Like many Americans, my eyes were glued last week to the Olympic women’s halfpipe snowboarding event, watching 17-year-old American Chloe Kim defy physics with back-to-back 1080s (three full rotations) and a nearly perfect score of 98.25. Even more symbolically, her parents are South Korean immigrants and self-proclaimed “believers in the American dream.”
While watching the Olympics, it is tempting to get caught up in the “win,” but not see the countless hours of work that go into achieving the victory. The same is true in the social sector. Countless times, I have heard people wonder aloud, “Why can’t we just solve poverty?” Or, my favorite, “Let’s find a quick win.” But, there are no quick wins in poverty. Like training for the Olympics, reducing poverty requires a long-term investment of time, energy and planning.
Recently, we have read heartening news – poverty rates are getting a little better, with 12.7 percent of the population living in poverty (n=43.1 million Americans). However, nationally, more than two out of every five households (44%) live in liquid asset poverty, which means many households do not have sufficient assets available to last 90 days should they lose their main source of income. In addition, almost half of Americans with a high school diploma are living at or below the federal poverty level. This creates a problem where many Americans have too few resources — savings, investments, credit, insurance — to fall back on in the event of a job loss. These statistics are enough for many of us to want to quit the race.
Instead of quitting, we need to join efforts and scale programs that work. We have learned a lot in the past 25 years that can help us in our effort to alleviate poverty. Poverty is a consequence of inequality. To reduce poverty, we need to collectively tackle its underlying root causes and not just fight the symptoms. In 1991, Michael Wayne Sherraden’s groundbreaking book, Assets and the Poor: A New American Welfare Policy, helped us realize that financial insecurity destabilized families and, in turn, jeopardized the long-term stability of the U.S. economy. This helped change our model from one focused on safety-net services to one focused on asset-building. National research showed that financial education classes, which many nonprofits were providing, were not enough to reverse the trend. As a result, we went beyond education and moved toward financial coaching to help develop action plans alongside our clients. We also learned we needed to start where our clients were by helping them reduce debt, improve credit scores and create regular savings, not necessarily work toward home ownership or small business creation.
The Annie E. Casey Foundation has taken these lessons a step further. The Foundation has developed an effective new model called Working Families Success, which delivers a “bundled” set of three core services (employment services, income support and financial coaching) with the goal of helping clients on a journey toward self-sufficiency. In measuring the model’s success, research has shown that clients who receive two or more services together are three to four times more likely to achieve a major outcome. This model promises to be a solution that can help us reduce asset poverty for many Americans.
Yet, for us to win together we need to take this innovation to scale. This means that all agencies serving the poor need to either 1) provide comprehensive financial capacity services and/or 2) partner with an existing provider in the community who can assist with cross-referrals and on-site services.
To find out more, check out this fabulous free e-book compiled by the Federal Reserve Bank of San Francisco called What It’s Worth. It includes all the best thinking over the past decade to implement as a nonprofit, funder, business, academic or policymaker.
While there are no quick wins, we are working together as a team to achieve a lasting victory. And, based on recent trends, we are starting to move the needle on meaningful programs that help our clients reach their finish line. We would love to hear what you are doing in your community with the Working Families Success model or other research-based models on poverty.
