Author: José Quiñonez

Wealth inequality and new Americans


The racial wealth gap is real, and it’s growing. But where do immigrants fit into this analysis?

This post first appeared on the Aspen Institute’s blog. It was written by MAF’s CEO José A. Quiñonez in preparation for a panel on the Racial Wealth Gap at the Aspen Institute’s 2017 Summit on Inequality and Opportunity

Here’s what we know about wealth inequality in America today: It’s real, it’s huge, and it’s growing. Barring substantial policy change, it would take 228 years for black households to catch up to white households’ wealth, and 84 years for Latinxs to do the same. This matters because wealth is a safety net. Without that cushion, too many families live just one job loss, illness, or divorce away from financial ruin.

Here’s another thing we know: Contrary to popular opinion, wealth inequality between racial groups did not come about because one group of people didn’t work hard enough, or save enough, or make savvy enough investment decisions than the other.

How did it come about, then? The short answer: history. Centuries of slavery and the bitter decades of legal segregation laid the groundwork. Discriminatory laws and policies against people of color made things worse. The G.I. Bill of 1944, for example, helped white families buy homes, attend college, and accumulate wealth. People of color were largely excluded from these asset-building opportunities.

Today’s racial wealth divide is the financial legacy of our country’s long history of institutionalized racism.

The factor of time is, in some ways, foundational to these findings. Sociologistseconomists, and journalists alike all underscore how the racial wealth gap was created and exacerbated over time. But when it comes to the question of new Americans—the millions of us who have joined this nation in recent decades—time often gets glossed over in racial wealth gap conversations.

Immigrants’ creative survival strategies and rich cultural and social resources could help inform better policy interventions.

Reports generally illustrate the racial wealth gap by, understandably, placing the average wealth of different racial groups side by side and observing the gaping chasm that divides them. For example, in 2012, the average white household owned $13 in wealth for every dollar owned by black households, and $10 in wealth for every dollar owned by Latinx households. This story matters. There is no denying that. But what might we learn from investigating wealth inequality with more attention to immigration?

A report by the Pew Research Center divided the population of adults in 2012 into three cohorts: first-generation (foreign-born), second-generation (US-born with at least one immigrant parent), and third-and-higher generation (two US-born parents).

Clearly different racial groups have very different American stories.

The vast majority of Latinxs and Asians are new Americans. Seventy percent of Latinx adults and 93 percent of Asian adults are either first- or second-generation Americans. In contrast, a mere 11 percent of white and 14 percent of black adults are in the same generational cohorts.

By comparison, the latter groups have been in the United States for much longer. And given their relatively comparable tenure in the US, it makes sense to place their data side by side.

But comparing the wealth of Latinxs—half of whom are first-generation Americans—to that of white families, 89 percent of whom have been in the US for many generations, seems to raise more questions than it answers.

Instead, we could add nuance and context to our analysis by measuring the differences in wealth between racial groups within generational cohorts; or by comparing members of different groups who share key demographic characteristics; or even better still, by measuring the financial impact of policy interventions within specific groups.

For example, we could investigate the financial trajectories of young immigrants after they received Deferred Action for Childhood Arrivals (DACA) in 2012. Did they improve their income, build their savings, or even acquire appreciating assets, as compared with their peers?

We could go further back in time and explore what happened to the generation of immigrants who were granted amnesty under the Immigration Reform and Control Act of 1986 (IRCA). What did emergence from the shadows mean for their assets and wealth? How does their wealth compare with those who remained undocumented?

These contextual comparisons can give us space not just to quantify what’s missing from people’s lives, but also to discover what works.

Their creative survival strategies and rich cultural and social resources could help inform better policy interventions and program developments. Bringing the story of new Americans into our conversations about wealth inequality will deepen our understanding of these disparities and the distinct forms they take for different groups. That’s what we need to develop the bold policies and innovative programs needed to narrow the stark racial wealth divide we face today.

