Department of Consumer Affairs (DCA) Commissioner Julie Menin, Citi’s Global Director of Community Development Bob Annibale, Parsons The New School for Design DESIS Lab Director Eduardo Staszowski, and the Mayor’s Fund to Advance New York City Executive Director Darren Bloch today announced the initial findings from Designing for Financial Empowerment, an initiative aimed at developing a new approach to free tax preparation services in New York City. During the first phase of the initiative, researchers uncovered factors that may explain why nearly three-quarters of New Yorkers who claim the Earned Income Tax Credit (EITC) choose to pay for tax preparation rather than take advantage of the City’s free tax preparation services.
“We are committed to delivering essential services to New Yorkers with low and moderate incomes, who are too often left behind, and to fixing that disparity to help them improve their financial stability,” said DCA Commissioner Julie Menin. “We’re excited to begin the next phase of this project, and together with industry partners and the community, design a program that dispels the myths and overcomes the challenges identified in the first phase in order to get every New Yorker who is eligible to file their taxes for free.”
“The first phase of this initiative has already produced extremely valuable insights about how New Yorkers use free tax preparation services to claim the Earned Income Tax Credit and uncovered possible avenues for improvement and innovation,” said Bob Annibale, Citi’s Global Director of Community Development. “We are excited about the potential to transform how the public sector designs services for underserved communities both here in New York City and around the country.”
The multi-phase initiative, which is employing the human centered design approach, seeks to enable more low-income New Yorkers to benefit from tax credits like the EITC and other financial empowerment services by improving the accessibility and effectiveness of the free tax preparation services provided by the nearly 200 Volunteer Income Tax Assistance (VITA) sites around the city. The initiative is made possible with support from Citi through the Mayor’s Fund to Advance New York City and in partnership with the Center for Economic Opportunity (CEO), which brings the Center’s experience with evidence-based program design and evaluation.
“At the DESIS Lab, we are exploring the relationship between design, social change and policy to foster more equitable and sustainable cities,” said Parsons The New School for Design DESIS Lab Director Eduardo Staszowski. “In our research, as well as in our teaching, service design is considered an advanced approach, one integrating many design and non-design disciplines. The Designing for Financial Empowerment initiative is an example of how public agencies and civil servants can meet with people and other organizations and together design new services and tools to enable working New Yorkers who have low to moderate income to file for free, claim their money and get access to other financial empowerment services they need.”
During the first phase, known as the discovery phase, researchers interviewed site managers, volunteer tax preparers and filers at VITA sites to learn firsthand the challenges and capabilities at the sites. They also conducted extensive field research to better understand why eligible filers do not use these services.
According to the discovery phase findings, many filers have a misconception about who is responsible if they are audited by the Internal Revenue Service (IRS). They believe preparers are responsible for the accuracy of their returns, so they choose whoever promises the largest refund. Some of these opinions are captured in the Designing for Financial Empowerment Tax Time Video.
Additionally, for many of these filers, taking time off work to wait their turn to sit with a tax preparer at a VITA site may be challenging, childcare can be costly or unavailable, and bringing children to VITA sites can make it more difficult for filers and those around to wait. Filers also have the misconception that because they are free, VITA services are lower quality than paid tax preparers.
In the second phase, the co-design phase, the research team is bringing together government agencies, policymakers, community and civic leaders, social service organizations, and local business owners to incorporate the findings and “co-design” potential solutions for new or improved services through a series of facilitated workshops. The goal of this phase is to create a model for VITA sites to be tested in as part of the last phase.
During the last phase, Food Bank For NYC will offer the redesigned free tax preparation service with the program’s continuous engagement with filers and preparers to understand their experiences and make continuous improvements based on feedback. This will help create policy and an infrastructure to support long-term development of the new model.
In New York City, one in five eligible households does not take advantage of the EITC, which returns an average of $2,500 – a significant cash infusion for low-income families. In addition, one-third of New Yorkers who do claim the EITC choose to pay for their tax preparation, which costs an average of $250, instead of taking advantage of the City’s free tax preparation services. Many of these families pay additional fees to gain quicker access to their refunds or defer the upfront preparation fees through products like Refund Anticipation Checks.
