Building better financial futures by targeting asset poverty

A local nonprofit is working with federal agencies to help people build stronger financial futures.

Nineteen percent of Massachusetts residents are considered to be asset-poor, according to Prosperity Now. That means they don't have the financial resources to provide basic needs for three months.  

In Boston that number jumps to 29%

Compass Working Capital is a nonprofit, working to help people find pathways out of that asset poverty.

And there's a little-known Housing and Urban Development program that is making dreams come true for thousands of people in Boston and beyond. 

"It’s been known as HUD’s best-kept secret,” said Markita Morris-Louis, Compass Working Capital CEO.

They estimate at least 87,000 others are eligible for the program that puts your rent to work for you. It creates proud success stories.

"I needed a place where when I come, it's home, I can relax. We can all be safe. You know, I wanted to achieve the American dream," explained Jenny Marcelin, who went through the program.

"I did not know how I was going to get that done."

Marcelin was born in Haiti. She came to Boston, married, had two children, and attended college and grad school. Eventually, she fled domestic violence in her abusive marriage and moved with her kids into Section Eight housing. It's there she learned about the Family Self Sufficiency Program, or FSS.

If you or someone you know is experiencing domestic violence, contact the National Domestic Violence Hotline by calling 1-800-799-SAFE (7233), visiting www.thehotline.org or texting LOVEIS to 22522.

"They want to save money for me. OK. Maybe that's that's a way of buying a house. So I reached out to them," Marcelin said.

"She came in very focused, very committed, very driven," said Anderson Diaz, Compass Working Capital financial coaching manager.

"I got connected with Anderson, through the  FSS," Marcelin said. "I told him exactly. I want to buy a house. I want to have a room for each of my kids."

Through a step-by-step process, she made the dream a reality.

"It basically allows families who live in housing that's subsidized by the Department of Housing and Urban Development to convert rent payments into savings," explained Morris-Louis.

"Families typically pay about 30% of their income towards rent. So when they increase their earned income, they experience a proportionate increase in rent."

Let's say a family pays $200 in rent. When they get a promotion or new job, their rent payment will increase to $500. But under the FSS program, that $300 difference goes into a savings account for up to five years. That gives them $18,000 in five years, courtesy of the federal government.

"It’s not about taking from their already limited income and saving. That's disrespectful to ask folks who are already struggling to meet their basic needs, to now figure out how to save in excess of what they need to live day to day," Morris-Louis said.

Compass is hoping to expand access to the FSS program.  Last month, Sen. Jack Reed of Rhode Island introduced legislation for a federal pilot program that would automatically enroll up to 5,000 families in  FSS.  So far, they’ve helped 6,000 people save $20 million.

Compass Working Capital is part of the Boston-based Draper Richards Kaplan Foundation. 

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