Instead of putting Band-Aids on poverty, a new program wants to help create long-term solutions by matching the savings of the poor toward self-improvement goals.
Tulsa's Project Get Together, a community service organization, has been selected along with 12 other groups nationwide to participate in a "demonstration" of a new anti-poverty strategy.
The Downpayments on the American Dream Policy Demonstration, sponsored by the Corporation for Enterprise Development, will officially kick off in January and end with an independent evaluation in 2002. The CFED plans to spend $25,000 a year in Tulsa for operating funds and $50,000 a year for matching funds for individual savers in the program. Project Get Together must match these CFED funds through local fund raising. So far, the biggest local sponsor is Bank of Oklahoma, which is supplying $25,000 a year. The CFED is sponsored by several high-profile foundations and plans to spend $12 million nationally on the four-year demonstration. "The idea is that with all this welfare reforming, we need ways to launch people out of poverty and into the middle class," said Jennifer Robey, who's overseeing the Tulsa demonstration. Robey said that the welfare recipients are "actively discouraged from savings" because the program sets asset limits for participation. "The program is targeting people who are working very hard and struggling," she said. She explained that Downpayments on the American Dream is "not another giveaway program," but instead promotes self-sufficiency based on the belief that "sound financial management can get your family out of poverty." She said the program is bringing the incentives of a 401(k) type savings program to the poor. Here's how the program works. Project Get Together will select 200 participants, who must not surpass certain income levels. For example, a family of four must earn less than $24,075 gross annual income. Participants will open an individual development account in which they must deposit between $10 and $50 each month. They also may deposit some of their earned income tax credit rebates. Participants' savings will be matched on either a one-to-one or two-to-one ratio. The savings can only be used for four purposes: education, buying or improving a home, starting or expanding a small business, or saving for retirement. If participants withdraw money from their accounts for any purpose other than these four, they forfeit their matching funds. Savers will attend a special introduction and orientation session before opening an account. Then they will regularly meet with Project Get Together staff to discuss credit problems and to work on a budget and savings plan. Project Get Together supplies an example: "Let's say Susan has a two-to-one match rate. …