United Way of America Plans Big Increase in Program to Strengthen Family Finances

United Way of America announced last week that it is creating a program to help low- and moderate-income people improve their finances, saying millions of Americans are struggling to survive in an economy marked by growing income inequality.

The giant social-service group said it would increase its spending by 50 percent over the next five years, to $1.5-billion annually, on services to help families earn more, get out of debt, and build their assets — a program it has dubbed the United Way Financial Stability Partnership.

The United Way, which is based in Alexandria, Va., and has more than 1,300 affiliates nationwide, said it has concluded that it needs to do more than provide social services to the many Americans who lack savings, are forced to charge basic needs such as food to their credit cards, and fail to take advantage of tax credits and other benefits that are available to them.

“We believe that maybe the most important thing we need to do over the next number of years is try to give individuals and families the tools to become financially stable,” Brian Gallagher, the group’s chief executive, told a news conference.

He said studies have shown that families with savings and assets tend to suffer less divorce, domestic violence, and chronic illness, and that their children are more likely to stay in school.

United Way has been working with businesses, foundations, and government agencies across the country over the past five years to give families basic economic tools — for example, help with filing taxes, decreasing debt, and opening savings accounts.

Last year, the national organization and local United Ways spent $1-billion on such efforts, or about one-quarter of the $4-billion total that they raised across the country.

Mr. Gallagher said the efforts need to be stepped up, noting that millions of working adults still live below the poverty level and that the country’s personal-savings rate is the lowest in almost 75 years.

Margaux Bergen, a spokeswoman for the group, said the United Way plans to realign current spending and raise additional money from its on-the-job campaigns and from donors, such as foundations and corporations, to pay for the $500-million in new spending by 2012.

Savings and Credits

The new program builds on the United Way’s existing projects and sets specific goals for helping families build their financial assets, including:

• Increase by 50 percent over five years the number of eligible families (in 400 areas nationwide) who claim the earned-income tax credit, a federal tax credit available to low-income workers.

  Kevin Brown, the acting commissioner of the Internal Revenue Service, said at United Way’s announcement that about 25 percent of eligible families nationwide do not claim the earned-income credit.

  Mr. Gallagher said United Way worked with Bank of America volunteers this year at tax-assistance sites in 33 geographic areas to help 200,000 families claim such credits.

• Reduce by 25 percent over five years the number of households in areas served by United Ways nationwide that are “unbanked” (without bank accounts) or “underbanked” (have such a low credit score that they have trouble getting credit).

  According to the Federal Reserve, 10 percent of households overall do not have bank accounts. Another study showed that 34 percent of Hispanics and 46 percent of African-Americans did not have accounts at a federally insured financial institution.

• Give all United Ways within two years the technology to enroll eligible families in government benefit programs such as the Children’s Health Insurance Program, food stamps, and Medicaid.

  The United Way is working on this project with Nets to Ladders, a technology company in Austin, Tex., that has developed Web-based software, the Benefits Enrollment Network, to help identify and enroll people for federal support.

  The company has pledged to spend $5-million on the United Way effort over the next two years, Mr. Gallagher said.

One Paycheck Away

The Annie E. Casey Foundation, in Baltimore, is among the foundations that are donating to the United Way’s project, providing more than $100,000 a year for the past several years.

Ralph Smith, senior vice president at the foundation, noted that many low-income parents suffer from extreme stress, becoming victims of predatory lenders and living in some cases just one paycheck away from homelessness.

While his foundation’s mission is to help disadvantaged children, he said, “We have come to the realization that you cannot do that unless you find ways to acknowledge and support the parents and families as co-producers of the outcomes of their children.”