EITC/Asset Building

The U.S. Department of Health and Human Services, Administration for Children and Families is committed to providing information on the Earned Income Tax Credit (EITC), financial literacy, and asset building.


This section presents research and reports on the Earned Income Tax Credit (EITC) and asset building for low-income families.

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Implementing a Conditional Cash Transfer Program in Two American Cities: Early Lessons from Family Rewards 2.0, October 2014

Stemming from the lessons learned of the initial conditional cash transfer program, this report provides key findings from the first two years of implementing Family Rewards 2.0. Launched during 2011 in the Bronx, New York and Memphis, Tennessee, Family Rewards 2.0 targets low-income families with children primarily in the ninth and tenth grade. In addition, the program seeks to provide financial stability for disadvantaged communities through conditioned-based rewards.

For more information, please see: http://www.mdrc.org/sites/default/files/CEO_SIF_2014_FR.pdf

Seattle Municipal Finance Report: Workforce Development, October 2014

This research study identifies different municipal financing tools which have been and might be implemented throughout the city of Seattle for workforce development programming. The report includes examples illustrating the process in which Seattle generates revenues to meet program expenditures, as well as current tools that the city utilizes in funding social benefit programs for its residents.

For more information, please see: http://www.seattlejobsinitiative.com/wp-content/uploads/SJI_MunicipalFinance_Report_v10.9.14.pdf

Your Money, Your Goals: A Financial Empowerment Toolkit for Social Services Programs, August 2014

The Consumer Financial Protection Bureau, in partnership with ICF International, released a toolkit that intends to equip frontline program staff with fundamental financial empowerment principles, an understanding of consumer financial protection, tools and information to help clients take steps to build and apply money management skills, and a referral guide to link clients to local financial empowerment services. Financial empowerment trainers can use the toolkit to train case managers and other frontline staff that are working with clients in a variety of contexts: asset building programs, TANF and workforce programs, Head Start, refugee resettlement services, programs for at-risk youth, programs serving people with disabilities, and more.

For more information, please see: http://www.consumerfinance.gov/your-money-your-goals/

Report on the Economic Well-Being of U.S. Households in 2013, July 2014

The Federal Reserve Board released a report that outlines results from a consumer survey that aimed to understand the financial and economic well-being of U.S. households since the Great Recession. The survey explored perceived risks to household financial stability, housing credit availability, and medical expenses, to name a few. Overall, authors of the report noted that many households fared well, while a small amount of households experienced financial stress.

For more information, please see: http://www.federalreserve.gov/econresdata/2013-report-economic-well-being-us-households-201407.pdf

Redeeming the American Dream: Children's Savings Accounts (CSAs) Build Children's Capacity For Economic Mobility, June 2014

The Assets and Education Initiative at the Corporation for Enterprise Development released a brief that states that Children's Savings Accounts are an important way to facilitate asset accumulation, educational attainment, and economic mobility. The author states that CSAs will connect disadvantaged children to capital that is critical for current well-being and future opportunities.

For more information, please see: http://cfed.org/assets/pdfs/CSA_Redeem_The_American_Dream_Brief.pdf

Introducing the Financial Empowerment Innovation Fund, April 2014

The U.S. Department of the Treasury created the Financial Empowerment Innovation Fund, an initiative designed to facilitate informed decision making amongst American families by providing increased access to knowledge and tools that promote financial capability. The Treasury will be allocating approximately six million dollars to research contracts that explore and test promising practices in this field. The Treasury is particularly interested in strategies that incorporate technology and focus on the needs of low- and moderate-income households.

For more information, please see: http://www.treasury.gov/connect/blog/Pages/Introducing-the-Financial-Empowerment-Innovation-Fund.aspx

Asset Poverty and the Importance of Emergency Savings, October 2013

Urban Institute held a webinar discussing families that are asset poor – lack sufficient resources to live at the poverty line for three months – and the importance of asset poverty. A third of U.S. families are liquid asset poor, and these families are disproportionately minority, young, and low-income. A lack of assets threatens families' ability to weather adverse events. After experiencing an involuntary job loss, asset poor families are nearly three times more likely to experience hardship than non-asset poor families. These large differences exist across the income spectrum--for low-, middle-, and high-income families.

