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Community Action Project of Tulsa County

Asset Acquisition Lifts Families Out of Poverty


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If meeting basic needs is the first priority of anti-poverty work, the Community Action Project of Tulsa County (CAP) believes the fundamental long-term objective is best achieved by initiatives that permanently lift families out of poverty. In this area, CAP is a trailblazer with a number of pioneering programs to help low-income families with children achieve economic self-sufficiency.

CAP's programs, which target the working poor, Include emergency social and medical assistance, early childhood education, affordable housing, credit access, tax assistance, Individual Development Accounts, welfare-to-work, and microenterprise support. CAP combines these direct services, which served nearly 18,000 households in 1998, with public education and advocacy efforts to advance public policies that support low-income families with children.


Established in 1974 through a grant from the Office of Economic Opportunity to assist migrant farmworkers who faced difficult working conditions, CAP has evolved into a multi-program agency that aims to strengthen families by giving them the tools to permanently build better lives. "A comprehensive approach to alleviating poverty includes both meeting basic needs and providing avenues out of poverty," says CAP Executive Director Steven Dow.
Two of CAP's initiatives stand out as exemplary model efforts: the Earned Income Tax Credit (EITC) and the Individual Development Account (IDA) matched savings programs. While the former utilizes an "income support" approach to poverty alleviation, the latter represents a novel, "asset-based" strategy. The programs complement one another and increase the likelihood that CAP can fulfill its ambitious mission.

Designed to boost income from low-wage work, the effectiveness of the federal EITC program has been diminished by the failure of many eligible low-wage workers to lay claim to the benefits they have earned. CAP's response was a broad-based public awareness campaign and an offer of free tax assistance to its clients. In the process, CAP has become the largest non-profit tax preparation service in the country - preparing more than 27,000 returns and generating nearly $30 million in federal tax refunds to its low-income clients over the past five years.

But the impact is illustrated best not by aggregate numbers, but by individual examples of how EITC refunds can change people's daily lives. Pamela Smith, a single mother of two, regularly missed work because of her car's chronic mechanical failures. In 1998, with a $3,200 EITC rebate, Smith solved her transportation problems and solidified her employment status by buying a used, but reliable, vehicle. "In the past I couldn't get financed because I didn't have enough for a good down payment. Thanks to my EITC for a down payment, I was able to obtain financing and payments I could afford," she says. CAP Executive Director Dow, explains: "The EITC is the nation's biggest and most successful anti-poverty government program. It lifts substantially more children out of poverty than any other government program or category of programs. When we help low-income families claim this benefit, we substantially increase their income and improve their lives."

At the same time, CAP believes income support and income maintenance strategies are not by themselves sufficient to help families escape poverty. In an attempt to move beyond income maintenance, CAP has pioneered the use of Individual Development Accounts (IDA). On the premise that individuals escape poverty through asset acquisition, not just income, the IDA program encourages regular savings to help participants acquire assets or enhance the value of assets they already possess. In the words of Washington University Professor Michael Sherraden, the intellectual father of IDAs: "Income may feed people's stomachs, but assets change their heads."

Often described as 401(k)s for the poor, IDAs offer incentives for low-income people to save a portion of their earned income by matching participants' personal savings with funds from private or public sources. Program participants also receive money management and financial literacy education. The savings and the match can only be used for one of several designated asset-building purposes - microenterprise, homeownership, education, and retirement planning. CAP matches participant savings at a rate of $2 for every $1 the participant saves for homeownership, or $1 for every $1 saved for other purposes. With more than 600 participants, CAP's IDA Program has become the largest in the country, and is widely regarded as a successful model for public-private partnerships to give families the opportunity to take themselves and their children out of poverty.

Consider Mike and Dawn Ferrill, IDA participants and parents of four who run a small appliance repair business, but whose income has remained below the poverty line. With their IDA savings, the Ferrill's bought a larger Yellow Pages ad, tools, and new uniforms to give their business a more professional look. As a result, Mike Ferrill says: "We've been able to triple our business."

Beyond the individual success stories, CAP sees a broader mission of public policy advocacy and public education to advance policies that enable poor Americans to permanently escape poverty. And, CAP's staff remains focused on an ultimate goal.

As Dow explains: "Our dream is that someday, we won't need to exist."