Savings programs with built-in lottery-style prizes, created and sponsored by nonprofit and philanthropic organizations, are gaining traction and showing results, The New York Times reports.
Prize-linked savings programs are designed to encourage low-income individuals to open and contribute to savings accounts. Each time an account holder makes a deposit, he or she is automatically entered into a lottery to win prizes ranging from $25 to $30,000. The idea is that the chance to win money, without risk, will propel low-income individuals to save regularly.
The Save to Win program, started by the Massachusetts-based nonprofit Doorways to Dream, has created 50,000 savings accounts with deposits of $94-million.
The savings programs are winning support from both liberal poverty advocates and business-minded conservatives. Several states have already modified banking laws to permit credit unions to offer prize-linked accounts, and bills in Congress to modify federal banking laws to allow for such programs have Democratic and Republican support.