Innovations: Making the Invisible Visible


CEO Jose Quinonez gives a behind-the-scenes look into MAF’s origin story in MIT Press’s “Innovations” journal.

The following excerpt was originally published in “Innovations: Technology, Governance, Globalization,” a journal published by MIT Press. Read the full essay here.

I was 20 years old when I realized that my mother had died because we were poor.

She passed away when I was nine, too young to understand the complex and dangerous nature of life in poverty. At that time, I had to muster everything inside of me just to survive the avalanche of sorrow and change in our family life.

It was only as an adult that I came to terms with my painful childhood. I see it now as the source of the deep empathy I have for people who suffer and struggle in the world.

That is why I’ve dedicated my life to working against poverty.

And it is how I became the founding CEO of Mission Asset Fund (MAF), a nonprofit organization that strives to create a fair financial marketplace for hardworking families. When I joined MAF in 2007, the organization was a nonprofit start-up with plans to help low-income immigrants in San Francisco’s Mission District.

Eight years later, MAF is nationally recognized for developing Lending Circles, a social loan program based on people coming together to lend and borrow money. With cutting-edge technology, we transformed this invisible practice into a force for good.

Program participants are freeing themselves from the grasp of predatory lenders by opening bank accounts, building credit histories, paying down high-cost debt, and increasing their savings. They are investing in businesses, buying homes, and saving for a better future.

Lending Circles brings to light what’s already good in people’s lives.

And within that light, participants are forging a sure path into the financial mainstream, unlocking their true economic potential every step of the way. The program’s success is serving as a model in the fight against poverty, demonstrating new and effective ways of helping low-income people without belittling them in the process.

This is the behind-the-scenes story of how we made this happen.

Honored with the Bullard Award by Princeton’s Wilson School


On April 9, the Students & Alumni of Color at Princeton’s Woodrow Wilson School honored me with the Edward P. Bullard Award. I was deeply grateful, and shared this message with my peers.

Thank you so very much. It means a great deal to me to receive this award.

I remember organizing the 2nd symposium back in 1996.

The number of attendees at that event may not have been as great as today’s. But I remember feeling the same energy and excitement over the wonderful opportunity to step back from our busy student lives and meet with alumni – to hear their stories, to learn from their experiences, and to gain some perspective about our own experiences here at the Wilson School.

And now we’re here, celebrating the 20th anniversary of Students and Alumni of Color coming together. And for that we owe Ed Bullard and Jeffrey Prieto and John Templeton and all the MPA students who organized these weekends a great deal of gratitude for their vision and hard work that got us here today.

Soon after I got the call from Renato Rocha and Gilbert Collins about the Bullard Award, I reflected back on my experiences here and how they shaped my career and ultimately my life.

Thankfully, I was able to forget all the painful and sleepless nights from working on econ problem sets or writing five-page policy memos or cramming for this or that exam. I’m really super thankful that my brain was able to erase all those memories so that I could focus on all the good stuff.

I’m sure all alumni in this room can say the same, right? Well, fine — I’ll speak for myself.

But earlier today I walked into a Bowl downstairs – and for the first time I did not get nervous. My heart rate didn’t go wacky, my leg didn’t get restless. Really. After 20 years I was able to just sit back and enjoy being here at Princeton. (Yeah. It took me that long to get over it.)

Thinking back on my life, I was able to trace much of my current work at the Mission Asset Fund to what I learned here at the Wilson School.

Professor Uwe Reinhardt, for example, he opened my eyes to the horrific injustices of people falling prey to predatory lenders in the financial marketplace. His class was about financial management, which was a little boring and dry. But in his subtle way, he would insert stories in his lectures about how lenders manipulate loan terms to load borrowers with extra fees and costs. I remember feeling disgusted over how easy it was to rip people off – and angry that lenders could get away with taking people’s hard-earned money with impunity.

Reinhardt’s stories allowed me to see finances not as dull but rather as a social justice issue that could materially improve people’s lives.

