Asset Building Program: Policy Papers

One of the most common myths in economic and poverty policy is that low and moderate-income people can’t or won’t develop financial assets. However, evidence from a wide variety of successful pilot projects from around the U.S. shows that, like wealthy families, low-income families can and do save when appropriate incentives and savings products are in place. Tactics like integrating savings tools into social support programs, providing financial education, matching savings, and even simple changes like allowing a savings check-off… more

To qualify for major public assistance programs like CalWorks, Food Stamps, and Medicaid, families must be both low-income and asset-poor. “Asset limits” make sense at first glance. The public pocketbook is not limitless and public aid should be directed to those who are truly desperate. However, asset limits can also put low-income families in a precarious position, causing them to deplete – and keep depleted – the part of a family’s financial portfolio that is critical for promoting independence and… more

In California, 28 percent of adults don’t have a checking or savings account, according to the US Census. Nationally, the estimate is that 10 percent of all households don’t have accounts. In San Francisco, the Brookings Institution estimates that one in five San Francisco adults---and half of its Blacks and Latinos—don’t have accounts. The un-banked are most likely to be people of color, less educated, and have lower incomes. For example, a Harvard poll of Hurricane Katrina evacuees in the… more

Starting a business is a principal way for a select but significant number of low-income people to accumulate assets that give them a stake in society. On an individual level, self-employment can help people exit poverty and build wealth. On a community level, small businesses help to anchor communities and provide diverse goods and services that respond to local needs. However, low-income entrepreneurs are not well-served by either mainstream financial institutions or government programs. The diversity of these businesses and… more

The 1996 welfare reform law which created the Temporary Assistance for Needy Families (TANF) program gave states far more flexibility in determining the best ways to move their neediest families from dependence on cash assistance towards economic self-sufficiency. Policymakers have issued a series of short-term extensions to TANF in recent years while attempting to build a consensus on how it should be reauthorized. Therefore, an opportunity exists to build upon existing -- and incorporate new -- asset building strategies into… more

Through an array of policies and programs, the public sector plays a significant role in the expansion of wealth and its distribution. Yet federal policy has historically discouraged asset building among households with fewer resources. The unintended consequence of this approach is that it creates a disincentive to engage in the types of activities which can help a family move up and out of poverty, namely savings and asset building. Specific policy proposals aimed to help lower-income families save have… more

What are asset-building policies?Asset building is about giving all Californians access to the government-sponsored financial tools and incentives that have created and sustained economic prosperity for higher-income families. Today, for example, the federal government spends over $300 billion per year to help individuals and families acquire assets through home mortgage deductions, tax incentives, business investments and retirement savings programs. There’s only one problem with these effective policies--more than 90 percent of that money goes to households already making over… more

The recent hurricanes wrought havoc on families and communities across the Gulf Coast and poignantly revealed how the debilitating effects of poverty persist across the country. The President has wisely proposed asset-based ideas as the core of his policy response—a urban homesteading act to encourage the ownership of land and homes, a Gulf opportunity zone to foster business ownership, and worker recovery savings accounts for job training and education. While insufficient in their scope, these proposals identify a promising path… more

Given the size and scope of tax refunds issued by the federal government each year, the tax filing process is a logical place to support and encourage savings behavior. In fact, the forms that IRS prepares for taxpayers are a nexus where individual behavior and institutional structures coincides. Allowing taxpayers to split their tax refunds directly on their tax returns will encourage increased household savings by making it easier for taxpayers to divide their refund between “money to save” and… more

While consuming only a tiny fraction of the Department of Housing and Urban Development’s (HUD) budget, the Family Self-Sufficiency (FSS) program is one of the nation’s largest programs designed to help working poor families increase their savings and build assets. The program has three primary components -- stable, affordable housing, asset-building escrow accounts and work-promoting case management -- that function together to help families build assets and increase their earnings. The program is open to families receiving federal housing assistance… more

Millions of low-income Americans are hearing two conflicting messages from their government: Save, and don’t save. Over the last decade a consensus has been emerging among researchers, policymakers, and practitioners around the importance of enabling low-income persons to save and build wealth, and state and federal programs have emerged to do just that. Yet, with limited exceptions, the rules of our nation’s public assistance programs aimed at such persons – Food Stamps, Medicaid, and TANF, for example – send the… more

The purpose of this annual report is to summarize and take stock of the current state of federal policy through an asset-building lens, especially as it affects the asset base of the poor.

In his Second Inaugural Address, President Bush reaffirmed his commitment to promoting an “Ownership Society” and unambiguously connected asset building policy to the most cherished ideals of the nation. He proclaimed:

In America's ideal of freedom, citizens find the dignity and security of economic independence, instead of… more

Individual Development Accounts (IDAs)—matched savings accounts for low-income households—are a relatively new means of improving the lives of the poor. Advocates of IDAs argue that those with assets are more economically secure, have more options in life, and can pass on status and opportunities to future generations. They further argue that assets have positive social, psychological, and civic effects that are independent of the effects of income. Over the last decade, research and demonstration projects have been initiated to address… more

At a time when policymakers are increasingly looking around for inexpensive ways to encourage savings, there is one promising program that is already on the books. The Family Self-Sufficiency (FSS) program is largely responsible for helping thousands of lower-income families make a successful transition from welfare assistance to independence. Despite its relatively small size, FSS is one of the largest asset building programs available to assist the working poor and has made an important contribution to the country’s asset-building efforts.… more

This menu of policy options is presented with federal policymakers in mind. It reflects our latest and best thinking, and draws heavily on the work of many experts focusing on various facets of savings and asset-building policy. The menu includes calls for new structures and policies as well as small changes to existing financial products and government programs. As there are many policy routes to broadening savings and asset ownership, there is necessarily some overlap among the ideas presented. The… more

This issue brief provides recommendations for federal policymakers to engage with the financial services industry to bring millions of un- and underbanked consumers into the financial mainstream. While as many as 22 million American families are “unbanked,” meaning they lack basic checking or savings accounts, millions more are “underbanked,” meaning they may own accounts but still rely on alternative financial service providers, such as check-cashing outlets. The issue brief is divided into five parts to answer the key questions about… more

Last tax season the IRS sent refund checks averaging $2,057 to 100 million tax filers. These cash infusions are often the best chance people have to save some money in any given year. This is particularly true for lower income families. Over 20 million lower income families—one in six taxpayers—received an average $1,700 boost to their refund from the Earned Income Tax Credit (EITC), a refundable tax credit designed to reward work.

While tax refunds are certainly valued by American… more

Many Americans have no assets to their name; they are disadvantaged from the start of their lives. One promising idea to expand opportunity and broaden asset ownership is to endow every newborn child with an American Stakeholder Account (ASA). This paper intends to serve as a vehicle to review and consider the policy design choices that would give this proposal its ultimate shape and direction. It builds on previous analytical work and offers new insights in examining the challenges, benefits,… more

Asset building has the potential to influence and reshape a wide range of social and economic policy debates around the world—but presently there is little trans-Atlantic or global dialogue on the issue. In Europe, for example, debates about social insurance, fiscal policy, pension reform, social exclusion, poverty reduction, and expanding Europe’s middle class are largely devoid of the assets perspective. In the U.S., and to some extent Europe and Australia, we could be approaching a “tipping point” around the importance… more