Tackling Poverty One Asset at a Time

City Partners with Credit Union to Help Low-Income People

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Michelle Becwar is Lead Education Impact Architect for Dupaco Community Credit Union in Dubuque, Iowa.

Andrea Helgager is coordinator of the city of Dubuque (Iowa) Circles Initiative.

Posted: Wednesday, November 2, 2016 3:47 pm

Generational systemic poverty doesn't just affect individuals and families. It affects entire communities. So it makes sense that individuals, families, and communities combine resources to resolve poverty, together.

Two organizations in Dubuque, Iowa, are involved in an innovative national movement that engages individuals and communities to resolve poverty. One of these is the Circles Initiative, a networking model for under-resourced individuals and families to address the barriers in their lives and create a supported vision for their future.

Locally, the Circles Initiative operates under the umbrella of the city of Dubuque. The other partner, Dupaco Community Credit Union, is a non-profit financial institution that serves many low-income individuals. Together the partnership features an education and support program designed to help individuals and families move from poverty into future-looking financial security.

Andrea Helgager and Michelle Becwar represent Dubuque Circles Initiative and Dupaco, respectively. Helgager is a Circles coach. "Sometimes even the most motivated individuals hit barriers," Helgager said.

The Circles Initiative connects volunteers and community leaders to families wanting to make the journey out of poverty. Volunteers known as allies help families break the cycle of poverty by sharing their time, friendship and support. There are barriers that can keep even the most motivated from achieving prosperity, but Circles works to expand opportunity and support for families as they create their own paths to stability.

According to Helgager, "Circles encourages growth from people of all financial classes and engages the community as a whole. Circles connects families working to get out of poverty with community resources in realms such as faith based organizations, government and health care."

Helgager has a professional background in non-profit work and life coaching. She describes the philosophy behind the Circles Initiative. "Families don't always have tools they need to break down barriers. Circles expands opportunities and creates a paths to stability."

That’s why the program matches a participant with a "middle class ally" who walks with them. "Poverty is isolating and complex. This gives them knowledge and resources to break down systemic barriers. If you don't know how to utilize tools, you are isolated." For example, each participant starts a bank account, and an ally works with them to understand the system.

Becwar has a background in business and marketing, and is lead education impact architect with Dupaco Community Credit Union. Dupaco is a full-service financial cooperative headquartered in Dubuque. It serves residents of eastern Iowa, southwest Wisconsin and northwest Illinois. A credit union is, by definition, a not-for-profit and member-owned financial cooperative, "people helping people," Becwar said. Dupaco's goal is to make its members financially stable. In a credit union, profits are invested back for members in terms of rates, fees, and services. Dupaco is a low income credit union, as designated by the National Credit Union Association. This means that more than half of its clients live in low income areas.

"The goal is to bring these areas up to stability," Becwar said. One way is through partnerships with groups like the Circles Initiative.

Both Helgager and Becwar approach breaking the cycle of poverty by understanding people's circumstances. In order to solve a problem, it is important to define its terms. The Circles Initiative defines poverty as the extent to which a family does without resources. Resources are also described as assets. Becwar explains that asset building is an anti-poverty strategy. It contributes economically, socially, and psychologically to family and community well-being. Asset building allows people to look to a long term future, rather than reacting to short term problems, only.

There are three legs to the asset building stool: economics, financial education, and access to financial resources. Income alone doesn't move people out of poverty, but income plus assets moves people toward a financially sustainable future, Becwar said.

She itemized these three asset categories and the benefits of each. Economic assets refer to whether a family has a stable, affordable home, has access to a vehicle, is able to pursue an education, and might have the capability of starting a microenterprise or a small business. "It is not enough to move people out of poverty, people also need a financially sustainable future," she said.

Home ownership brings stability to families, and neighborhoods. Having a vehicle expands employment opportunities if people are not dependent on public transportation. It also helps them deal with emergencies. Small businesses, especially in low employment areas, can also lead to jobs for others. Education helps individuals and their children with better job opportunities and higher income. Becwar said that children of families with these assets are more likely to graduate from college, which becomes a generational benefit.

Other benefits of these economic assets are better health, because poverty causes psychological stress, as well as poor nutrition because low asset families have fewer food resources in their neighborhoods. Child well-being is also improved with assets: healthy children can focus better on their school work, often leading to improved self-esteem and better behavior. Children who feel more rooted in the community may contribute to better neighborhood stability. All of these traits are the result of being able to look into the future at their plans for life.

The asset of financial education means knowledge, skills and access to financial resources. Becwar noted that people who inherit money have assets six times larger than those who don't. Further, African American families are five times less likely to receive inheritance, which often keeps these families in generational poverty.

"Knowledge plus skills plus access to resources equals financial capability," Becwar said. That capability can help lead to behavior change especially around money management. "We don't always do what we know we should, at all income levels. We tend to emphasize wants versus needs, but this is something we can learn not to do."

As a non-profit institution, Dupaco works with all of its members on financial education, not just those in its partnership program with Circles. Becwar said the credit union teaches members how to start a savings account, how to budget and cut back on spending. They also teach about credit and what it impacts, from getting a job to renting a home. The asset of financial education has community benefits, Becwar said, including a better educated workforce, increased spending power, better health, decreased public assistance and more engaged citizenry.

Having access to financial resources is also known as "getting banked," Becwar said. People who do not trust the banking system or who have not had a reliable way to manage their income do not necessarily know how to navigate the process of a savings or checking account. That makes them vulnerable to predatory practices such as high-fee check cashing businesses which might drive them deeper into the cycle of debt.

The first step is for a Circles program participant to start a savings account. The savings account isn't for some vague future but for a specific asset the individual has determined would help move them out of poverty, such as a home, a car, education, or starting a small business. The participant may take up to two years to save the amount required for the matching fund. In this case, the Circles participant may save up to $2,000. That money will then be matched by both Dupaco, and by Circles, through its own fundraising that does not tap into taxpayer money. In this way, the participant can have a total of $6,000 to put toward the asset they'd been striving toward.

"The goal is asset ownership and financial capability, to bridge the gap between knowing and doing," Becwar said. "Financial habits take time to create."

There are guidelines that people must meet to participate in the partnership's money match IDA program. They need to be "low income" meaning 200 percent of the poverty level. They need to have an earned income, and net assets of less than $10,000, excluding home or automobile. People can use the funds to buy a home, to finance an education, whatever it might be to build assets. Additionally, financial education is an essential part of program.

Dupaco administers the program, provides the financial education and counseling. Dubuque Circles provides participant referrals from its program, conducts personal and financial coaching, and contributes matching funds. Together, the partnership measures success by participant outcomes: How much are they saving; Are they saving consistently; Are they reaching goals; Are they attaining assets; How comfortable are they managing money, saving, budgeting and reaching out to resources.

The ultimate impact of this program is that individuals learn to think long term. "This is not the norm for everybody, especially low income individuals," Helgager said. "This program will help us end poverty in Dubuque. It can lead to sustainable benefits for individuals, communities and institutions."

Becwar said Dupaco is considering how to broaden its involvement in IDA partnerships in other areas where it operates. She advises other institutions with interests in forming similar partnerships to "know what it is you are looking to get out of it and how you want to reinvest into the community. We can put a lot of our resources into this because it's very mission-aligned. We hope to make this scalable for our members in other communities."

Julianne Couch is the author of The Small Town Midwest: Resilience and Hope in the Twenty-first Century.

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