What does it mean to be “poor” in California? With the high cost of living in most of the State, the “federal poverty level” is almost meaningless. Government and philanthropic programs classify people as poor according to a variety of measures, sometimes derived from area median income, or from a “self-sufficiency standard” based on the cost of housing, child care, transportation, etc. I’d like to propose a qualitative definition for this discussion. At its most fundamental, being poor means lacking enough money to lead a comfortable existence, free from day-to-day financial worries. (Yes, I know we all have financial worries, but I’m talking about the kind that really threaten your family’s well-being.) By that definition, we at Opportunity Fund believe that about 30 – 40% of Californians are “poor.”
I like to remind the team here at Opportunity Fund that, “People are poor because they don’t have enough money.” And for the vast majority of poor people, the reason they are poor is not because they lack “financial literacy” (although that is certainly a great thing to have). It’s because they had bad luck at birth.
Sure we all know examples of people who overcame bad luck at birth to become financially successful. Heck, at Opportunity Fund we specialize in finding those kind of strivers and giving them a hand up. But they are the exceptions, and their incredible stories don’t change the fact that for most people born into poverty, there is no real path to get out.
It’s all too easy, when you run a non-profit organization, to give into temptation and promise that your programs can really SOLVE the problem. But we try not to do that here. In reality, to move millions of people out of poverty in California, and across the Country, we would need millions of higher wage jobs, quality subsidized child care, affordable finacing for college, millions of units of high quality, subsidized affordable housing, and significant increases in the Earned Income Tax Credit. That would do it. But it would take enormous civic and political will. And it would have to be paid for by middle class and wealthy Americans, either through higher taxes or reductions in other government expenditures. I will continue to dream that one day we will get there.
In the meantime, we labor away with the resources at our disposal: philanthropic contributions, earned income from our loans, government funding from the CDFI Fund, and low-cost capital we borrow from banks motivated by the Community Reinvestment Act. Combining these resources in artful ways, Opportunity Fund is on a path to invest $100 million into small businesses and working families in California in five years or less. Every year we help thousands of striving families achieve a measure of economic mobility, some in fairly dramatic ways. And every day we prove things about “poor” people. We prove that they can save, and manage their money wisely. We prove they can build businesses, create jobs and pay back loans. We prove that investing in poor and working people yields phenomenal returns. And maybe if we keep scaling our impact, one day we can convince enough people in this Country to get together and amass the kind of resolve and resources we would really need to solve the problem.