Advocacy Alert – Food Stamps’ Asset Test

The good folks at Center for Enterprise Development emailed supporters today encouraging the asset development field to contact Congress regarding the onerous asset test for food stamp recipients. Here’s what they said (most of the text below is unapologetically taken directly from CFED’s email):

Congress is poised to reauthorize the Farm Bill which includes the Food Stamp Program. Tell Congress to Stop Discouraging Savings: Remove or Improve Food Stamps’ Asset Test. Add Your Organization to the Sign-on Letter by April 9, 2007!

Savings and asset advocates are sending a letter to the Agriculture Committee Chairmen on Monday, April 9, 2007.  The letter requests that the Committees eliminate or improve asset limits for the Food Stamp program.

The Food Stamp Program is integral to ensuring that low-income people, seniors, and people with disabilities have the resources to sustain a healthy diet.

However, the asset rules for the Food Stamp program penalizes low-income families by requiring that they spend down their Individual Retirement Accounts and 529 college account savings to under $2,000 ($3,000 for households with an elderly or disabled family member) before they can receive assistance.

CFED and others seek to remove this strong “do not save message” by eliminating or lessening the impact of the asset limit in the Food Stamp Program. In this changing economy, low-income workers must receive incentives – not disincentives – to develop a “nest egg” for financial emergencies, save for college, and save for retirement.

Studies have shown that asset tests discourage low-income households from saving because families fear that savings might disqualify them if they need to rely on means-tested public assistance in the future. A policy that eliminated or raised the asset limits and exclude retirement and college savings accounts would benefit families and the nation. Research has shown that families with savings are better able to weather a financial crisis such as an eviction or job loss. With greater stability, families are less likely to rely on public assistance.

Add your organization’s name, city, and state to the letter, asking the Agriculture Committee to eliminate the asset test, or adjust the limit for inflation and exempt specific assets including tax-preferred retirement and education savings.

To join the letter, please send your organization’s name, city, and state to jjones@cfed.org or call (202) 202 207-0156.

CFED, working with the Center on Budget and Policy Priorities, will send the letter to the Senate and House Agriculture Committee Chairmen on Monday April 9, 2007.

The New York Times

The Times recently made a big splash for global microfinance with Nicholas Kristof’s piece earlier this week titled “You, Too, Can Be a Banker to the Poor” (only accessible to Times-Select subscribers), featuring an organization I mentioned in a previous post, Kiva.  There’s an accompanying video segment titled D.I.Y. Foreign Aid, also featuring Kiva, that doesn’t require a Times-Select subscription.  I’m sure the loans and contributions have been rolling in to Kiva like crazy this week; a good piece by a Times op-ed columnist has the power to drive a lot of action.

I was pleased to see today that the Times is not forgetting domestic poverty either.  A piece titled “Can Poor People Be Taught to Save?” by guest columnist Rachel Louise Snyder, will be appearing in Sunday’s paper, the April 1 edition.  Although it doesn’t focus on IDA accounts specifically, it does do a nice job of capturing what the asset development field is all about, and provides great exposure for an organization that strangely had not yet caught my eye, America Saves.  They take a “network” approach to encouraging the habit of saving.  I’ll certainly be following up with them to learn more about how we might introduce some of their “savings campaign” strategies into our community, which might be a nice complement to our fairly new Earned Income Tax Credit campaign (we’re not even calling it a campaign yet, but perhaps we’ll be ready to do so next year) and other asset development initiatives. 

Perhaps Snyder’s piece will generate some major buzz about asset development the way that Kristof’s piece produced lots more buzz about microfinance and Kiva.  We’ll see.

Good Night, and Good Lux

Ethan Zuckerman, my Williams College classmate (although perhaps better known as an international development/technology & communications guru and co-founder of the terrific GlobalVoices blogging movement), had an interesting post on his personal blog the other day, offering his impressions of Pittsfield and North Adams here in the Berkshires. He and a number of his readers really captured the sense of depression that can permeate a post-industrial mill town, and which can be particularly debilitating for the poorest residents. This depression is one of the psychological barriers we have to be prepared to face with our Berkshire County asset development program, which is largely focused on the residents of Pittsfield and North Adams.

Ethan’s post was in the same spirit as the novel I’m reading now, Richard Russo’s Pulitzer Prize-winning “Empire Falls,” set in a former mill town in Maine that could easily be North Adams or Pittsfield. I’m only about a third of the way through, but the struggling, working-class characters feel so familiar to me from the encounters I have in North Adams every day. Russo knows this kind of town so well; I highly recommend “Empire Falls” to anyone interested in the social and economic life of a small post-industrial New England town.

