January 2003      Vol. 12, No. 1  REAP HOME PAGE  A publication of the Center for Rural Affairs    
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REAP Works: Building Assets and Income
A new report based on a REAP member survey shows that the program has helped rural people raise business and personal asset levels and increase family income.

BY JON BAILEY, RURAL RESEARCH & ANALYSIS PROGRAM DIRECTOR

Through funding from the Ford Foundation and the C.S. Mott Foundation, the Center for Rural Affairs recently studied participants in REAP’s small business development program to determine the success of REAP in building income and asset levels. This article summarizes the findings.

Business Assets
Prior to involvement with REAP over 55.1 percent of participants had business assets below $5,000. That is to be expected – the primary objective of REAP is to help startup businesses, those with no or very low business asset levels.

Our survey showed that the business asset level of REAP participants changes significantly after their involvement with REAP. The number of participants with the lowest level of business assets declined by nearly 40 percent; those with the highest level of business assets (over $50,000) increased by over 117 percent.

Our survey also suggests a very clear “step up” process in business asset holdings. We provided respondents with four levels of business assets. The changes in each step before and after REAP involvement are:

STEP 1 (below $5,000) decrease 37%

STEP 2 ($5,000 -19,999) increase 198%

STEP 3 ($20,000 – 49,999) decreases 40%

STEP 4 ($50,000 and over) increase 117%

These data suggest REAP businesses were “stepping up” to the next highest asset level after their participation in REAP. In any event, REAP participation appears to have a positive affect on business asset levels.

Household Assets
Our survey shows that REAP has a significant impact on raising the asset levels of participant households. Using the same asset levels as above, the survey shows that the number of households at the lowest asset level remained unchanged after their involvement in REAP.

However, the number of households at the next two levels decreased by 15 percent and 20 percent respectively. The highest household asset level increased by nearly 43 percent after involvement with REAP.

It is clear that REAP has helped build asset levels both in businesses and in participant households, providing for stronger futures for many participants, their families and their communities.

Business Revenue
Gross business revenue follows much the same pattern as business assets. As expected, most respondents had very low income levels before REAP involvement – 53 percent had less than $5,000 in gross business revenue. But the same “step up” process in revenue seems to be at work after REAP involvement. Using the same levels for gross business revenue, the survey shows:

STEP 1 (below $5,000) decrease 23%

STEP 2 ($5,000 – 19,999) increase 99%

STEP 3 ($20,000 – 49,999) decrease 12%

STEP 4 ($50,000 and over) increase 67%

Although the largest percentage of REAP participants in the survey still have gross revenue at the lowest levels, revenues are improving after REAP involvement.

Family Income
REAP has also shown significant affects on the family income of participants. The number of participants with family incomes below $15,000 (a generally accepted definition of the “poverty level” for many families) was cut in half after REAP involvement.

Conversely, the number of REAP participants with family incomes over $50,000 increased by over 25 percent after REAP involvement. It appears from these results that REAP has helped alleviate poverty in many families by helping to increase family income.

While REAP was designed as a rural economic development strategy that fits the scale and needs of many rural communities, it is important to note its contribution to the betterment of people through asset building. Assets like businesses bond one to a place and help to build strong, more sustainable communities.


 Contact: Jon Bailey, Rural Research and Analysis Program Director at the Center for Rural Affairs at jonb@cfra.org or 402.846.5428, extension 16 for more information.
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