For more information, please see: http://www.urban.org/UploadedPDF/412911-Asset-Poverty-and-the-Importance-of-Emergency-Savings.pdf

Financial Literacy, Financial Education and Downstream Financial Behaviors, October 2013

The Social Science Research Network released a paper discussing financial literacy, education, and downstream financial behaviors. A meta-analysis of the relationship of financial literacy and of financial education to financial behaviors was conducted in order to understand the increasing complexity of the financial decisions of individuals over the last generation. The paper discusses the importance of financial education and literacy, as well as suggestions to implement financial education programs. Financial literacy and education are extremely critical to improving the economic self-sufficiency of workers, and therefore, should be reinforced throughout an individual's life.

For more information, please see: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2333898

Integrating Financial Security and Asset-Building Strategies, April 2013

The Corporation for Enterprise Development (CFED) released a guide which provides examples of workforce programs that have integrated one or more financial capability and asset-building strategies into their work. For the most part, these examples rely on partnerships to deliver services; however, some of the examples include referral networks or building internal capacity to deliver services directly.

For more information, please see: http://cfed.org/assets/pdfs/Integrating_Financial_Security_and_Asset-Building_Strategies_into_Workforce_Development_Program.pdf

Tax Credits and Job-Oriented Programs Help Fathers Find Work and Pay Child Support, March 2013

The Urban Institute released a brief that provides a summary of the evaluation of New York's Strengthening Families through Strong Fathers Initiative, which provided job services and a state earned income tax credit to low-income fathers. The study found that this approach was successful in connecting fathers with work and increasing child support payments. The information would be helpful to state administrators interested in using innovative approaches to engaging non-custodial parents with barriers to work.

For more information, please see: http://www.urban.org/UploadedPDF/412773-Tax-Credits-and-Job-Oriented-Programs-Help-Fathers-Find-Work-and-Pay-Child-Support.pdf

AFI Innovative Projects and New Strategies, 2013

The Assets for Independence (AFI) Resource Center's Web site devotes a section to innovative projects and strategic partnerships for delivering AFI projects and asset building services. Areas of innovation include developing IDA programs and services for youth; working with financial partners such as credit unions and housing agencies; and integrating IDA services into other programs for low-income people, such as Temporary Assistance to Needy Families and job training

For more information, please see: http://idaresources.org/page?pageid=a047000000ApiTQ

Financial Empowerment Training for Social Service Programs, 2013

The Office of Financial Empowerment within the Consumer Financial Protection Bureau (CFPB) recently released a white paper titled "Financial Empowerment Training for Social Service Programs: A Scan of Community-Based Initiatives." The paper presents the results of a field scan conducted by the CFPB to learn more about the tools and information social service providers across the country need to help their clients increase their financial capabilities. This information was fundamental to the design and development of "Your Money, Your Goals," the financial empowerment toolkit developed by CFPB and scheduled to be released in 2014.

For more information, please see: http://files.consumerfinance.gov/f/201309_cfpb_report_training-for-social-services.pdf

Economic Security for Extremely Vulnerable Families: Themes and Options for Workforce Development and Asset Strategies, September 2012

This recently released research study from the Urban Institute identifies promising approaches that could be implemented within the Annie E. Casey Foundation's Center for Economic Opportunity program to assist the most vulnerable families, of which families escaping domestic violence are included. The research indicates that programs can improve a vulnerable family's employability and savings; however, the most successful interventions are "high touch," longer in length than standard programs, and therefore, more expensive. Also highlighted is the importance of creating partnerships with healthcare providers, as this is often a significant barrier to stability for these families that remains unaddressed.

For more information, please see: http://www.urban.org/UploadedPDF/412699-Economic-Security-for-Extremely-Vulnerable-Families.pdf?RSSFeed=UI_Poverty,AssetsandSafetyNet.xml

Sharing Risks and Returns: Social Impact Investment to Scale Up Effective Programs, September 2012

The Finance Project released a brief aimed to help policymakers, community leaders, private investors, and other stakeholders understand what is known about the opportunities and conditions for success in designing and implementing incentive-based financing strategies to take innovative evidence-based social solutions to scale. It describes the design and implementation of three broad types of innovative financing strategies that make funding contingent on specific benchmarks for success. The brief offers considerations for stakeholders to address when determining how these strategies could work for a community or State seeking to link funding to achievable outcomes.

