Cities aren’t the only proponents of giving no-strings-attached cash to people in need. Here come the nonprofits.
The national movement, which had its local roots in Chelsea and spread to Cambridge, aims to empower low-income households with monthly stipends and settle an age-old debate about whether we can trust poor people with money instead of having them constantly jump through hoops to receive aid.
Advocates of so-called guaranteed income programs believe that low-income households know best how to lift themselves out of poverty rather than being told what to do. It’s that combination of confidence and cash that can help people move up the economic ladder.
At least three local nonprofits have launched pilots in recent months: Camp Harbor View with 50 families that are receiving $583 a month for two years; United South End Settlements with 16 families that are getting $800 a month for 18 months; and UpTogether — in partnership with the Massachusetts Department of Transitional Assistance, Harvard Business School, and others — has embarked on a research project providing nearly 1,500 families with varying amounts of money and social capital over 18 months.
UpTogether, formerly known as Family Independence Initiative, has been giving cash to families for two decades with positive results. Now the nonprofit hopes that a large-scale study involving families with average household incomes of just over $16,000 can shed light on how unrestricted cash can fight poverty.
Jessica Ridge, partnership director at UpTogether, said the $7 million pilot has been four years in the making. She now fields calls from potential funders, nonprofits, and governments interested in pursuing guaranteed income programs of their own.
“There is a growing awareness that families can and should be trusted and invested in, and a recognition that the policy choices of the past haven’t been effective,” said Ridge. “This is a new opportunity to invest in the wisdom and ingenuity of families.”
The timing couldn’t be better, coming just as pandemic-related federal relief programs, from bigger unemployment checks to the expanded tax child credit, have ended.
The nonprofits are also closely monitoring the impact of their income programs. Camp Harbor View, which launched its pilot in August, and USES, which began its effort in October, are already seeing remarkable results for participants compared with control groups of families who are not in the pilot:
- Just over half of the families in the Camp Harbor View control group reported experiencing food insecurity compared with 36 percent of the families receiving payments.
- 61 percent of the control group families with Camp Harbor View reported that their debt had increased compared with 39 percent of the payment families.
- Only 16 percent of the Camp Harbor View control group were able to save in the last three months compared with 40 percent of the payments families.
Meanwhile, about 64 percent of families in the USES pilot report saving an average of $1,000, and 44 percent decreased debt by an average of $2,350. Most of the families have household incomes of less than $30,000.
Children were among the biggest beneficiaries at USES, with families starting college savings accounts, and being able to pay for extracurricular activities and school-related field trips. Before the pilot, about 86 percent of families said they could not afford to participate in extracurricular activities such as sports and dance; with the extra cash, that dropped to 50 percent.
The most striking statistic revolves around parent engagement: Before the pilot, only 7 percent of families were reading daily to their children. That has surged to 31 percent.
“One of the most important things that we learned was how incredibly impactful the money was almost immediately,” said Melody Valdes, chief of staff at USES who has been overseeing the nonprofit’s pilot known as STEP (Striving Towards Economic Prosperity).
Philanthropists approached USES about a guaranteed income experiment, similar to how nonprofits such as Shah Family Foundation and Cambridge Community Foundation seeded efforts in Chelsea and Cambridge.
The USES donors wanted to test a hypothesis: Could giving cash to families who are already part of social safety net programs that nonprofits provide increase the chances of them breaking the cycle of poverty?
The mission of USES, which was founded in 1892, focuses on economic mobility of families working with children and parents through early childhood education and personal coaching. The USES pilot involves families the nonprofit already works with, all of them headed by single mothers.
“Our two-generational model really makes it possible for us to not only see the impact that our programs and our interventions have on families, but to also see the ripple effects that it has on their children,” said Valdes.
The $800 monthly stipend is on the higher side for these experiments. The Chelsea pilot, which ended in October, involved about 2,000 families receiving between $200 to $400 a month for 10 months. The Cambridge program, which launched in September, is giving out $500 a month for 18 months to 130 households headed by a lone caretaker, such as a single mother.
USES settled on its figure after seeking guidance from another nonprofit, Magnolia Mother’s Trust, which began a guaranteed income initiative for low-income Black mothers in Jackson, Miss., in 2018. That program gives out $1,000 a month for a year, and is on its third cohort.
Jerrell Cox, co-executive director of USES, said its pilot donors — who want to remain anonymous because they want the focus to be on the mission — were particular about the amount.
“They were very adamant about making sure that it was a meaningful amount,” said Cox. “They didn’t want to give a lot of people a little bit of money ... they really wanted to make sure that we were able to reach families with a meaningful amount of money for a significant amount of time.”
Camp Harbor View came up with the figure of $583 a month for two years after hiring a consultant who determined that giving financially-strapped families about $7,000 annually would give them a shot at reaching an “escape velocity” to lift them out of poverty, said Lisa Fortenberry, executive director of Camp Harbor View, who is overseeing the nonprofit’s guaranteed income program.
What makes Camp Harbor View’s pilot different is that it focuses on families whose households make more than $43,000 a year and don’t qualify for government benefits such as food stamps and public housing. These are the families who struggle to make ends meet in a high-cost city like Boston and are one emergency away from a financial crisis. Not poor, but hardly stable.
Like USES, Camp Harbor View saw an opportunity to work with families it has known for years through summer camp. The brainchild of philanthropist Jack Connors, who cofounded the Hill Holliday advertising firm, Camp Harbor View launched to offer free summer camp on Long Island, but has grown into providing year-round support to about 1,000 Boston children and their families.
The success story both Fortenberry and Connors like to highlight is of a single mother of two children who has been working two jobs for six years. The monthly stipend allowed her to focus on her full-time job, which paved the way for a promotion and a raise. That allowed her to quit her second job.
Fortenberry said it’s an example of what happens when people have more control of their economic future.
“You have agency and trust, and you have autonomy,” she said. “This strength-based approach is incredibly powerful. There are great possibilities here.”
These nonprofits are boldly testing the unrestricted cash concept, but this doesn’t absolve government of figuring out how to win the war against poverty. As income inequality grows, it will take all of us to figure this out rather than stick to old formulas that haven’t worked.
Shirley Leung is a Business columnist. She can be reached at firstname.lastname@example.org.