Asset Building Movement Essay

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The  asset  building  movement  has  grown  rapidly over the past 20 years. It is focused on increasing the financial  security of working  families through practical strategies and public policies that encourage  low and  moderate-income people  to save,  invest,  and  preserve  their  financial  assets. Asset  poverty,   not   income   poverty,   is  a   true measure  of  poverty   in  the  United  States.  Asset poverty is defined as insufficient net worth (including savings, home equity, and other investments)   to  survive  for  3  months   without income  at  the  federal  poverty  level. The  federal income poverty  rate is 12.7  percent,  but the asset poverty  rate in the United States is 25.5 percent.

The gap in wealth  is most  pronounced among people  of  color  and  women.  Assets, much  more than  income,  are  distributed unevenly  across  the United States. According to Compass Working Capital,  more than  twice the percentage  of households of color (40.7) are asset poor compared with the 18.7  percent  of white  households in the same predicament. In Massachusetts, the  net  worth  of Caucasian households is 37 times higher than  that of minority  households. The fight against  poverty lies within  asset  development with  strategies  like acquiring  assets (i.e., a house, a small business, an investment  account, or a college education).

Home ownership is associated  with higher property values, improved  property maintenance, enhanced  social participation, enhanced  civic participation, and  lower  residential   mobility.  Asset ownership increases household savings and investment,  helps  single-parent families  stay  above  the poverty     level,     reduces     the     duration    of unemployment,  and   lowers   families’  subjective sense  of  economic  hardship. Owning  assets  also improves  educational outcomes  for children, results  in higher  high  school  and  college graduation rates, decreases intergenerational poverty, and creates  a  more  hopeful  and  positive  view of the future.

Financial decision making has become more complex.  The  average  consumer  lacks  the  necessary knowledge, skills, and resources to make informed   decisions.   Financial   education  has   a strong  impact  on  families  and  quality  of  life. A solid  foundation in financial  matters  and  a clear understanding  of  financial   actions   (e.g.,  poor credit   scores)   are   critical   to   maintaining and expanding assets. In 2010, the Center for Financial Services Innovation, a national organization that conducts  research,  found  that  the types of educational  efforts  that  are most  effective in improving outcomes  and  changing  behaviors  for  customers are   immediately    relevant,    coincide   with   life changes,  assist  consumers   in  turning   knowledge into  action  immediately,  and  help  clients  acquire and  preserve  assets.  Designing  an  education program starts  with the family and an understanding of  the  community. The  most  pressing  financial needs are of utmost  importance.

Financial Education

Individual  Development Account  (IDA) programs have been increasing  in the past decade. IDA programs  provide  financial  education and  a matched savings account for the low-income individual. Savings are  typically  applied  to  home  ownership, building a business, or education. IDAs have begun to expand to include second-generation asset building services and products for the poor. Examples of this  include  universal   children’s  saving  accounts and  increasing  low-income  earners’  access to savings  and  investment  products such  as  individual retirement accounts,  529 college savings plans, and products linked to the earned  income tax credit.

While in an IDA program, participants establish a pattern of saving and must attend  financial  education and asset-specific education classes. The classes teach participants about  different aspects of finance,  such  as how  to establish  credit,  decrease expenses, set goals for savings, and overcome  barriers.   Most   IDA   programs   are   delivered   by community-based organizations and  can  be  particularly  effective in rural  communities. Often, community members  feel that  IDA programs are too good to be true. Families in rural communities typically already have a relationship with nonprofits or  other  organizations within  the  community that  will administer the program. The benefits  of the program can also be spread by word of mouth by the residents  of a rural  community. The Office of Community Services in the U.S. Department of Health  and  Human Services provides  competitive grants  for IDAs. The federal grants  are the largest single source of matching funds. In 2011, the office had  $19  million  to dispense  to 60  projects.  Each project must raise nonfederal  cash contributions in an  amount at  least  equal  to  the  grant.  Since the asset building  movement  began  in the mid-1990s, it has  grown  to  include  local, state,  and  national nonprofits; elected officials; public agencies; financial institutions; foundations; regulators;  and  the Federal Reserve.

