In the third quarter edition of Credit Union Strategy & Performance (CUSP), I wrote about a prize-linked savings initiative gaining ground in Michigan. The program, Save to Win, combined the fiscal responsibility of saving with the emotional excitement of winning.  Launched by eight credit unions, the Michigan Credit Union League, the Filene Research Institute, and the Doorways to Dreams (D2D) Fund in January 2009, the goal of the initiative was to increase the savings of people who typically do not save through traditional programs. The core product of Save to Win was a one-year certificate of deposit. To encourage savings, the program used a raffle-like incentive: For every $25 deposited throughout the month, participants earned one entry into a $100,000 grand prize drawing. Individual credit unions also sponsored smaller monthly drawings.

The project announced the winner of Save to Win, NuUnion Credit Union member Billie Smith, on Thursday. All said, Save to Win members opened more than 11,600 CDs with a total deposit at year end of more than $8.6 million. Total deposits across the participating credit unions ranged from more than $306,000 to more than $1.7 million. Member penetration ranged from 1.6% to 14.9%. Collectively, participants saved more than $173,500 per week.  Forty-four percent of participants were from low-to-moderate income households (less than $40,000 year); sixteen percent were from households that earn less than $20,000 a year.

What lessons can we learn from Save to Win? Was the ultimate goal – to incentivize non savers to save – achieved? According to the Washington Post, more than half of the participants who opened accounts said they had not regularly saved before. Is a prize-linked savings structure an efficient allocation of resources, and does it encourage lasting savings habits among non savers?

UPDATE: 03.17.10

The Save to Win program is a result of a collaboration among the Michigan Credit Union League, the Filene Research Institute, and the Doorways to Dreams (D2D) Fund. I do not believe the concept has gone into wide-spread adoption, but if you know of a similar program, feel free to note that in the “comments” below or contact me directly. For more information on Michigan’s Save to Win, contact the following:

• Michigan Credit Union League marketing associate Maureen Lafrinere at 734.793.4242, vice president of CU Growth Solutions Lee Ann Mares at 734.793.4515, or visit the league online at mcul.org.

• Filene Research Institute innovation officer Denise Gabel at 608.232.8922 or visit the institute online at filene.org.

• Doorways to Dreams Fund executive director Timothy Flacke at 617.541.9064 or visit the fund online at d2dfund.org.

UPDATE 11.16.10
In the November 16 podcast of Freakonomics Radio, NPR's Kai Ryssdal and Stephen J. Dubner (co-author of Freakonomics and Super Freakonomics) talk about prize-linked savings and Michigan's Save to Win lottery. Click here to access the Freakonomics podcast.