Margaret Clancy was a trust company vice president when she enrolled in classes at the Brown School. She envisioned her master’s studies as a future hedge against a downturn in the financial industry, as well as a way to satisfy her desire to contribute to social justice.
“I wanted to be sure my work would make a positive difference in people’s lives,” she said.
Now, more than two decades later, she is one of the nation’s leading experts on Child Development Accounts (CDAs), a concept pioneered by her Brown School mentor, Michael Sherraden, and one that has influenced policy across the U.S. and the world. The gains have been in large part due to Clancy’s 20-year second career as the policy director at the Center for Social Development (CSD) and an ambassador for asset building in diverse populations.
Six states have CDAs, funded at birth to give children a financial head start – with some providing additional deposits for those from families with low income. Other states have expressed an interest and most recently, the center received a grant to continue measuring the impact of SEED for Oklahoma Kids (SEED OK) an experiment that began in 2007 by testing the policy idea of universal and progressive accounts for postsecondary education. The child-account concept has also gained traction at the federal level. Presidential candidate Corey Booker and some economists are promoting “Baby Bonds” as a way to build a financial foundation for children. And Sherraden has suggested that the CDA model could be used to solve the potentially knotty problem of how to administer reparations to the descendants of slaves if that idea is adopted.
“Margaret is the leading expert in the United States regarding policy design and implementation for Child Development Accounts,” Sherraden said. “Her expertise has also directly affected CDA design and implementation in Israel and other countries. She is directly improving the lives of literally millions of children in America and abroad.”
When she started her studies at the Brown School in 1994, Clancy thought mental health would be her academic focus. She started to change her mind after reading “Assets and the Poor,” the 1991 book by Sherraden, one of her teachers, who is now the George Warren Brown Distinguished Professor at the Brown School and the director of CSD. She was intrigued by the proposed child accounts, but her on-the-ground experience in the world of finance made her question how the idea would be put into practice.
“I asked him, ‘How are these accounts going to be run efficiently?'” she recalled. “‘He said, ‘You’re going to figure that out.'”
The challenge further piqued Clancy’s interest, but what “sealed the deal,” as she put it, was a 1995 conference in Chicago on the then-new field of asset building which she attended as a student. As she listened to Sherraden and others talk in a non-academic setting about the real-world impact they envisioned, she reflected on her own life.
“My family struggled financially when I was young, but the concept of social justice – caring for others – was always in the forefront,” she said. At the trust company, she dealt with wealthy families and big institutions – including Washington University — but also with factory workers who didn’t understand how investing small amounts over time could yield a healthy sum for their retirement.
Suddenly, she saw her future.
“I sat there thinking this would be a perfect way to meld my financial experience with my goal to contribute to society,” she said. “This is a way I could hit the ground running in social work. I should do this.” She walked out of the conference to a pay phone (1995!) and called her Brown School advisor with the news that she needed to switch her focus to economic development and policy.
Clancy joined CSD after graduation, and tackled the challenge Sherraden had set out for her: crafting Child Development Accounts so that they would be both effective and sustainable. She soon realized that the 529 college savings plans that states were beginning to offer could be a good model. With financing from the Ford Foundation, the Center partnered with the Oklahoma State Treasurer’s office for the experiment. After just over 2,700 mothers of newborns randomly selected from state birth records completed a baseline interview, half of their children received a $1,000 deposit in an Oklahoma 529 account and half were randomly assigned to the control group.
The CSD team created a rigorous research plan to test the effectiveness of the accounts. In 2011, researchers conducted a second interview of mothers who were participating in the study; the third round of interviews will be in 2020, when their children will be about 12 years old. Early results for those who received the account have been promising:
- Initial deposits increased in value more than 70% over 10 years.
- Mothers’ outlook and parenting improved, as did their education expectations for their children.
- Children’s social–emotional development improved, regardless of whether or not the families saved additional amounts.
- The positive effects were typically greater for low-income and disadvantaged families.
Those results, detailed in some 30 peer-reviewed, published papers based on SEED OK, have been crucial to the decisions of other states to establish their own policies for kids. Connecticut, Maine, Massachusetts, Nevada, Pennsylvania and Rhode Island have programs, also using the 529 plan as a financial platform. More recently, Nebraska began to consider a statewide policy; Clancy testified in February before the state’s Senate Education Committee.
Especially promising are the statewide CDAs in Maine and Pennsylvania, which set aside seed funds to every child in the state at birth. In Maine the program is funded by a philanthropist. Initially, it offered the funds only to families who enrolled, and 40% of eligible children participated. Clancy and Sherraden used SEED OK results to influence a policy change: beginning in 2013, all Maine newborns are automatically enrolled. Today assets in Maine are valued at more than $100 million and impact more than 85,000 children. In 2018, Pennsylvania’s bi-partisan legislation provided $100 to each newborn in the state; it’s now the nation’s largest CDA.
“Our vision was always to influence policy on a grand scale,” Clancy said, with “Every kid on the planet,” the team’s goal. Not only does providing every child with an account increase the program’s impact, she said, it removes a potential stigma if only poor families were permitted to participate. In Oklahoma the new grant expands the original, automatic deposit, with larger amounts for disadvantaged children.
Clancy said the accounts are especially impactful for families whose financial focus is often limited to getting through the week. “Our theory, which has held true to date, is that parents will be more future-oriented” when they see the account statements for their children, she said.
She expects the study in Oklahoma will last well after she and Sherraden retire. She’s proud of the legacy that her work will leave, and is quick to credit the team of professors, consultants and staff with whom she has worked for the Center’s achievements.
“It really is humbling,” she said.