There has been increasing awareness of the importance  of  financial   assets  to  help  families move  toward economic  security.  Other   areas  of increasing awareness include concerns about the increasing wealth gap. Before the Great Recession, the  gap  was  greater  than  at  any  time  since  the Great Depression. Most working families had concerns  regarding  home ownership, education access, health  insurance,  and  retirement security. In 2010,  the Barack Obama administration revealed  a  strategy  to  guide  federal  and  private efforts to ensure that all Americans have the financial skills to attain  economic security and stability. The    strategy    focuses   on    four    main    areas: (1) increasing awareness  of and access to financial education, (2) improving  the delivery of financial education, (3) identifying core financial competencies, and (4) sharing best practices. The plan, developed by the Financial Literacy and Education Commission, included 22 federal agencies, including the Federal Reserve Board. The administration also created the President’s Advisory Council on Financial  Capability, which is responsible  for implementation of the plan.  The primary  goal of the council is to coordinate federal activities with resources  at the community level.

A policy promoted by the New America Foundation is to advance financial education using an employer-based approach. The workplace is an effective place to deliver important financial  education and services. This may be especially true for low and  moderate-income employees,  who  may not be inclined to seek advice from a financial institution and  are  much  less likely  to  have  the funds available to pay for professional advice. Employees who have low levels of financial  stress are  more  productive—an incentive  for  employers to provide  financial  educational services. Because of the recession,  financial  education is more  relevant  than  ever  before.  Nonprofits, philanthropic organizations, and the government have embraced programs that educate people about  their finances.

Cooperatives have emerged to bridge asset building  and  shared  ownership. There  are 29,000 cooperatives in the United  States, with  more  than $3 trillion in assets. Members include farmers, ranchers,  fishers, and co-op workers.  Cooperatives are   educating   asset   building   supporters  about wealth  building  in  cooperatives. Rural  cooperatives, for example, could bring new skills and resources to rural communities while building members’  individual  assets and  strengthening the long-term  sustainability of the cooperative.

In 2008,  the  Annie  E. Casey  Foundation convened  a  meeting  of national leaders  of the  asset building   and   shared-ownership  movements   to build a bridge between  the movements  in order  to identify and advance  common  goals. In 2009,  the Casey Foundation sponsored two  national working  groups  that  encouraged collaboration in  the areas  of  research,  practice,  information sharing, and  public  policy.  The  foundation continues   to support efforts  to  educate  people  through media outreach, presentations, workshops, webinars, and conferences. Asset building coalitions are now operating in 40 states. County  and regional  coalitions are increasing  in number.

Rural Texas  As  An Example

The  state  of Texas  has  made  great  strides  in the asset building  movement.  In 2009,  almost  one in six people  living in a U.S. rural  area  were below the  poverty  line. Of  the  nearly  3 million  Texans who  lived in a rural  area  that  year,  19.5  percent were  below  the  poverty  line.  Employment rates and the highest education levels achieved were also below par. In 2008,  an acre of land was valued at $2,247. In 2009, the value had dropped to $2,086, a  7-percent   decline.  Texas  typically  experienced multigenerational growth before the recession. Oil, natural  gas,  and  cotton   continue   to  experience growth  in a few counties.  However,  rural  jobs typically pay low wages and  do not  offer educational reimbursement, medical benefits, or retirement benefits. Average  earnings  in rural  areas  are  $20,000 lower  than  in urban  areas.  Rural  families who  do have  assets  generally  have  them  invested  in  livestock, land, and farm equipment. All these are hard to quickly convert  into  cash. In 2010,  IDA participants  in Texas  spent  almost  $4.4  million  on  asset purchases and received $9.8 million in match money.