And as long as I have found myself using this post to create some high-brow context for the towns and the people with whom my asset development work is taking place, I might as well bring in Thomas Lux’s “Grim Town in a Steep Valley.” Lux has long been one of my favorite poets, a blue-collar man-of-the-people sort of poet if such a thing exists in the world of serious poetry today, a great storyteller who can be hilarious in one instant and heartbreaking the next. This probably won’t be the last time I refer to Lux on this blog, but “Grim Town in a Steep Valley” (although directly inspired by a town in the Merrimack Valley of eastern Massachusetts, I think) is another lens into the place that North Adams and Pittsfield are coming from, and is certainly more heartbreaking than hilarious. The poem was first published about 15 years ago, around the time North Adams (and many former mill towns in New England) hit rock bottom, and the geography and psychology of the poem (and even details like the abandoned shopping cart in the shallow river) always take me back to my memories of North Adams at its worst when I was a student nearby in Williamstown.

This valley: as if a huge, dull, primordial ax
once slammed into the earth
and then withdrew, innumerable millenia ago.
A few flat acres
ribbon either side of the river sliding sluggishly
past the clock tower, the convenience store.
If a river could look over its shoulder,
glad to be going, this one would.
In town center: a factory of clangor and stink,
of grinding and oil,
hard howls from drill bits
biting sheets of steel. All my brothers
live here, every cousin, many dozens
of sisters, my worn aunts
and numb uncles, the many many of me,
a hundred sad wives,
all of us countrymen and -women
born next to each other behind the plow
in this valley, each of us
pressing to our chests a loaf of bread
and a jug of milk…. The river is low
this time of year and the bedstones’ blackness
marks its lack
of depth. A shopping cart
lies on its side in center stream
gathering branches, detritus, silt,
forcing the already weak current to part for it,
dividing it, but even so diminished
it’s glad to be going,
glad to be gone.

***

Thankfully, that’s not exactly the North Adams of 2007, but those grimmest of grim times have left their mark in many ways, and we who are working to reach the broadest possible segment of the population with support for economic empowerment and opportunity would do well to remember those images and give credit for every step taken out of such depths.

Financial Education

Several asset-building thoughts are taking up space in my brain today, all having to do with financial education:

1. I’m eager to become familiar with the “Pathways to Prosperity” curriculum for IDA programs, which Berkshire Community Action Council acquired recently from the Center for Enterprise Development (CFED).  Sustaining our momentum will require having an initial curriculum ready for up to a dozen or so participants to begin gettin’ schooled on finance sometime in May.  Paula Consolini and her students at Williams will be testing out some elements of the curriculum in April, but we’ll still be taking a fairly big leap of faith.  I hope the parachute opens.

2. I subscribe via Bloglines to the Carnival of Debt Reduction, which sounds like some bizarro-world amusement park (come one, come all, and watch our amazing knife-thrower pop the credit card balloon without skewering the pretty lady), but I learned that the word carnival is now used to refer to a website that collects posts from various bloggers all writing on a single topic — a sort of anthology that has presumably been edited to make sure that it contains the best available content on a particular theme.  Every week or so I hear what a variety of bloggers are saying about debt reduction, which is a surprisingly popular topic in the blogosphere.  Many of these bloggers are chronicling their own struggles to get out of debt, and they find that writing about it helps give them discipline to abide by the sometimes draconian measures that are necessary to pay down debt and still make ends meet.  They all seem to have quite a few readers (and not just each other), so I’m assuming that many non-blogging debtors find that reading about other debtors helps give them discipline to improve their financial management.  These writers and readers are not necessarily poor; in many cases, they earn decent or even above-average salaries, but they have exercised bad judgment or had bad luck when it comes to money and have put themselves in a hole from which it is hard work to get out.  They’re not precisely the folks I’m thinking of for asset-building programs, but nevertheless there’s inspiration to be found in a group of people who have wound up in financial straits but are working hard to extricate themselves from those straits.  IDA program managers might want to tune into what these bloggers are sharing and decide if any of their financial education participants would find it beneficial to hear (week after week) how certain people are finding ways to cut back on spending and improve their net worth.  Debt reduction certainly plays a role in asset-building, and I’m sure that a number of people who qualify for IDA accounts on the basis of income are also struggling with some amount of credit card debt, car loans, etc.  I want to learn more about the interplay between IDA programs and debt reduction.

3. I got an email today about the annoyingly named Planet Orange Financial Literacy Awards from online bank ING Direct.  These are small grants ($200 – $1,000) for K-8 teachers who want to incorporate financial education into classroom activities and need some extra materials or books or equipment to do so.  I plan to pass that on to some local educators who might be interested.  Anything we can do to get people moving down an asset-building track early in life makes a lot of sense.

