Most people think of poverty as a lack of income. But for someone trying to move out of poverty, said Andrea Levere '83, president of the Corporation for Enterprise Development (CFED), "income is important but insufficient. Our focus is to built assets to get people out of poverty."
Levere spoke at Yale SOM on February 13 as a guest of the Economic Development Club. She is a frequent visitor to Yale: many of the second-year students in the room had heard her speak at Orientation in fall 2010. And in 2008, she was one of the first class of Donaldson Fellows, honored by Yale SOM for a career that embodies the school's mission to educate leaders for business and society.
At the beginning of her talk, Levere invited students to interrupt her with questions, and they obliged, stopping her frequently to ask her to dig further into a statistic or to explain the methods of a study. One student suggested a connection that Levere said she had never considered and wanted to look into. "Write it down," she said.
CFED, Levere said, is "a do tank rather than a think tank." The organization does research and works with other organizations and governments, pushing a variety of initiatives with the goal of helping low-income people build assets.
"Assets change the way you think about the future," she said. And they provide a safety net, preventing a family from slipping into poverty if income is interrupted. At the end of January, CFED made headlines when it released a report, 2012 Assets & Opportunity Scorecard, showing that 43% of the U.S. population lacks the liquid assets to stay out of poverty during a three-month interruption of income. "That's a statistic that has really resonated," she said, "It speaks to how financially insecure almost half of U.S. households are."
CFED's initiatives include efforts to encourage matched savings accounts, help people build and formalize small businesses, and expand ownership of affordable housing. "One of the things about this work is that there is no silver bullet," Levere said. "There is no one solution." Instead, CFED works on many fronts, collaborating on programs with practitioners on the ground and pushing municipal, state and federal governments to adopt policies that encourage asset building. For example, in many places, public benefit programs have asset limits, making low-income people ineligible if they accumulate too much savings. "What kind of a policy doesn't allow you buy a car to get to your job?" she asked.
The federal government provides nearly $400 billion a year in subsidies to asset building, including a tax savings on mortgages and investments, but more than 53% of these subsidies goes to the top 5% of earners, and less than 4% goes the bottom 60% of earners," Levere said. These policies get very little political attention, she added, because they are achieved almost entirely through the tax structure rather than through direct expenditure.
CFED is working on several programs to encourage families to create children's savings accounts. The results of CFED's research is striking, she said: children who know that they have a savings account are more likely to graduate from high school, even if the account has only a small amount in it, and children with college savings accounts are twice as likely to go to college.
February 20, 2012