We’ve all heard of investing in companies, but what about investing in individual people? Perhaps, the idea isn’t as far-fetched as it sounds.
After all, that’s the model of the Albuquerque-based nonprofit Prosperity Works. Ona Porter, the president and CEO of the organization told Kevin Robinson-Avilia of the Albuquerque Journal, “We believe in the concept that income gets you by, but assets get you ahead. Asset building creates a safety net for people to leverage more opportunities. It seeds dreams.”
So who’s eligible to enroll? People who earn up to 200 percent of the federal poverty rate — that’s $42,000 for a family of four — can build assets in three ways: personal, financial, and social. (Those earning more than that aren’t disqualified completely; they can still take free classes.)
The financial portion of the program involves free financial literacy and management classes, as well as Individual Development Accounts, or IDAs, through which participants can save money and receive dollar-for-dollar matching funds (up to $4,000) encouraging them to save. Once their goal is met, the participant can tap into the money to pay for education, fund a business, or put a down payment on a home.
Participants also build personal assets through gaining additional education or certifications and develop social assets by learning what resources are available to them in their communities. Porter describes the program as, “a coach-based empowerment model that helps people build financial stability and create opportunities for themselves.”
The unique approach seems to be working. The U.S. Department of Health and Human Services (HHS) provides grants for programs running IDAs — $20 million worth in 2013. According to the HHS, since 1999, 84,000 people have participated in IDAs, saving more than $76 million in income.
One success story is Rick Noland, who used his matching funds to expand his bike rental business. He started The BikeSmith in 2010 with 16 bicycles. Now, he has his own 800-square-foot shop near Old Town Albuquerque and recently hired his first employee. Noland said that the Prosperity Works program was a life-changer. “It forced me to take a comprehensive look at all my finances, put things into perspective and create a new plan for the future. It helped me better control and manage things, and now, several years later, I’ve become essentially debt free.”