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Philanthropy and Poverty in the US: Highlights of Current Approaches

October 31, 2019

According to the United States Census Bureau Report, Income and Poverty in the United States 2018, there are 38.1 million people in United States living in poverty. When this number is viewed in light of the actual metrics used ($25,465 annually for a family of two adults and two children) it becomes clear that this number dramatically understates the problem. A more appropriate poverty threshold as noted by the OECD would put nearly 18% of the US population in poverty. This reality, and its disproportionate impact on people of color and particular geographic regions, is one of the biggest challenges facing the country today.

Existing government services—such as subsidized housing, healthcare, transportation and food, as well as tax breaks and social security benefits—have had some success. For example, according to the US Census Bureau’s Supplemental Poverty Measure: 2018, social security benefits moved 27.2 million people out of the category of poverty as defined in the report, while refundable tax credits elevated 8.9 million from the lowest financial ranks.

However, the stark numbers of those still impoverished reveal that such programs alone are not enough, especially in times of declining governmental support. Thus, this is a key area in which philanthropy can make a meaningful impact. From seeking to address structural challenges and policies that perpetuate economic inequality, to developing programs that counter the effects of poverty, philanthropy has a large role to play in securing a more equitable and balanced future for citizens throughout the United States.

Although poverty has long been an area of interest among Rockefeller Philanthropy Advisors clients, it has taken on new urgency for many in light of the current political and economic environment. While exploring with them the philanthropic traditions of direct service, individual change, systems change, and social justice, we also shared the following four potential models for engaging in anti-poverty philanthropy as a starting point.

  • The Two Generation Approach

This approach includes interventions that target low income children as well as their parents. Given the lack of generational mobility that it typical in poverty-ridden communities, this approach theorizes that moving the family unit out of poverty will improve mobility overall. For children, the emphasis is often on providing high-quality education, especially in early childhood. Those services are typically paired with strong “wrap-around” supports for parents, including housing, health care, and other related social services.

Examples of leaders in this space are The Annie E. Casey Foundation and the Aspen Institute’s Ascend program.

  • Asset Building

The asset building model is an effort to build financial assets (such as savings accounts, home ownership, etc.) among low-income individuals and families. The assets contemplated by this approach can also include knowledge and training. This approach is designed to build wealth to allow families to weather a financial shock such as illness, and which can transfer to subsequent generations. Programs include financial literacy training and counseling, advocacy for policies such as auto-enrollment into retirement accounts, and home ownership support. Another example would be “Baby Bonds,” a policy to provide a bond of a certain dollar amount to every child born in the United States, which they could access on maturity for education, housing, or retirement.

Examples of leaders in this space are Prosperity Now and Asset Funders Network.

  • Universal Basic Income

Universal basic income is a proposal that calls for the provision of a fixed annual payment to each eligible person in a city, state, or country. This payment would provide a “guaranteed” income floor. There is a high level of current interest in this concept, driven in part by worries over automation leading to massive job loss. While it may sound like a significant leap from traditional thinking in many circles, examples of this already exist: the Earned Income Tax Credit is a kind of UBI, as is the annual dividend from the Alaska Permanent Fund given to eligible Alaskan residents. There are major questions over the cost of this program in the US, though other countries have some form of this.

Leaders in this space include Economic Security Project and Y Combinator.

  • Upskilling

Upskilling is a largely employer-driven effort to provide on-the-job training that can augment the skills of workers to respond to changes in the tools of the economy. The emphasis is on leveraging employees’ and employers’ existing relationships and knowledge base, to build out job-relevant skills that also move employees “up the ladder”. Employers typically employ it hope that it reduces turnover and alleviates the skills mismatch that many employers report make it hard to hire qualified workers.

One of the leaders in the space is The Aspen Institute’s UpSkill America program.

One other area in which we are doing significant work is in global financial inclusion, which includes research to enable the creation and implementation of systems to reach those with the least access to financial products and services.

Alleviating poverty in the United States will require sustained, comprehensive effort and a significant allocation of resources. This is a challenge that cannot be confronted by any one organization, philanthropist, or government policy. There are already efforts underway, and there are numerous opportunities for philanthropies throughout the country to join this urgent fight.

If you’d like to learn more specifically about the work of RPA and our clients in this issue area, please email Mae Hong, Vice President at [email protected], or Jon Quinn, Director, at [email protected].

If you’d like to learn more about this article, please email Kalyah Ford at [email protected].

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