Three principles can help philanthropy create financial stability for the futures of American families.

This blog post is part of the series “Closing the Racial Gaps: Together We Can” which highlights efforts across the United States that show promise for closing racial opportunity gaps and creating a more equitable future.


What are we missing? Over the past 25 years, we have seen the proliferation of results-focused philanthropy, investment in systems change-level approaches, and technology innovations that allow us to drive and scale effectiveness. We have acquired more tools and know-how in our philanthropy tool kit, but the road to opportunity is still filled with traffic jams, potholes, and far too many detours. If you hit enough bumps along the way (and you’re out of a spare tire or lack a AAA membership), it’s no surprise that you might pull over in despair and give up.

Today, more than 50 million Americans live in financially distressed communities, struggling to pay their bills and meet their families’ basic needs. This is particularly true in communities of color where longstanding inequities have resulted in a lack of stable income, savings and wealth growth and have contributed to a stark racial wealth divide. In its 2016 Assets and Opportunity Scorecard, the Corporation for Enterprise Development (CFED) reported that households of color are 2.1 times more likely to live below the federal poverty line than whites and are 1.7 times less likely to have the cash to deal with a financial emergency. Despite the immense progress that has been made by the community development and asset-building fields to help combat these disparities, we are still faced with the economic reality of “Two Americas,” and the distance between the two is growing and increasingly disparate.

Below the Poverty Line

2.1x Households of color are 2.1 times more likely to live below the federal poverty line than whites.

With heightened political awareness that more and more Americans at all income levels are feeling financially insecure but have nowhere to turn, this is philanthropy’s moment to put forward bold, realistic ideas. This requires us to take what we have learned over the past 25 years, fill the solutions void, and help restore hope. But instead what I see is a philanthropy Tower of Babel. Many ideas are being perched one on top of another precariously, with the inevitable biblical moment where it comes crashing down upon us because we just couldn’t get it together. This doesn’t mean we don’t have great ideas that work, but we lack common ground; a common purpose. So where can we come to a mutual agreement? I offer these three principles for a consent agenda:

1. People vs. Place? Let’s agree it’s about both.

Our approaches to community development must be coordinated to simultaneously improve neighborhoods while also supporting the residents who live there. This means bringing together funders and practitioners from a variety of sectors to work together by investing not only in affordable housing, community facilities and commercial development but also neighborhood safety and quality schools, youth development, job training, financial capability services and more. These are all proven onramps to opportunities.

2. Health and Housing

Health and housing are fundamental to economic opportunity. While jobs are crucial, increasing access to safe and affordable housing and healthcare helps families gain the stability they need to hold down those steady, good paying jobs and move towards positive economic outcomes.

3. Asset Building

Asset-building approaches, such as savings, homeownership and education, are powerful because they can close the wealth gap today, and serve as a down payment on prosperity for future generations.

I know there is no silver bullet, but the “asset effect” can be a powerful lever that sparks momentum.

So if we can agree on these guidelines, where do we begin? We start at the end – what we want to see happen. Is it possible for U.S. philanthropy to pull together around an asset-building goal (e.g. three-months household savings for emergencies; an educational savings account; access to home and small business ownership opportunities) that allows us to more permanently close the wealth gap? To do so, we must deploy our resources to move beyond treating the symptoms of poverty and racial disparity by catalyzing the financial capabilities in the people we serve to their fullest potential and instilling the sense of optimism needed to succeed. I know there is no silver bullet, but the “asset effect” can be a powerful lever that sparks momentum. Not simply because of the short-term financial outcomes, but because of the long-term impact on hope, inspiration and persistence.

Peter Drucker once famously said that efficiency means doing things right, but effectiveness means doing the right things. After working in philanthropy for almost a quarter of a century, I can say that optimism about the future is at the core of every effective asset building intervention I have ever seen. This is not sentimentality, but quite the opposite. Societies where fatalism has taken hold are communities that stop innovating and inventing—a downward spiral from which it can be very difficult ever to escape.

But, if fatalism is contagious, if pessimism is a self-fulfilling prophecy, the good news is that so too is the inspirational power of hope. When households begin to move from economic insecurity and accumulate a cushion of savings of any amount or type (cash, educational savings, retirement savings, home equity) they also develop a sense of control and hope about their financial futures that can propel them forward and have a positive impact on so many other issue areas that we are concerned about. By directing more philanthropic capital to asset building approaches we are both enabling and protecting gains. So, even if that breakdown on the side of the road does happen–and it will–households and communities are better equipped to navigate the experience without reversing course.