Investment firm BlackRock has announced that it is expanding its $50m philanthropic Emergency Savings Initiative, to include five new corporate partners.
Many Americans do not have the cash on hand to cover an unexpected emergency expense, a reality worsened by the Covid-19 pandemic.
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Founded in 2019, the initiative is a response to the growing call for companies to step in and adopt programs to help Americans sock away rainy-day funds.
The goal of this philanthropic effort: helping one million low- and moderate-income Americans knit a financial safety net so they’ll be in better shape if they get socked with a financial shock.
New corporate participants in the programme include payroll services company ADP, consumer electronics retailer Best Buy, financial technology company Self Financial, regional bank Truist and digital bank Varo.
Money saving challenges
To participate in the programme, the companies must agree to launch an effort addressing emergency savings within a year and share anonymised data of results from those efforts with the initiative.
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By GlobalDataIn return, they gain access to the expertise BlackRock provides through partners such as Common Cents Lab, Commonwealth and Financial Health Network.
A recent Capitol Hill hearing on retirement security highlighted on key hurdle to increasing long-term savings: People tend to withdraw money from their retirement accounts to pay for short-term emergencies.
A 2018 Federal Reserve report found that 40% of Americans would have difficulty paying for an unexpected $400 expense.
A survey released by Bankrate.com in January indicates that those cash reserves still fall short for many people, with only 39% of people able to pay for a $1,000 emergency expense out of savings.
And those who do save, Bankrate finds, aren’t putting away a lot: Another 20% save only 5% or less of what they make, while 28% save 6 to 10%.
Just 16% are saving more than 15% of their income — and even that, experts say, probably isn’t enough to make sure you have both an emergency fund and enough money socked away to retire by 65.
Helping shift focus to the future
More companies began reaching out to BlackRock for help with starting emergency savings initiatives amid Covid-19, according to Deborah Winshel, global head of social impact at BlackRock and president of the BlackRock Foundation.
The Emergency Savings Initiative “will focus on people who can’t necessarily think about the future because they’re focused on today,” said Winshel. “We want to help people build financial security and opportunity.”
