How are rural families building assets

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How are rural families building assets?

• Headline They are struggling to get by, having
  difficulty getting ahead

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Big caveat

• When youve seen one rural community,
• youve seen one rural community
• Amenity rich areas
• Declining resource-dependent areas
• Chronically poor areas

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Why Do Assets Matter?

• Financial shock absorber
• Getting by ?getting ahead
• Riding the tide ? raising the tide

Earn It Keep It Grow It
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One-third of rural families have low income,
especially those with children

• More than 2/3 of single parent families
• 1/2 of families with young children
• Rural child poverty increased in 41 states
  between 2000 2005

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Place and poverty
Poverty by rural urban continuum code
Rural
Source USDA Economic Research Service
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Race, Place and Poverty
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Earning ItAvailable Jobs Pay Low Wages

• ¼ rural jobs would not lift a family of 4 out of
  poverty if full year/full time
• 42 rural jobs are low-skill and vulnerable to
  dislocation
• 84 consider lack of job opportunities a serious
  problem
• 73 would advise teen to move away for better
  opportunity

Among 6500 randomly selected rural residents
surveyed by the Carsey Institute
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Helping Families Earn It

• Address low educational attainment (Lumina)
• Build career-ladders in high-demand sectors (West
  Central Initiative, Southern Good Faith Fund)
• Strengthen workforce intermediaries new
  National Fund for Workforce Solutions seeking
  rural sites/funders (Ford, Casey, Hitachi, COF)
• Use PRIs to help increase/improve jobs (Heron,
  NWAF, Ford, Casey)

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Keeping ItIncome vs. Expenses
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High cost of being rural/poor

• Low income rural residents pay 10 - 25 more for
  food
• Financial services The hole in the bottom of
  the bucket
• High-cost, exploitive services fill the void left
  by absence of mainstream financial services
• Higher mortgage rates and predatory lending
  practices Payday lending Check cashing Car
  title loans rent-to-own refund-anticipation-loan
  s

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Closing the Gap

• 25 hold multiple jobs
• 50 do odd jobs and self-provisioning (including
  microenterprise)
• Going without necessities, doubling up
• ½ of bankruptcies are due to illness or medical
  bills
• Public benefits
• 10 rely on Food Stamps (vs. 7 urban)
• 32 of rural children rely on SCHIP or Medicaid
  (vs. 26 urban)

From Carsey Institute survey
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EITC Really Big Gap Closer

• Rewards work, boosts income
• Claimed by 18 rural families as many as 25 or
  more of eligible workers dont claim.
• Average rural refund /- 1700
• Families and communities benefit Generates as
  much economic activity in Iowa as the hospitality
  industry
• Lots of philanthropic activity outreach, tax
  prep policy
• EITC Funders Network will convene interested
  rural funders in December (WKKF and
  AECF-sponsored).
• Native Financial Education Coalition (Oweesta,
  NEFE)
• SFAI Nonpartisan state policy work, 29 states
  (Casey, Mott, Ford, OSI, PWF, Knight)

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Growing It

• The Pathway to Building Assets

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Multiple goals Home, business, car, reduce
debt, savings, retirement
Assessment, Coaching Financial Education
(continuous appropriate to each stage)
Policy and market forces
Asset preservation Insurance, foreclosure
prevention
Long term savings/investments IDAs, homebuyer
assistance, mortgages, biz loans, 529 accounts
Short-term/emergency savings credit Savings
accounts, access to emergency loans, car
financing, debt consolidation, credit repair
Transactional financial services Checking
accounts, online bill pay, prepaid debit cards
Referral from multiple sources
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Savings would provide a cushion, but

• ¼ US households does not own enough to support
  itself at the poverty line for three months
• ¼ female-headed households and 1/3
  minority-headed households has zero or negative
  net worth

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Matched Savings (IDAs)

• Good but not as rural-friendly as possible
• Federal program limits permitted uses to home,
  business, education.
• State and local programs offer more flexibility,
  especially car purchase, equipment purchase.
• Philanthropy, public sector, private sector
  collaboration (national, regional, corporate,
  community foundations, private donors, United
  Way, financial institutions)

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Homeownership

• Pathway to upward mobility is more complicated
  for rural families
• 82 own their homes, but
• Homes are worth only ½ as much as urban homes
• Home equity is 40 less than urban homeowners
• Self-help housing is an important exception

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• Special issues in manufactured housing
• 12 of rural homes fastest growing affordable
  housing
• Vulnerable to predatory financing
• Coops appreciate in value
• Financing and policy initiatives underway (Ford
  with CFED, Meridith Institute)

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Business Ownership

• Small business can be a pathway to upward
  mobility.
• 17 of household wealth is business equity
  (second only to home equity)
• Philanthropy and public sector help grow
  entrepreneurs
• Supportive infrastructure/business climate (many
  community foundations, McKnight Foundations
  MIFs,)
• Access to capital (PRIs)
• Research and best practices (WKKF, Heron,
  National Rural Funders Collaborative)

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For more information on rural family economic
success, visitwww.aecf.org