Policy Blog
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January 13, 2010
Pathways to Prosperity: The Policy Opportunity
"Parents [in poverty] aren't allowed time to be involved at their child's school -- that's something that needs to be integrated into a lifestyle of financial independence." -- Citizens League interview, August 2009
People impacted by poverty must help to design a better set of policies and practices to combat poverty. Moreover these policies can promote community and family wealth while simultaneously promoting the health and growth of the overall economy. And we believe there is bipartisan support for an approach to poverty that is based first on developing pathways to prosperity.
We are looking at specific practical opportunities to begin to change policies, resources, and incentives that govern access to prosperity in Minnesota. As another participant in the Pathways to Prosperity project put it, "Because of the shortness of the public process, the policies are, in turn, very short-sighted -- sustainability is not on the map. Cost-effectiveness and expediency are 'more important.'"
Some examples:
Asset Building through Prize-Linked Savings
The Citizens League has been in discussions with the nonprofit D2D (Doorways to Dreams) and the Minnesota Credit Union Network to explore the potential for "prize-linked savings" opportunities in Minnesota.
Research has disclosed a number of barriers to saving money, including the lack of childhood lessons about the importance of saving, feeling overwhelmed by life and getting by paycheck to paycheck, difficult and sometimes tragic prior experiences that can make goals for the seemingly distant future seem unattainable, and pressure within social networks to share any resources. It is perhaps not surprising that 38% of lower-income Americans surveyed said that winning the lottery was the most practical way to accumulate a large sum of money.
Based on the research and modeled after longstanding successful programs abroad, a "prize-linked savings" initiative was piloted in 2009 with Michigan credit unions. In seven months, more than 9,000 new accounts were created totaling over $4.5 million. Fifty-five percent of account-holders had not saved money regularly before; 44% had household income less than $40k and 16% under $20k; 39% had financial assets (excluding home equity) of less than $5,000; and 59% played the lottery in the prior 6 months.
Next: More examples to consider
Posted by Annie Levenson-Falk at January 13, 2010 11:34 AM