Andrea Levere, president of Prosperity Now, was in Tacoma yesterday to celebrate the opening of a new Heritage Bank in Salishan. The bank, which is the first to open in East Tacoma in years, will serve both children and adults in the low-income neighborhood.
As a national leader in serving low-income people and expanding matched savings for children and youth, Prosperity Now has been instrumental in ensuring that the new bank will focus on helping children save from an early age. To do so, Levere has worked closely with Michael Mirra, executive director of Tacoma Housing Authority. Mirra acknowledged in a meeting before the ribbon-cutting for Heritage Bank that being engaged in the Children’s Savings Account program is “an unusual endeavor for a housing authority,” but he said that it is nevertheless “a good fit for a housing authority that understands its mission to help people prosper.”
Research shows that low-income children with savings accounts starting at a young age are three times more likely to go to college and four times more likely to graduate. In Salishan, one of the lowest income neighborhoods in America, 65.8% of the children live below the federal poverty line. The Children’s Savings Account program for Salishan children will provide seed money to start accounts and match contributions for families. The accounts provided through Heritage Bank can ideally help them learn positive money habits early in life, which can make a huge impact down the road.
“(The savings accounts) are available to all children without regard to income,” said Mirra. “We want (the bank) to be a unifying influence in this very diverse community to solicit and enlist the community expectations that all Salishan children will succeed.”
After a five-year demonstration modeling 16 different programs for children’s savings accounts, preschool through high school, Prosperity Now launched The Campaign for Every Kid’s Future in June of 2017. The initiative set a goal of having 1.4 million children with a college savings account by 2020.
“Today, we are up to 382,000 accounts and 54 programs that we can measure around the country,” said Levere in the meeting. “Seven of these are statewide or city-wide programs. In Maine, every child born is given a 529 account. Imagine the impact within the school system of having an entire class with school savings instead of just a few because they belong to a certain neighborhood. If you start school and everyone has an account, you just assume that that’s how life should be.”
Research done by Prosperity Now has shown that the presence of a bank branch at a school has a long-lasting impact on how children think about saving and their futures. For this reason, the new Heritage Bank has made its staff available to teach a financial literacy curriculum in the classroom at Lister Elementary, which is located near Salishan.
“The children will see the same people in the front of their classroom that they see when they go into the bank,” Mirra said. “All this is trying to make the bank a familiar, friendly place. When those children walk to school, they’re going to walk past that bank — what they would think of as their bank — and they’re going to think of their money in there.”
Mirra and Levere are hopeful that the presence of the bank will help to interrupt the cycle of distrust that many low-income people have in financial institutions. This distrust is particularly exacerbated for people who have immigrated to the United States from countries with highly corrupt banking systems. Prosperity Now has a mission to build that trust because alternative financial services can be quite expensive: On average, a financially underserved person spends $2,400 a year on fees and interest.
“I get attacked a lot by people who say it’s unfair to ask low income people to save,” Levere said. “This data point is incredibly helpful, though: If we could help low-income people save just half of that $2,400 by having a fair account, it would be transformative.”
Heritage Bank currently acts as the operating sponsor for the Children’s Savings Account program in Salishan. The ribbon for the new bank was cut yesterday afternoon — a celebration that was complete with remarks from Mayor of Tacoma Victoria Woodards and Andrea Levere; a barbeque; and performances by East Tacoma residents.