Transcript Asset Building” as Public Policy

Asset Building Policy in the
United States
Ms. Josephine Bias Robinson
Director, Office of Community Services
Administration for Children and Families
U.S. Department of Health and Human Services
Role of Assets in Economic
Security and Independence
• U.S. anti-poverty strategy has traditionally
focused on income support to help lowincome households.
• Policy makers are increasingly considering
the role that wealth and assets play in a
household’s economic security and access
to opportunity, and in long-term
intergenerational independence.
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Theory and Research Underlying
Asset Building Policy
•
Assets not only help households sustain themselves during difficult
economic times, they also orient people to the future and provide a stake in
society.
•
As more low-income households have a stake in society, families and
neighborhoods stabilize and economic opportunity and the economy expand.
•
Low-income households want to and can save and, while saving generally
rises with income, they may actually save at a higher rate (as a percentage
of income) than higher-income households.
•
Evidence suggests that, while providing household stability and expanding
educational and entrepreneurial opportunity, asset building also can:
– Decrease economic strain, marital dissolution, and risk of intergenerational
poverty;
– Increase property values, property maintenance, health and satisfaction, and local
civic involvement.
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Economic Model for Poverty
Reduction
Household Income minus Consumption
# workers # hours
worked
from
household
worker
capital
Adequate Income and
Possible Savings
or
Inadequate Income and
Possible Debt
# members
in
household
ONE POLICY LEVER: INCREASE HOUSEHOLD INCOME
VIA INCREASING WORKER CAPITAL (AFI does this via
enabling education and small business development)
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Origins of Asset Building Policy
in the U.S.
•
In 1991, Michael Sherraden, a Washington University professor, argued that
income support policies often have been inadequate in helping low-income
households escape poverty and improve their economic status.
•
Sherraden recommended an asset-focused approach based on two primary
considerations:
– While the U.S. has long successfully used tax code mechanisms to incentivize
saving and asset building, those mechanisms largely excluded low-income
households due to their limited income tax liability.
– Means-tested income support programs often have asset limits that can act as
disincentives to saving and investment and discourage economic independence.
•
Sherraden recognized that an asset-building approach could not replace
income support programs so long as poverty persists, but would complement
and augment existing policy.
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Individual Development Accounts as a
Mechanism for Helping Low-Income
Households Build Assets
• Individual Development Accounts (IDAs) have emerged as a
mechanism for incentivizing saving among low-income households.
Other mechanisms include:
– Homeownership – Down-payment assistance, mortgage insurance, and
support for property rehabilitation
– Small Business Capitalization – Loans and technical assistance to
microenterprises
– Tax Credits – Saver’s Credit, Earned Income Tax Credit, Child Tax Credit
• IDAs are bank accounts for low-income households that incentivize
saving by matching individual deposits.
• Federal and State agencies work through community-based
organizations, along with banks and other private sector partners, to
promote IDAs for low-income households.
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Assets for Independence (AFI)
A Federal IDA Program
• Federal program that provides five-year AFI grants that enable participants to use IDAs to acquire a
first home, capitalize a small business, and pursue postsecondary education and training.
• AFI projects work with clients to open IDAs and provide basic financial management training and
supportive services.
• Participants are individuals who meet one of the following criteria:
– They are eligible for income support through Temporary Assistance for Needy Families;
– They are eligible for the Earned Income Tax Credit and have household net worth of less than $10,000
(excluding a residence and one vehicle); or
– They have household incomes of less than two times the Federal poverty line (Federal poverty line
was approximately $21,000 for a family of four in 2007) and have household net worth of less than
$10,000 (excluding a residence and one vehicle)
• Participant savings are matched at rates between $1:$1 - $8:$1, depending on the provider and the
asset to be purchased.
• Through Fiscal Year 2006:
– Participants opened 36,077 IDAs, depositing a total of $31,508,293 in earned income.
– 11,029 participants had withdrawn an average of $3,839 in savings and match funds for purchasing an
asset.
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AFI in Action: AnewAmerica
• AFI funded project serving low-income new citizens, immigrants, and
refugees living in the San Francisco Bay area of California.
• Mission:
“promote the long-term economic empowerment of new Americans - new citizens,
immigrants, and refugees - and to encourage their full participation in the political,
social and cultural growth of America.”
• Participants are provided with three years of customized services that
includes business development, asset building, and social responsibility.
