Megan O'Neil, Access to Assets Project Coordinator

Roundtable Discussion Participants: Jeanne Argoff, Disability Funders Network; Steve Mendelsohn, Law, Health Policy & Disability Center, University of Iowa College of Law; and Deborah Kaplan, Kathy Martinez, Kevin Dalcamo, and Megan O'Neil, World Institute on Disability

People with disabilities experience some of the highest levels of poverty in the world. Recent World Bank estimates show that people with disabilities may account for as many as one in five of the world's poorestⁱ. In the United States, according to the 1995 Current Population Survey, 39.7% of working-age persons with disabilities live in poverty. Furthermore, one third (34%) of adults with disabilities live in households with total income of $15,000 or lessⁱⁱ. Disability frequently results in limited access to education and employment and leads to economic and social exclusion. Poor people with disabilities are caught in a vicious cycle of poverty and disability, each being both a cause and a consequence of the otherⁱⁱⁱ

Considerable attention has been paid to the value that asset building programs can play in the lives of people living in poverty. What has been neglected is the reciprocal benefit to financial institutions that sponsor asset building programs. The financial education component required of most asset building programs ensures a more fiscally well-informed population. This assists not only the consumer, but also financial institutions that hope to increase advanced service participation (loans, mortgages, investment possibilities) by people of lower socio-economic strata. This is one of the most promising aspects of asset building programs: transforming the lives of individuals who long to escape the cycle of poverty by providing the means to long-term economic stability.

Asset building programs hold the potential to alter the cycle. However, many people with disabilities are slipping through the cracks of poverty reduction measures. There exists a need to not only increase participation rates, but also serve better people with disabilities currently enrolled in programs. To discuss the possibilities of enhanced relations between corporate sponsors, asset building programs, and the disability community, a roundtable discussion including Jeanne Argoff, Disability Funders Network; Steve Mendelsohn, Law, Health Policy & Disability Center, University of Iowa College of Law; and Deborah Kaplan, Kathy Martinez, Kevin Dalcamo, and Megan O'Neil, World Institute on Disability was held on June 30, 2004. While this article will not attempt to detail all the reasons for inadequate disability participation and service in asset building programs, our discussion did unearth some of the causes as well as propose some solutions and potential areas in need of further exploration.

Disability Stereotypes

A major obstacle is a shared misunderstanding about the ability to build assets. This misconception from financial institutions, asset building program administrators, as well as people with disabilities themselves is that they are unwilling and/or unable to save. People with disabilities, especially those on public benefits with asset restrictions, believe that building assets can jeopardize their income, health insurance, and food stamps. Asset building tools, like Individual Development Accounts (IDAs), sponsored by the Assets for Independence Act (AFIA) and those receiving state funding from Temporary Aid for Needy Families (TANF) are exempt from asset tests that normally apply to people on Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI). In fact, IDAs are currently the only way a person with a disability on SSI can save to buy a home (See the March edition of EQUITY for more on the intersection between benefits and IDA participation).

One of the best reasons IDAs hold so much promise for people with disabilities is that they are neither a "government program" nor the exclusive domain of the private sector. The existence of combined support may appeal to funders who are generally opposed to government programs and as well as to those who believe government should be doing more to help low income people. This is particularly relevant for the disability population, which suffers from the misperception that they are solely reliant on government benefits for survival.

Barriers to Pursuing the Disability Population in Asset Building Programs

Another pervasive obstacle to participation in asset building programs by people with disabilities concerns the rate of employment. According to the US Census Bureau, the unemployed rate for people with disabilities is 10.2%, two and one half times the 4% rate for those without disabilities^iv. On one hand, as long as asset building programs contain an earned income requirement that does not allow disability benefits (SSI or SSDI) to be used, then the high unemployment rate is a barrier to participation. However, on the other hand, workers with disabilities earn 20% less per hour than those without disabilities^v. While these unemployment and poverty rates are high, the statistics only prove that an ample market exists for poverty reduction programs and for the sponsoring financial institutions.

Yet, despite these numbers, people with disabilities have shown the ability to not only save, but also to become valuable customers at financial institutions. The government sponsored Alternative Financing Project (AFP) provides low interest loans for people with disabilities who need to buy assistive technology but were unable to access traditional funding sources. The program has been an unqualified success. In a report produced by the University of Illinois at Chicago, Department of Occupational Therapy and the Rehabilitation Engineering and Assistive Technology Society of North America (RESNA), 75% of loan payments and conditions were currently being met, with only 1% of loans in default and another 1% having problems meeting payment requirements^vi.

According to Deb Kazmerzak, State Public Policy Group Vice President for Programs and Services for the IowaAble program under the Alternative Financing Project (AFP) grant, this program demonstrates that when given the opportunity, people with disabilities are responsible banking customers. She also insists that banks and other non-traditional financial institutions have been incredibly receptive to AFP, which strongly suggests that a potentially valuable market sector has been untapped by financial institutions. Asset building programs offer a tailor-made means to introduce a new sector of the population-people with disabilities- into the financial mainstream.

Incentives for Inclusion

The most obvious incentive for financial institutions to include people with disabilities in asset building programs is a matter of sheer numbers. The disability community, comprising nearly one-fifth of the American population, is an untapped market worth over $220 billion in collective spending power^vii. According to the U.S. Census Bureau, between 1990 and 2000 the number of Americans with disabilities increased 25 percent, outpacing any other subgroup of the U.S. population. Of the nearly 70 million families in the United States, more than 20 million families have at least one member with a disability. Marketing programs aimed at people with disabilities can reach as many as four out of every 10 consumers^viii.

