Women's Initiative: Where Dreams Become Thriving Businesses

Child Care and Poverty

Los Angeles-based child and family services org Crystal Stairs released a report recently, "A Step Up, but Not Out: Tracking the Poverty and Income Impacts of Child Care Subsidies."

The report looks at the effect of Clinton-era welfare reforms which have seen welfare caseloads declining, but no escape from poverty. "While child care subsidies per se are not charged with reducing poverty, they should be considered as part of an array of supports that are integral to the success of anti-poverty initiatives."

The three main conclusions are:

1. Child care subsidies can be the difference that allows families to survive above the poverty level.
2. Child care subsidies alone do not increase family income.
3. Working families receiving child care subsidies are growing poorer.

The report suggests that "tracking poverty levels of families at the agency and state level could lead to the identification of more successful programs." For more details, read the report's executive summary.

But as Karuna Jaggar comments: "Poor childcare options impact women’s work options and women often are forced to sacrifice earnings in order to ensure their children are properly cared for."

Microbusinesses as Assets

CFED's Assets and Opportunity Scorecard for California gives us a C overall, although we get an A for business development opportunities.

California's citizens face mixed prospects when it comes to their opportunities to build and preserve assets. On one hand, the state's households have the 11th highest average net worth in the country. On the other, the state ranks 36th in asset poverty — the proportion of households without sufficient assets to subsist above the poverty level for three months if income were to be interrupted.

Long-term financial independence requires assets as well as adequate income. Families must be able to both cover their basic needs, and have enough in reserve to keep them from slipping into poverty when circumstances change unexpectedly.

Furthermore, assets are critical in obtaining adequate income to begin with. For instance: education and even car ownership are strongly linked to earnings. Anecdotal stories from Women’s Initiative’s clients indicate that owning assets often leads to additional asset acquisition: home-equity loans pay for children’s college, stocks provide down payments on homes or capital for business growth, and so on. It's this combination of sufficient income and assets that allows families to be truly self-sufficient in the long term.

Businesses are a unique and powerful type of asset. They increase income, in the way that education does, and they also increase in value over time like real estate. Microenterprises typically have very low start-up costs, making them a relatively accessible asset for low income individuals, particularly compared to buying a home.

For asset-poor individuals with no credit or poor credit, starting a business is a uniquely accessible way to build on work experience, ingenuity and vision to grow an asset.  This can then be leveraged to acquire additional assets. Starting one’s own business can be a critical strategy for low income individuals to build powerful assets that are transferable across generations, helping to break the cycle of inter-generational poverty.

While asset poverty is a grave problem for all California families, current research has shown that women and people of color own disproportionately fewer assets than men and whites. Strikingly, the median net worth of a white-headed household in California is nearly $151,000 while that of a minority-headed household is just over $16,500. There is a need for additional research on the linkages between microenterprise and assets, with particular focus on inequalities linked to race and gender.

Data analysis of the most recent Women's Initiative client outcome data shows an overall trend of increasing wealth, with asset growth outpacing liabilities resulting overall gains in net worth. Average wealth at program entry is $9,288. Survey respondents report that their wealth increases a remarkable four-fold to $38,626 within twelve months.

--- Karuna Jaggar, Women's Initiative Director of Public Policy and Research

Linking Domestic Violence and Economic Independence

W This Microcapital article about a microfinance project in South Africa underlines the links between poverty, domestic violence, and AIDS:

IMAGE provides women with short term business loans of up to USD 1300 operating on the presumption that an increase in earning power will encourage women to be more vocal at home, confronting unfaithful husbands about issues such as condom usage.

Domestic violence and Aids infection have long plagued the eight villages outside of Burgersfort, Limpopo Province, South Africa where IMAGE currently operates. According to Dr. Pronyk, “Of the approximately 400 women receiving loans, between 36 and 71 percent reported having been in a violent relationship.” Not unrelated is the HIV/ Aids infection rate, which identifies one out of every three adults in the region as HIV positive. Image findings report that most women in the region accept their husband’s extra- marital affairs as common practice. IMAGE claims most wives avoid confronting their spouses about such behavior, leaving their health at risk, as the male is typically the only wage earner and thus perceived as the unique authority in the household.