“At the Mayor’s Fund, we are committed to strengthening public programs through innovative partnerships across the public and private sectors to improve the lives of New Yorkers,” said Darren Bloch, Executive Director of the Mayor’s Fund to Advance New York City. “That’s why we’re excited to be here today, to work with City agencies like the Department of Consumer Affairs Office of Financial Empowerment, philanthropic and business leaders like Citi Community Development, deeply-rooted nonprofit service providers like Food Bank, and the creative minds at Parsons. We look forward to working with these partners to enhance the lives of our fellow New Yorkers through the design of inventive public services.”
“The Center for Economic Opportunity is proud to champion the service design approach and to be a partner on this project to improve tax-time services for low-income New Yorkers,” said CEO Executive Director Matt Klein. “Human-centered and participatory design methods prioritize the experiences and insights of people whom we hope to support, and they provide a way for residents, experts, community-based organizations and government to work together to build better public services. We look forward to continuing to incorporate these methods into CEO’s ongoing work.”
The Designing for Financial Empowerment program is one of several ways in which the City and Citi are demonstrating a commitment to improving access to critical financial empowerment services for New Yorkers. This year, the City invested more than $3 million in its Annual Tax Credit Campaign, the largest in City history, which represents a 20-fold increase in spending; Citi has contributed $665,000 to support several of these initiatives, including capacity-building for VITA sites and targeted advertising in Spanish-language media outlets. The $800,000 advertising component of the tax credit campaign, which will run through April, is nearly five times the investment in advertising as previous years in an effort to reach a broad audience and target messaging to key audiences based on factors, such as income and language access.
You can learn more about the Designing for Financial Empowerment (DFE) project at DFE.nyc.
The Department of Consumer Affairs (DCA) licenses, inspects, and educates businesses, assists and informs consumers, mediates complaints, and offers free financial counseling and safe banking products. DCA enforces the Consumer Protection Law, the Paid Sick Leave Law and other related business laws throughout New York City and licenses nearly 80,000 businesses in 55 different industries. For more information, call 311 or visit DCA online at nyc.gov/consumers or on its social media sites, Twitter, Facebook, Instagram and YouTube.
Citi, the leading global bank, has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services, and wealth management. Additional information may be found at www.citigroup.com | Twitter: @Citi | YouTube: www.youtube.com/citi | Blog: http://blog.citigroup.com/ | Facebook: www.facebook.com/citi | LinkedIn: www.linkedin.com/company/citi
About Parsons The New School for Design and Parsons DESIS Lab
Parsons The New School for Design is one of the leading institutions for art and design education in the world. Based in New York but active around the world, the school offers undergraduate and graduate programs in the full spectrum of design disciplines. Critical thinking and collaboration are at the heart of a Parsons education. Parsons graduates are leaders in their respective fields, with a shared commitment to creatively and critically addressing the complexities of life in the 21st century. For more information, please visit www.newschool.edu/parsons.
Parsons DESIS (Design for Social Innovation and Sustainability) Lab is a research laboratory based at The New School University. DESIS Lab works at the intersection of strategic and service design, management, and social theory, applying interdisciplinary expertise in problem setting and problem solving to sustainable practices and social innovation. For more information visit DESIS website, http://www.newschool.edu/desis, or on Twitter at @desisparsons.
About The Mayor's Fund to Advance New York City
The Mayor’s Fund to Advance New York City, chaired by First Lady Chirlane McCray, is a 501(c) (3) not-for-profit organization that facilitates high-impact public-private partnerships throughout New York City’s five boroughs. The Fund leverages individual, philanthropic, and corporate partnerships to support public programs advancing key Mayoral and agency priorities. The Fund is focused on supporting public programs in areas including mental health, youth workforce development, immigration and citizenship, domestic violence, financial empowerment and support for young men and women of color. To learn more about the Mayor's Fund, please visit our website and follow us on Facebook and Twitter.
The Center for Economic Opportunity (CEO) is the City of New York’s anti-poverty innovation unit. Working in conjunction with City Agencies and other partners, CEO develops, manages and evaluates program and policy initiatives to help the City improve its systems and identify effective responses to poverty and its related challenges. CEO provides expertise in the areas of evaluation, policy research, and program design and management related to antipoverty programs and policies.