Yet, despite the growing population of people with disabilities, as noted above, poverty remains rampant. This is the reason that the F.B. Heron Foundation insists that disabled people be served by their poverty reduction grantees. The F.B. Heron Foundation is a private, grantmaking institution dedicated to supporting organizations with a track record of building wealth within low-income communities. Mary Jo Mullen, Heron's Vice President of Programs, states that Heron prioritizes making wealth creation strategies (including asset building programs) inclusive for people with disabilities. For Mullen, the connection is natural, and as long as poverty and disability are inextricably linked, Heron remains committed to inclusion efforts.

Future Developments

There were several recommendations made by the panel for further study. One of the potential connections raised by Jeanne Argoff was the ability for financial institutions to develop ties with disability benefits planners. The Social Security Administration (SSA) established a grant program called Benefits Planning, Assistance and Outreach (BPAO), which was authorized by the Ticket to Work and Work Incentives Improvement Act of 1999. In order to contact a local BPAO, see SSA's web site called "The Work Site" at: http://www.ssa.gov/work/ServiceProviders/BPAODirectory.html
While BPAOs are extremely knowledgeable on a variety of benefits issues, they remain untrained in areas of financial literacy and asset building techniques. Further training and investigation of options for integrating financial institutions and benefits planning is needed.

Another area in need of research is how disability can play a role in tax credits that apply to financial institutions sponsoring asset building programs. A wide variety of Federal and state tax credits exist for financial institutions (non-profits are ineligible for tax credits). The Center for Social Development at Washington University in St. Louis produced a Policy Report- Tax Credits and IDA Programs- in July 2003 that details numerous opportunities that are available. This report states that IDA tax credit legislation offers several benefits for states. First, it offers an incentive to build statewide IDA coalitions, leveraging efforts in multiple regions. Second, it creates more sustainable funding streams for matching dollars for IDA accountholders. Third, tax credits can provide administrative dollars to support the management of IDA programs. Lastly, tax credits allow major corporations and individual taxpayers (with tax liabilities) to be socially responsible by directing their charitable giving to non-profit organizations that provide low-income individuals opportunities for economic improvement^ix. See EQUITY's August Tip of the Month for more information on the Savings for Working Families Act (SWFA) IDA tax credit.

Conclusion

As the field of asset building continues to gain momentum, ensuring that these poverty reduction tools are inclusive of individuals with disabilities is the primary goal of the World Institute on Disability's Access to Assets program. While considerable progress has been made, one topic that has been neglected is the financial incentives of inclusion. According to a report produced by the University of North Carolina's Kenan-Flagler Business School, 86% of IDA programs sponsored by financial institutions cite community development as their motivation for sponsorship. They want to be known for their community support - helping citizens develop economic self-sufficiency and to establish or strengthen ties to their communities. Forty-five percent of these institutions also cite investing in new market segments as a stimulator. Financial institutions understand that asset building programs enhance revenue potential, opportunities for cross-market mortgages, opening other lines of credit, and that graduates of asset building programs become more knowledgeable and comfortable in the financial mainstream^x.

Financial institutions, such as banks and credit unions, understand that involvement in asset building programs is in their best interest. People with disabilities, 54 million Americans, represent an untapped market that can no longer be ignored. Asset building programs like IDAs, offer a golden opportunity to alter the cycle of poverty that continues to plague people with disabilities. Heidi Van Arnem, founder of the disability website company iCan!, explained, "The quickest way to social change is through business and consumers both benefiting"^xi. The participants in the roundtable convened believe that inclusion of people with disabilities in asset building programs can prove to be advantageous to everyone involved.

ⁱ Ann Elwan, Poverty and Disability; a background paper for the World Development Report, World Bank, October 1999.

ⁱⁱ John M. McNeil, Employment, Earnings and Disability, 2000.

ⁱⁱⁱ Department of International Development (DFID). Disability, poverty, and development. February 2000. http://62.189.42.51/DFIDstage/Pubs/files/disability.pdf.

^iv US Census Bureau, March 2001, Current Population Survey.

^v Disability Watch, Volume 2, Disability Rights Advocates.

^vi University of Illinois at Chicago and RESNA. Alternative Financing Program for Assistive Technology Outcomes Survey, 2000-01. http://128.248.232.70/aftap/report/selectReport.asp

^vii National Organization on Disability, Economic Participation: Marketing to People with Disabilities. 2004. http://www.nod.org/economic/

^viii Kipp Cheng. What Marketers Should Know About People with Disabilities. May 2, 2002. http://www.nod.org/content.cfm?id=925

^ix Gene S. Gunn, Anupama Jacob, Melinda Lewis. Policy Report: Tax Credits and IDA Programs. Center for Social Development, Washington University in St. Louis, George Warren Brown School of Social Work. July 2003. http://gwbweb.wustl.edu/csd/Publications/2003/PolicyReport-TaxCredit.pdf

^x Center for Community Capitalism. Finacial Institutions and Individual Development Accounts: Results of a National Survey. The Frank Hawkins Kenan Institute of Private Enterprise, The University of North Carolina at Chapel Hill. October 2003. http://www.kenan-flagler.unc.edu/assets/document/CC_Financial_Institutions_and_IDAs.pdf

^xi Robert Rudney and Meg O'Connell. Marketing the Disability Market: iCan!, But Can It?. National Organization on Disability. June 25, 2003. http://www.nod.org/content.cfm?id=1398