Commonwealth’s Collective Emergency Savings (CES) work explores an innovative approach to building short-term savings as a group and builds on a tested savings tool, Rotating Savings and Credit Associations (ROSCAs). In CES, a group saves together to build an emergency fund: the pooled savings are held in a joint account until a member requests a disbursement (which may be greater than the amount that they have individually saved) in the case of an emergency.
The hypothesis guiding the CES framework is built on two components:
- Social support: The social contract of saving with a group will motivate users to start saving and to keep saving.
- Access: The pooled account will help savers feel more prepared for unexpected emergencies, and if an emergency arises, users will have access to a larger reserve to manage the emergency.
From December 2019 to January 2021, Commonwealth tested this model in a small pilot experiment with Esusu, finding that the structure and community helped group members save more funds more consistently, as detailed in the full report on this study, Collective Savings: The Power of Social Support in Building Emergency Savings.
In 2022, through BlackRock’s Emergency Savings Initiative, Commonwealth partnered with QUBER, a Canadian financial technology company that had recently transitioned into the U.S. market, to test the CES framework at a larger scale. While a test launched in Fall 2022, uptake numbers were low, and in early 2023, Commonwealth and QUBER decided to suspend work on the pilot and reflect on lessons learned thus far.