Case Study: Community Investment Trust
Across the country, lower-income Americans face common barriers to building personal wealth. Mercy Corps’ domestic economic development arm examined these barriers, which include insufficient experience with money management and a lack of financial products suited to people’s means and desires. These conditions prevent an ever-growing number of families from building financial resilience, which leaves them vulnerable to even small financial setbacks. Unexpected expenses can become calamities that exact a high cost upon families – and upon the resources of social safety net programs. For over a decade, one in four people in the nation are susceptible to “asset poverty,” an economic and social condition that is more persistent and prevalent over the past decade than income poverty. A household is asset poor when it lacks resources sufficient to provide for its family members’ basic needs for a period of three months. Renters, single parents and minority populations make up a disproportionate share of asset poor households. The number of asset-poor households is increasing annually due to the intransigent challenges of intergenerational poverty, a culture of personal finance inaction, entrenched tax policies that favor debt and home ownership, and inadequate access to long-term and affordable real estate investments. With that situation in Portland and the nation, Mercy Corps took action. They used human-centered design principles to understand the motivations of low-income and renter populations and the impediments that hinder them from taking personal financial action, such as long-term investing, that would improve their lives. The Community Investment Trust (CIT) is the product that emerged from that research. It is both an inclusive wealth-building path for families and a community economic development strategy.