Building social capital: A path forward

Dennis Duquette

By Dennis Duquette
Dennis Duquette is MassMutual’s head of community responsibility and president of the MassMutual Foundation.
Posted on Dec 3, 2021

Social networking has long been linked with career success, but the extent to which personal connections can help build bridges between poverty and financial security is only now becoming clear.

Indeed, research suggests that the material and social benefits we garner from our relationships with individuals, groups, and institutions (such as banks), commonly called “social capital,” make economic mobility possible.

For many of us, the emergence of social capital in our lives has been largely organic, gained through relationships we begin making as children in our neighborhoods, our schools, our religious affiliations, and the activities in which we participate growing up. Yet, these basic connections that invariably lead to still more connections and opportunities later in life often look different in economically challenged communities. The detrimental effects of fewer connections within and outside of one’s community can be significant.

Social capital is not synonymous with privilege or even nepotism—favoritism shown to friends and family, especially in job placement. Rather, it’s the behaviors and shared values that exist within – and across - communities that form a framework for reciprocity.

It’s the neighbors who swap child care or deliver meals when one of their own falls ill, the friends who pool resources to create lending circles, and the family members who model and encourage educational attainment. It’s the engaged parents who rally together to change laws, build parks, and improve their schools, which in turn results in a more robust community with higher home values.

In many of America’s most economically depressed neighborhoods, pathways to social capital already exist in the programs (both public and private) that connect families to affordable housing, health care, transportation, banking, career training, and healthy food. But all too often, those resources reach only a fraction of those they seek to serve.

Through our community-based work with the MassMutual Foundation’s Live Mutual Project, we’ve seen how limited social capital within a community can hamper the ability of residents to connect with vital, often local, resources and services that can help alleviate impediments to their overall ability to thrive. It can be as simple as not knowing services are even available and accessible right around the corner, so any efforts to foster those basic connections can provide residents with not only short-term assistance, but also contribute to long-term stability.

Seeking solutions

The growing body of evidence that economic well-being is closely correlated with social capital has triggered a global search for solutions.

In 2021, for example, the MassMutual Foundation partnered with the Impact Genome Project (IGP) to create a first-of-its-kind Social Capital Genome—a research platform designed to study resources in marginalized communities, raise visibility, track progress, and create a common language by which researchers, funders, and nonprofits can evaluate interventions. The goal is to develop sustainable, data-driven strategies to help people build social capital - activating their personal, professional, and community networks.

Initial findings from the joint effort have identified both racial and economic inequities on the social capital continuum.

  • Low-income households and people of color are far more likely to have limited or no personal networks to elevate their economic status. White, college-educated, wealthier adults are more likely to have a trusted network upon which they can rely for personal and professional support.
  • People with incomes below the federal poverty line are 2.5 times more likely than their higher income peers to have no one to turn to for help wihen they get sick or need unexpected child care so they can continue earning a paycheck.
  • 35 percent of Hispanic adults and 38 percent of black adults have only one person or no one to help them write a resume, navigate a professional challenge, or connect them with job opportunities. That compares with 26 percent of white adults.
  • 25 percent of black adults could not access essential services and supports (like government benefits or legal system advice), compared with 10 percent of white adults. And the majority (62 percent) of those who could not access a needed service indicated that they did not know if they were eligible or where to turn to for help.

Financial deserts

Access to banking can help or hinder economic well-being. Indeed, many of America’s working poor reside in so-called financial deserts, where banks and lenders are either sparse or absent. But it isn’t simply about access to banks and other institutions– it’s also about the relationships that inspire confidence to utilize those services. An example of this type of social capital would be a bank employee who has built a relationship with a customer over time, so they are able to help them better understand other bank benefits, such as a loan or 529 college savings plan.

Without access to a savings account, it’s harder to put money away for retirement or short-term financial goals. And without a local lender you trust, it’s more difficult to establish credit, which enables consumers to buy a house or obtain a small business loan (to build wealth) with favorable interest rates.

Reliance on pawn shops and payday loans (which often come with annual interest of 400 percent) in financial deserts is prevalent, which contributes to poor financial literacy and perpetuates a cycle of debt. Having someone help you navigate your financial options is a critical aspect of financial well-being.

To address the financial obstacles associated with limited social capital, the MassMutual Foundation’s Live Mutual Project is bringing together community resources and partners in select communities to broaden access to critical resources and foster healthy financial futures. (Learn more: Fighting poverty one relationship at a time)

The heart of what we’re doing at MassMutual, our mission, is to help people secure their future and protect the ones they love. It is predicated on the belief that we should be able to deliver on that for everyone, regardless of their Zip code.

The challenges of creating social capital in vulnerable communities are vast, but so, too, is the resolve of business leaders, social scientists, nonprofits, and civic leaders. By working together and bringing their own networks to bear, these partnerships are already making inroads toward greater economic opportunity and delivering hope for a brighter tomorrow.

This is a huge problem, and we can’t do it alone. We truly believe that engaging others is the way we bring scale to this approach, to concepts like social capital, the value of social capital, and the ultimate programs that emanate out of that.

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The information provided is not written or intended as specific tax or legal advice. MassMutual and its subsidiaries, employees, and representatives are not authorized to give tax or legal advice. You are encouraged to seek advice from your own tax or legal counsel. Opinions expressed by those interviewed are their own and do not necessarily represent the views of MassMutual.