Study shows entrepreneurship as a path out of poverty

November 1, 2012 at 11:43 am 1 comment

Maruice Lim Miller, who was recently awarded a MacArthur Foundation “genius” grant, is also the director of the Family Independence Initiative (FII) in Oakland. FII is a ” national center for innovating and testing approaches to economic and social mobility that strengthen social networks, respond to initiative, and respect low-income families’ ability to lead their own lives.” One of the primary missions of FII is to develop an Opportunity Platform, which is a set of practices, products and policies to provide a pathway out of poverty, and a vehicle for social and economic mobility, for low-income communities.

Bloomberg Buisnessweek recently profiled Miller and FII, looking at their initiative to track 350 families in Boston and San Francisco with median incomes of $26,000. The families report on their efforts to get out of poverty, and FII provides them $160 per month to participate. Here’s how it works:

At the outset of the project, families receive a computer to access FII’s online data-tracking system. Every month participants input their activities from the prior month. People track their activities in six different areas: health/wellness, income/savings, education/skills, housing/environment, networking/helping others, and resourcefulness/leadership. We collect up to 230 unique data points.

The results provide unique insight into the efforts of these families to improve their lives. The results also highlight these families’ entrepreneurial spirit. After the first two years of tracking, 33 percent had a new or expanded business. Earnings had increased by 23 percent, while savings had increased 240 percent. In San Francisco, 30 percent of families had supplemented their income with a side business. Bloomberg reports that the businesses started by these families created 74 full-time equivalent jobs.

Entrepreneurship is one way families reduce their dependence on government. Miller’s data show that, far from the caricature of welfare queens, families in poverty work hard and find creative ways to get off welfare. “Given alternatives, you see families really try to drop out of that system,” he says. “So how do they do that? They start creating their own jobs. They try to get their kids to go to college. There’s a lot of initiative.”

This innovative work done by FII powerfully illustrates what those of us working in underserved communities have known all along– that there is no lack of will, creativity, commitment, or gumption in these areas. What families need, as FII corroborates, is support– social and institutional– and to be afforded agency over their life choices.

In the area of entrepreneurship, institutional support can be provided by those of us offering technical assistance, financial education, and, most importantly, affordable capital. CDFIs, credit unions, and other community-based lenders and financial service providers can reach entrepreneurs where the mainstream financial sector cannot. This is particularly crucial in this economy. By helping families along on their path toward a more economically and socially secure future, we can be a part of uplifting underserved communities.

 

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Entry filed under: CDFI, Credit Unions, Economic Development, Economy, Jobs & Employment, Small Business. Tags: , , , , , , .

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1 Comment

  • 1. What do small businesses need to thrive? « OneJustice Blog  |  November 24, 2012 at 1:21 pm

    […] Small businesses have a powerful impact on our communities and larger society. OneJustice supports using our consumer power to support small, local businesses – which are frequently a road out of poverty and toward self-sufficiency for low-income entrepreneurs and small business owners. (For more about entrepreneurship as a poverty alieviation strategy, read here.) […]


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