In 2016, Massachusetts Treasurer Deborah Goldberg’s Office of Economic Empowerment created SeedMA, a three-year pilot program offering families in the cities of Worcester and Monson $50 when they opened a state-sponsored U.Fund 529 College Savings Plan.
The move caught the attention of Boston-based philanthropist Bob Hildreth.
“I had read that Goldberg made these accounts one of her main planks when she was running for treasurer,” Hildreth said. “So I hustled over to [Office of Economic Empowerment Executive Director] Alayna Van Tassel’s office and we started a dialogue, and that matured into BabySteps.”
Launched on January 1, 2020, BabySteps is a public-private program expanding on SeedMA’s charter by providing $50 to Massachusetts families after they open a U.Fund 529 college savings account — which can be used for universities, community colleges and vocational technical schools — with Fidelity Investments within one year of their birth or adoption. As a founding sponsor, Hildreth, whose charitable priorities include boosting educational outcomes and financial literacy for low-income families, provided funding to cover the deposits made to the first 6,000 children enrolled in the program. The program has 60,723 individual accounts, and its total balance exceeds $1 billion as of early April.
In the aftermath of last December’s news that billionaires Michael and Susan Dell — and then Ray and Barbara Dalio in Connecticut — would be contributing to the federal child savings “Trump accounts” program created under the One Big Beautiful Bill Act, BabySteps’ success serves as an instructive case study as donors show increasing interest in this method of boosting families’ intergenerational wealth.
The program underscores the importance of having families sign up when their child is born and encouraging them to contribute to the accounts over time. It also underlines the fact that a founding donor can play a formative and ongoing role in ensuring the program’s long-term efficacy.
“Alayna and I really had to sweat the details to make this successful,” Hildreth said. “This baby, as far as I’m concerned, is no longer a baby.”
How BabySteps came together
Following a career in finance in Latin America, which included running his own brokerage company, International Bank Services, Hildreth returned to Boston and turned his attention to the nonprofit world, with a focus on education and immigration.
He went on to launch the college prep organization La Vida, as well as Inversant, which is focused on building parents’ engagement and financial literacy throughout their children’s college experience, and the Hildreth Institute to advocate for student debt reform and tuition relief. He is a trustee of his family foundation, the Hildreth Stewart Charitable Foundation.
In 2009, Hildreth also founded Families United in Educational Leadership (FUEL), an organization that helps low-income families get their children into college. “When it comes to education,” he said, “I had the belief that parent involvement was essential to the educational success of their kids.”
The Massachusetts Educational Financing Authority administers the U.Fund 529 College Investing Plan, contracting with Fidelity Investments for program management, and has provided funding support for the seeding of U.Fund accounts through BabySteps.
Hildreth’s contributions to BabySteps totaled $300,000 for 2020 and $300,000 for 2021. Other BabySteps funders include the charitable arms of financial services firms like M&T Bank Charitable Foundation, the HarborOne Foundation, Needham Bank Charitable Foundation and Eastern Bank Foundation.
“Sometimes we applied for grant funds, and other times, funders reached out to us because they heard Treasurer Goldberg talk about how great the program is,” Van Tassel told me.
The importance of engaging families when their child is born
When working with Hildreth on creating BabySteps, “we quickly recognized that to be successful, we needed to be in the hospitals,” Van Tassel said. “We had to be on the birth certificate worksheet that every family fills out to get a Social Security number for their child.”
Since BabySteps went live, families can indicate their interest in participating in the program by checking a box on the worksheet. After doing so, families are contacted by a state representative to help them open an account. (Families can also sign up online.)
Despite the onset of COVID and a pivot to promoting the program online, BabySteps got off to a better-than-expected start. Van Tassel had anticipated a 10% enrollment rate for the program’s inaugural year of 2020. Instead, the figure clocked in at 12.6%.
Obstacles to having families sign up for child savings accounts
Of course, checking a box to get the process started and actually following through with fully opening an account are two different things.
Van Tassel, who called this “the biggest challenge” facing her team, has thought long and hard about this question. Many people are intimidated by the “technical language used to describe a 529, especially around investment options,” she said. “Other families have different savings priorities, whether it means putting money toward essentials or retirement accounts. So you try to explain, ‘You can open the account with $50, and when you’re ready to start saving, it’s going to be there for you.’”
This is all a reminder that a philanthropic funder’s upfront investment in a child’s savings account must be complemented with ongoing family engagement.
Massachusetts’ website includes a BabySteps Outreach Toolkit, and Van Tassel’s office also has a cadre of community ambassadors focused on helping families boost their financial literacy. “They speak the same language as their neighbors, and they’re talking about BabySteps and other key savings topics,” she said. “We’ve found that to be very helpful in terms of educating communities about the importance of the program.”
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Encouraging SNAP recipients to open a BabySteps account
As mentioned, BabySteps is one smaller, local iteration of what could become a philanthropic trend: big donor commitments to child savings and investment account programs in collaboration with the public sector.
Most notably, last December, Michael and Susan Dell announced they would donate $6.25 billion to augment 25 million federal children’s saving accounts, known as “Trump accounts,” which intend to provide $1,000 per child. The Dells’ commitment would add $250 to all 25 million accounts.
That same month, hedge fund billionaire Ray Dalio and his wife Barbara announced they would commit $250 to the accounts of 300,000 children under 10 in Connecticut who live in ZIP codes where the median income is less than $150,000. The move came around the same time that U.S. Treasury Secretary Scott Bessent launched a “50 State Challenge” encouraging donors, corporations and states to fund and match the U.S. Treasury’s contributions for the accounts.
On April 6, the New York Times’ Stacy Cowley reported that 4 million children have enrolled in the accounts — which are intended for general savings and retirement versus college expenses — and around 1 million of them qualify for a $1,000 seed contribution from the federal government. (Families signing up for an account can either fill out a Form 4547 when they file their taxes or at trumpaccounts.gov.)
Hildreth, who applauded the Dells for funding the Trump accounts, told me that Massachusetts Treasurer Deborah Goldberg “has done two very innovative things” to make BabySteps so successful, the first being “getting the child right at birth by having the mother check the box on the birth certificate.”
As we’ve pointed out, though, while big donors’ interest in direct giving for families is an intriguing and promising development, child savings programs aren’t exactly getting at the systemic factors behind poverty and wealth inequality. Nor are they necessarily set up in a way to best target the families most in need.
Consistent family engagement to boost sign-up rates among those demographics is critical. To this point, Hildreth cited Goldberg’s second innovation — the 2023 launch of an initiative within the program called SNAP into BabySteps.
Developed in partnership with the Department of Transitional Assistance, which runs the state’s Supplemental Nutrition Assistance Program, SNAP into BabySteps stipulates that families enrolled in SNAP can also receive a monthly deposit of $10 into their BabySteps 529 account for one year, up to $120, totaling $170 when including the initial $50 seed deposit. The program has had some success in engaging the critical lower-income demographic about the college savings program. According to a March Office of Economic Empowerment report, total SNAP into BabySteps deposits reached $96,160, reflecting 837 SNAP into BabySteps accounts.
“BabySteps has proven that low-income people can save for their children,” Hildreth said. “If you set up the program correctly, it can have huge benefits.”
