The Unequal Impact of the COVID-19 Crisis on Households’ Financial Stability

In April 2021, we released a brief showing the disproportionate impact of the COVID-19 crisis on the finances of households and individuals who are already economically vulnerable. Drawing on data compiled in the most recent Prosperity Now Scorecard, the brief shows how this crisis would more severely and immediately impact the financial stability of:

• About 45 million households that lack sufficient cash to weather an emergency;
• Tens of millions of American workers who are employed in low-wage occupations, or who are paid hourly wages;
• Racial and ethnic minorities, undocumented immigrants and women, all of whom are more likely to work in low-wage occupations and have less in savings;
• Low-wage workers in certain occupations and states without vital protections and benefits.

Additionally, given the new environment created by the COVID-19 pandemic, we pivoted with our existing tax time research project, generously funded by H&R Block, to launch a new survey research project to examine how the crisis is immediately affecting the financial lives of low- and moderate-income (LMI) households. The data collected through the survey allowed us to analyze the circumstances these households are confronted with and the strategies they use to secure resources to navigate this crisis. This resulted in a better understanding of who received stimulus payments and other forms of government assistance, how households managed their debts, and what types of financial products and services they turned to during the crisis to survive. We hope that the insights gained through this study will inform policymaking, programs and products designed to serve this population in the aftermath of the COVID-19 pandemic.

Expanding Access to Tax Assistance During COVID-19 and Beyond

With the COVID-19 crisis came the forced shut down of in-person Volunteer Income Tax Assistance (VITA) sites across the country. VITA sites provide critical tax services to low- to moderate-income (LMI) households that help them access essential tax credits and benefits through the tax code, like the Earned Income Tax Credit (EITC), the Child Tax Credit (CTC) and Economic Impact Payments (EIP). Through the Taxpayer Opportunity Network (TON), the Field Engagement Team pivoted to help VITA sites switch to virtual and creative service delivery options. With generous support from Blue Meridian Partners, The Rockefeller Foundation and Citi Community Development, we provided more than $800,000 in subgrants to VITA organizations. We also facilitated their access to a new technology platform with Code for America for VITA partners to use now and in future tax seasons. Moreover, we provided messaging support to reach taxpayers and provided targeted technical assistance to ensure that the most vulnerable and hardest to reach communities have access to quality tax prep and are maximizing their returns by claiming eligible EITC, CTC and EIP stimulus checks. Additionally, we managed a $300,000 technology fund to provide grants to VITA sites to aid them in switching their services virtually. This fund prioritized VITA sites in communities with the greatest need that were most heavily impacted by COVID-19, and successfully served more than 60,000 LMI households in 2020 and up to 1.5 million in 2021.

Pivoting the Emergency Savings Pilot project in response to COVID-19

With generous support from the Wells Fargo Foundation, in early 2020 Prosperity Now launched the Emergency Savings Pilot project with four carefully selected partners that have operated matched savings account programs to assist LMI families in saving. After receiving more than 200 applications, we selected East LA Community Corporation, Foundation Communities (TX), Texas Muslim Women’s Foundation and the University of Arkansas. The project aimed to build the capacity of the partners to raise funds for matched savings accounts, assess the best terms and conditions for matching emergency savings (such as the match rate, the threshold for receiving a match and eligibility criteria), assess the infrastructure of the field to support savers (such as technology and fundraising platforms) and provide matching funds for families’ emergency savings accounts. Starting in March 2020, Prosperity Now pivoted the project to an Emergency Assistance Program because many participants, which are predominantly low-income, immigrant or undocumented and female, were deeply impacted by the crises. Many lost their jobs or had a reduction in hours, were tapping into their savings to make ends meet and were expressing dire need for support with rent, food and other bills. In response, Prosperity Now, shifted the design and extended the duration of the project to ensure 226 participating families could access funds they needed to support themselves and their families during this difficult time.

Home Reserve

In March, Prosperity Now kicked off the HomeReserve: A Prosperity Now Mortgage-Match Initiative in Washington, DC, and Detroit, MI, with housing practitioners, government officials, local banks and residents. Prosperity Now brought together – in-person and virtually – participating organizations to reduce mortgage default in LMI households by providing ongoing matched savings coupled with post-purchase homebuyer education. We also introduced members of local government, such as officials from the D.C. Department of Housing and Community Development and the Michigan State Housing Development Agency, to local banking institutions, brokers, VITA partners, nonprofits, residents and many more.

