Basic Needs Out of Reach?
We’re getting a closer look at the financial barriers and hardships facing Michiganders, as a new report shows 40 percent of Michigan households cannot afford necessities.
The 2017 Michigan United Way ALICE Report, released last week, shows that while 15 percent of households live below the poverty line, there’s a greater number that live above it and still can’t afford the basics, they’re considered working poor.
The researchers say the report dispels stereotypes, showing that these households are in our urban and rural areas, they're single fathers, single mothers, dual parent homes, individuals, people of all races and ethnicities, and for many, they're working multiple jobs and still challenged to fill financial gaps.
What the data tells us:
15 percent of Michigan households live below the poverty line but there’s a greater number, 25 percent that are working and live above the federal poverty line, often aren’t eligible for aid and still can’t afford the basics, they’re considered ALICE (asset limited, income constrained, employed).
Households by race/ethnicity data shows:
62 percent of African American households can’t afford the basics, more than half are considered ALICE
54 percent of Hispanic households can’t afford the basics and 37 percent are considered ALICE
35 percent of white households can’t afford the basics and 25 percent are considered ALICE
The number of Michigan households that can’t afford basic needs is still higher than it was in 2007
62 percent of all jobs in the state pay less than $20/hour
Low-wage jobs are projected to grow faster than higher-wage jobs over the next 10 years
The average annual budget for the actual costs of necessities for a family of four in Michigan is $56,064, well above the federal poverty level of $24,250
All age groups under 65 saw a decline in financial stability
Michigan is aging and many seniors don’t have the resources to support themselves. As the older population is growing, the number of younger households has decreased.
Child care costs are one of the top financial burdens facing working families in Michigan, with the average cost of child care for a working ALICE family of four costing $1,108 per month, consuming 24 percent of their budget.
Health care costs can be a burden for ALICE families, as they make too much to be eligible for Medicaid but not enough to afford the premiums for the Affordable Care Act marketplace plans.
This is the first ALICE update we’ve seen since the first report was published in 2014, giving us insights as to where Michigan families stand and where they’re still struggling. Since the 2014 report, the percentage of Michigan households living in poverty dropped by 1 percent, while the number of ALICE households grew by 1 percent.
“More than any other factor, jobs are defining ALICE,” Nancy Lindman of the Michigan Association of United Ways said. “While unemployment has gone down, the cost of that survival budget — what it costs for child care, health care, food, transportation — has outpaced the increased incomes from jobs.”
Many of these individuals and families are living paycheck to paycheck, don’t have emergency savings and often earn too much to be eligible for aid.
How can we help provide opportunities for these working individuals and families to ensure our communities are growing in vibrant and equitable ways?
Addressing the needs:
Support workforce development as a strategy to increase wages by getting better jobs
Recruit and retain new talent, as we need to grow our high-skilled workforce
Seek innovative ways to connect communities with technology-based and higher-wage jobs
Support the development of smaller, low-cost housing for our aging population
Support affordable housing, public transportation and affordable health care opportunities
Address racial bias in policies, practices and communities that are widening racial disparity gaps
Invest in high-quality child care programs
In the area of child care, CMF's Public Policy Committee and the Board of Trustees are advocating for the Michigan Legislature to support Governor Rick Snyder's request to increase child care subsidies and expand eligibility for Michigan families.
This comprehensive ALICE report highlights many issue-areas CMF members are already tackling in their communities but it also shows the need for continued collaboration and innovation as we seek to build opportunities for all.
Tax Reform on the Horizon
There’s a lot of talk about tax reform, what it could look like and when we may see a tax bill package introduced. The exact timeline remains unclear, with some experts saying it could come as early as this spring, others forecast this fall.
We do know tax reform is on the horizon and it’s expected to be the largest tax reform package we’ve seen since 1986.
There are two potential tax reform frameworks that have been shared, one is a blueprint provided by House Republicans and the other is President Donald Trump’s Tax Plan.
For the charitable sector, there are concerns that the charitable tax deduction, that's existed in our tax code for a century as an encouraging giving tool, could be limited or eliminated in potential tax reform.
The value of the charitable tax deduction:
It’s estimated about 80 percent of all charitable giving in our country comes from taxpayers who itemize their taxes and use the charitable tax deduction.
Every $1 in tax incentive activates $3 in charitable action
Taxpayers who receive a charitable tax deduction are more inclined to give
Tax reform proposals under consideration could reduce charitable giving in one of the following ways:
Elimination of the federal estate tax: While impacting a very small number of Americans, these high net worth individuals have traditionally been high charitable givers.
Reducing the number of Americans who are itemizers: It's estimated it would reduce the number of tax filers who itemize from 33 percent to 5 percent, shrinking the number of filers who can utilize the charitable tax deduction.
Increasing the standard deduction: While this is being considered as a strategy to help all Americans be charitable givers, we know that people will take advantage of the other standard deductions, for instance, the mortgage interest deduction before they consider using the standard deduction for charitable giving.
Our tax code has a complex structure and beyond changing the charitable tax deduction itself, as the Council on Foundations (COF) shared in an issue paper, altering the federal income tax rate structure, the standard deduction and/or the estate tax could also affect the charitable tax deduction.
As we know from research by the Dorothy A. Johnson Center for Philanthropy at Grand Valley State University, the loss of the charitable tax credit for gifts to community foundations in 2012 reduced the size of gifts and the pipeline of new givers. This research confirms that tax policy does not determine charitable giving but it does impact the amount of charitable giving.
