Child Support and Asset Building Providers: Strategies for Partnering

Across the US, child support (CS) offices are beginning to work closely with asset-building agencies in their communities to strengthen the financial standing of low-income parents. Assets for Independence (AFI) programs are often the lead agencies for asset building work in any community. The potential to combine talent and resources to achieve common goals is significant, but how exactly will these partnerships work? And what will make them a success? This document offers examples of potential services and activities that each system could offer and how working together can be mutually beneficial.The document highlights approaches for delivering asset-building services to custodial and noncustodial parents as well as partnering strategies between child support and asset-building agencies.

Overall Strategies for Collaboration

Referrals between Asset Building and CS Agencies: Referrals of parents in the child support system to asset-building can help parents better manage their resources. CS agencies may want to refer parents who are not using mainstream financial services, who need debt reduction or credit repair services, or who are not likely to receive child support owed. 

Develop Incentives to Save Money or Seek Financial Education Services: Asset building agencies are in the business of providing incentives for savings. Working together with CS agencies, they can identify how to tailor these incentives to address circumstances of families they serve. CS agencies may be able to offer special incentives for parents to better manage and save money. One example is forgiving child support debt owed to the state if the parent provides timely payments to the custodial parent.

Cross-Trainings: In order to maximize the potential for referrals, conduct cross training for asset building and CS agency staff on ways that parents can benefit from the partnership.

• CS staff can train asset building staff on the basics of the child support system, how to work with child support staff, their casework experiences, history and success with outreach, and the barriers that noncustodial and custodial parents face in using mainstream financial services.

• Asset building agency staff can introduce CS staff to financial education, Individual Development Accounts (IDAs), the whole range of asset building strategies available, what types of clients might benefit from each strategy, and how to make referrals.

• Fatherhood organizations can brief asset building and child support agency staff on the special problems experienced by many noncustodial parents. In addition, staff of asset building organizations can describe opportunities that might be attractive to clients of fatherhood programs.

• In addition to general cross-training, more in-depth presentations can be made to selected CS and asset building staff members. The goal could be that each organization has one or two staff members that become resident experts about the other program area. 

Presentations to clients: Staff from CS, asset building, and fatherhood organizations can reach out to all their clients. CS staff can help clients of asset building or fatherhood programs better understand how to navigate the child support system. Asset building staff can link up with fathers in fatherhood programs to explore opportunities to participate in financial education classes and IDAs or other matched savings programs.

Approaches for Serving Noncustodial Parents (NCPs)

Noncustodial parents are a highly diverse population. About 65% are eligible for AFI services and some may be ready to have an IDA. For many others, IDAs may not be appropriate, but they could benefit from other services such as financial education and debt management.

What Asset Building Agencies Can Do for Noncustodial Parents:

• Get them banked. This would benefit the NCP by reducing reliance on nontraditional and high-cost services such as check cashing and payday loan firms. Bringing fathers into banks could make child support payments more manageable through the use of automatic transfers.

• Provide financial education and training. Providing credit counseling, financial management tools, and tax credit education to noncustodial parents could help these parents manage their debts (both child support debt and other types of debt), credit rating, and their relationship with formal financial institutions. CS agencies could advise on dealing with child support orders and on managing situations where noncustodial parents fall behind on payments.

• Design savings incentives. Asset building organizations and CS agencies can develop creative incentives for savings and better financial management. One option is to match the savings of custodial and noncustodial parents in an IDA. This strategy is most appealing for custodial parents and for noncustodial parents with little or no arrearages (past child support owed) and consistent earnings. In addition, matched savings might be established as part of an agreement that trades reductions in arrearages for steady contributions to support payments and savings by noncustodial parents.

• Offer services and incentives to support modest and achievable savings goals for low-income noncustodial parents not ready for an IDA. Examples include offering small payments for completing a financial education class or opening a bank account.

• Enhance case management services. Asset building agencies may be able to provide one-on-one counseling-- particularly in the area of credit repair and debt reduction-- and help clients navigate the necessary steps to financial improvement. These steps, though not typically provided by CS agencies, may help noncustodial parents manage their child support past-due payments. 