• Since the establishment of the program:
–
–
–
–
103 small business startups and expansions were achieved
155 new jobs have been created in these businesses
110 accountholders have accumulated $416,972 in savings and earned match
24 families have purchased 20 homes with a combined value of $9,175,500.
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Sources
AnewAmerica Community Corporation (2007). Annual Report 2006. Berkeley, California.
Beverly et al. (2008). “Determinants of Asset Building.” Report prepared by the Urban
Institute and its collaborators for the U.S. Department of Health and Human Services,
Office of the Assistant Secretary for Planning and Evaluation (ASPE).
Caner, A. and E. Wolff (2004). “Asset Poverty in the United States: Its Persistence in an
Expanding Economy.” Public Policy Brief, no. 76. The Levy Economics Institute of
Bard College.
Organisation for Economic Co-Operation and Development (2003). “Asset Building and
the Escape from Poverty: A New Welfare Policy Debate.”
Sherraden, M. (1991). Assets and the Poor. A New American Welfare Policy. New York:
M.E. Sharpe.
U.S. Department of Health and Human Services, Office of Community Services (2007).
Report to Congress. Assets for Independence. Status at the Conclusion of the
Seventh Year.
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Web Resources
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Office of Community Services
http://www.acf.hhs.gov/programs/ocs
The Office of Community Services is an office within the Administration for Children and Families, U.S. Department of Health and Human
Services. The mission of the office is to work in partnership with states, communities, and other agencies to provide a range of human
and economic development services and activities which ameliorate the causes and characteristics of poverty and otherwise assist
persons in need. The aim of these services and activities is to increase the capacity of individuals and families to become self-sufficient,
to revitalize communities, and to build the stability and capacity of children, youth, and families so that they become able to create their
own opportunities.
•
Anew America Corporation
http://www.anewamerica.org
AnewAmerica's mission is to promote the long-term economic empowerment of new Americans - new citizens, immigrants, and refugees - and to
encourage their full participation in the political, social and cultural growth of America. The organization was founded in 1999 by a group of community
leaders representing immigrants and community development advocates who saw a continuing lack of integrated job creation, asset development, and
community empowerment strategies for low-income new Americans living in the San Francisco Bay Area.
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Corporation for Enterprise Development – CFED
http://www.cfed.org/ http://www.cfed.org/focus.m?parentid=31&siteid=374&id=560
CFED is a nonprofit organization that expands economic opportunity. Established in 1979 as the Corporation for Enterprise Development, CFED
works to ensure that every person can participate in, contribute to, and benefit from the economy by bringing together community practice, public policy,
and private markets. Access tools, resources and policy reports on IDAs and asset building strategies.
http://www.cfed.org/imageManager/IDAnetwork/IDAs___Spanish.doc
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MoneySmart
http://www.fdic.gov/consumers/consumer/moneysmart/index.html
Developed by the Federal Deposit Insurance Corporation, Money Smart is a training program to help adults outside the financial mainstream enhance
their money skills and create positive banking relationships. The Money Smart curriculum helps individuals build financial knowledge, develop financial
confidence, and use banking services effectively. The curriculum includes 10 modules on topics such as managing a checking account, key to savings,
and owning your own home and is available in English, Spanish, Chinese, Korean and Vietnamese.
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Web Resources
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Consumer Action
http://www.money-wise.org/
In partnership with Capital One, Consumer Action provides the MoneyWi$e series which combines free multilingual financial education
materials with community training seminars. The resources include: leader guides, PowerPoint presentations, training outlines, and
attendee booklets. These tools are available to order or a PDF version is available in English online. In addition, there is a MoneyWi$e
Best Practices Online newsletter, a quarterly publication, designed to bring you news, expert tips and success stories from financial
educators nationwide who have used the MoneyWi$e materials in creative and innovative ways. Moneywi$e is a great resource to turn
your free tax preparation service into a year-round asset development volunteer program. In addition, Consumer Action offers many more
free publications that range from Health Care education to legal materials. Check out www.consumer-action.org for a complete list.
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Center for Social Development
http://gwbweb.wustl.edu/csd/asset/index.htm
The Center for Social Development (CSD) is part of the George Warren Brown School of Social Work at Washington University in St.
Louis. The central theme in CSD's work is research and policy development that will enhance the capacities of families and communities.
Find resources on Individual Development Accounts and other asset building tools and policy here.
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