Assets

The War on Poverty – it’s not just about counting jobs anymore.

A new strategy among policy makers of many stripes is to focus on building assets among low-and-moderate income families.  Asset policy, as it is often called, breaks from the traditional emphasis on jobs and income in efforts to lift households from poverty.

As great as the divides are among rich in poor in incomes, the gulf is even greater when people measure indicators of wealth.  A 2004 report by the Pew Center found that hispanics and African-American households had a median asset base (including home equity) of less than $10,000.  White households, by contrast, enjoyed a median wealth of almost $90,000.

People like Michael Sherraden (Center for Social Development at Washington University) and Thomas Shapiro (Brandeis University) have constructed some of the core texts in this field.  The Corporation for Enterprise Development has funded a network of groups implementing these strategies.

Those texts find that assets protect a family from shocks like hospitalizations and job loss.  They also strengthen the ability of the household to invest in the future.  Assets can be transformative, creating seed money for the down-payment on a home or for college educations.

CFED just put out their list of budget priorities for their Assets Agenda.  Here is an abbreviated list of some of the ideas that make up current asset policy:

• VITA Grants: funding to assist with free tax preparation for low-income households.  Seeks to encourage uptake of the EITC, and to extinguish the use of the refund anticipation loan.
• CDFI Fund: CFED recommends $243 million for capital grants, equity investments and capacity building funds to community development financial institutions.
• PRIME: training for low-income entrepreneurs.  A bootstrap program.
• Community Development Block Grants: a federalized approach to community enhancement, driven by local leaders but funded by federal support.
• MicroLoan TA: extend the how-to for small businesses seeking small dollars.
• MicroLoans: small and sustainable debt to startups or growing small businesses.  Through the SBA, borrowers can get up to $35,000.
• Farmer and Rancher IDAs: savings accounts for entrepreneurs in agriculture, or in rural areas.
• Assets for Independence: matching grants to stimulate new savings accounts among the poor.

There are a lot of ideas out there.  Assets policy is a new take on an old problem, and perhaps it will be the idea that finally resolves some of the aims initially addressed during the War on Poverty.