Cutting-Edge Innovations in EITC Efforts

As the EITC movement throughout rural (and urban) America matures, sites around the country are finding new ways to build and support their programs. They are beginning to move beyond EITC as an end in itself and are using it as a springboard for having broader impact on the lives and well-being of low-income families. This can be a great way to build Family Economic Success!

Hard as it was to pick among the many great things people are doing, we have selected three cutting-edge innovations to highlight:

1. Work with employers to build your program’s size and reach,
2. Link tax preparation and asset building, and
3. Make data work for you.

There’s a bit here for those still struggling to build their EITC programs, and a lot for those with mature programs that are looking for ways to increase their impact on the lives of families.

Innovation #1:
Work with employers to build your program’s size and reach

If EITC is all about making work pay for families, then it only makes sense to build linkages to employers to make the most out of this great program. Employers can help your tax program in many ways—and in return, you can provide benefits with real value to the businesses and their workers.

What can you do when you collaborate with an employer?

• Do outreach on tax credits—provide EITC information in payroll stuffers, employee newsletters, include info with W-2’s.
• Offer “Lunch and Learn” workshops for employees year-round so that by tax season, you have a relationship to build on.
• Do free tax prep on-site with a mobile service.
• Include tax credit info in new employee orientation packets.
• Train benefits managers to be more aware of financial issues for their employees—for example, alerting new parents that they may be newly eligible for tax credits.
• Work with employers to consider larger asset-building opportunities such as Individual Development Accounts (IDAs). For example: St. Joseph’s Hospital in North Carolina started a large IDA program so that employees could afford to live close to the hospital and not be recruited away to places with lower housing costs.

Some of the benefits include:

For the business:

• Boost employee recruitment, morale, attendance and retention by showing that their employer cares about their workers.
• Motivate workers by showing them that working offers financial benefits beyond their weekly paycheck.
• Help ensure low-skill/low-wage workers meet their basic needs so they can afford to remain on the job.

For the worker:

• Increase convenience when information and tax services are provided in places and at times when workers are already present.
• Boost the likelihood that workers will learn about and use the tax credits and benefits to which they are entitled.
• Increase employer sensitivity to the issues that low-income families face trying to get by on limited incomes.

For the EITC program:

• Gain a “captive audience” of large numbers of low-income families all in one place—some of whom might otherwise be hard to contact.
• Create easy access to families year-round, not just at tax time, to reinforce your EITC program’s message and link them with other services.
• Secure cash and/or in-kind assistance (space, printing, computer access, loaned staff, etc.) for EITC efforts by participating firms.

See employer program example:
Pilot program by Center for Economic Progress and Northside Federal Credit Union (Illinois)

Innovation #2:
Link tax preparation and asset building

The EITC doesn’t have to be an end unto itself. In many cases, it can serve as a springboard to do even more to help families Earn It, Keep It and Grow It!  This is especially true when you link tax preparation with asset building opportunities. What better time to encourage families to grow permanent assets than the one time a year when they are likely to have a significant chunk of money to start with—tax refund time!?!

Linking asset building and tax preparation offers lots of benefits, but the chief reason for doing it is that it turns short-term benefits into long-term gains for families! So, let’s explore three promising links based on a survey of tax sites across the country:

1. Offer Free Credit Reports at tax sites with follow-up referral to credit counseling.
   Read more on free credit reports.
2. Set up “Asset Building Super Sites” that introduce tax customers to asset building opportunities.
   Read more on asset building super sites.
3. Open savings accounts when combined with Refund Splitting.
   Read more on refund splitting.

Making it work in rural areas

Some small, rural tax sites may not have the staff power to be able to offer asset-building services on-site. What should they do?

• Link to groups outside of tax sites, such as Head Start parents, who might welcome an opportunity for financial education programs.
• Move out into the schools—both for financial education for students and for training high school students to prepare tax returns or to help at tax sites.
• Create partnerships with CPAs, realtors, bankers—anyone who might have the training and willingness to pitch in on providing financial education.

More helpful information

For more information, see “Strategies for Linking Your Community Tax Campaign to Asset Building,” published by EITC Carolinas.

Innovation #3:
Make data work for you

If you are just starting out on your first EITC campaign, or you are an old hand, there are many ways that data can work for you, and boost your efforts. It can help you build support with potential partners, make your case with funders, or cultivate support of legislators. Once you have been operating your program for a while, the data you collect can help you improve your services by identifying and eliminating quality problems and finding the most productive times and places to operate. Here are some examples of how programs in rural areas around the country have made data work for them.

Minnesota group uses data to build support for EITC coalition

In Fergus Falls, Minnesota, West Central Initiative (WCI) (RuFES Alumni 2003, 2004, 2005, 2006), a regional community foundation, was interested in seeing if an EITC Coalition made sense for its nine-county rural area. If so, they wanted to build some local support for an EITC campaign. When they couldn’t find good data about the impact that increasing EITC uptake would make in their area, they created an “EITC Estimator” tool. The estimator uses Census and IRS data to estimate how much EITC remains uncollected in an area. Any community can use this tool to determine how much benefit they might gain by increasing uptake of the EITC.

Using this tool, in 2004 WCI estimated that families in their nine rural counties were leaving over $5 million per year of EITC on the table. WCI used this information to galvanize local action, and organize local groups to offer free tax assistance and promote the EITC. In 2004, when they set out, there was no free tax assistance at all in seven of their nine counties, and now there are active programs in all nine. The National Community Tax Coalition recently selected one program as a rural EITC campaign demonstration site!

Tax data “makes the case” for Hawai’i legislators

Following his attendance at a RuFES Institute in December 2004, one Hawai’i legislator realized that supporting free tax assistance and EITC outreach might pay for itself through increased excise tax revenues. (Hawai’i’s excise tax functions like sales taxes do in other states.) He enlisted a local economic development organization to help him run the numbers, and determined that increased tax revenues gained as tax refunds were spent in the local community ought to be enough to recoup a state investment to support an EITC outreach and tax preparation program. So, he introduced legislation to support these activities.

The local EITC coalition went to work to gain backing for the bill, and eventually the legislature provided $100,000 per year for two years to the Aloha United Way (AUW). AUW used the funds to hire a coordinator for the EITC coalition and to support a quite ambitious EITC Outreach effort.

The investment by the state paid off. The 232% increase in the number of EITC filings at coalition VITA sites more than repaid the state in excise tax revenues alone. Like legislators in many states, Hawaiian legislators really like projects that pay for themselves and help the state drawdown more federal funding. These two arguments made the appropriation an “easy sell.”

For more information, contact Brent Dillabaugh at HACBED or Norm Baker at AUW.

Financial data convinces banks to underwrite Vermont EITC sites

In Burlington-Winooski, Vermont, the local EITC coalition (RuFES Alumni 2005) has convinced local banks to underwrite the cost of coordinating EITC sites by using financial data to make a strong economic case. The coalition uses their program statistics to show local banks that supporting an EITC coordinator is a wise investment. Using past performance data, they demonstrated that a gift of $2,000 to support a site supervisor (for 80 hours) yields $32,500 in savings on tax preparation and instant refund fees and accesses $100,000 in refunds.

Many banks are looking for good opportunities to meet their obligations to give back to their communities under the Community Reinvestment Act. So, when programs approach banks with this compelling economic case, their responses are often: “Yes, of course we will do that!”

For more information, contact Margaret Bozik or Robyn Wainner.

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