Asset Building: A Long Term Tool to Fight Poverty Mary Cleary Jewish Family & Career Services Louisville, KY

Assets Framework: a paradigm shift for poverty reduction From traditional focus on income/consumption support to access to/development of resources & wealth creation Spotlights inadequacy of short-term, income-only approach in helping people to get out of poverty Puts poor and rich on same metric, focusing attention on policy and social changes needed to achieve equity. Shifts focus to concrete outcomes that move people beyond poverty and towards social and economic security. Desired outcome is building assets that allow people to be independent.

Why do assets matter? Assets enable families to… –Weather financial crises –Invest in their children and their communities –Plan for a secure retirement –Pass resources on to future generations Income enables families to get by. Assets build their long-term economic security.

Key Concepts Economic security is not just about income it is also about assets. Assets exert effects that income does not. (i.e. cushioning against unpredicted adversity or planned risks, enhance social capital and inclusion, build sustainable capacity with intergenerational effects). Assets and income are complementary and interrelated. Good asset-building policy also requires good income security policy.

A Challenge: Unequal Distribution of Assets Longstanding social structures, cultural traditions, and public policies facilitate or impede ownership of, access to, and investment in assets Lack of assets is the basis of recurrent and trans- generational poverty Women and ethnic minorities have often been excluded from developing assets

The term asset implies not only the existence of wealth, but also a set of rules and institutions that govern access to this wealth and the distribution of the benefits derived from it. (James Boyce) An assets framework reveals ways political, economic & social power are used to create and maintain inequitable outcomes based on race, gender, and class Subsidies for asset building for affluent and middle class, but not the poor Asset-building support for the affluent but not for low and moderate-income families Policies and practices that develop communities’ physical assets inequitably

Asset Building Programs Asset building programs invest in individuals and organizations to build financial, human, and social assets in ways that reduce or prevent poverty.

Targeting 3 Types of Assets Social Social Financial Financial Human Human

Financial Assets Savings Investments Home ownership Business ownership

Financial Asset Building Savings Investment Preservation

Savings/asset accumulation – addressing barriers and creating opportunities for families to save Investment/asset leveraging – expanding opportunities to invest in home, business and real estate equity Protection/asset preservation – advancing measures to protect families’ assets

Savings/Asset Accumulation

Financial education – Improving and expanding access to financial education Asset limits – Raising or eliminating asset limits in public benefit programs Individual Development Accounts (IDAs) – Increasing public support for IDAs Earned Income Tax Credit (EITC) – Capturing federal EITC and creating state EITCs Retirement savings – Expanding access to retirement savings Children’s Savings Accounts – Supporting children’s savings accounts programs

Investment/Asset Leveraging Homeownership – Increasing affordable homeownership opportunities Business ownership – Supporting low-wealth entrepreneurs to build business equity Real estate – Leveraging economic development opportunities to build wealth for community residents

Protection/Asset Preservation Health insurance – Exploring ways to expand health insurance coverage Anti-predatory lending – Reducing abusive lending practices Anti-insurance redlining – Implementing/ strengthening measures to prevent insurance redlining

Human/Personal Assets Health Knowledge Skills Rewarding/fulfilling work

Social Assets Families Cultural capital (Trust) Intergenerational relationships Community leadership Philanthropic capital

The Result Ability to make and enforce their own decisions as individuals, families and communities.