The impact of the economic crisis on asset building in Europe:

The impact of the economic crisis on asset building in Europe: Using opportunities and creating resilience new economics foundation EMN Conference, Milan 5 June 2009

Asset Building – a definition • Asset building as a strategy to help people out of poverty differs in its approach to more traditional thinking which seeks to iron out lows in incomes. The emphasis of asset building is on long-term savings, either through savings accounts, wealth creation (e.g. house purchases), but also through investment in education and training. • Long-term focus – not to equalise current income • Savings • Wealth Creation • Human capital growth • Resilience and ability to overcome crisis

Asset Building during economic crisis Is Asset Building in Europe more relevant than ever or under threat? nef and LSF examined the impact of the crisis on Asset Building’s potential across Europe

Asset Building Foundations - US • US asset inequality • Inter-generational and racially-based impact • Interventions, e.g. tax incentives, often aided better-off • Legislation to address discrimination and exclusion including the Community Reinvestment Act; for 40m underserved households • Individual Development Accounts • Auto-enrolment of employees into retirement savings plans • Tax incentives designed to target excluded, low-asset groups • Laws protecting assets & reducing vulnerability

Key differences

Asset Building in the EU, during crisis Asset Building originally developed despite widespread economic growth, amidst its failure to deliver comprehensive benefits Conditions now reversed, and Asset Building’s task will inevitably alter

Asset Building in the EU, during crisis • Asset Building needed despite widespread economic growth • Persistent inequality in backdrop of rising incomes • Crisis likely to exacerbate exclusion that pre-dated it • Credit relations strangled, despite Governments’ stimuli • Individuals and communities in Credit Crunch, inhibiting necessary borrowing and destroying savings • Over-concentration at top meant greater distance from borrowers and savers

Macro Causes, Micro impact • The shape of the challenge: • Increased demand for and need of Asset Building • Debt Advice • Microfinance, especially for self-employment and business support • Funding pressure, especially from partnerships with private sector • Social lenders facing growing bad debt burden • The test for Asset Building: • Can AB help to do more with less?

Funding is major concern, but opportunities do exist • Demand and need for Asset Building increasing • Realising Asset Building goals is expected to become harder to achieve and more at risk • 6 organisations reported immediate decrease in funding • 3 organisations also saw decreased non-funding support • Recognition of enhanced importance of financial literacy • Evers & Jung anticipate greater demand for their role as research organisation • KIZ optimistic of increased take-up of their practice-oriented approach to supporting self-employment and skills training

Findings: key role of policy Recognition Public Partnership More localised, more responsive UK, Toynbee Hall, working with non-financial assets “ There are no plans to re-conceive the broken system… people who used to stand at the precipice are now falling, and [Government] is not doing anything… to stop people getting to that precipice in the first place. “ Hungary’s Autonómia; Asset Building project threatened

Findings: Policy recognition of importance of assets approach • Germany, KIZ and Evers & Jung • Increased support • Visibility and recognition of asset builders’ role • Spain, Asociación Comunidades CAF • Partner to Catalan regional government, regional roll-out • Visibility and recognition of asset building tied to supportive policy • Enhanced in contexts with more local and federal structures

Lessons • Funding Adaptation • including networks, and easier collaboration and cooperation • Co-funding, partnership strategies • Redesign of elements of Assets Building programs • Increased operational capacity • Networking • Accelerated development • Support required to develop enhanced need for Asset Building into opportunity to enhance AB programs and their impact • Risk of displacement or dilution of AB impact • Increased demand and vulnerability; asset erosion • Responses & capacity correspond with circumstances

Recommendations • Organisations’ network presence needs to be bolstered • Funding strategies need to adapt • Support required to develop enhanced need for Asset Building into opportunity to enhance AB programs and their impact • Diversify sector and ensure cross-section of products designed to meet broader range of needs

The impact of the economic crisis on asset building in Europe: