Bridging Economic Inequality

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Phoenix is caught in an economic chasm. On one side, the metro area is robust and diverse, bouncing back from the foreclosure crisis to attract new businesses and residents.  On the other, it suffers from one of the highest big-city poverty rates in the country, leaving tens of thousands of people struggling to pay the rent, put gas in the car and feed their children.
The simple fact is that too many families at the bottom of the economic ladder can’t pull themselves up no matter how hard they work. It is a problem that not only holds back disadvantaged areas of the Valley. It also chips away at our overall economic energy and potential for growth.
But what if we could move the needle on economic mobility?  What if we could dispel that sense that the quality of life you are born to determines your opportunities in life?
New research points toward one way to do that. A study released last week looked at the outcomes of 40,000 low-income people who sought help through Financial Opportunity Centers (FOCs), a network of programs embedded in 76 local nonprofits around the country. (The Mesa nonprofit A New Leaf is opening an FOC program this spring.)
The study found those who accessed a bundle of coordinated services supported by intensive, long-term financial coaching were able to significantly improve their employment outlook, their net incomes and their credit scores, among other indicators.
Think of it as high-impact financial planning—not for those with assets to invest but for those without them.
Does that sound counterintuitive—to focus on money management for people whose expenses have long outstripped their incomes? In fact, it makes quite a bit of sense when you see it in action. This approach helped a homeless single mother in Indianapolis turn her life around after bouncing back and forth from housing to shelters to streets. Now, several years later, she has an administrative job at a law firm, has purchased a home, has her young kids in a good school and has a little money in the bank. She has worked hard to build a more stable future—and recover from the kind of poverty most of us can’t even imagine.
This is not an isolated story. The data tells us that among the people most deeply involved in financial coaching and employment services, 74 percent find jobs, 78 percent maintain that employment over time and 76 percent improve their net incomes.
Gains like those are what help people break the cycle of poverty. An improving local economy can set the stage. But it’s not enough on its own. We must give people the tools they need to succeed.
Michelle Sullivan is president of The Caterpillar Foundation. Terry Benelli is executive director of the Local Initiatives Support Corporation’s Phoenix program. The two organizations are working with A New Leaf to open a new Financial Opportunity Center in Mesa.[/vc_column_text][/vc_column][/vc_row]

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