Interview with Ona Porter
Ona Porter believes in people: if you give them the right tools, they’ll thrive. She’s been an advocate and an educator in one form or another from Texas to the Caribbean and now in New Mexico. Her organization, Prosperity WORKS!, helps low-income families lift themselves out of poverty by saving to purchase an asset (a house, a college education, or a business). What these people have achieved is just incredible. Here’s Ona to tell the story…
Prosperity WORKS! designs and demonstrates high-impact, Out of Poverty and Ending Poverty strategies. Our vision for New Mexico is that everybody will have the opportunity, knowledge and relationships needed to achieve economic security and prosperity. We distinguish between Out of Poverty and Ending Poverty in this way:
An Out of Poverty strategy focuses on individuals or households, providing them with products and services that move them out of poverty.
In Ending Poverty, we work on policy and budget issues to effect systemic change.
We have a social justice framework that guides us and we work for structural change to increase opportunity for those who are least well-off politically, economically and socially. We do that by:
Focusing on root causes.
Striving for lasting systemic and institutional change.
We utilize policy advocacy, community engagement, litigation and communication as tactics. We work for what we do want instead of against what we don’t want. We have a belief that the opposite of poverty is not wealth, but rather opportunity and social justice.
Tools for Families and Individuals
We focus on developing assets, with the understanding that income gets you by, but assets get you ahead.
Individual Development Accounts
One of our products is matched savings accounts, called Individual Development Accounts. We provide these through the New Mexico Assets Consortium, a network of 30 organizations and 11 banks. Participants first complete 10 weeks of financial capability training, then they are eligible to save. When they reach their goal, we match them 4:1 for the purchase of a first home, to capitalize a small business, or for post-secondary education.
This strategy not only addresses household and individual needs, but is also a significant community economic development driver. In addition, it develops the capacity of our partner organizations to deliver a product they didn’t have in their tool chest.
Rather than taking the rough edges off of poverty by providing food or rental assistance, etc., this strategy actually moves people out of poverty in about 18 months.
1491 Low Income Families and Individuals | |
|---|---|
Homes purchased | 319 |
Students entered college | 512 |
New or expanded local businesses | 660 |
New jobs created by these businesses | 1250 |
Aggregated increase in income | $3 million/yr |
Success rate (retention of asset) | 90% |
Prosperity Kids
We have another product, Prosperity Kids, which is a child savings account initiative. We’ve just completed enrollment in our pilot program with 520 children between birth and 11 years old. We open these savings accounts with $100 and we match family money up to $200 a year for 10 years.
The parents participate in 10 weeks of child development and community engagement training, plus another training segment on financial capability. This also makes the parents eligible for an emergency savings account, which is opened with only $10. For most of these families, it’s the first time they’ve been banked, which reduces their costs.
Prosperity Kids | |
|---|---|
Families served | 40 |
Savings accumulated | $25,000 |
Months of operation | 15 |
We also incentivize those accounts. Through the training, we emphasize the important role they have as parents in the development of their children and we enhance that with skills and knowledge. Then we reinforce their efforts with incentives—deposits into their savings account for things they do to support healthy outcomes for their kids.
The parents also have a secured credit card attached to their account so they can build credit. People who have even a small amount of savings are financially and emotionally secure to a pretty high degree. But the secured credit card allows them to build credit and keeps them out of the hands of the predatory lenders, which are found on every street corner in New Mexico. With this credit card, essentially they’re borrowing their own money. So they have the opportunity to learn how to use the financial systems without negative consequences if they make a mistake.
Dr. Willy Elliott, at the University of Kansas, is our researcher and the guru on the relationship between assets and education. His data demonstrate that kids who have an account in their own name are four times more likely to matriculate into college after high school and 3.5 times more likely to complete college. The children in those studies only had $500 or less in savings. So we’re clearly not paying for college. But we are creating a college identity and a future orientation. Both parents and children are more highly engaged immediately. By third grade these kids are ahead of their peers in both language and math.
Opportunity Starts Here
We also have a program for single immigrant moms and their college-bound students, called Opportunity Starts Here. Both the mother and the child go through financial capability training together and then each of them gets a savings account with a low goal and a high match. These are very low income families, so we have a high match of 6:1. At the end of their savings period, each mom and child has enough savings for two years of post-secondary education in a community college or training program of their choice. The premise of our initiative is that 1) moms will do things for their kids that they won’t do for themselves and 2) the mother’s educational level is one of the best predictors of child well-being.
Systemic Change
There are four categories in which most of the research on poverty is organized:
Individual behaviors.
Lack of human and social resources.
Exploitation of low income people.
Political and economic systems designed to keep people exactly where they are.
We are primarily focused on the last two.
Predatory Lending
There are 3 big corporations that operate over 700 predatory lending storefronts in New Mexico—that’s more storefronts than fast food and Starbucks put together. Unfortunately we have a legislature, a governor, an attorney general who are all bought and paid for by this industry that is essentially taking $180 million a year out of New Mexico.