For more information, please see: http://www.financeproject.org/publications/SharingRisksReturns.pdf

Assets for Independence (AFI) Serving Domestic Violence Survivors Toolkit, April 2012

The Federal government has recently placed a greater emphasis on connecting survivors with asset building programs as a way to build financial independence for the population. With this goal in mind, this toolkit was designed as a step by step guide for both AFI programs and domestic violence service providers interested in creating partnerships. It provides information targeted specifically at each partners, as well as additional resources such as draft MOUs and letters of commitments.

For more information, please see: http://idaresources.acf.hhs.gov/servlet/servlet.FileDownload?file=01570000001bh8JAAQ

Building Assets*Building Stronger Families Financial Education Activities, 2012

Families play a large role in determining how we spend, save, and invest for the future. The Building Assets*Building Stronger Families financial education guide provides 50 financial literacy activities designed to help families talk about Money Values and Attitudes, Family Dreams and Goals, and Family Budgeting. These activities can be used alone in or in combination with another financial education curriculum, such as the FDIC’s MoneySmart.

For more information, please see: http://idaresources.org/page?pageid=a047000000ApiTG

Empowering Women Through Financial Awareness and Education, 2012

Published by the Organisation for Economic Cooperation and Development (OECD) , this document is a literature review of existing gender differences that pertain to financial literacy. The literature reveals that women are often less financially literate than their male counterparts. Since a high proportion of TANF participants are women, this review sheds light on some of the potential policy and programmatic responses to this gender gap.

For more information, please see: http://www.oecd-ilibrary.org/finance-and-investment/empowering-women-through-financial-awareness-and-education_5k9d5v6kh56g-en

Saving for Success: Financial Education and Savings Goal Achievement in Individual Development Accounts, 2011

Using microdata from the American Dream Demonstration, this study examines factors associated with savings and savings goal achievement (indicated by a matched withdrawal) among participants of individual development account (IDA) programs. Results show that hours of participation in financial education programs, higher matched caps, prior use of a savings account, and greater educational attainment are each associated with a greater likelihood of savings and savings goal achievement. IDA programs need to maximize available resources, particularly financial education, to assist participants in achieving savings goals.

For more information, please see: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1996707

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Earned Income Tax Credit (EITC)

40th Anniversary of the EITC: A Call for Innovative Outreach, January 2015

This entry discusses the 40th anniversary of the Earned Income Tax Credit (EITC) and how a notable percentage of Americans are unaware of their eligibility to participate in the program. In addition, it reports on how different organizations have partnered together to increase EITC enrollment by implementing innovative outreach strategies.

For more information, please see: http://www.acf.hhs.gov/blog/2015/01/40th-anniversary-of-the-eitc-a-call-for-innovative-outreach

Paycheck Plus: A New Antipoverty Strategy for Single Adults, May 2014

MDRC released a brief that outlines a project effort that is testing Paycheck Plus, an enhanced Earned Income Tax Credit (EITC) for single, low-income adults with no dependent children in New York City. According to the authors, most EITC benefits go towards families with children, so this initiative focuses efforts on this sub-group. The project just enrolled over 6,000 individuals and will now monitor these individuals for the next several years to assess the effectiveness of the Paycheck Plus supplement on economic well-being, work, and other outcomes.

For more information, please see: http://www.mdrc.org/sites/default/files/PaycheckPlus.pdf

Map: The Earned Income Tax Credit in Your County, January 2014

The Brookings Institution released an interactive map in which users may explore EITC take-up rates at the county level nationwide. Darker colors indicate higher value, while grey shading indicates unavailable data. According to this tool, the southeast part of the country provides the highest EITC take-up rates.

