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From its earliest days, the U.S. microenterprise industry has included welfare recipients among the low-income individuals it seeks to assist. With the advent of federal welfare reform in the early 1990s came new issues and challenges for microenterprise organizations that sought to work with this population. Thus, in 1998 the Charles Stewart Mott Foundation funded 10 microenterprise programs to test whether – and under what circumstances – self-employment can be a viable source of work and income for welfare recipients. FIELD conducted a five-year learning evaluation of this demonstration effort, which was completed in 2003.
Key Findings
The microenterprise Welfare to Work project yielded a wide range of findings, as it not only explored the experiences of welfare recipients who received services, but also documented how TANF policy affected the experiences of both welfare clients and program operators, as well as the program strategies and services that the grantees used in working with welfare clients. These findings are detailed in 12 publications (see below), each of which is available as a free PDF.
Some of the key findings from this work are:
The welfare recipients who participated in the demonstration clearly progressed in a number of ways:
- Most notably, they experienced strong growth in income and employment, and their reliance on TANF cash assistance was greatly reduced.
- Individuals who patched income from both self- and wage employment showed the strongest growth in income, and generally experienced lower levels of unemployment.
For welfare agencies considering supporting self-employment, the findings from the study suggest consideration of several factors:
- The employment outcomes experienced by individuals who participated in these microenterprise programs involved wage employment, and employment patching, as well as self-employment – and that the program designs anticipated and supported this range of outcomes.
- While study participants clearly increased their rates of business ownership, and while the businesses they operated grew over time, at the time of the two-year follow-up the level of business draw was not sufficient to support the family’s full income needs.
- Given that those who patched self- and wage employment showed the strongest incomes, policymakers may want to consider supporting income patching as a strategy for helping TANF recipients advance toward self-sufficiency. Such support might include orientation sessions that discuss income patching as an option, access to microenterprise training services structured to meet the needs of individuals engaged in wage employment, and access to child care assistance to support the high number of hours worked by income patchers.
- Welfare agencies may also want to create policies governing the treatment of business income and assets that allow individuals to reinvest business revenues, as well as to continue to receive some income support, as they work to grow their businesses to the point at which they can become a larger source of income support.
For microenterprise practitioners, the study findings indicate a number of programmatic issues for consideration.
- Most importantly, in order to serve welfare recipients effectively, microenterprise programs must both understand local TANF policies and build relationships with their local TANF office.
- As with welfare administrators, program staff may want to consider how they can promote, and structure their services to support, income patching on the part of their clients.
- Programs should examine their approaches to assessment and screening, business financing and economic literacy, as well as the needs of low-income individuals with disabilities, to ensure that they meet the particular needs of welfare recipients.
FIELD and its partner in the demonstration, the Center for Law and Social Policy, have released several publications that detail findings from the learning cluster. These publications cover research on three different areas of interest:
Client Outcomes: Research briefs and reports detailing the characteristics of and outcomes for TANF recipients participating in the demonstration.
Policy Context: Publications documenting TANF policies in the states where the demonstration programs were located, analyzing issues and challenges under current TANF laws and policies, and providing suggestions for TANF reauthorization.
Program Strategy: Brief publications that describe the specific services and strategies used by the grantees to assist TANF recipients to become self-employed.
Learning Cluster Members
The 10 projects that participated in the learning cluster are briefly described.
Learning Evaluation
Provided here is a description of the learning evaluation for this grant cluster, which includes both qualitative and quantitative information on the implementation of the projects and the experiences of project participants.
