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Future Of Philanthropy

6 Ways We Could Spend $1 Billion To Fix America's Economic Mobility Problem

If we want to save the dying American dream, this is how we could change policy to make sure more people had opportunities to succeed.

6 Ways We Could Spend $1 Billion To Fix America's Economic Mobility Problem

Illustrations: chuckchee via Shutterstock

If you had $1 billion and you really cared about the state of social mobility in this country, where would you put your money to best use?

That's the animating question of a new report from the Bridgespan Group, a consulting firm for nonprofits and philanthropists. It reviews a mass of research evidence and identifies six "big bets" that prospective donors might take on.

"A child born into the bottom 20% of the U.S. income distribution has just a one in 10 chance of making it into the top 20% of the distribution—less than half the likelihood in European countries like Denmark," the report points out. And the prospects for African Americans and Hispanics are worse than that.

But, despite interest among philanthropists in promoting mobility, there's actually a lack of investment going into the area. Four-fifths of large donors want to catalyze social equality, a Bridgespan survey found, but most don't follow through. Between 2000 and 2012, they directed just 20% of donations above $10 million to "social-change organizations." A billion might sound like a lot of money, but it's not in the face of the problem. Just think, most estimates peg the cost of the Iraq War at more than $2 trillion. And these billion dollar investments all return much more than that in economic benefits.

Bridgespan says this is partly because "the root causes of poverty are interwoven and systemic, [so] donors struggle to identify the right structure and focus for sizable investments." The new report therefore lays out a roadmap of ways to effect change, and calculates which interventions might have the greatest return-on-investment (ROI). Below are the six ideas in turn:

Tech-enabled early childhood development

Inequality begins early. Research shows that kids from poorer homes tend to have fewer cognitive skills, a less developed vocabulary, and to be less developed socially and emotionally. This puts them at an immediate disadvantage compared to their peers.

The report recommends investment in "a suite of tech-enabled tools that parents, informal caregivers, daycare center providers, and instructors can use to support the healthy development of children." That includes ideas like Text4baby (a text advice program for mothers and mothers-to-be), UPSTART (a PC-based pre-school program from the Waterford Institute), and Ready4K (a text program for "kindergarten readiness" skills). Making sure kids are ready for pre-school, the report says, would return $5.5 billion to $11 billion in increased lifetime earnings.

Clear pathways to careers

The second bet concentrates on identifying the type of skills employers actually need (as opposed to the skills that traditional education tends to teach). It encourages "competency-based learning" and calls on employers "to clearly articulate (and disseminate) the skills that are necessary to succeed in a given career." By educating youth in what they need to know to get ahead, it should be possible for more to get ahead, the report reasons. It also estimates an enormous ROI on the long-term benefits: $7.3 billion to $14.7 billion.

Decrease convictions and incarcerations

The United States convicts and locks up people at five times the rate of comparable advanced nations. No country puts more people in prison, and, of course, black males are disproportionately affected. The criminalization binge stops people from developing useful skills, while a criminal record hinders people who have been released from prison from being considered for jobs.

The report wants new "laws and norms that support the appropriate treatment, intervention, and rehabilitation of individuals who have served their time." It says such laws and norms "should be consistent across race and class, and they should be based on the specific behaviors and supports that help former inmates become productive members of society."

Lifetime earnings dividend: between $4.3 billion and $8.6 billion.

Cut unintended pregnancies

The fourth bet aims "to shift market behaviors among health care providers and policymakers to support greater access and uptake of effective contraceptive options." The aim: to reduce the roughly 1.6 million unplanned babies born every year. The report says long-acting reversible contraception is proven to reduce unwanted pregnancies among teens and young adults and that more counseling and education could spread its use (even if pro-life advocates are bound to object).

Potential lifetime earnings boost: $3.2 billion to $6.4 billion.

Reduce concentrated poverty

America is full of distressed communities where poor housing, schooling and health care compound the effects of poverty. This bet would build on the insight that children born to low-income parents fare better when they live in more "economically diverse" neighborhoods (places where richer and poorer people live side by side).

The intervention would try to prove the economic benefits of greater integration "by building the infrastructure and services that support far greater access to economic opportunity in five regional areas." The total ROI in lifetime earnings could be $4.5 billion to $8.5 billion, the report says.

Improve the performance of social services

Finally, Bridgespan calls for a new evidence-based transparency ethos around existing public services. Too often, it says, government funds "ineffective, cost-prohibitive [programs]" with only "modestly effective outcomes for low-income and marginalized populations." The specific program would fund the continuous improvement of services in 15 U.S. localities based on the rigorous capture and application of data. Then a "learning platform" would be spread more widely. The report says such an approach could yield $3 to $6 billion (though it's only an "illustrative" estimate rather than a definite one).

Read more from the report here.

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