Poverty: It’s not just an issue of income

1. Poverty: It’s not just an issue of income • a Asset-Building in Canada

2. Assets Matter – SEDI’s Asset-Building Agenda Our Vision: SEDI envisions a society where there is an end to barriers that prevent individuals from realizing their full economic and human potential and where social, cultural and economic supports are available to enable people to learn, take risks, invest wisely and participate in the economic mainstream.

3. Assets Matter – SEDI’s Asset-Building Agenda continued… Core Values: • SEDI is innovative – pioneering in our development of new socio-economic ideas and creative in implementing existing programs. • SEDI has a client focus – focusing on client needs for everything from voicemail to vision. • SEDI is a catalyst for change – strengthening the capacity of individuals, organizations, communities and national to effect positive socio-economic change. • SEDI is inclusive – upholding diversity, respecting integrity in all relationships with internal and external organizational stakeholders.

4. Assets Matter – SEDI’s Asset-Building Agenda Policy Areas • Asset-Building • Self-Employment • Youth-at-Risk • Organizational Capacity Building

5. Assets Matter – SEDI’s Asset-Building Agenda Asset-Building Our Goal: To create an enabled environment for savings and asset-building by low-income Canadians.

6. Assets Matter – SEDI’s Asset-Building Agenda Income-Poverty • As many as 10 to 14% of Canadians, and 27 to 30% of Canadian children are currently living in poverty; the gap between Canada’s rich and poor appears to be growing. • Social policy debate, research and action in Canada have long recognized the need to provide a minimum level of income to meet basic consumption needs. • Array of targeted and universal measures to provide income support in cases of temporary unemployment, disability, work-related injury or illness, retirement and parental leave.

7. Assets Matter – SEDI’s Asset-Building Agenda Key Concepts • Economic security is not just about income it is also about assets. • Assets exert effects that income does not. (i.e. cushioning against unpredicted adversity or planned risks, enhance social capital and inclusion, build sustainable capacity with intergenerational effects). • Assets and income are complementary and interrelated.Good asset-building policy also requires good income security policy.

8. Assets Matter – SEDI’s Asset-Building Agenda Asset-Poverty • Significant Asset Inequity: 50% of Canadian families have almost no net assets; Savings and assets increase substantially from low-income to middle and upper-income; Widening gap between asset-rich and asset-poor. • Income-Poor also tend to be Asset-Poor: Less likely to have higher education, own a home, have retirement savings, savings for their children’s education. • Significant barriers and disincentives to asset-building among low income earners (assets in means tests, benefit claw-backs). • Governments invest millions annually to encourage asset-building among middle and higher income earners. (i.e.) RRSPs, RESPs, etc.

9. Assets Matter – SEDI’s Asset-Building Agenda The Government of Canada currently invests: • $15.4 billion to support private retirement savings in RRSPs and Registered Pension Plans through deferred tax income and allows these savings to be used for adult learning and downpayments for first-time homebuyers. • Nearly $1 billion to support savings for children’s post-secondary education by matching the savings of contributing relatives and friends with ¢20 for every $1 saved. • $2.4 billion in foregone taxes on capital gains. • $415 million in deductions for employee stock options. Note: All figures are in Canadian dollars. All figures are for the fiscal year 2001-2002 and are from Government of Canada sources

10. Assets Matter – SEDI’s Asset-Building Agenda The Asset-Building Field United States: • Federal and state legislation supports Individual Development Accounts • Downpayments on the American Dream Demonstration • Savings for Working Families Act • See: www.cfed.org or www.idanetwork.org United Kingdom: • Child Trust Fund • See: www.ippr.org

11. Assets Matter – SEDI’s Asset-Building Agenda Current Initiatives • Largest demonstration, worldwide, of Individual Development Accounts (IDAs) -- one approach to program model for asset-building. • Thousands of low-income participants across 10 sites, saving to invest in their own life-long learning. Matched accounts generating up to $18 million in productive assets. • Innovative multi-sectoral partnership and a rigorous research and evaluation framework. Will generate important information for field in Canada and internationally.

12. Assets Matter – SEDI’s Asset-Building Agenda continued… As of May 2003: • more than 3,000 low income Canadians have enrolled • average monthly deposits are $55, totaling approx. $1 million and leveraging a further $3 million in matching grants • participants are predominantly young (77% are in their 20’s or 30’s), single with no dependants (47%), female (59%) and have some form of employment income (63%). • 83% of participants have a household income of less than $20,000, while at the same time 79% have at least some post-secondary education, if not a post-secondary degree. Source: Management Information System, internal data, SEDI

13. Assets Matter – SEDI’s Asset-Building Agenda Current Initiatives continued… • National consultation on applying IDA methodology to challenge of affordable housing. • Results very positive and support a broad approach including transitional housing, rental housing, home purchase and maintenance. • Proposal underway to launch a new national demonstration project.

14. Assets Matter – SEDI’s Asset-Building Agenda Current Initiatives continued… • Financial Literacy • Necessary condition for equitable participation in financial services sector (including basic banking services) and, in turn, asset-building. • Shift in delivery of income benefits via EFT – places onus of responsibility on governments to ensure access to, and understanding of, financial services. • Already a significant national commitment to literacy. National, multi-sectoral commitment to financial literacy required.

15. Assets Matter – SEDI’s Asset-Building Agenda 3 Year Policy Research Agenda • Develop and test asset-building applications such as children’s education, youth, aboriginal communities and homeownership. • Produce thoughtful and timely research and recommendations based on information from the learn$ave project on the interactions of asset-building programs and taxation, impacts of provincial social assistance programs and the experience of special need groups such as newcomers. • Stimulate dialogue on asset-building within Canada’s policy research community and support the development of a network of new investigators on asset-building and asset-based policies.

16. Assets Matter – SEDI’s Asset-Building Agenda 3 Year Policy Research Agendacontinued… • Develop a policy analysis matrix to evaluate the likely success of asset-building policy initiatives in Canada. • Conduct a comprehensive review of all Government of Canada and provincial programs and services to establish the first ever baseline for public expenditure and outcomes on asset development in Canada. • Provide thoughtful, timely and relevant policy research, analysis and advice on how an asset-building approach might enhance current federal initiatives in priority areas including: increasing life-long learning; increasing access to affordable housing and reducing poverty and child poverty in Canada.

17. Assets Matter – SEDI’s Asset-Building Agenda What else needs to be done? • More inclusive lexicon: “institutionalizing” assets and asset-poverty • Better data: On-going, regular research on asset-poverty in Canada • Broader debate: Involve multiple sectors, stakeholders and perspectives • More mechanisms: More IDA and IDA-like projects AND innovation • Policy response: start by removing barriers

18. Assets Matter – SEDI’s Asset-Building Agenda Social and Enterprise Development Innovations 1110 Finch Avenue West, Suite 406 Toronto, Ontario, Canada M3J 2T2 Ph: 416.665.2828 / Fax: 416.665.1661 Email: info@sedi.org www. .org