Food, Nutrition, and Taxes
February, 2007
FoodChange runs three of the five largest volunteer tax-preparation sites in the country. Since inception, FoodChange has been responsible for $218m in refunds to working families in New York City. In the 2006 tax filing season, they completed over 44,000 returns and $81 million in refunds, making them the biggest EITC program in the National Community Tax Coalition.
FoodChange's Harlem site
Founded in 1980 as the Community Food Resource Center, the agency that later became FoodChange first functioned as a soup kitchen for New York’s hungry people. Over time, they expanded their services to address the underlying financial barriers that compel people to participate in emergency meals programs.
Now their initiatives include increasing people’s income and purchasing power through access to benefits and vocational skill-building. They also aim to make nutrition and wholesome eating a daily reality for all New Yorkers, working through nutrition education, a community kitchen, a food pantry, and school lunch programs. Two high schools focused on hospitality and food services are in their stable of programs.
The bombing of the World Trade Center towers in September, 2001 resulted in many low-income workers losing their jobs in lower Manhattan either through the destruction of property or diminished activity in the area. FoodChange (under the leadership of Amy Brown), the New York City government, the Robin Hood Foundation, and other community organizations, came together to see what could be done. As a result, The New York City Dept of Consumer Affairs now coordinates a city-wide EITC coalition that prepared 65,000 tax returns through more than 100 partners in 2006.
The Robin Hood Foundation was founded in 1988 to target poverty in New York City. Unlike most foundations, it has no endowment, but raises its grant money each year. In like manner, it provides grants to organizations one year at a time, and requires them to demonstrate their effectiveness each year. Robin Hood’s Board of Directors underwrites all of their fundraising and administrative expenses, so every dollar donated is passed on to programs. Other supporters of FoodChange are consumer banks and family foundations.
As well as participating in the EITC campaign, FoodChange seeks to raise the incomes of working families by running a Tax Academy. The Tax Academy trains former clients in tax preparation, which FoodChange hires during the tax filing season.
Because a huge number of EITC campaign clients speak Spanish, FoodChange prepared 2,000 returns with Individual Taxpayer Identification Numbers (ITINs) last year.
Looking at the daily client flow by day and site last year, P.J. Kim, Director of Income Policy, observed that there were lots of single filers without dependents early in the season, waiting in long lines to have their returns done. He realized that these long lines prompted families with children to go to commercial preparers because they could get their returns done quicker, and the fee was a lower proportion of their large refund. Since families with children are the priority for an EITC campaign, Kim decided to give priority to families with children first in the first six weeks of the tax filing season, and to postpone the single filers until March. Like many EITC programs around the country, Kim. has noted a steady decline in FoodChange’s EITC-eligible population, from 62% eligible in 2003 to 52% in 2006.
FoodChange’s EITC campaign is run by a core management staff of five, assisted by seven year round part-time employees, who help run the year-round Harlem site and the Low Income Tax Clinic. During the tax season, these part-time staff are deployed as site managers to the 10 sites around city and the many mobile teams. Another 140 seasonal staff (some part-time) are employed for various periods, and 300 volunteers complete the staffing.
This year they are aiming for 400 VITA-certified volunteers. They will be assisted by another 100 volunteers who are not certified but will assist in non-tax related tasks. Volunteers are drawn from corporations, law schools, law firms, and foundations. The program relies on paid staff more than most EITC programs due to the difficulty of finding volunteers who are available when sites are open. Furthermore, some locations are out of way for volunteers, or stay open too late into the night. It’s New York City, after all.
With a desire to reduce costs last year, FoodChange made a concerted effort to make internal hires of tax season staff rather than rely on temp. agencies, as they have in the past. Though successful in reducing staff costs, FoodChange found themselves relying heavily on first-time tax preparers. During the early part of the tax season, this led to greater preparation time and longer waits at the tax sites. Once the first-time tax preparers became familiar with the tax software and core tax issues, this problem largely dissipated. Those people are now experienced and many of them are returning for 2007.
This is the third year that FoodChange has used mobile tax preparation teams. They send teams of four to ten preparers with laptops to good locations where the population is too small to justify a fixed site for the whole season. The hosting organizations are responsible for setting up appointments and guaranteeing a minimum number of clients. Last year, mobile teams prepared 700 returns. While they have a higher cost of operations, they can provide a “scouting” function. Last year, mobile teams completed 300 returns in four days at one Long Island city housing project. This year they will have permanent site there for five weeks at the start of season.
Kim believes that FoodChange has changed the way the tax preparation market operates in the city. This year, H&R Block and Liberty Tax Service have established a good coupon deal with the Department of Consumer Affairs and the Robin Hood Foundation. FoodChange is distributing these coupons to people who earn over $40,000 and thus are not eligible for free tax preparation. The coupon covers 50 percent of the cost of tax preparation, with a $75 ceiling for a basic tax return. It also can’t be used with ancillary services like refund anticipation loans (RALs).
This is only one of three coupons deals that the City has arranged, according to Diana Breen from the New York City Department of Consumer Affairs. H&R Block, Jackson Hewitt, and Liberty Tax Services will honor coupons distributed to members of eight unions. Another coupon is inserted with the paychecks of 115,000 City workers, and valid at H&R Block and Liberty Tax Services. The City knows that, even with over 100 free tax preparation sites, only 1-2 percent of EITC-eligible taxpayers are receiving. Breen sees these coupons as a way of providing choice to taxpayers, while protecting them from exploitation.
This is the second year for tax preparation coupons in New York City. Liberty Tax Services will extend the conditions of this deal into 2008 and 2009 for clients who presented a coupon this year. Jackson Hewitt and H&R Block are interested in providing similar coupon next year, according to Breen.
In 2006, FoodChange’s tax preparation sites in all 5 boroughs prepared 44,272 returns - including 3,911 prior-year returns - representing nearly $81 million in overall refunds, an increase of 20 percent over last year's numbers. They prepared 9,744 'new' current-year filer returns. At the sites, they also provided pre-screening for food stamps, bank accounts, and screening for public health insurance, resulting in 1,200 tax clients signing up for public health insurance in 2006, despite difficulties recruiting banks or health providers to staff the sites.
In addition to the raw statistics, Kim sees the program’s impact on individuals. At last year’s graduation at the Tax Academy he met a single mother who worked 7am-3pm at a job, then came to class to learn taxes. Her proud daughter took a day off high school to see her mother graduate. That is how much it meant to her whole family, her self-esteem. Now she will be facilitating that impact for her tax clients, who may be her friends and neighbors,” Kim said
Story by Don Wedd
