A $1 million grant will help two organizations, in Detroit and Battle Creek, kickstart child savings accounts to help parents put aside funds for their kids’ college education.
Gov. Gretchen Whitmer on Monday announced that nonprofits Battle Creek Community Foundation and Wayne Metropolitan Community Action Agency will each receive $500,000 in funding to pilot the saving programs.
Among the recommendations: Michigan children need savings accounts, incarcerated people should have more apprenticeship opportunities and the state should offer families facing temporary financial woes lump-sum cash assistance.
“Children’s savings accounts offer an exciting platform to help families build wealth and pay for educational expenses, including extracurricular activities that are critical to a child’s development,” Whitmer said in a Monday news release.
Through the grant, Wayne Metro has a goal to provide a $50 “seed” deposit initially for 1,600 children enrolled in 14 Wayne Metro Head Start locations across Wayne County, Renaissance Head Start and the Urban Neighborhood Initiative’s out-of-school programs.
Families are encouraged to match up to $10 a month and Wayne Metro will provide another $10 monthly match, which will be paid out quarterly, said Ebony Stith, a spokesperson with the Michigan Department of Labor and Economic Opportunity.
The Battle Creek Community Foundation is aiming to create 360 child savings accounts — starting at kindergarten — for underserved school districts of Harper Creek Community Schools and Pennfield Schools.
The foundation will also deposit $50 in seed money “with other deposits based on incentives,” Stith said. The organization will set aside $371,000 for future cohorts.
Both Wayne Metro and Battle Creek Community Foundation will seek out more corporate and philanthropic support, Stith said.
Families enrolled in child savings account programs had about six times more in total savings than other families — $1,851 compared to $323 — and participation “may also increase families’ educational expectations for their children,” according to a 2020 report from the U.S. Government Accountability Office. Savings can help low and moderate income families weather emergencies like job losses and increase financial security, a 2015 report from the Washington, D.C.-based Urban Institute notes.