It is no surprise that many people zone out when they see statistics, but love a good story. The asset-building field is crafting its story, creating the narrative and casting new characters. As the field forms the statistics into a compelling narrative, it is imperative that equity play a leading role. Recently, the Assets Learning Conference sponsored by the Corporation for Enterprise Development (CFED) brought together over 1,300 government leaders, service providers, bankers, and funders to discuss trends, lessons,
and best practices for expanding economic opportunity for low-income families. We
gained significant insight into the burgeoning field of asset building that we would
like to share with you.
CFE defines assets as tangible and intangible economic resources – a home, savings in a bank account, a college education – that can produce value for their owner. Assets
are important because they provide the ability to weather a job loss as well as the potential to move up the economic ladder. Someone new to the asset-building field might ask, how can we focus on assets while the basic needs of low-income families are unmet? Michael Sherraden, author of Assets and the Poor, argues that assets have economic, social and psychological power that income alone does not. Assets are the foundation for achieving financial sustainability and escaping poverty. Here are some observations from the conference:
Communities thirst for practical tools. Rather than theories, leaders want tools and action plans. Living Cities designed and moderated a standing-room-only session called “Embedding Financial Empowerment into Social Service Delivery.” Program Associate Helen Leung moderated the panel featuring our Income & Assets Working Group grantees and grant evaluator. The panel highlighted the ways Louisville and Seattle are integrating financial empowerment into their homeless-service continuum for low-income people. Our audience was intrigued by our unconventional focus on the process of helping people manage their assets rather than just the products that dominate the field. Our panelists highlighted various emergent processes in asset building, including cross-sector partnerships, improved contract requirements for social-service delivery, and training on financial empowerment approaches. Ultimately, what matters most is perspective. Seattle’s Senior Mayoral Advisor Jerry DeGrieck, a leader in municipal financial empowerment, commented that “folks are more comfortable talking about sex and drugs than financial empowerment for low-income people.” In order for financial empowerment to succeed as an asset-building strategy, practical tools must be complemented by education, technical assistance and provider training.
Growing race and gender wealth gaps must be addressed. Data strongly link wealth inequality to income inequality. Wealth confers benefits that income does not. Wealth can generate further income, be used as collateral for loans, be passed from generation to generation, and help weather financial crises. Wealth inequality is distinct from income inequality and much more severe. Dr. Mariko Chang, author of Shortchanged: Why Women Have Less Wealth and What Can Be Done About It, states that white families have 18 times the wealth of Hispanic households and 20 times the wealth of African American households. The gender wealth gap is similarly severe. Women have less wealth and disposable income, yet are more likely to be the sole custodial parent and to support more people. For both women and minorities, there needs to be increased focus on the “wealth escalator” – the transition potential from income into wealth. Closing racial and gender wealth gaps is imperative. Strategies to closing these gaps range from access to employment and appropriate financial products, policy interventions that remove asset limits on public assistance and greater focus on product innovation and outreach.
Social capital is not reserved for only the rich. A theme that emerged repeatedly, especially among service providers, is the need to leverage social capital – the value derived from social networks. A big challenge is that lower-income populations have different and arguably more limited types of social capital. For example, 80% of available jobs are never formally advertised and therefore remain inaccessible to people without extensive social networks. Innovative programs piloted by Boston Rising and the Family Independence Initiative help strengthen and broaden social connections for low-income individuals. Both organizations challenge the field to invest in programs that build social capital and encourage support networks among family and friends. The successes of these efforts demonstrate the unleashed power of social capital when applied to lower-income communities’ financial empowerment and asset building strategies.
Unfortunately, most systems we rely on for prosperity are obsolete, and overhauling the systems that support low-income people is incredibly difficult. We believe that asset building practitioners and advocates have to stop working around systemic problems and face wealth and gender gaps head on. There is great potential in moving innovations in financial empowerment and social capital from the periphery to the mainstream and to scale. So, as the asset-building field pens its story, we suggest integrating the points made here into the storyline. The key mandate is that the narrative compels actions on behalf of low income people.