Community leaders: 3 ways to use your federal stimulus to reduce poverty

Community leaders: 3 ways to use your federal stimulus to reduce poverty

By Luke Forrest

Forrest is the executive director of the Community Economic Development Association of Michigan (CEDAM), a nonprofit trade association serving community builders across Michigan.

As we emerge from a pandemic that hit low-income workers and children inordinately hard, your community will soon deal with an injection of money that could have unprecedented impacts on eliminating poverty.

As the head of a nonprofit that has worked on anti-poverty issues since 1998, I can’t state strongly enough that now is the time to tear down barriers that have kept low-income families and people of color from building wealth. 

This is a call to Michigan communities to take the money and run with it, swiftly and with purpose, to stabilize vulnerable populations. The $1.9 trillion American Rescue Plan, signed into law by President Biden on March 11, gives you the luxury to think outside the box for ways to lift them up. 

Bridge Magazine reports that more than $4.4 billion will be divided among every Michigan township, city and county, ranging from $100 per resident to as high as $1,300. That excites us at CEDAM, but with a great amount of money comes responsibility. 

This once-in-a-lifetime funding opportunity could reduce poverty by 28%, and raise more than 11 million Americans out of it, according to Columbia University’s Center on Poverty and Social Policy. The pandemic revealed glaring inequities. To close those gaps, here are some of the issues you should be thinking about: 

  • Increase affordable housing. About three-quarters of Michigan’s impoverished households pay more than half of their income for rent. The state needs almost 205,000 more housing units to solve this problem, says the National Low Income Housing Coalition. Providing affordable housing can stabilize a family’s health, education and work life. Possible solutions include starting a housing trust fund, partnering with your local nonprofit housing agencies, or repurposing the expected glut of office space, now that 30 percent of our employee base will work from home – up from 11 percent pre-pandemic. We can point you to helpful resources, including our annual Real Estate Development Boot Camp to be held later this year. 
  • Expand broadband access. Too many kids were left behind in school and too many adults skipped telehealth appointments as they struggled with inadequate technology. The lack of high-speed internet access also can affect a family’s bottom line: Broadband provides households with an estimated $1,850 annual economic benefit. For a community of 20,000, online sales and home-based businesses can bring in $2.4 million annually, according to Connected Nation Michigan, a great resource for communities looking for help on this issue. Expanding broadband to the estimated 212,700 Michigan households with inadequate internet speed will enhance the economic mobility of those families. 
  • Invest in Children’s Savings Accounts (CSA). Fifteen Michigan communities automatically enroll students in these accounts and provide seed money to encourage saving for post-secondary schooling. The impact goes beyond savings – students get a financial education and learn the importance of continued education. It works: A University of Kansas study shows that children who save between $1 and $500 for college are three times more likely to enroll in college or trade school and four times more likely to graduate than those without savings. For the first time, a governor’s budget allocates money for CSA programs, and we hope the legislature will support Gov. Whitmer’s $2 million proposal. This is literally an investment in our young people’s futures. We encourage you to join the Michigan Children’s Savings Account Network, a group of community foundations, nonprofits and local governments that share best practices and receive technical assistance from CEDAM. 

These are three smart ways you can spend American Rescue dollars as you face the challenge of educating your workforce, creating jobs and removing barriers to higher incomes for at-risk populations. You’ll hear lots of ideas on how to spend this windfall, but many will be simply band-aids. These bold initiatives will not just stabilize your community coming out of the pandemic, but also strengthen it for generations to come. If you want more information, please contact me at forrest@cedamichigan.org or call 517-485-3588 ext. 1940 and together we’ll figure out what solutions fit your community.