Local and state governments in Texas are facing budget  shortfalls  created  by the  recession.  Public programs that  are  funded  that  might  assist  rural communities  may  get  cut  or  never  be  created. School   districts   are   also   facing   concerns.   The Center  for  Public  Policy  Priorities  has  estimated that  school districts  may see a decrease  of 80,000 in staffing to offset a $10 billion state deficit. Furthermore, another 110,000 related  jobs could be lost from the education cuts. Education quality most likely will suffer, as well.

Rural  Texas  has  undergone a profound economic  transition. The shift away  from  an agriculture-based economy  has resulted  in smaller communities because of loss of workers  and decreasing  population. Only 13 percent  of jobs in rural Texas are agricultural in nature. The number of  full-time  farmers   has  decreased   significantly. Rural  manufacturing has also  seen the  outsourcing  of jobs  to  other  regions  of the  world.  Since 2000,   90  percent   of  the  population  growth   in Texas occurred  in five regions (nearly 4.5 million): Dallas, Houston, San Antonio, Austin, and the Rio Grande  Valley. Over  the same period  of time, the population decreased in 79 of the 254 Texas counties, which  were  mostly  rural  areas.  Rural  areas are increasingly relying on urban areas for jobs. Demographic trends  indicate  that  rural  residents are older  than  urban  residents.  They also tend  to be  poorer   and  less educated. This  can  translate into heavier demands  on the already  strained  systems of health  care and other  supports.

In  the  past  10  years,  asset  building  became  a specific policy agenda in Texas. Policy makers, nonprofit   organizations,  and   business   leaders   have come together  to strengthen and  connect  community wealth–building strategies, identify new approaches, and implement  public policies to increase  opportunities for working  families. Texas asset  building  efforts  appear  to  favor  community tax centers, financial  education, and small-business development  as  nonprofits, financial  institutions, and  municipalities are  the  primary  driving  forces. The initiatives  also focus on developing  policies to promote saving  and  investing  in education, home ownership, retirement, and small-business  development. Another  focus is identifying tax-based saving incentives and making them accessible to lower income families. Yet another focus is on increasing access to financial education, including the idea that credit is an asset. Families are encouraged to establish a relationship with a bank  or credit union  and to avoid high-cost  payday and auto  title lenders.

In  2010,  the  Federal  Reserve  Bank  of  Dallas, RAISE (Resources,  Assets,  Investments,  Savings, and  Education) Texas,  Texas  Rural   Innovators, and community partners met to build on the work begun in 2008  and 2009  to expand  asset building resources.  Six Rural  Asset Building  Forums  took place  in  the  cities  of  Corpus   Christi,  Midland, Tyler,  Silsbee,  Bryan,  and  Plainview.  More  than 250  practitioners, service providers,  policy makers, and bankers  came together  in these forums.  Local perspectives and rural initiatives were primarily discussed. The topics included financial education, small-business  development, earned  income tax credit, payday lending, and college savings programs. New initiatives were launched  in Plainview and  Midland, while existing  coalitions  were reinvigorated. Corpus Christi and Bryan focused on expanding and  reaching  out  to  the  surrounding rural  areas with community tax centers.


  1. Compass Working    http://www.compassworking (Accessed October 1, 2015).
  2. Lopez, Roy C. “Asset Building Taking Root  in Rural Communities.” Dallas, TX: Federal Reserve Bank of Dallas. bcp/2011/bcp1101-1.pdf (Accessed August 2014).
  3. McCulloch, Heather. “Why the Asset-Building Movement Matters for Rural  Co-Op  ” (Accessed August 2015).
  4. Page-Adams, Deborah and Michael Sherraden. “Asset Building as a Community Revitalization Strategy.” Social Work, v.42/5 (1997). http://sw.oxfordjournals. org/content/42/5/423.abstract (Accessed August 5, 2015).
  5. Schreiner, Mark and Michael Sherraden. Can the Poor Save? Saving and Asset Building  in Individual Development Accounts. Piscataway,  NJ: Transaction Publishers, 2007.
  6. Survey of Income and Program Participation, 2008  Panel, Wave 10. Washington, DC: U.S. Department of Commerce,  Census Bureau, 2013.  Data  calculated  by Haveman Economic Consulting.

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