Summary:  Families without wealth such as property, cash, and other investments, often get trapped on the bottom rungs of the economic ladder. Foundations can help develop asset building strategies that allow low-income Americans to save for home ownership, higher education, retirement, or a small business.

The Growing Interest in Asset Building

President Obama has called for a new era for the American economy that emphasizes savings and building assets rather than borrowing and spending. The growing field of asset building has evolved dramatically since the release of Michael Sherraden’s seminal book, Assets and the Poor in 1991. Sherraden proposed an asset-building tool called Individual Development Accounts and helped seed a movement that has sparked the interest of foundations for many reasons:

Increasing assets may help lift more families out of poverty. Research shows that increasing income for low-income families does not always increase generational wealth or reduce poverty. In The Color of Wealth: The Story Behind the U.S. Racial Wealth Divide, authors Meizhu Lui, Barbara Robles, and Betsy Leondar Wright, reveal that public policies that have promoted asset building have helped dramatically increase wealth among whites. Unfortunately, low-income communities have not benefitted equally from these policies.

Strength-based approaches to helping families work better. The old paradigm of lifting people out poverty has shifted from focusing on remediating the deficits in families to focusing on their strengths. Self-help approaches also appeal more to the public and policymakers. Many asset building strategies promote personal responsibility. Individual Development Accounts, for example, link education and training programs with incentives to save.

Market-based approaches offer new solutions. Programs that harness the power of markets to offer cost-effective resources for needy families promise to reach thousands more people than the government or the nonprofit sector alone. The country is entering a new era of microenterprise, small business development, and worker-owned businesses.

Funding Opportunities That Help Working Families

Foundations that focus on issues of education, workforce development, health, housing, and community development can help low-income families by supporting asset development approaches.

Expand Access to Mainstream Financial Services. Support organizations that teach people how to use financial services and resolve credit problems

Increase Savings Opportunities. Promote universal retirement savings accounts, increasing savings for post-secondary education, and flexible medical savings accounts.

Increase Investment Opportunities in Homes and Businesses. Support the development of shared ownership businesses such as worker owned cooperatives and employee stock ownership plans. Encourage shared ownership housing models such as cooperative housing, community land trusts, deed restricted home ownership and shared appreciation mortgages

Preserve Existing Assets. Support programs that keep homeowners in their homes. Invest in consumer advocacy campaigns that promote responsible lending practices among banks and credit card companies and propose safeguards to protect pensions. Support advocacy and service programs that prevent and reduce medical debt

Lessons Learned: Bridging the Service and Advocacy Divide

GMA Foundations has learned that supporting asset building approaches requires funders to be effective bridge builders and partners. Most asset building policy solutions have been developed by coalitions of organizations that provide direct services while also campaigning to shape public policy. Finally, asset building requires a long-term view. Policy change and program outcomes are seldom linear and require a long-term approach.

For More Information

Asset Funders is a network of foundations supporting policy, programs and strategies enabling low-wealth individuals to accumulate assets and build their net worth. is a project of the New America Foundation is a nonprofit, nonpartisan public policy institute that invests in new thinkers and new ideas to address the next generation of challenges facing the United States.

– Prentice Zinn

Prentice is a managing partner at GMA Foundations