Money on the Table: Why Funders Care So Much About This Tax Credit
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The Earned Income Tax Credit (EITC) is one of the nation’s most powerful anti-poverty programs, but it is often overlooked by eligible taxpayers. While some 27 million low-income filers received $66.7 billion in refunds from the program in 2014, these figures would have been higher if all taxpayers knew about the EITC—one of the few tax “secrets” that directly benefits working families.
What's more, those who do claim the EITC could have received bigger refunds if exploitative tax preparer services didn't charge excessive fees. A troubling study recently found that EITC recipients spend between 13 and 22 percent of their refund at local tax preparation outlets. Other studies have found the same thing over many years.
All this explains why top anti-poverty funders support efforts to better publicize the EITC, and to ensure that low-income earners aren't gouged at tax filing time. The Corporation for Enterprise Development is one organization that has drawn foundation support for such efforts. Among its newer initiatives is the Taxpayer Opportunity Network, which was formed in 2014 to raise awareness of the EITC and other tax benefits. A key strategy is supporting the Volunteer Income Tax Assistance (VITA) program, which is funded by the federal government and has sites around the U.S. VITA exists to help filers navigate the tax season maze and claim refunds.
Recently, the W.K. Kellogg Foundation, a longtime CFED funder, gave CFED $750,000 over three years with the goal of supporting over 800 VITA sites. Kellogg has backed CFED since at least 1993. Among other things, it's made sizeable grants to CFED’s children’s savings account program and the 1:1 Fund, a matching donations initiative for college savings.
Founded in 1979 by Bob Friedman, CFED focuses on asset building and financial inclusion. EITC refunds offer one of the few opportunities poorer families have to build savings and pay down debt, which is why CFED is such a big booster. In a conversation with Inside Philanthropy last year, Bob Friedman discussed why tax assistance and advocacy is one of the asset building community’s top concerns.
Related:
- Bob Friedman Explains How the Asset Building Movement Got Its Mojo—And Its Dough
- New Ideas, New Funders: Has the Asset Building Movement Finally Arrived?
Over the years, CFED has quietly amassed an impressive array of funders, including many of the nation’s premier corporate and private foundations. Some notables are JPMorgan Chase, whose work with CFED we covered last year, as well as Bank of America, Charles Schwab, Citi, Prudential, MetLife, and Wells Fargo. Foundations include Annie E. Casey, Ford, Kresge, and Levi Strauss (founder Bob Friedman comes from the Levi Strauss family).
As a philanthropic objective, asset building transcends some of the usual fraught politics around poverty. The goal of building wealth and ownership dovetails nicely with the conservative preference for self-help, while also addressing progressive concerns about inequality.