What Child Support Agencies Can Do for Noncustodial Parents:

• Identify and refer parents who are eligible for asset building services. The CS agency may want to involve the Family Court (which has authority to make legal decisions over child support, paternity, and custody and visitation) in the referral process. The CS agency or the court could identify and refer good candidates to asset-building agencies. This approach may be particularly effective at order establishment when the noncustodial parent has to start paying child support while also meeting his/her own financial needs. Fatherhood programs may also serve as a referral source for both CS and agencies that provide asset building services.

• Intervene at strategic points. CS can make referrals at key life events that can affect the noncustodial parent’s financial situation, such as paternity establishment, divorce/separation, order modification, birth of a new child, illness, or job loss. Similarly, asset building agencies could help parents contact CS to ask to modify child support orders if there is a change in employment.

• Dedicate experienced staff to answer questions. CS can dedicate an experienced case manager to address child support issues for participants in AFI projects, such as order modification, payment agreements, and license reinstatement.

• Intervene at strategic points. CS agencies can help asset building staff stay current with the financial situation of noncustodial parents served by both systems, alerting them when there are changes in child support orders, family size, or employment status.

Approaches for Serving Custodial Parents

Custodial Parents are a diverse group with diverse needs. For almost all, consistent child support payments are a key to economic self-sufficiency. Some will need help establishing child support orders. Others will need assistance modifying child support orders. And all could benefit from new skills for managing child support payments and other resources as part of their household budgets.

What AFI grantees and other Asset Building Agencies can do for Parents:

• Refer certain clients to child support agencies. Asset building agencies can refer single parents who may be eligible for child support to the CS agency for help. If a CS case manager is dedicated to working with the asset building group, both organizations can determine ways to build the trust of customers, especially those who have previously been reluctant to interact with the child support agency.

• IDAs for Custodial Parents. IDAs may be ideally suited for low-income working single parents who receive enough child support to set aside some of their earnings. Reserving IDAs specifically for custodial parents referred by a CS agency could enhance the partnership and ensure that referrals to asset building agencies are worthwhile.

• Get them banked. Assisting the custodial parents who are not banked establish and manage checking/savings accounts at mainstream credit unions or banks would allow them to receive child support payments through direct deposit, to cash or deposit checks without having to pay check-cashing and payday loan fees, and to build savings.

• Provide financial education and training. Providing credit counseling, financial management tools, and tax credit education to custodial parents will help them navigate their savings, debts, credit rating, and their relationship with formal financial institutions. Financial education for custodial parents can help them better understand how child support payments can help them save, build assets, and provide a more financially stable household for their children.

• Enhance case management services. Many parents would benefit from more intensive case management on financial matters.

What Child Support Agencies can do for Custodial Parents:

• Refer Certain Clients to Asset Building Agencies. CS agencies can refer custodial parents to AFI grantees and other organizations that provide asset building services. CS can also work with Family Courts to refer these parents for financial education and case management services. Other referral partners could be those that work with domestic violence survivors, many of whom both need and want child support but are not sure how child support agencies can safeguard their identity and location.

• Dedicate experienced staff to answer questions. CS can dedicate an experienced case manager to address issues of clients who receive or are owed child support and who are receiving services from AFI grantees or other asset building agencies. This case manager can help clients understand child support processes, obtain child support, and facilitate cooperation among both parents where appropriate.

• Educate parents who receive child support on the benefits of using stored value cards. More and more custodial parents access child support payments through stored value cards. In such cases, the CS agency electronically deposits a child support payment into an account accessible for cash withdrawal or for credit purchases, similar to a debit card. Many parents use these cards as mini “savings” accounts even though they do not earn interest. They are especially helpful for parents who are not banked, as they can avoid check-cashing fees. Custodial parents need to know whether fees are associated with accessing money from a stored value card.

Comments or More Information

This is one in a series of fact sheets on asset-building, fatherhood, and child support services produced by the Assets for Independence Resource Center. For more information, visit the resource center website at www.IDAresources.org or contact the center on 1-866-778-6037 or via email at info@IDAresources.org.