SEED — Saving for Education, Entrepreneurship, and Downpayment — accounts are long-term savings and investment accounts established at birth and allowed to grow over the course of a lifetime. Seeded with an initial deposit of up to $1,000 and built by deposits from family, friends, and accountholders themselves, as well as augmented by other public and private sources, SEED savings are restricted for the primary purposes of financing education/training, starting a small business, buying a home, or financing retirement. Moreover, with age-appropriate financial education, SEED accounts will take on additional meaning for young accountholders and their families.

Any SEED account policy should be:

• Inclusive.
  Accounts should be established at birth for every child in America.
• Seeded with an initial deposit.
  Every newborn should receive a modest but significant start-in-life deposit.
• Designed to build lifelong assets.
  Savings should be held until at least age 18 and should be used for only higher education/training, small business development, home purchase, or retirement.
• Matched progressively.
  Voluntary additional contributions from any public or private source (e.g. family, friends, relatives, community organizations, and parents' employers) should be incented by a public match that increases in value for lower-income families.
• Simple.
  Parameters of the account should be kept as simple as possible to enable low-cost, high- scale delivery (e.g. simple match rates, tax incentives, deposit structure, integration into tax forms).
• Private-market oriented.
  Accounts should be held primarily in private financial institutions that provide limited investment options.
• Designed to build financial aspirations, knowledge, and skills.
  Age-appropriate financial education should be delivered by a variety of sources (e.g. financial institutions, nonprofit organizations, youth development organizations, schools, and families).
• Non-discriminatory to families on welfare.
  Eligibility for means-tested programs should not be affected by savings in SEED accounts.
  

It is possible that an effective, universal, and progressive system of SEED accounts will emerge in the United States of its own accord. But it is not very likely.

The initiative began full operation in 2003 and will span an additional five years. The first year was devoted to selecting community partners, ramping up individual programs, completing development of initiative systems and tools, and opening first accounts. The following four years are dedicated to operation, communication, research, evaluation, innovation, and advocacy. The final year will focus on compiling, assessing, and communicating the lessons of the initiative.

CFED coordinates the initiative by raising funds; issuing a request for proposals for community partners; managing the selection of community partners; providing technical assistance; fostering on-going communication; sponsoring semiannual learning conferences; managing finances; developing and advocating policies; promoting public education; and disseminating emerging lessons from the initiative on-line, in newsletters, and other publications. The initiative is being evaluated by the Center for Social Development (CSD) of Washington University and the School of Social Welfare of the University of Kansas (KU). The Research Triangle Institute (RTI) has been chosen to conduct impact evaluations of the large site.

This initiative will be the first large test of the efficacy and impact of the SEED account concept as a tool to promote economic independence in the United States. There are no guarantees that a universal, progressive savings and investment system will be established, but the possibility is real and the potential impact, huge.

To learn even more about the SEED initiative, click on one of the following links:

• Why SEED Accounts?
• Lessons learned from the American Dream Demonstration (ADD)
• Background Research