Foundations That Get It

I came across a post at the Washington Regional Association of Grantmakers tonight that was encouraging. Apparently, there’s a “trend” among leading foundations to be more adventuresome in their approaches to anti-poverty programs.  I happen to know that some of the mentioned foundations are interested in asset-building, although I didn’t see those strategies highlighted in the Washington Grantmakers piece.  And the latest issue of the Ford Foundation’s “Ford
Reports” highlights their increasing support for asset development programs including IDAs.

Who knew asset-building would be so trendy?  Pretty soon, every 12-year-old at Myspace will be blogging about their favorite IDA programs and the hottest new financial education techniques.

Hmmm, Del.icio.us

There must be many terrific internet apps I have yet to discover, but I’m proud of my normally luddite self for taking the plunge and starting to use del.icio.us. 

With a subscription to the “poverty” tag on del.icio.us, I can see what anti-poverty do-gooders like me are bookmarking on all corners of the web.  Most of the interest in poverty seems to be focused on international development: the Make Poverty History campaigns; Bono’s ONE Campaign; a variety of great microcredit initiatives like the brilliantly conceived Kiva.

I’m extremely encouraged by this enthusiasm for international anti-poverty efforts (I was a Peace Corps volunteer in the Ivory Coast, and was fortunate enough to be in Abidjan for the 1999 Microcredit Summit, where I managed to get my picture taken with the very deserving Nobel Peace Prize winner Mohammad Yunus of Grameen Bank).  While the momentum in favor of reducing poverty around the world is welcome and long overdue, I’d like to see a similarly sweeping enthusiasm and spirit of innovation be brought to the fight against poverty in America.  Not that there aren’t people doing great work; as I’ve said previously, the focus on asset-building strategies strikes me as offering great potential for transforming our anti-poverty efforts at home.  But the same Americans who are coming out in droves to be involved in the fight against poverty in Africa often lack a sense of urgency and outrage at the tragic persistence of poverty in our own country.

However, every once in a while I’ll get a link through the poverty tag on del.icio.us that points me to an unlikely group of people focused on addressing poverty here in America.  Today it was the Hunger, Homelessness and Poverty Task Force of the Social Responsibilities Round Table of the American Library Association.  This is a group of librarians who work “to ensure that libraries are accessible and useful to low-income citizens and to encourage a deeper understanding of poverty’s dimensions, its causes, and ways it can be ended.”  Book-lovers battling poverty: these are my kind of folks.  Recent posts on their site have included comments on William T. Vollman’s Poor People, information about phone service discounts for low-income people, and one post titled “How Can Librarians Repond to Poverty?”

Maybe I should get in touch with them and suggest that every poverty-minded librarian in the ALA should read Michael Sherraden’s Assets and the Poor and keep a copy on hand to be able to steer more readers to it, and they could be promoting the growth (or launch) of asset-building programs in each of their communities.  Why not?  It may take little coalition-building steps like that, one after another, to gradually turn a ripple of interest into a wave that sweeps skepticism and indifference out of the way.

Match of the Penguins

Okay, you caught me, I stole this not very ingenious post title from a card game I play with my 5-year-old daughter that involves closely comparing and contrasting some fashionably dressed penguins to note how their wardrobes differ ever so slightly.  (The game claims to be a “preposterous preponderance of penguin puffery” — and isn’t that exactly what the painfully penguin-parched game market was missing for so many years…)

I chose that title today mostly just to attract and disappoint one or two wayward penguin-lovers (remember, I’m just starting this thing and don’t have any readers yet so I’ll try any stunt), but also to give me a random segue to the word match.  The idea of a match for the savings of poor people is what got me interested in asset development, and thus in writing this blog.  (If you know all about asset development, you can skip the rest of this post, because I want to take a moment to explain, for those who may be uninitiated, this idea that gave me some hope for how our society could actually do something at last about the seemingly intractable poverty in our midst.) 

The logic is very simple (important ideas are often simple): 401k account-holders save more when there’s a company match; perhaps poor people (few of whom have access to any 401k account, much less a matched one) would save more, and have a better chance of clawing their way out of poverty, if their difficult efforts to save for the future were also matched (just to make my title look remotely relevant, picture penguins marching through the polar winter — that metaphor may suggest the discipline and sacrifice necessary to save on an extremely low income).  Michael Sherraden at the Center for Social Development at Washington University had that epiphany (well, not the goofy penguin part — I take full responsibility for that) and he wrote about it in his 1991 book, Assets for the Poor: A New American Welfare Policy.  He argued that asset development, as opposed to (or in addition to) income support, is what can give poor people a chance at financial security and real self-sufficiency. 

