For many Mainers, saving for a house, for an education, or even just to get through an emergency is a goal that feels out of reach. In fact, according to the latest Assets and Opportunity Scorecard released by the nonprofit CFED, nearly half of Maine households live in “liquid asset poverty.” This means they either already live below the poverty line, or would slip below it if they lost their income source for three months, lacking the savings to make ends meet. At the John T. Gorman Foundation, we believe that all Mainers deserve the opportunity to acheive the peace of mind that comes from having money in the bank. We are proud to support a variety of programs that provide a powerful incentive for struggling Mainers to save through matched savings opportunities, while at the same time offering a path to long-term success through financial literacy education.
Some of those opportunities include:
Family Development Accounts: A federally funded program, Family Development Accounts (FDAs) provide the opportunity for low-income families to save up to $2,000 for a down payment on a house, or up to $1,000 for business or education goals. The Maine FDA Coalition works with financial institutions to offer these accounts, which carry no fees for the accountholder. Savers receive a four-to-one match after completing financial education and asset-specific training.
“That’s one of the highest state matches of any such program in the nation,” says Nicole Witherbee, chief Program Officer at the John T. Gorman Foundation, which granted $200,000 to the Maine FDA Coalition in 2012.
The results of the program have been so strong that the Foundation in 2015 committed another $200,000 over the course of six years. By the end of last year, the program had already helped 327 families meet goals, with another 84 accountholders currently saving.
Rainy Day Savings Account (RDSA): While FDAs help accountholders save for long-term goals, they aren’t designed to be used for emergency savings. In times of crisis, a vulnerable family’s future can easily be derailed as bills pile up. That’s why New Ventures staff member Janet Smith helped create the Rainy Day Savings Account program, which offers a dollar-for-dollar match to help families cover necessary expenses like car payments or rent in case of loss of income. The program is funded entirely through private donors, including the John T. Gorman Foundation.
“We’ve had really great results in terms of participation, and the program makes a big difference,” Smith says. “We find that initially account holders often think they don’t have enough income to save, but once they get in the habit of doing so, they love the security they gain from having a bit extra in the bank.”
Smith recalls the story of one man, living with a disability in a rural part of the state, who initially had to use his Rainy Day Savings for a dental emergency. However, after becoming more financially savvy through classwork, he continued to set savings goals. After opening an FDA and receiving scholarships, he eventually completed his Bachelors’ Degree. “He started out only being concerned about emergency savings, but he’s now completely taken charge of his finances,” Smith says.
Opportunity Passport: Ideally, the habit of savings starts early, but many young people don’t have adequate resources to put money aside. Opportunity Passport gives them a chance to invest in their future. Nationally, the program is funded by the Jim Casey Youth Opportunities Initiative as part of the Annie E. Casey Foundation, and is administered locally by Jobs for Maine’s Graduates with support from the Maine Department of Health and Human Services. Opportunity Passport offers a dollar-for-dollar match in a savings account for older youth transitioning out of foster care. Participants can save up to $1,000, and the money can be used for education, housing, transportation, or other important expenses. The program also includes financial education to instill the value of savings.
In 2015, the John T. Gorman Foundation gave a grant of $360,000 for a three-year pilot to expand the program beyond youth transitioning from foster care who have overcome adversity in other ways, such as experiencing homelessness or involvement with the juvenile justice system. Since Opportunity Passport first came to Maine in 2004, accountholders in the state have saved over $1 million for their future. The expanded program promises to help even more young people in Maine work towards their goals.