And there’s Professor Alejandro Portes. He taught me a very important lesson, one that is actually the cornerstone of Lending Circles, a program that we offer at the Mission Asset Fund to help hardworking families build and improve their credit.

Portes taught me to see and appreciate the incredible economic activity that happens informally.

We see it all over the world. The street vendor selling tamales on busy street corners. Or the day laborer working odd jobs.

He showed us that what the street vendors do, the economic activity they generate in the informal economy – while invisible, it is still very similar to the economic activity that happens in the formal economy. It’s not less than, not criminal, not inferior, but the same – with the only difference being that economic activities in the formal economy have laws and regulations to protect and secure and make them visible to the broader economic systems.

I used this idea to create Lending Circles.

Our clients – largely unbanked, low-income Latino immigrants – have a time-honored tradition of coming together in groups to lend and borrow money from each other. In Mexico, these are known as tandas or cundinas, and they go by many, many different names throughout the world. These loans are informal, based largely on trust.

But nobody really knows about them except the people involved. Nobody knows that participants actually pay these obligations first, before anything else. Really, the financial industry has never appreciated the fact that tandas are a phenomenal financial vehicle – helping participants manage the intense income fluctuations in their lives.

Why is that? Because tandas are informal, taking place outside of the financial systems.

They’re invisible. But at MAF, we changed that.

We created a process to make this activity visible by getting people to sign promissory notes, allowing us to service loans and report payment activity to the main credit bureaus, Experian, TransUnion and Equifax. And thereby we’re helping our clients start a credit history and improve their credit scores.

The program works. In 2014, Gov. Brown in California signed a law recognizing lending circles as a force for good. So, as you can imagine — and I can say this in this room of full of fellow policy folks – getting a bill enacted into law is pretty cool. I was excited.

I was proud of myself for getting this done!

I was flying high as a kite when this happened. But In time I realized that this achievement was no accident. You see, I’m the product of the Public Policy & International Affairs (PPIA) program, a program dedicated to increasing the number of students of color in public service.

I did my Junior Summer Institute here, at the Wilson School in 1994. And because of that experience and support and people I met, I was able to see myself here at the School as a full time student, getting an MPA, and building a career in public service.

It was no accident. I’m doing exactly what this program was designed to accomplish.

Through the years, the PPIA program has built an incredible cadre of professionals of color, working in public service. It’s wonderful. We can see it in this room right now. Look around.

It’s incredible to see a room full of beautiful and talented and passionate people dedicating their careers – their lives – to public service. Half of MPA students of color come through the PPIA pipeline.

But when you consider the enormous problems we face as a nation: from the lack of public trust in our institutions and leaders; to the appalling inequalities from wealth to income to educational opportunities; to the disenfranchisement of millions of people from electoral process; to the devastating effects of climate change… well, you know we can go on for hours listing all the issues we face as a nation.

The point is that there are not enough professionals of color in public service confronting these issues.

I look around this room and I’m amazed with everyone here. But frankly, I don’t think that there’s enough of us. There is simply not enough people in the trenches that come with different perspectives, different ideas, different life experiences that can add significant insights to solutions to our nation’s problems. The number of people in this room, quite frankly, should be double or triple.

While I love that the Wilson School has made these weekends a tradition. I think the time has come for the School to do more. The status quo is simply not acceptable anymore. We need to double down and widen the pipeline. We need more students of color getting exposed to careers in public service. We need more students graduating with MPAs. We need more professionals of color working to create the America we deserve.

As you know, the urgency on this issue is not new.

Many times, we’d talked about diversity and inclusion and getting more students of color in this School. But to me it hit home last June. I was getting ready for work the morning of June 18, listening to the news about the horrific massacre of nine people in Charleston South Carolina. The shooting happened the day before, during an evening prayer service at the AME Church.

The senior pastor of the church, the Rev. Clementa Pinckney was among those killed. I was stunned.

