Financing Financial Literacy

By: Marc H. Morial
President and CEO
National Urban League

Knowledge is power, the old saying goes.

It's a truism that's long fueled the zeal of African Americans to pursue education, and has produced outstanding benefits for individual African Americans and for Black America as a whole.

And certainly, we're all aware that literacy—whose definition I'll broaden to mean not just knowledge but the ability to keep learning—is more crucial in the world of the twenty-first century than ever before.

However, it's also become increasingly clear that to do well in this new world individuals also need another kind of literacy: "financial literacy."

By that I mean the ability to effectively manage one's money and other material resources in order to establish, maintain and increase a secure financial portfolio. The end of the boom years of the 1990s and the wreckage in lives and financial assets wrought by the recession and slow economic recovery of the last four years have made that painfully clear.

Black Americans, who charted significant economic gains during the so-called Long Boom, have suffered disproportionately from the reverses that followed, as University of Minnesota Professor Samuel L. Myers bluntly wrote in the Urban League's annual report The State of Black America 2004.

"The lesson to be learned from the long period of expansion,"he pointed out, "is that African-American families and households still are perched precariously between a significant narrowing of income gaps and a persistent inequality in wealth."

That predicament, I noted in my introduction to the volume, is both a cause and an effect of a particular force: the complexity of black progress

That complexity springs from the fact that, in broad terms, African Americans' progress has always been unsteady. It's always been shadowed by the possibility that a significant reversal of fortune lurks just over the horizon that could completely erase all the gains made.

One example of that force at work is that in 2000 the black unemployment rate fell to an historic low of 7 percent—as poor black males rushed to fill the low-wage service sector jobs the Long Boom had, finally, made available to them. But, within a year, as the recession took hold, the black unemployment rate moved back to the 10-percent level, where it has remained ever since.

At this critical juncture, when the nation's economic future is full of uncertainties, this facet of the African-American experience may be repeating itself—with consequences that could widen even further the "equality gap"between Black America and White America.

That's why it's critical that we close the economic "equality gap"that exists between African Americans and white Americans. The National Urban League Equality Index we unveiled in The State of Black America 2004l determined that, in terms of economic parity, black Americans stand at just 56 percent of where white Americans are.

This gap is perhaps the most dangerous gap of all.

That's why Citigroup, the giant financial services company, and the National Urban League, have joined to spread the message that financial literacy is critically important and help more African Americans develop it.

Citigroup and Urban League affiliates in six cities across the country are launching financial education programs to teach people how to more effectively manage banking, savings, investing and credit. The program is funded by a $900,000 grant from the Citigroup Foundation.

Despite the glitter of the go-go years, when it sometimes seemed that everyone was on their way to making millions in the stock market, millions of Americans have no investments at all: that includes 47 percent of African Americans.

In addition, only one-third of African Americans have savings accounts; and, perhaps most critically, as Professor Myers points out, just 47 percent of African Americans are homeowners.

The goal of Citigroup and our Urban League affiliates in Chicago, Los Angeles, New York City, Rochester, New York, Sacramento, California, and San Diego is to increase these latter two percentages (and others, too) by helping individuals grasp the essentials of managing money wisely, by aiding entrepreneurs of small businesses save, invest and secure financing to "grow"their businesses, and by supporting other programs that help spread this message.

For the next three years Urban League staffers and members of our Young Professionals auxiliary will use Citigroup's financial education curriculum to train community residents on the fundamentals of sound financial management and inspire them to build savings and other assets—in order, as Bob Willumstad, Citigroup's President and Chief Operating Officer, said, to "raise the quality of life for individuals, families and institutions and strengthen communities."

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