The Importance of Asset Development in Addressing Poverty

In general, poverty reduction strategies are typically categorized as income-focused or asset-focused.

Income-focused strategies for poverty alleviation have their origins in 20th century social policy. These strategies are geared to offering relief for emergent needs, and are often described as “emergency programs”. The purpose of such programs is to address basic needs. While important, these programs address the symptoms of poverty, and not the direct causes. Such programs do not give families or individuals an opportunity to change their circumstances; they simply help families to make ends meet.

Asset-focused poverty reduction strategies provide opportunities to build long-term wealth. Individuals and families with assets are more resilient, and can create sustained wealth to lift themselves from poverty or offer protection against economic decline. While assets allow families to remove themselves from the constant cycle of financial crisis, they also tend to promote a more positive and proactive orientation toward the future. Assets give opportunities for upward social mobility, allowing for more participation in the market economy (such as when buying a home, engaging in postsecondary education, or capitalizing a business).

While both strategies are important, existing poverty reduction methods are almost solely geared to income relief (food stamps and Temporary Assistance for Needy Families are examples). This gives families some relief in their day-to-day lives, but does little to help their financial situation long-term. Asset-building opportunities would break this cycle by providing opportunities for building wealth and embarking on a path of self-sufficiency.

RCIL helps individuals to identify, apply for, and access income assistance programs they are eligible to receive. This can be thought of as poverty management assistance – it may help an emergent situation, but only until the next crisis occurs. To break this cycle RCIL has developed and advocated for programs focused on asset building. This approach is more transformational, and provides real opportunities to move from poverty.

Fundamental policy changes are needed to change from a system that manages poverty to one that eradicates it. The current programs and systems in place can provide some opportunities, but are clearly not enough.
-Quinton