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SaveFirst

A Tax Preparation and Financial Literacy Initiative

The goal of the SaveFirst Initiative is to train college, graduate, and law students to provide free tax preparation, financial literacy information, and opportunities for savings and investment to low-income individuals, especially targeting those eligible for the Earned Income Tax Credit.

Background

Abusive practices such as payday loan schemes, check-cashing operations, and predatory lending target low-income individuals and dramatically erode their earnings.  Commercial tax preparers offering refund anticipation loans to individuals qualifying for the Earned Income Tax Credit can charge an amount exceeding an effective annual rate of 700% through exorbitant fees and interest rates.  SaveFirst offers a smarter alternative: free tax preparation services and seminars designed to equip members of our community with the skills and knowledge they need to protect themselves from predatory lenders.  In addition, we offer access to reputable financial institutions that can help low-income individuals establish checking and savings accounts and Individual Development Accounts and begin to develop assets.

SaveFirst Services

1. Tax Preparation.  Trained college and graduate students provide free tax preparation services to low-income individuals and families, targeting those eligible for the Earned Income Tax Credit.  This assistance is provided at multiple sites in Tuscaloosa and Birmingham on a daily basis from mid-January until mid-February.

2.  Banking the Unbanked.  Tax preparation is the perfect time for low- to moderate-income individuals without bank accounts to gain access to the benefits of being “banked.”  Tax season may be the only time of the year that they have a conversation about their long-term financial situation or think about their income as a whole.  A large tax refund may provide them the financial flexibility necessary to begin to establish savings.  Products we offer include checking accounts, savings accounts, and Individual Development Accounts.

3. Financial Literacy.  To counteract abusive predatory lending practices, SaveFirst is partnering with regional banks and institutions of higher education to offer financial literacy information to our families.  Learning about money is as important as earning it—and effective money management results from access to information and disciplined behavior.

4. Asset Building.  SaveFirst will offer Individual Development Accounts (IDAs) to eligible participants through a collaboration with the Alabama Asset Building Coalition.  IDAs allow low-income households to save up to $2,000 over a period of two years toward investment in an asset such as higher education, the purchase of a home, or the development of a small business.  At the end of the savings period, participants’ savings will be matched at a $2 to $1 ratio, providing a total of up to $6,000 for each participant.

Collaboration

The University of Alabama is a leading campus for SaveFirst.  Students from UA combine their service with students from colleges in Birmingham, Montgomery, Auburn, Decatur, Huntsville, and Mobile to maximize the impact of their service and the various universities' tremendous resources.

SaveFirst is a collaborative effort among Impact Alabama, The University of Alabama, Birmingham-Southern College, Samford University, Cumberland School of Law, UAB, Huntingdon College, Jones School of Law, Alabama State University, Calhoun Community College, Spring Hill College, University of South Alabama, UAH, Auburn University, Tuscaloosa Housing Authority, Tuscaloosa Parks & Recreation, City of Tuscaloosa, Boys & Girls Club of West Alabama, Alabama Credit Union, Birmingham Public Library (Smithfield Branch), New Hope Federal Credit Union (Birmingham), Mutual Savings Credit Union (Birmingham), Regions Bank, Compass Bank, Children's Hospital, Alabama Credit Union League, City of Birmingham, Junior League of Birmingham, Community Foundation of Greater Birmingham, Jubilee Community Center (Montgomery), Montgomery Area Transit Systems, BONDS/Building Our Neighborhoods for Development and Success (Montgomery), Central Alabama Community Foundation, Decatur Daily, Auburn Park & Recreation Authority, AARP, Mobile Community Action Agency, Bedsole Foundation, United Way of Madison County, Community Action Partnership of North Alabama, Retired and Senior Volunteer Program of Decatur, the Decatur Daily, the Internal Revenue Service, and businesses, churches, and community organizations throughout the Birmingham and Tuscaloosa metropolitan regions.

Achievements To Date

The inaugural year of SaveFirst (2007) saw tremendous success in terms of student participation and community members served.  78 UA students participated in SaveFirst, joining thirty others from Birmingham-Southern College and Samford University to serve over 300 working families at five community-based sites in Tuscaloosa and Birmingham.  In just five weeks, our students saved these families over $60,000 in commercial preparation fees and brought over $365,000 in refunds (including Earned Income Tax Credits) back to them and their communities.

How You Can Be Involved

UA students participate in SaveFirst in two ways:

1. Service-Learning Course.  The Center for Ethics & Social Responsibility sponsors a service-learning course that allows students to combine academic coursework with service through SaveFirst.  Through readings and classroom discussion, students examine issues of poverty including perceptions and misperceptions of individuals living in poverty, race and poverty, federal policies toward the working poor, and predatory lending practices.  Complementing the academic component is a service requirement to provide free tax preparation services and financial literacy information to individuals in low-income Tuscaloosa neighborhoods. Through their direct service at SaveFirst sites located directly in communities of need, students gain firsthand experience and the ability to think more critically about those issues introduced in the classroom.

     Course credit for the SaveFirst service learning course is available in the spring semester through UH 400, MGT 491, and MKT 597.

2. Volunteer with SaveFirst.  Students are also trained and volunteer outside the context of the course, typically committing four hours per week from mid-January to mid-February.

For more information and/or to sign up, please contact Sarah Louise Smith, SaveFirst Coordinator, at 348-6494 or SLSmith@impactalabama.org .