Rev. Pinckney was a PPIA fellow – we did the Junior Summer Institute program together. He went on to become a State Representative in South Carolina, and later State Senator. He was only 41 years old when he was killed. He did so much at such a young age. Apparently, he was shot dead to ignite a race war. But his death was the impetus that finally took down the Confederate flag in South Carolina, that shameful symbol of racists.

While in the Bowl earlier today, I looked over to where Clem use to sit, remembering his easy smile and deep voice. We spent 10 grueling weeks in those bowls over the summer of 1994. And just thinking of him there, in that room, for at least a moment, it brought me hope. Hope that our lives’ work in this world can be truly consequential.

We need to remember Clem and honor his life.

In my view, he is a true example of what it means to live life in the Nation’s Service. America needs more people like Clem. And I believe the Wilson School has the responsibility and obligation to do more to find and train the Clementas of the world so that we can have a real shot at solving our nation’s problems.

Thank you.

Photographs by: Katherine Elgin Photography

Policy Must Uplift People’s Strengths, Not Criticize Their Character


A recent article from sociologist Philip N. Cohen underscores the importance of policies that respect the dignity & strengths of the families we serve.

Last week Philip N. Cohen, professor of sociology at the University of Maryland and senior scholar with the Council on Contemporary Families, published an article in the Washington Post arguing that “American policy fails at reducing child poverty because it aims to fix the poor.”

The headline grabbed my attention.

It succinctly captured what decades of work with low-income communities have taught me: We don’t need saviors to teach poor people the right morals. We need advocates to recognize and cultivate their strengths so that they move out of poverty themselves.

Current anti-poverty policies that aim to fix them, actually work against them.

Cohen’s piece scrutinizes this current approach, and dispenses with it. He challenges the motives, logic, and outcomes of anti-poverty policies that pressure poor parents to get married or find jobs as a precondition for government assistance:

We know growing up poor is bad for kids. But instead of focusing on the money, U.S. anti-poverty policy often focuses on the perceived moral shortcomings of the poor themselves. … Specifically, we offer two choices to poor parents if they want to escape poverty: get a job, or get married. Not only does this approach not work, but it’s also a cruel punishment for children who cannot be held responsible for their parents’ decisions.

Tax benefits like the Child Tax Credit and Earned Income Tax Credit are reserved for those able to find and hold a job, which can be all but impossible for people struggling to care for young children or older parents and people with disabilities that make it difficult to work. Welfare payments are restricted by work requirements and time limits that leave millions of families out.

Other past, present, and proposed anti-poverty policies are designed to incentivize marriage, effectively penalizing parents who choose not to marry – a choice that everyone, rich or poor, should be able to make freely.

Policies like these fail to treat poor people with the respect they deserve.

And they fail to provide solutions that work for all families. Cohen proposes simpler alternatives, programs that serve all parents equally and offer poor families a leg up without imposing moral judgments on their individual decisions and needs.

This brings us to a broader lesson that all of us – policymakers, nonprofit leaders, community members – can learn from: We must meet people where they are, respect what they bring to the table, and build on the strengths they have.

This approach is not a pipe dream. I see it work every day with Lending Circles.

MAF’s social loan programs begin from a position of respect, acknowledging and valuing the rich resources and financial savvy that our clients already possess. We then build on those strengths by integrating their positive behaviors and informal practices into the mainstream financial marketplace.

Poor people are not broken. They have strengths that we too often fail to recognize.

Rather than judging their behavior and imposing our own values on them, we must treat them with dignity and seek out solutions that work for everyone, whatever their background, abilities – or marital status.

Hierarchy of Financial Needs: An Introduction


MAF’s Hierarchy of Financial Needs provides a framework for evaluating every person’s economic well-being.

Eight years into our mission to build a fair financial marketplace for hardworking families, we at MAF know that Lending Circles are empowering participants to build credit, reduce debt, and increase savings. But how do those gains translate into greater financial security? Do they produce meaningful improvement in our clients’ larger financial lives?

