rantmaking support for the human services sector, including efforts to improve the lives of children and their families, has been a focus of The McKnight Foundation since its inception in 1953. From individual out-of-school time programs on a small scale, to coordinated efforts to affect youth policy and systems change statewide, McKnight has made it a practice to investigate and facilitate innovative approaches to improving the quality of life for children and families.

In 2004, in the interest of creating an ongoing forum on improving financial literacy in the state, The McKnight Foundation convened a group of individuals representing 20 different organizations — including 15 McKnight grantees — from the public, private, nonprofit, and philanthropic sectors. With the University of Minnesota acting as homebase, this group was dubbed the Minnesota Saves Network.

At the time, the network’s goal was for practitioners and policy advocates to learn from and encourage each other, draw from each other’s strengths, and work more cohesively. By 2005, Minnesota Saves had established its own steering committees and, more importantly, had begun the process of moving beyond its collective self-interest in the financial management arena, and into the realm of providing financial tools to everyday folks in need of their practical application. Today it is one of the strongest and most effective initiatives of its kind.

Background

key element of any family’s overall success is its financial well-being. Raising a family is challenging under any circumstances, but low-income families and their children face a unique set of obstacles. Compared to their counterparts in moderate- and upper income families, kids living in poverty are at a much greater risk for a host of negative outcomes, including lower graduation rates, higher instances of teen pregnancy, and greater inclination to criminal activity as adults. Furthermore, as illustrated by the Brookings Institute’s 2006 report From Poverty, Opportunity, lower income families tend to pay inflated prices for consumer products — things like mortgages, car loans, even furniture, appliances, and electronics — than families with higher incomes. This correlation exacerbates financial woes and can diminish possibilities.

In day-to-day matters of personal finance and especially as a tool for wealth creation, sound money management is one of the keys to escaping poverty. To make financial well-being an attainable goal for as many of Minnesota’s families as possible, in 2002 McKnight launched a strategy of promoting family economic success. This strategy aims to give families the tools they need to make informed choices as consumers and savers, choices which are designed to lead to asset building and wealth creation.

hese tools take many forms, from being exposed to basic financial principles to gaining access to financial services normally not on the menu for low-income families. In this area McKnight has made grants supporting home-buying programs; programs which promote individual development accounts, or IDAs; and community-based economic education programs. Many of these efforts aim specifically to help Minnesota’s growing immigrant community, a demographic particularly vulnerable to subprime and predatory financial practices due to language barriers and cultural differences.

Although complex and interrelated factors affect the economy, one of the oft-cited causes of today’s economic problems is the sagging housing market, and in particular those problems caused by predatory lending practices. Foreclosure in the Twin Cities metro area, especially in lower income neighborhoods, has reached near-epidemic proportions. Predatory financial products — which often prove to be a gateway to foreclosure — prey largely on families of low income. As the economy has glaringly shown, financial problems in one strata (in this case, real estate in low-income areas) can have a ripple effect across the whole system. So it is in the best interests of people at all income levels to help families learn how to manage their money wisely.

The Minnesota Saves network

innesota Saves is composed of 20 different organizations offering expertise in topics such as financial literacy, tax accounting, banking, asset development, academic social sciences research, and legal and public policy advocacy. Member organizations range from Twin Cities-based advocacy nonprofits like the Home Ownership Center and the Minnesota Community Action Partnership, to organizations with broader reach like ACORN Housing and the U.S. Federal Credit Union. (Click here for a full list.) The network’s goal has changed from an inward-looking sharing of information among practitioners to an outward-looking effort of providing financial tools to Minnesota’s families to help them improve their financial health.

The network strives to identify the barriers and challenges that families face in acquiring and preserving assets, to highlight best practices modeled at the national, state, and local levels, and to share resources and information. With a broad and multi-layered approach, utilizing meetings, training opportunities, conferences, counseling, workshops, advocacy, and electronic media, the network:

• supports resource sharing among members,
• enhances effective direct service programs that work with low- and moderate-income Minnesotans
• supports public policy that advances economic self-sufficiency, and
• increases public awareness of the importance of financial stability and asset development

ne of the major strengths of Minnesota Saves is the fact that it represents something new — this particular group of organizations had not previously been called to work together in this way, despite clear overlaps among their missions. Furthermore, ideas will be incubated and shared that would not otherwise have emerged; most of the member organizations are very busy trying to do their work to meet the needs of their clients. So the knowledge, experience, and perspective pulled from such a diverse array are collectively unique, creating a whole greater than the sum of the parts.

Yet another strength of the Minnesota Saves network is that it works at both the individual and systemic level. It responds to community needs by building the capacity of direct service staff working with individual families to improve financial health. It also works at a more "macro" level, by bringing public and private to work together more effectively, laying the foundation for broader changes in systems and public policies, and testing and sharing best practices with the field at large.

Indeed, the inherent information-sharing possibilities are a step forward for the field of financial literacy, but a glance at any newspaper makes it clear that this field needs to move forward by leaps, not just steps. Despite the preponderance of bad news, there are reasons for optimism.

The future of financial literacy

he Minnesota Saves model of bringing together a group of unlikely allies is being replicated in other areas. In 2008, a group of organizations representing city government and nonprofits (including several McKnight grantees) formed the Minnesota Foreclosure Partners Council, whose mission is to identify, fund, and implement coordinated policies and programs that effectively address the impact of the recent surge in mortgage foreclosures on families, neighborhoods, and communities. Partners confront the practice and consequences of predatory and inappropriate lending by taking specific, innovative, and collaborative action including changes in policies and practices and the provision of resources.

So far, the indicators for positive outcomes from the network's efforts are good. At the local level, one simple but effective measure of its success is the participation rate. Over the first two full years of its existence, participants have expressed a continued and growing desire to be involved. And at the federal level, elements of the network are being used as the basis for many of the new anti-predatory lending bills. With more efforts like these, which put the power of asset-building in the hands of the families and the children who need it most, momentum is building to push the economic downturn of recent years into an upswing.

Related Links

Minnesota Saves network
Minnesota Saves participant organizations
Family Assets for Independence in Minnesota
Financially Fit Minnesota
McKnight's children and families grantmaking program
Browse McKnight children and families grantees