For more information, please see: http://www.brookings.edu/research/interactives/2014/county-eitc-map?utm_campaign=Brookings+Brief&utm_source=hs_email&utm_medium=email&utm_content=12249593&_hsenc=p2ANqtz-9klyF0eKPZxsNqHJcR6BDoAl-DSzeY

Strengthening the EITC for Childless Workers Would Promote Work and Reduce Poverty, July 2013

The Center on Budget and Policy Priorities released a report discussing the benefits of strengthening the Earned Income Tax Credit (EITC) for childless workers in order to promote work and reduce poverty. The report addresses how strengthening the credit could bring about social and economic benefits through an increase in labor participation, marriage rates, and a decrease in incarceration rates. In addition to this, examples on how to strengthen the EITC for childless workers are also discussed.

For more information, please see: http://www.cbpp.org/files/7-15-13tax.pdf

Earned Income Tax Credit (EITC) Promotes Work, Encourages Children's Success at School, April 2013

The Center on Budget and Policy Priorities released an article suggesting that EITC's benefits extend well beyond the limited time during which a family typically claims the credit. The article indicates that children of EITC recipients do better in school, are more likely to attend college, and earn more as adults. The Child Tax Credit (CTC) is discussed, which is a related credit that is designed to help offset the cost of child-rearing, and also plays a major role in helping low-income working families.

For more information, please see: http://www.cbpp.org/files/6-26-12tax.pdf

Encouraging Savings for Low- and Moderate-Income Individuals, April 2013

MDRC has released a report on the preliminary implementation findings from the SaveUSA program evaluation. SaveUSA is a pilot program in New York City, Newark, San Antonio, and Tulsa that offers a matched savings account to low-income tax filers by building on the opportunity presented by tax-time refunds, especially the Earned Income Tax Credit (EITC). This policy brief also includes recruitment and account enrollment results.

For more information, please see: http://www.mdrc.org/sites/default/files/SaveUSA_brief14.pdf

The Earned Income Tax Credit (EITC): Linking Income to Real Health Outcomes, March 2013

The Center for Poverty Research faculty at the University of California Davis released a new study that examines the 1993 EITC expansion to measure the effect extra income had on rates of low birth weight. The study found that while the EITC is not a health program, it does have a clear impact on newborns.

For more information, please see: http://poverty.ucdavis.edu/sites/main/files/file-attachments/policy_brief_hoyes_eitc_0.pdf

The Earned Income Tax Credit for Single Mothers: Insurance Without Disincentives?, December 2012

The Earned Income Tax Credit (EITC) is one of the single most important social insurance programs in place in the U.S. The purpose of this paper is to evaluate the insurance and incentive effects of the EITC on a central class of recipients: single mothers. To the authors of the paper, it is to their knowledge, the first attempt to analyze the EITC in a life-cycle decision problem with risky wages, risky family-composition, and limited self-insurance. The results indicate that the EITC provides substantial insurance to young single mothers and does not significantly distort labor supply decisions.

For more information, please see: http://www.economicdynamics.org/meetpapers/2010/paper_1103.pdf

The Effects of Safety Net Programs on Food Insecurity, October 2012

The University of Kentucky's Center for Poverty Research released a discussion paper that explores whether the safety net reduces food insecurity for families and children who receive any of the five major safety net programs: Temporary Assistance for Needy Families (TANF), Supplemental Security Income (SSI), Earned Income Tax Credit (EITC), Supplemental Nutrition Assistance Program (SNAP), and Medicaid. The results indicated that the various safety net programs do improve food security.

For more information, please see: http://www.ukcpr.org/Publications/DP2012-12-3.pdf

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Individual Development Accounts

Savings and Personal Discount Rates in a Matched Savings Program for Low-Income Families, December 2013

The West Coast Poverty Center released a short summary about a study that explores matched savings programs and low-income people's ability to accumulate assets depending on individual desires to save and ability to act on those preferences. The paper defines "time preference," a concept that describes how present- or future-oriented a person may be, and discusses the ways in which variations in time preferences are important for understanding individual financial outcomes. The researchers used data from a 2002-2009 matched savings program to conduct factor analysis, and found that persons with lower future orientation had significantly lower average savings deposit amounts in their first year in the matched savings program.

For more information, please see: http://depts.washington.edu/wcpc/sites/default/files/Flash/PFLASH.Klawitter2013.1.pdf

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