The COVID-19 pandemic has changed life for everyone. Individuals, families and small- and medium- sized businesses have seen their health, their interactions and their finances threatened. It is an unanticipated scourge that touches each of us. It is well documented that the impacts of the COVID-19 pandemic have fallen disproportionately on those already disadvantaged, with the least resources of health, connections and savings. But both the suddenness and the severity of this economic tsunami also caught many others by surprise, including those who believed they were on slightly higher ground and were also not prepared for this life changing event. How many of us were truly ready?
Tens of thousands of Marylanders lost their jobs in the pandemic and remain unemployed today. Many of these individuals have no reserve funds to cover expenses during this time. High numbers of Maryland households have zero or negative net worth, and many Maryland households do not have sufficient liquid assets to subsist for three months.
There are several state and local funded programs available to assist the low- and very low- income population in Maryland, including energy assistance, homelessness prevention, Supplemental Nutrition Assistance Program help and pro-bono legal services. Many of these programs have strict eligibility requirements based on income, however, which means that many working families that are struggling financially do not qualify for some of this assistance available only to those at the very lowest rungs of the ladder. Our leaders must be challenged to focus on both low income and moderate-income families. Many families and individuals in Greater Baltimore have traditionally had income levels in excess of minimums, but still insufficient to meet basic needs. These are the working poor. The number of individuals and families falling into this gap created by limited assets and constrained income has been repeatedly highlighted by numerous community leaders including the United Way of Central Maryland. Post COVID, more families are falling into this gap category of distress.
It’s critical to provide financially fragile families with comprehensive financial counseling and advice. As families fall behind on mortgage and rent payments, car loans and unsecured debt, many could benefit from the support, resources and solutions nonprofits offer to help families recover, grow and prosper.
Recent studies on the impact of counseling and financial coaching by the Department of Housing and Urban Development (HUD), The Ohio State University, the University of Wisconsin and NeighborWorks America have all documented the benefits of these services, which include: increased disposable income through budgeting; increased ability to handle future financial shocks; access to safer and more sustainable financial products and solutions; increased awareness of potential fraud and identity theft; and, with the support of nonprofit professional advocates, access to refinancing or loan modification options, legal protection and other social benefits designed to improve individuals and families’ financial circumstances.
Although financial coaching, counseling and tenant assistance and legal services are generally provided at no-cost to clients, there is a very real cost to the agencies that provide it. Not-for-profit providers need a safety net as well. Most are funded through a combination of public and private grants. Maryland Attorney Brian General Frosh and the Access to Justice Commission on COVID-19 have recommended a $2 million annual appropriation to support such organizations. The Maryland General Assembly and Gov. Larry Hogan should support this recommendation so that these organizations can fill the gap for families throughout our state as the needs increase throughout this pandemic. If these families are able to learn how to build some resilience, their need to continue turning to other public and private assistance programs will eventually diminish and our communities will become stronger from the inside out. This represents an investment in the future.
Mary Ann Scully (firstname.lastname@example.org) is chairman and CEO of Howard Bank.