As Lending Circles have flourished and expanded over the years, we’ve amassed data allowing us to better understand the program’s impact on clients’ overall economic stability and mobility. But as we began to dive more deeply into these questions, we realized that we lacked a clear definition of financial security and, by extension, a reliable way to measure it.

An Incomplete Picture of Financial Health

Typically, income or credit scores are seen as proxies for a person’s financial well-being. But these common metrics aren’t adequate for assessing a person’s full financial life. Knowing someone’s income alone does not say much about her expenses, debts or net worth — especially in cases where income is volatile, uncertain from day to day or week to week. And while credit scores predict the probability that a borrower will repay a debt, they tell us little about a borrower’s true ability to repay.

What will it take for a borrower to pay back that loan? Will she need a second loan to pay off the first? If so, can we honestly say she is able to repay that initial loan? And what about the myriad informal financial transactions our clients rely on to meet their financial obligations? Where do those fit in when assessing an individual’s financial security?

MAF’s Hierarchy of Financial Needs

For answers we turned to Abraham Maslow, the revered American psychologist who developed the “Hierarchy of Needs,” a model that outlines the physical, social, and psychological requirements that must be satisfied for an individual to realize her true potential. In his seminal work from 1943, Maslow organized human needs into five levels, ordered from the most basic (health and well-being) to the most complex (self-actualization), with each level facilitating the satisfaction of the subsequent, higher-order need. Using the same logic, MAF developed the “Hierarchy of Financial Needs” (HFN) to explain what individuals require to realize their true economic potential.

The HFN identifies financial parallels to physiological needs (income), safety (insurance), love and belonging (credit), esteem (savings), and self-actualization (investments):

  • INCOME: The most basic financial need is income to cover basic living expenses, such as food, housing, and utilities. Income can take many forms, from wages and dividends to government benefits or even transfers from family or friends. Income is the foundation of financial security.
  • INSURANCE: To protect earnings, people must insure against unforeseen events that create setbacks. This requires taking stock of assets, including cash, belongings, and health, and securing against loss, theft, damage, and illness.
  • CREDIT: To acquire assets such as a car, home, or education otherwise unattainable through income alone, people need credit. This requires individuals to have credit histories and credit scores to access, and leverage, low-cost capital.
  • SAVINGS: When individuals save, they put away resources for specific goals. The ability to save demonstrates discipline and engenders confidence, a sense of achievement, and respect for oneself and others.
  • INVESTMENTS: The pinnacle of the HFN is when people realize the dynamism of their economic potential. This is the stage where people can invest in ventures that carry risk as well as the potential for return. It represents a turning point because people have investments to generate income, rather than relying solely on earned wages. Through investing, people have the opportunity to attain important life goals such as achieving financial security for their families, retirement, and dignity in old age.

The Hierarchy of Financial Needs is a revolutionary yet simple model that provides clarity regarding what people need to do to realize their true economic potential. For most Americans, financial security starts with a job. People need income to pay for expenses and balance their budgets. They also need to insure against shocks; they need to leverage credit to acquire assets; they need to save for a rainy day; and they need to invest for future returns. Although every individual faces a unique set of circumstances and challenges in managing these needs, the model is applicable across all income and demographic groups. In the same way that Maslow’s model applies to all people, we believe HFN applies to everyone as well, providing a clear 360-degree view of people’s financial lives.

A New Framework for Moving Forward

Despite the fact that 1 in 4 Americans is financially underserved, there has yet to be a comprehensive framework for understanding an individual’s economic needs. MAF’s Hierarchy of Financial Needs fills a gap in the economic development field, giving us a means of evaluating every person’s financial well-being. Consumers — especially low-income consumers — have complicated financial lives, often mixing and matching different financial products, informal practices, and government programs to achieve their unique version of economic security. Our holistic view of their financial well-being enables us to identify their strengths and challenges at every level. This comprehensive approach will equip the nonprofit sector, financial services industry, and policymakers to provide far more meaningful and effective solutions to improve people’s financial well-being.

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