THE OWNERSHIP SOCIETY:

For decades, academics and activists have floated ideas about how to help families automatically save part of this windfall at tax time. Evidence suggests that starting a savings account with a lump sum of money makes it easier to continue saving throughout the year--partly because few people imagine that putting $50 or so away a month will ever add up to anything worth the hassle. New York City, under the Michael Bloomberg administration, began such a program in 2008. Families that qualified for EITC could ask that some of their refund--at least $100 at first, later changed to $200--be deposited into a savings account before they ever saw it. The program contributed 50 cents for every dollar each family saved for an entire year, up to $250 at first, later changed to $500, with funding coming from the Rockefeller and Ford foundations. If the families withdrew money from their accounts before the year was up, they wouldn't receive the matching funds.

The city recruited workers at neighborhood tax-preparation sites, where accountants help low-income families file their taxes at no cost, to enroll people in the plan. Billy Garcia worked for three years at sites in the Bronx, in poor, mostly black and Latino neighborhoods like Mott Haven and Morrisania. "A lot of people would say, 'I don't want to participate because this money is already spent,'" Garcia says. "I understood that."

A number of Garcia's clients who had opted to open accounts returned to tell him their success stories. While some had saved money and used it for small purchases or to keep on top of bills, others had planned for things they wouldn't be able to afford with their normal salaries. One woman wanted her kids to meet their grandparents in the Dominican Republic--she put away $1,000 for a whole year, which was matched by another $500, and saved an additional $1,000, also matched, in the following year. With $3,000 in savings, her family was able to make the trip.

A few families were not able to save the money for an entire year. "They would come to me, and they would be a little disappointed, as if I would be disappointed in them," Garcia says. One client needed to wire money to Uruguay because of a family emergency. Garcia told him: "We did actually help you save that money, because you held it for six months. You can't help the things that come up in life, but at least you had that money and it was there for you to use."

In the program's first three years, 2,600 filers participated, taking up every available spot. (Admissions to the program were limited by the amount of matching funds the foundations had donated.) Eighty percent of the families saved for the entire year and received matching funds--for a total of $2.3 million in savings and matching funds--and 70 percent continued to save after the year was up. "They were successfully saving money, even though on average they were making $18,000 a year, and this was when the economy was all falling apart, and they were living in a city like New York," says Jonathan Mintz, commissioner of the New York City Department of Consumer Affairs, which runs the program through its Office of Financial Empowerment. "The odds were really against them."

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