15^th Annual I’M HOME Conference

For 15 years, Prosperity Now has poured countless hours into our Innovations in Manufactured Homes initiative, known as the I’M HOME program, in an effort to improve the asset- and wealth-building of LMI communities. In a final push to support the manufacture home movement and advocate for new and better policies to help families reach their financial goals, we held the capstone Innovations in Manufactured Homes (I’M HOME) Conference. Nearly 300 manufactured homeowners, advocates, academics, policymakers, lenders, developers and others convened at the conference in Portland, OR. Thanks to our generous supporters and sponsors, this conference was a huge win for Prosperity Now, and successfully highlighted the substantial advances this program helped secure in state policy, housing finance and resident engagement and new partnerships with key constituencies.

The Impact of COVID-19 on the CSA Field

The Children's Savings Account (CSA) movement grew exponentially in 2019, based on a survey conducted during the fall of 2019 and our report, The Movement Reaches New Heights: The State of the Children’s Savings Field 2019, prepared in early 2020 before the start of the COVID-19 pandemic.

The arrival of the COVID-19 pandemic impacted families and communities across the country, and CSA programs were tasked with adapting their program operations to remote work, finding new ways to engage families and participants and reframing their messaging around long-term savings in the midst of an immediate crisis. Prosperity Now held listening sessions for CSA programs to provide opportunities for practitioners and stakeholders to discuss programmatic challenges and share new strategies for remote engagement, communication and relationship-building with participants and their families.

New Manuals Establish CSA Common Metrics

In 2020, the Consumer Financial Protection Bureau (CFPB) released a set of CSA common metrics and two accompanying manuals that provide guidance on implementing the metrics and evaluation. These metrics and standards were developed by Prosperity Now’s Children's Savings Team and Abt Associates as part of a three-year project with the CFPB. The metrics represent a major step toward making it easier to track individual CSA programs' outcomes and the impact of the field as a whole. In July, the team co-facilitated a virtual convening to unveil the Common Metrics for CSA programs with Abt Associates and the CFPB. Speakers from San Francisco's Kindergarten to College and Promise Indiana shared their common metrics implementation pilot experiences, and participants discussed the logic models, selecting metrics and data sources associated with successful outcomes. In 2021 and beyond, Prosperity Now will continue working with the CFPB to refine the standard metrics and share them with more CSA programs.

The Cascading Impact of COVID-19 on Microbusinesses and the U.S. Economy

In August 2021, we released a brief that details the scope and importance of microbusinesses in the United States; the role women, racial and ethnic minority business owners have in this sector; and how these firms have been devastated by the pandemic and left behind by the implementation of the Coronavirus Aid, Relief and Economic Security (CARES) Act. The report, “The Cascading Impact of COVID-19 on Microbusinesses and the U.S. Economy,” shows that even in the strongest economy, just over two-thirds of businesses survive for two years, and only about half survive at least five years. Microbusinesses, defined as firms with one to nine employees and non-employer firms, are historically the most vulnerable to financial shock.

Virtual Prosperity Summit

On Sept. 30-Oct. 2, 2020, Prosperity Now hosted our first-ever Virtual Prosperity Summit. We had a record number of 1,406 registrants, of which 70% of were first-time Prosperity Summit attendees. Every two years, the Prosperity Summit brings together organizations, advocates, practitioners, and policymakers dedicated to creating opportunity for financial security, wealth, and prosperity for everyone in the United States. As the only event addressing the range of life moments that influence well-being, the Prosperity Summit is renowned as a place for partners in the field to share and learn best practices, discover new solutions, and galvanize around policies that promote security for all.

In our post-event survey, some respondents said the virtual format and lower cost allowed more staff and organizations who could not afford past, in-person events to take part in the conference. An additional benefit of a Virtual Summit was that we were able to record the content throughout the conference and make it available to all 1,406 registrants through June 2021. We are devising a strategy to continue pushing the content and hosting conversations on the platform around content areas that are key to our new strategic direction through 2021. And, as we look forward, we are considering how we continue to make the Summit more accessible and reach wider audiences.

In our post-event survey, we asked attendees to rate how they were feeling after the Virtual Prosperity Summit:

• Connected to the Prosperity Now Community: 86% selected at least somewhat true.
• Equipped to use tools resources, or knowledge gained: 92% selected at least somewhat true.
• The Summit represents me, my work and priorities: 92% selected at least somewhat true.
• More aware of Prosperity Now’s commitment to racial justice: 96% selected at least somewhat true.
• More energized about my work: 91% selected at least somewhat true.
• More would recommend the Prosperity Summit to a colleague: 96% selected at least somewhat true.
• Likely or very likely to apply something they learned in the next three months: 92% selected at least somewhat true.