IMAGE believes the solution is to increase women’s authority at home by increasing their earning power outside of the home via a microfinance programme.

Although here in the US AIDS and reproductive control are not firmly linked to women's economic independence, the link between poverty, poor health, and risk of violence for women and children is well established. The Kaiser Foundation 2004 report shows that low-income women are twice as likely to report being in fair or poor health as higher income women. The American Cancer Society estimates that cancer survival rate of poor individuals is 10 to 15 percent lower that those of other Americans. And the US Department of Health and Human Services links poverty and issues related to violence as significant factors in women’s health.

At Women’s Initiative we see that self-employment is a powerful component of any multi-pronged strategy in the prevention of and recovery from domestic violence. Self-employment can increase a woman’s economic independence through increased earnings and greater economic control. In addition, owning a business and being one’s own boss allows domestic violence survivors -- many of whom have been controlled in virtually every area of their lives during the abuse -- to be in control of several important areas of their lives.

Nearly one-third of American women (31%) report being physically or sexually abused by a husband or boyfriend at some point in their adult lives. In addition to physical and sexual assault, many survivors face economic and other forms of abuse. Examples of economic abuse include controlling or even stealing money; fostering dependency; and making financial decisions without asking or telling the partner.

Many women taking our classes have told us of the impact of their lack of access to even small amounts of money: taking the bus to class was enormously problematic, let alone coming up with the $25 registration fee or finding childcare. The impacts of this epidemic are far-reaching, affecting each area of the survivors’ life and in turn that of her family and community

Based on these interviews, we believe that our program can help interrupt domestic violence through:

1. the supportive group environment and training we give focuses on reducing isolation during and after the program: a common barrier for many of our ALAS clients, who are immigrants with limited or no English-language skills and little knowledge of resources available to them;


2. financial literacy training, which is critical for women who have faced economic abuse which has limited their access to or knowledge of household finances;


3. financial independence through business ownership which allows women to increase their income and gain control over earnings, thus expanding her options, including to escape domestic violence.

Our work clearly illustrates the linkages between a woman’s health and her economic independence. Through our multi-pronged business management program, Women’s Initiative empowers women to achieve economic self-sufficiency. Along the way, women build self-esteem, financial literacy, and strong networks of other supportive women. By providing culturally competent business management and personal empowerment training, Women’s Initiative helps prevent domestic violence before, during, and after abuse has occurred.

--- Karuna Jaggar, Women's Initiative Director of Public Policy and Research

SBA Gendered Entrepreneurship Study

Regarding the new Small Business Administration study, "Are Male and Female Entrepreneurs Really That Different?", several things stand out to me from the report:

1. Women entrepreneurs have different expectations, reasons for starting a business, and motivations from men;
2. Women were more likely to start a business to balance work and family life whereas men were more likely to start a business to make money;
3. Men are more likely to believe that starting a business is more important than spending time with one’s family;
4. There is no statistically significant difference between men and women regarding motivation to start a business to be innovative and learn;
5. Male entrepreneurs have consistently higher expectations for their business than female entrepreneurs, both with regard to earnings and number of employees;
6. Male entrepreneurs had greater confidence that they can attract employees in addition they seek opportunities in different ways and start different kinds of businesses;
7. Men are more likely to found technologically intensive businesses, biz's that lose their competitive advantage more quickly and businesses that have a less geographically localized customer base. Women are more likely to prefer low-risk/low-return businesses;
8. Male entrepreneurs more likely to identify business opportunities through research;
9. Controlling for these factors, gender does not affect new venture performance

The good news is that women-owned businesses are not smaller because the gender of the owner specifically limits business performance. Women are not simply less capable of running a business.

However, it is also clear is that preferences, motivations, and expectations are different for men and women. And the researchers point out that understanding such structural barriers to female entrepreneurship are critical for policy makers.

Experience with our clients confirms that work/family balance is a primary motivating factor for many women entrepreneurs, particularly low-income entrepreneurs, who for example may not be able to afford adequate child care through low-wage work.

While certainly many Women’s Initiative clients cite making more money as a key motivation in starting a business, it is unlikely that many (if any) would agree that starting a business is more important than spending time with family, as men in the study report. This research highlights the role of self-employment and business-ownership for women in balancing financial and non-financial responsibilities to provide for and care for their families.