The beauty of the matched savings account is that the match can be used as not just an incentive to save but also a source of leverage about what to save for.  Matched savings accounts, dubbed individual development accounts (IDAs), allow low-income people who complete a required financial education program to use their savings and the matching funds (which are often a generous two or three times the amount saved by the individual, up to a certain limit) to invest in a productive asset such as a first home, higher education, or the capitalization of a micro-business; in other words, the kind of investment that has been shown to move many people permanently up the economic ladder, and though certainly not risk-free investments (which we are being reminded of with the current subprime mortgage crisis), they have proven to be more practical and effective than most other investment options for the poor.

IDAs aren’t a panacea, but the results so far (tracked by Sherraden and the terrific folks at the Center for Enterprise Development, CFED, who have been among the leading champions of asset development) indicate that IDAs are a tool that must be brought to scale in concert with expanded financial education and other asset-building policies.

When I started to learn about IDAs several years ago and realized that no asset development initiatives were in place in the Berkshires, my first response was to start bothering my local members of congress to get behind the legislation that CFED and others were advocating, including a proposed tax break for financial institutions that would agree to host and match the savings of low-income people in IDA accounts. I still recommend that folks do that, by the way — 2007 could be the year when the stars align for major new IDA support in congress, and CFED is leading another drive to help move the legislation through congress; everyone ought to contact their senators and representatives (with user-friendly messaging tools and stock messages that make you sound really smart, all provided by CFED) to encourage them to make that happen. 

But about a year ago I decided I could do more than just hope for congress to do the right thing, and I started talking to whoever would listen about the need for asset development strategies in the Berkshires.  People were surprisingly patient with my rants and raves, and soon we had a steering committee that agreed to develop an asset-building plan and seek the resources to implement it.  Key community partners are on board including the Berkshire Community Action Council (which had already been thinking along these lines), the Northern Berkshire Community Coalition, the local housing authority, students from the experiential education and community service programs at nearby Williams College (my alma mater — go Ephs!), and several banks (including the great hometown bank that has gotten my meager do-gooding business ever since we moved up here, Hoosac Bank). 

We managed to pick up some helpful planning grants over the past 6 months and folks have given a lot of volunteer time; now we have some small implementation grants pending and continue to seek other funds.  It feels like we have some momentum, which is partly why I thought it would be a good time to be blogging; as we actually get going on this initiative we’ll have lots of questions, make lots of mistakes, feel really proud one day, get really frustrated the next, etc., all of which will, I hope, generate some lively posts you find worth reading, whether you want to commisserate, lend us advice, borrow an idea or two, or just shake your head at our folly. 

With Apologies to Benjamin Franklin…

So I was thumbing through my Norton Anthology of Early American Literature recently (yes, I’ll come out and admit I’m that much of a literary geek) and I started reading Ben Franklin’s “The Way to Wealth,” a 1757 compilation of his most popular money-related proverbs, all channeling the Poor Richard persona that made him a rich man.

It got me thinking that Franklin would have been a helluva blogger, and that “Poor Richard” would be a nice title for the blog I was going to start.  If I want to record my ideas, questions and adventures in the world of financial education and matched savings as a strategy to help lift people out of poverty (in case you’re wondering, that is indeed what this blog is about), and if I aim to do so with some reasonably snappy writing, then who better to serve as the mascot and lend some literary gravitas to the undertaking than Ben Franklin, who penned such wonderful little sayings as “For age and want save while you may; no morning sun lasts a whole day” and “Beware of little expenses; a small leak will sink a great ship.”

You can imagine my disappointment when I tried to launch this blog and discovered that poorrichard.wordpress.com was already in use by a snappy-writing printshop owner/blogger in Macon, Georgia, who was obviously as inspired by Franklin’s success in the printing biz as I was by his success crafting aphorisms on frugality and finance.  Just 55 million bloggers in the world! Come on, what are the chances that anyone else would want to blog under the pseudonym Poor Richard? 

And with that revelation I gave up on my short-lived dream of being the 21st century’s Poor Richard. Yes, I suppose I could be Poor Rich or Poor Dick, both of which have an interesting ring, but I don’t want to cause confusion for the legions of Googlers who will soon be stampeding to find my blog.  Anyway, that other guy’s name actually is Richard.  How can I compete with that? But I look at it this way: I haven’t even completed a single post yet and already I can say my blog is on version 2.0.  

As you no doubt have realized, I retained a nod to Poor Richard with the title “Asset Almanac,” which also has the virtue (in my opinion) of looking eye-pleasingly odd when it’s written as a url address without a space between asset and almanac (assetalmanac.wordpress.com). And now, without further title-ruminating ado, I’m officially in the blogosphere.  In subsequent posts, you’ll learn what I’m on about with this idea of asset development, and you’ll discover whether I can actually find new things to say about it on a regular basis.