tax prep field are worth noting. These mistakes have received attention in a variety of ways;
1. The assumption that pilot projects lead to scale impacts is not always the case. Some remain small; partners change; and some experiments just don’t work. The EITC platform came about in part because scaling potential of technology was recognized at the outset. Many pilot projects remain pilots forever.
2. On-the-spot connection between tax prep and asset building has proven to be more challenging. People come to do their taxes; and we do not have good data sources on whether information is turned into changed behavior. Split refunds and saving bonds offer promise
3. The tax prep field is data rich and evaluation poor. We do a better job documenting our policy influence than assessing the impacts of campaigns. The way we report on tax prep success each year frequently confuses our understanding of impact. Is our impact saved tax prep costs for repeat customers? How do we assess non EITC filers? How many new people are we attracting to tax credits?
What do you see as the most intriguing recent new program/idea/product in the asset building field?
Behavioral economics has been of great assistance to the asset field even though we have not completely figured how its principles can be most helpful. The basic idea is that all people make lots of consumer decisions based upon various prompts, defaults, sequencing, timing trade offs, and identity relationships. Inversely, people shut down from too much complexity, too many choices. In general, the nonprofit field has not paid attention to these ideas. The basic nonprofit assumption is that if we provide a good service or product people in need of it will come. In many cases this has simply not happened.
The bad news is that understanding behavioral economics does not lead automatically to good solutions. Ongoing research is needed. The good news is that there is now much more understanding of behavioral economics and many more experiments with how it can benefit the tax prep and asset-building fields. For example, Intuit (Turbo Tax), Duke University, and University of North Carolina are studying ways to improve the link between savings and tax-time refunds. This builds upon what we are learning about making split refunds available for savings.
What do you see as the biggest barrier for asset building programs in the near future?
It would be difficult not to underscore the economic and policy challenges for asset-building that face all families and especially low-income families. We may not only be missing critical bipartisan political leadership to take action but also a set of powerful and credible policy ideas about how to create a more prosperous and fair economy. Nevertheless, we should not ignore more tactical advances that can be achieved even in this environment.
Another major challenge is making our asset building tools and campaigns relevant for our growing immigrant population. This challenge is multi-faceted, including language access, product design, alternative credit reports, and documentation.
Putting aside big picture, environmental challenges, the asset-building field faces challenges about how to build upon or create a scalable infrastructure for affordable and quality financial products and how to scale up and sustain important asset-building components like financial coaching and year-around asset-building services. We have lots of great examples of promising practices but few scalable models. This is also a challenge for building a sustainable tax prep field.