In contrast to other research, this report finds that women do not lack self-confidence, in comparison with men, in their ability to undertake the firm organizing process and women entrepreneurs do not perceive greater barriers than male entrepreneurs. This finding may be explained by the fact that the study looks at entrepreneurs in the process of starting a business, rather than the likelihood of men and women to choose to start a business. This distinction is important in whether women even consider starting their own business, let alone act on the interest.

-- Karuna Jaggar, Women's Initiative Director of Public Policy and Research

Sharing Green Secrets with Competitors

While I'm on the subject of the Business Alliance for Local Living Economies (BALLE) Conference ...

I was inspired by many of the business owners I met at the BALLE conference, but two in particular stood out for their lesson in the ways that sharing and openness with the competition actually benefit the business.

Judy Wicks, of Philadelphia's White Dog Café developed an entirely organic, local, cruelty-free menu for her restaurant and bar.

Judy defines her mission in four parts: serving our customers, serving our community, serving the earth, and serving each other. Click here for more information on her vision.

Don Shaffer, of San Francisco's Comet Skateboards introduced new environmentally-friendly adhesives and other materials into his line of skateboards.

The website states, "We are working with companies and universities worldwide to assist in developing "Green" BIO BASED epoxies, reinforcements, and coatings for the future." Click here for a rundown of the elements of Comet's manufacturing process, and a list of links to companies they work with and organizations they support.

Both might easily have decided that this was part of their niche, their unique appeal. Instead, both decided to go out and educate other business owners, to share their ‘secrets’ and sources with their competition. Not only did this mean that there is more of a good thing, but it meant that rather than losing market share---as traditional business theory might expect---they were in fact rallying other business owners to help them grow the market!

-- Karuna Jaggar

"Local Living Economies" and Our "Green" Graduates

I was very energized to participate in the 5^th Annual Business Alliance for Local Living Economies (BALLE) Conference last week. BALLE’s vision is to build a sustainable global economy which consists of Local Living Economies, which create long-term prosperity and economic empowerment. The three pillars of this model are

• local business ownership
• economic justice
• environmental stewardship.

The parallels with our work are obvious. At Women’s Initiative we use business ownership as a tool in building economic independence, and in turn social and political empowerment. While environmentally--and socially--responsible businesses have not historically been an integral part of our training model, in fact we find that they are very much part of our clients’ visions.

Clients come to us because they are not thriving in the wage labor market. They also come because they don’t like how traditional business is done and want to do business according to their values. As women who have struggled on the margins of the economy, their values include paying a living wage and creating quality, family-friendly jobs.

Their values also include environmental stewardship, and a majority of clients report making environmentally-friendly choices in their businesses. That is: they go above and beyond simple recycling to make conscious decisions about product and materials sourcing, waste and packaging reduction, pollution, and energy consumption.

Despite clients’ willingness to spend more money on materials, products, etc. in order to uphold their environmental values, they often represent these as individual, personal choices, not as business decisions.

I do think that there can be something overwhelming about identifying one’s business as “green” in some undistinguished way, without acknowledging that the business owner has made headway in some areas and not necessarily in others. But I think we can do more to help clients identify the ways their businesses are already environmentally responsible and think about developing this niche in addition to stretching to become even “greener.”

-- Karuna Jaggar

Meet Karuna Jaggar

Hi. I’m Karuna Jaggar and I lead and coordinate the research and public policy activities at Women’s Initiative.

I have been working in the microenterprise field for a dozen years, mostly internationally. I came to the field fresh out of college because of my belief that business ownership and financial independence is a powerful tool in the social and political empowerment of women. I feel very lucky to be part of Women’s Initiative, which I sincerely believe is doing some of the most innovative and high-quality work around.

I’m one of those people who doesn’t usually take someone else’s word for anything and I generally like to come to my own conclusions after examining the facts. Having the opportunity to really dig into our extensive outcome evaluation data shows me that my commitment to microenterprise and this agency is well founded: Yes, indeed, our clients incomes go up dramatically; They gain self-confidence and they grow assets; Just as importantly they re-shape their communities based on their values and their businesses reflect their commitment to improving the lives of others.

When I am not working I am empowering the next generation of women, raising with my partner our wonderful 2 year old daughter, Rylyn.