When we talk about stabilizing families and helping them grow, you can do that in two ways: increase income, decrease costs or both. So when $180 million is being ripped out of the most vulnerable communities and families in the state, the damage is enormous.
The industry line is: “Nobody can loan money to those people for less than we do.” But, in fact, the problem is the business model, not these people. So we’re doing something to take that argument away. In doing so, we’re also taking away the veil the legislators stand behind: “Ay! These poor mamas! What would they do without this money? Everybody needs access to borrow.” Interest rates for these loans can go as high as 500%, 1000% or even higher.
We’ve created several initiatives to address this:
Interest Rate Cap. We’ve been leading the New Mexico Fair Lending Coalition to create legislation that would set a 36% cap rate on all non-bank lending in our state. This would also control Internet lending. Essentially, any loan made to a New Mexican, living in New Mexico would be unenforceable if it exceeds 36%.
Employer-Based Loans. We now have an online provider that works with employers and provides next-day funded loans with no credit checks to employees. There is no cost and no risk to the employer. Employees can borrow up to $3000 a year, but it can’t exceed 8% of their income. Their job is the security on the loan and the interest rate is 24.8%.
Community Organizations to Facilitate Lending. We are looking at a platform that allows us to recruit community organizations to be the face of a loan, or the need for a loan, for people who are marginalized by the big banks: people of color and low income people. In this program, a person can go into one of these organizations and fill out basic information about their needs and their income. The system searches for local options to meet that need. The person can then choose one of those options and the information they entered is automatically transferred to an application to that institution.
There are a couple of things happening here: First, we’re creating parallel systems that serve people who have been marginalized. Second, we are convincing banks and credit unions to open up access to people they have not previously served. Without access, there is no social justice.
Other Initiatives
Two years ago, we passed, in both Houses, a bill that would prevent the use of credit information as a primary screen for employment. Then the governor vetoed it. So we will be running that one again next year. We are working on wage theft. We’re also working on the opportunity for people in the agriculture industry to be covered by Worker’s Compensation.
Removal of Asset Tests for Benefits
For most benefits there is an income test, but there’s also an asset test: if you have more than a certain amount of money in savings, you are ineligible. This is absolutely antithetical to the idea of people creating their own safety net and being able to move out of poverty. So we protected the IDA accounts from those tests and now we need to protect the Child Savings Accounts from those tests.
But the larger issue really is, how do we eliminate asset tests entirely? Dory Rand was the researcher who originally challenged this notion and demonstrated that, in fact, the state’s costs are reduced by removing this test: there’s one less thing to verify. The mythology is that if we remove the asset test, 100,000 more people are going to rush into this broken system to get a few bucks. That’s nuts. So we’ll be running that bill also. We want to eliminate the asset test on all benefits in our state.
Successes
This work is about holding a vision with integrity. Really believing in people. Believing that we can shift the norms from greed and self-interest to the common good. Individuals really do have the capacity to control their lives, if we just create an environment that supports that.
For instance, there’s the man who used his IDA to start a business and has hired six employees.
One woman used her IDA to get a college degree and then buy a home. She was given her first drink when she was a year old. At age 13 she was incarcerated in solitary confinement for three years. When she was released, she got pregnant and was put back into solitary confinement for two more years because she got pregnant. Not only did this woman overcome all the issues of poverty and abuse by community, family and the systems, but she is now a program director in one of our local agencies that does some of the best work around.
Our Out-of-Poverty strategies are important, not only for the people who are served and the communities that grow because of that service, but also because it is a very compelling pushback on the dominant culture message of “We don’t know what to do. We don’t know how to do it. It costs too much.”
Our work flies in the face of all of that. The Committee for Effective Philanthropy studied our organization and six others. Looking at our income, our outflows and our impact over a five year period, they calculated that we return $157 for every $1 invested.
That’s all well and good, but we are touching such a small part of the need. That’s why we have to be engaged in systemic change. Because those organizations that control budgets and policy need to create pathways and remove barriers to prosperity. Our job is to push them to do that.
We’ve been doing this work for 15 years. One of the things we think about is critical mass: What happens when you really put intentional, intensive resources on the ground?
For example, there’s a rural community on the interstate, called Truth or Consequences, New Mexico. There are now three thriving Main Street businesses that have changed the face of that community. One is a high-end Italian restaurant. It’s the destination point for tourists going up and down the highway. But it’s also a training center for our workforce development work in the state. All of that happened with less than $10,000 of our investment.
Dr. Elliott talks about the idea of congruence—among families and within communities. What’s happening is that the norms of the community are changing.
Looking Forward
Our dream is to not only develop a trust fund that will continue to drive and expand this work in New Mexico, but to help propagate this model over and over again across the nation.
The ripple effects are really enormous. When families own their own home, kids do better in school, the family is more engaged in their community and they’re more economically and emotionally stable. On the community economic development side, there’s now $57 million in new mortgage money in our state. We’ve helped 512 individuals get into college and they brought $2.2 million into institutions of higher education.
So we think we know what we’re doing. We know how to do it. We know what it costs. And we need to do it everywhere.