Detroit’s newly elected mayor, Mary Sheffield, has announced a bold vision: poverty elimination is a growth strategy. To achieve this, the city needs a wealth-building strategy. Mayor Sheffield’s statement emphasizes that reducing poverty will improve profitability, productivity, and regional growth.

A New Approach to Poverty Elimination

Traditional anti-poverty systems are built around consumption, with the U.S. spending over a trillion dollars annually on social assistance programs. However, subsidizing consumption does not build wealth. A system that gives people just enough to remain poor, but not enough to build assets, will never eliminate poverty.

The Detroit Residents’ Investment Fund, or iFund, is a resident-owned investment fund designed to reduce poverty by expanding access to investment opportunities for low-income households while revitalizing local small businesses with flexible capital. This model solves two problems simultaneously: Detroit’s small businesses need flexible, non-extractive capital, and residents need access to wealth-building opportunities.

The public policy implications are significant. Instead of public funds subsidizing development where private investors capture the equity, the government could subsidize low-income residents in purchasing equity in local businesses, reducing their reliance on government support. Tax revenue generated by growing businesses could offset the subsidies, creating a hand-up, not a handout.

Original reporting: BridgeDetroit — read the source article.