September 16, 2011; Source: National Public Radio | In light of reports that the wealth gap between Latinos and African-Americans on one side and whites and Asians on the other has widened, public agencies and nonprofits are working on mechanisms to fight poverty in a number of ways, one of which is to build the assets of lower-income people. National Public Radio reported this morning on a number of interesting public sector and nonprofit asset-building initiatives currently underway in the Bay Area:

  • The City of San Francisco gives all children entering kindergarten their own college savings accounts, capitalized with an initial $50 deposit ($100 for kids who get free or reduced price lunches), with additional contributions by parents matched by local nonprofits for up to $200. 
  • The San Francisco nonprofit EARN helps people buy homes by developing matched-savings accounts for down payments. This is essentially a home savings account, like an Individual Development Account to help people save toward a long-term asset like a home. EARN also provides financial counseling to people with these accounts, because some have no experience with handling money or buying homes.

Research suggests that people with IDAs have lower foreclosure rates, higher savings rates, and indications of improved education outcomes for their children.  But overall, given resource constraints among nonprofits and public agencies, the numbers of people with IDAs are still only a tiny proportion of the population that would benefit from these asset-building tools.

These tools seem to get support from liberals and conservatives (NPR cites Stuart Butler of the Heritage Foundation suggesting the creation of automatic savings accounts and 401(k)s rather than having people opt in). That said, they are also public/private partnerships that will require the participation of the anti-poverty wing of the nonprofit sector. Are any NPQ Newswire readers offering IDAs or HSAs at their nonprofits?  How are they working?  And how are you getting the money you need to access them?—Rick Cohen