Editor’s note: This article was initially published in the Detroit Free Press.
One nonprofit wants to improve the credit profile of Black and brown Detroiters — many of whom are shouldering unmanageable debt.
Another group wants to get vetted contractors to Detroit homes in need of repair — a pressing concern estimated to cost millions of dollars.
And another coalition of community organizations in the city’s Warrendale neighborhood wants to kickstart a “pay it forward” zero interest loan program for home repairs and small business development.
They are among 17 projects selected to receive seed money to tackle some of the biggest economic barriers Detroiters face. It’s a part of the Detroit Financial Well-Being Innovation Challenge, launched in February by the United Way for Southeastern Michigan and University of Michigan Poverty Solutions initiative.
In August, the projects each received a $20,000 grant and technical assistance as they work on advancing to the next stages of the challenge, which runs through 2026. Those at the last phase can get up to $1 million.
Among them is a self sufficiency program bythe nonprofits COTS and Cinnaire to expand a program to help Detroit families buy the homes they are renting, and offer support services along the way to help maintain homeownership.
“Homeownership is a goal that’s often out of reach for very low income families, but we know it’s one of the main tools for building wealth,” said Nikki Carbonari, COTS senior director of strategic partnerships.
But these families are left out because of income restraints and the need for mortgages and down payments, she said.
It’s not that Detroiters make worse financial choices, said Megan Thibos, director of economic mobility, United Way for Southeastern Michigan. It’s that families face a more difficult financial landscape because of “underlying systemic causes” of economic instability like the legacy of redlining — the practice of denying loans because an applicant lives in a certain area — and the foreclosure crisis of the Great Recession, she said.
“We are trying, through this challenge, to bring to life bold new ideas that help change that landscape of financial opportunity and unstack the financial deck so Detroiters have a fair shot at achieving financial stability and the platform with which to pursue their hopes and dreams,” Thibos said.
The challenge stems from a 2020 U-M report which highlighted that, because of low incomes and high costs, many Detroiters cannot maintain cash flow, making it harder to save. A little more than half of the 755 Detroit residents surveyed in 2019 said they didn’t see themselves as financially secure or were in financial trouble.
Roughly two-thirds of Detroiters reported having an unmanageable amount of debt and about a third of Detroiters have missed a housing payment in last year, said Afton Branche-Wilson, U-M Poverty Solutions assistant director of community initiatives, who co-authored the report.
Through its Credit Escalator project, Farmington Hills-based GreenPath Financial Wellness wants to partner with a credit union to offer a low-interest line of credit to help people pay off collection debt over time and build their credit score, along with a financial coaching.
“We want to find an opportunity to create an alternative to payday loans and something that meets their needs in a way that their current local banks are not doing at the moment,” said Omari Hall, a learning experience designer at GreenPath Financial Wellness.
The goal is to build the credit history of Black and brown Detroiters, so they can purchase a car or home.
“We know the housing market. It’s difficult for folks to find affordable housing. We know the employment market in Detroit. It’s difficult for folks to find work that pays a living wage. … Folks who are not able to afford basic needs often take out loans, run up charges on their credit card in a way that’s unsustainable. We know that there’s a lot of systems swirling around residents that make it difficult to make ends meet,” Branche-Wilson said.
At 30.2%, Detroit continues to have one of the highest poverty rates in the nation, according to the latest census figures. The childhood poverty rate in Detroit was 43.1%, more than double the state’s childhood poverty rate. Nationally, the childhood poverty rate was 16.9% in 2021.
The vast majority of families in Detroit living below the poverty line — $27,750 for a four person household — would have trouble weathering a $400 emergency, according to an August report from Detroit City’s Council’s Legislative Policy Division. At-Large Council Member Coleman A. Young II, who requested the report, told BridgeDetroit that he’s looking to pilot a guaranteed basic income program.
“At the end of the month, many Detroiters don’t have money left over and so they don’t have money left over to save, which means they’re not able to maintain a financial cushion for emergencies and the consequences of that are all around us, in the form of utility shutoffs, in the form of evictions,” Branche-Wilson said.
The goal of the challenge, Thibos said, is to create pathways for Detroiters who are struggling to stabilize their finances and thrive.
“It’s not fair to ask people to make good financial choices when the only financial choices they have are bad ones, when they’re stuck between rocks and hard places,” she said.
Here is a rundown of the other projects: