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The nonprofit startup Gifted Savings has teamed up with the YS Community Foundation and the University of Pennsylvania's Center for Guaranteed Income Research to launch a two-phase, three-year research study in the village to determine how donated assets held in a savings account will affect those who partake in the study.
Yellow Springs to test Gifted Savings pilot
- Published: December 13, 2023
Beginning in January 2024, Yellow Springs will be the first community in the U.S. to test an up-and-coming philanthropic program in which donors share their wealth with beneficiaries in the form of investment savings accounts.
The nonprofit startup Gifted Savings has teamed up with the YS Community Foundation, or YSCF, and the University of Pennsylvania’s Center for Guaranteed Income Research, or CGIR, to launch a two-phase, three-year research study in the village. The goal of the study is to determine how donated assets held in a savings account will affect those who partake in the study.
Gifted Savings was founded by Farhad Mohit, an entrepreneur and philanthropist who founded online shopping search engine Shopzilla and was previously the CEO of Flipagram, a mobile social media app that later became TikTok.
Last week, the News spoke with local residents Maya Creighton and Mychael Roberts, who were recently hired by the YSCF to act as liaisons between the foundation and Gifted Savings and to recruit applicants. Roberts said Yellow Springs was chosen as the testing ground for the program due to its already-established relationship with the CGIR.
“Gifted Savings found out about [YSCF] because we’re already working with the University of Pennsylvania on YSEQUITY,” she said, citing the local guaranteed income program YSCF launched in 2022.
Representatives of Gifted Savings initially met in-person with leaders from a number of local YS organizations this summer to pitch the pilot program, and met again remotely in early November just before the pilot’s application period opened. The meeting was attended by YSCF staffers and board members; members of Village Government; representatives of the YS Development Corporation, or YSDC, YS Home, Inc. and the Senior Center, and was led by representatives from Gifted Savings and the CGIR.
During that meeting, Gifted Savings founder Mohit said the impetus for the program was a single statistic-that about 400 Americans currently hold $4.6 trillion in wealth.
“This wealth is growing faster than can ever be spent. Traditional philanthropy is clearly not enough to redistribute this,” he said. “Our hypothesis is, if you give people agency through capital and investments, they will be able to make decisions. One act by a big donor can lead to a diverse number of positive impacts for recipients.”
Mohit added that his startup and the YSCF have envisioned Gifted Savings not as a replacement for or competitor with YSEQUITY, but to work in tandem with the guaranteed income program, allowing folks who are enrolled in both to receive monthly income and build savings via donated investments.
How the pilot’s phases will work
The application period for the first phase of the program opened in mid-November to Yellow Springs residents ages 18 and older whose household income falls within three times the federal poverty level. Applications are based on individuals and are not limited to one per household; the application period for the first phase will close Friday, Dec. 15.
On Dec. 18, the CGIR will randomly select 20 applicants from the pool, and those applicants will be invited to become participants in the program on Jan. 2, with an onboarding meeting to be held Monday, Jan. 15.
Each of these 20 participants will receive investments worth $2,000 placed in a savings account, with that value made up of a mixture of cash, stocks and/or the cryptocurrency Bitcoin, depending on what a donor chooses.
According to the Gifted Savings website, the program chose the investment model because it gives donors the “flexibility to choose which assets they want to give,” adding that “the easier we make it for donors to give, the more we can share Gifted Savings with people.”
Program participants must hold onto the donated investments, which will be facilitated and overseen by Gifted Savings, for a period of two years. During that time, participants will be able to view whether or not the gifted investments are growing via an online interface.
During the two-year period, participants will be allowed to make emergency withdrawals of up to $500 each year. After the two-year period, participants will be free to sell the investments in their account for their cash value to use as they see fit, or to keep them in the savings account and potentially let them grow.
“These 20 first folks are going to be the ones who kick the tires on our app and on our services and see if this thing works,” Mohit said.
Those who apply for the first phase of the pilot and aren’t selected will have their applications automatically rolled over for consideration in the second phase. The second phase of the program is slated to begin recruiting additional applicants in May of 2024 and will roll out the following month to a wider slate of villagers.
Creighton and Roberts told the News that the second phase of the study will need 625 participants though not all of those participants will receive funded accounts.
