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Funds of knowledge refers to the knowledge base a household has accumulated from the lived experiences and social practices of its members. In the case of working-class households, these social practices may include the formation of social networks with other households—both kin or otherwise—that may feature the reciprocal exchange of information, labor, or knowledge. Such exchanges are usually mundane or everyday occurrences, but the concept spotlights them as important aspects of household life. For example, someone with knowledge of auto mechanics may be asked to help repair a relative's or neighbor's car to avoid the expense of taking it to a commercial auto repair shop. In exchange, the person with automotive skills may later call on that relative or neighbor, who has knowledge about carpentry, to repair a leaky roof. There is, therefore, exchange and reciprocity, a sense of mutual obligation, in these informal social systems that form the quid pro quo of daily life across many households.

The metaphor of funds refers to knowledge becoming the capital of exchange in household activities or transactions and, as such, establishes funds of knowledge as a central, but nonmonetary, aspect of a household economy. It is also true, however, that households may partake in these forms of exchange to varying degrees. Some households may also be characterized by numerous social networks, representing “core” units in a series of interconnected households, whereas others may remain more isolated from friends and neighbors. Nevertheless, the central claim is that all households, regardless of social status or income, possess funds of knowledge that they have generated and accumulated through family member participation in the practices of working and living and that have become central resources in their survival and advancement.

The concept of funds of knowledge comes from the research of anthropologists James Greenberg and Carlos Vélez-Ibáñez, particularly from their ethnographic study of nonmarket systems of exchange within the Mexican-origin community in Tucson, Arizona. The concept also builds on the insights of anthropologist Eric Wolf, who identified bodies of information essential to the subsistence or well-being of households. The origins of this concept are anthropological, having little or no relation to broader sociological concepts, such as cultural capital, although a convergence of these concepts may prove beneficial to researchers and educators.

The educational implications of the concept were developed by Luis C. Moll, Norma González, and colleagues though a series of studies in Tucson involving teachers as coresearchers. The aim of the work was to establish the pedagogical worthiness of identifying and documenting funds of knowledge in the households of the students in these teachers' classrooms. One goal was to help teachers establish through household visits a vision of the children's families—who were mostly working-class Mexican families—as possessing valuable experiences and knowledge for instruction. This work gave a pedagogical turn to research on funds of knowledge, where teachers became researchers in households, establishing relations with families through their visits, learning and documenting firsthand the knowledge base of the households of the children in their classes, and attempting innovations in instruction based on their experiences and data from their studies. Central to this work was establishing collaborative arrangements in the form of study groups between researchers and teachers for the ongoing discussion of the research and related literature, and for the attempts at classroom instruction. Prominent in the discussions was theorizing the concept of culture, not as some sort of normative model that defines entire groups of people, but as social practices with all the variability or diversity that those practices imply.

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