Last month, CMF members were advocating in D.C. and talked to Michigan senators and members of Congress about the importance of maintaining the charitable tax deduction.
While organized philanthropy from foundations and corporate giving is significant, 80 percent of charitable giving is provided by individuals who take advantage of the charitable tax deduction. CMF encourages members to contact their lawmakers and share how the charitable tax deduction encourages giving, helping our Michigan communities.
COF released a statement last week saying that legally, private foundations can lobby on the charitable tax deduction as part of tax reform, under a self-defense exemption. This is due to the fact that if the charitable tax deduction is limited or eliminated it would directly affect contributions to the charitable sector. COF said, “This means that private foundations could engage in communications with legislators and staffers on this subject.”
While we want to ensure the charitable tax deduction is maintained, there are also efforts to make the deduction available to all Americans.
Independent Sector announced last week the launch of the Giving100 campaign to advocate for expanding the charitable tax deduction to all taxpayers, not just those who itemize their taxes.
Check out the statement on lobbying.
Join the Giving100 campaign.
Energizing MI Communities
Michigan’s new energy laws go into effect next week, boosting our state’s standards, requiring utility companies get 15 percent of their electric needs through energy waste reduction and renewable energy sources by 2025.
The Michigan Public Service Commission (MPSC) recently released a report showing renewable energy is growing in Michigan and our utility companies have successfully met and sometimes even surpassed the current standards.
MPSC’s report provides a statewide snapshot of renewable energy projects, from several wind-related initiatives in the Thumb region to emerging solar projects in West Michigan. Our state is making gains in renewable and clean energy.
“It's a great trend because we're creating jobs, stimulating the economy, and helping to clean the air as well,” John Freeman, executive director of the Great Lakes Renewable Energy Association (GLREA) said.
The Michigan Conservative Energy Forum recently shared that our state is home to more than 87,000 clean energy jobs. Clean energy jobs may include roles such as engineers, contractors, any roles that build, operate and/or maintain a wind farm, solar energy storage, solar energy facilities, etc.
“As our state’s clean energy industry continues to expand, all Michiganders will benefit from cheaper energy prices and less energy waste,” Larry Ward, executive director, Michigan Conservative Energy Forum said.
Clean and renewable energy is about more than reducing pollution, it helps to lower utility bills for families, creates job opportunities, positively impacts public health and can help build new partnerships to increase economic impact in a region.
What these opportunities may look like:
Highland Park, a low-income community, had previously been in the dark because it couldn’t pay for its street lighting, until Soulardarity, a nonprofit, stepped in to help. Soulardarity has since helped to install solar-powered streetlights in the community, ensuring there’s lighted streets and low energy bills for those who live there.
Michigan State University (MSU) is installing solar array carports that will generate about 5 percent of the electricity used on campus in a given year. MSU officials say this will lower university utility costs, saving as much as $10 million over 25 years and “have a direct effect on keeping tuition rates as low as possible.”
Consumers Energy created two solar gardens in West Michigan, allowing customers to subscribe to the grid and get credits.
DTE Energy is working on two solar arrays in Lapeer and as Crain’s Detroit Business reports, the two sites have generated 150 new jobs.
Michigan Saves is a nonprofit that helps Michigan energy consumers make energy efficient improvements to their homes or businesses by offering affordable financing and incentives through grants and partnerships.
In February, CMF reported how solar energy can benefit low-income communities and how funders are getting involved in this emerging practice, to benefit the communities they serve in social, economic and environmental ways.
CMF members are exploring this practice further to see what it could look like in their communities. Next month, CMF is offering free, intensive workshops for community foundations to get an in-depth look at energy transition and efficiency efforts and the opportunities it might present for our Michigan communities.
The workshops stemmed from member interest following last year’s gathering of community foundations to discuss clean energy transitions, led by the C.S. Mott Foundation, the Energy Foundation and CMF.
This work is expected to evolve, as philanthropy and other stakeholders statewide continue to look for ways to stimulate job growth, improve public health and lower bills for Michigan families.
Rock Ventures seeks innovative solutions for Detroit
Content excerpted and adapted from a Crain’s Detroit Business article. Read the full article.
Rock Ventures employees are spending several days a week sorting through old school records to help the Detroit Public Schools Community District digitize student records. It's a big cost and time saver for the school district and will make those records more accessible for graduates who need them for employment, benefits, citizenship and more.
The project began after it came to light that Detroit's hospitals were having issues getting high school transcripts and health records of job applicants who attended Detroit schools that have long been closed.
Officials at Detroit hospitals were rescinding job offers because the school district had delays of up to three months to produce a copy of a former student's academic records.
“When we have Detroiters not being able to get jobs because you can't find the records in a timely manner, it just seemed like a very logical one for us to kind of swing at,” Chris Uhl, vice president of community initiatives at Rock Ventures said.
As Crain’s reports, it’s one of the many ways Rock Ventures is “exploring new ways to work upstream in fixing Detroit’s most vexing problems.”
Rock Ventures is working in many areas of the city, encourages volunteerism among its employees, allowing them to help as much as they’d like on company time with 250 different causes in the city.
“We have a different DNA. It's not your traditional corporate philanthropy,” Uhl said.