“There will be a group who receives the funds, and a control group that doesn’t,” Creighton said.
Of the 625 applicants selected for the second phase, 250 will receive gifted accounts, and 375 will not. All 625 will be asked to participate in paid surveys and interviews conducted by the CGIR.
The CGIR aims to collect data concerning the impact of the program, comparing the psychological well-being, financial well-being and financial hardships of participants who receive gifted accounts with those of the control group. Surveys and interviews will be conducted every six months for three years, according to CGIR Qualitative Research Manager Jesse Golinkoff at the November meeting.
“We’re doing sort of a mixed-method study to see how people perceive gifted savings and what the impacts are,” Golinkoff said.
He added that participants will be paid $50 for each survey they complete; surveys are not mandatory, and participants will still receive the incentive payment even if they don’t complete every question on each survey.
What applicants should keep in mind
Creighton said the gifted accounts will be held by Gifted Savings, and those who receive gifted accounts in either phase will not be expected to manage the investments in those accounts themselves.
“The idea is to make it a little bit more accessible for people who might not know a lot about [investing),” she said.
She added, however, that the YSCF is currently working to create an educational component to the program for those who do want to learn more about investing via stocks and cryptocurrency.
Mohit said that, because gifted accounts are held by the nonprofit and not by banks, participants will not be enabled to add their own funds to the accounts they’re gifted.
“We don’t want to be a bank that has its own set of issues about how to set that up, and that’s not for this pilot,” he said.
The gifted accounts will be funded by stocks and cryptocurrency the values of which can fluctuate so participants may see growth from the initial $2,000 investments, but it’s also possible that those investments may lose value over the two-year holding period.
And because donors choose the assets. they give, recipients won’t be involved in selecting the nature of those investments. To that end, YSDC member Amy Magnus asked in November how participants might respond if they have reservations about the ethics of the companies in which their gifted assets are invested.
“If there is a situation where someone says, ‘I’m morally against this stock and I don’t want to accept this gift,’ that is absolutely their right,” Mohit responded.
Gifted Savings representative Ally Mexicotte also acknowledged in November that some folks may be wary of Bitcoin, as the value of cryptocurrency can fluctuate dramatically and the way it functions is abstruse to many.
“There is opportunity for education around Bitcoin and the top concerns around it we’ll definitely look into that,” Mexicotte said.
Though participants won’t be liable for taxes on the value of their gifted accounts during the two-year holding period, they may be liable for capital gains taxes or stock dividends on the growth from the initial investment values once that two-year period ends. Potential tax liability may depend on “the value of the assets, your tax-filing status, how long you held the assets after the two-year point and your annual household income,” according to the Gifted Savings website.
Mexicotte said Gifted Savings will check in with participants as the end of the two- year holding period approaches to help navigate potential tax liability, and will pro- vide tax forms to help participants calculate that liability. YS Home, Inc. Executive Director Emily Seibel shared concerns in November about how receiving donated assets might affect those who receive income-based state and federal benefits. In response, Gifted Savings created a data sheet explaining how benefits might be affected.
According to that sheet, which Creighton and Roberts shared with the News, the program is unlikely to affect SNAP/food stamps, MAGI Medicaid, Social Security Disability Insurance, WIC, Ohio Works First, child care subsidy benefits, the Ohio Home Energy Assistance Program, Head Start benefits, Greene Met/HUD and Title XX childcare funding for most beneficiaries.
However, the program may affect benefits from programs that have asset limits, including Medicaid, Medicaid, Supplemental Security Income and the Medicare Savings Program for Seniors. HUD and SNAP, too, may have asset limits for some people based on dividends or interest. Gifted Savings recommends that those who receive benefits and are considering applying talk with a caseworker or benefits before applying to Gifted Savings.
With all these things in mind, Mohit said Gifted Savings is looking forward to the data it receives from launching the program in Yellow Springs, and that the nonprofit hopes the pilot will be successful enough in the village that the program can be rolled out across the U.S.
“We’re activist-researchers here, in a way,” he said. “We’re excited about taking this step I truly believe giving people agency will make a big difference.”
For more information on eligibility, and to apply for the first phase of the Gifted Savings pilot, go to giftedsavings.org/yellow-springs . The application deadline for the first phase is Friday, Dec. 15.
Contact: chuck@ysnews.com
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