SOURCE: The Bridgespan Group

The Bridgespan Group

May 05, 2016 08:00 ET

Seeking Economic Opportunity: How a Billion Dollars of Philanthropy Can Restore the American Dream

A New Report by the Bridgespan Group Calculates Returns of 3:1 to 15:1 for Six Specific Investments to Spur Upward Mobility

BOSTON, MA--(Marketwired - May 05, 2016) - Despite the widely shared perception that the American Dream is unattainable for a sprawling segment of the population, there is reason to believe the American Dream is not dead -- and may be revitalized. A new report from The Bridgespan Group, "Billion Dollar Bets to Create Economic Opportunity for Every American" sets out to provide a data driven perspective on ways to put low-income Americans on an upwardly mobile trajectory. Building on the latest research on social mobility outcomes and evidence-based programs, the study features return on investment calculations for targeted outcomes such as early childhood education preparation. The calculations demonstrate that large amounts of philanthropic capital -- if invested in ways that influence policy or market behavior -- can potentially deliver returns of $3 to $15 on every $1 invested.

According to Bridgespan Partner Debby Bielak, who co-authored the study, "Our team set out to look at the issues around social mobility with a different lens: Identifying opportunities where $1 billion of targeted private funding would be most likely to impact many more Americans and identify pathways to the middle class. Philanthropists have powerful roles in supporting equal economic opportunity."

To date, Bridgespan research has shown there are very few large investments ($10M or more) toward social change. Major barriers include not knowing where to invest, and lack of confidence that investments would make a difference. The social mobility study tackles these barriers, highlighting the outcomes that matter most for social mobility and the programs and policies currently achieving results, and provides a range of ways that donors can invest to advance social mobility.

Said former US Department of Education Deputy Secretary Jim Shelton, a 2015 Bridgespan Fellow and study co-author, "Betting big pushed our team to think big. We reviewed existing research, conducted numerous interviews, and worked with an amazing advisory board of national leaders. Together we identified investments where $1 billion of philanthropy leveraging public will and resources could spur upward mobility for large numbers of low-income Americans. My hope is the study will encourage some to pursue these ideas and others to identify better ones."

The data show that 70 percent of individuals who are born to parents in the bottom two income quintiles will remain trapped in the bottom of the economy throughout their lives. Additionally, research shows that nearly seven out of ten black Americans born into the middle class will fall into one of the bottom two income quintiles as adults.

Despite the grim statistics, the Bridgespan study points to reason for optimism. Citing public outcry that spans the ideological spectrum, their research identified key areas for philanthropic investment across 15 specific pathways for social mobility proven to be both "powerful" and "feasible." Working with field experts and practitioners, the Bridgespan team explored six investment ideas in depth, including:

  • Support the scaling of technology-enabled applications to help improve early childhood development and caregiving
  • Shift employer incentives to drive inclusive hiring based on competence as much as pedigree and build new training and career pathways
  • Stimulate public and private innovation to reduce conviction and incarceration rates through grant competitions, prizes and alternative funding models
  • Influence existing funding flows and healthcare provision by expanding access to long acting reversible contraception (LARCs) and providing training to support expanded provision from or referral to family counseling among primary care providers
  • Support greater economic integration of communities by buttressing housing voucher programs with additional mobility assistance supports and removing blight conditions in distressed neighborhoods
  • Shape government oversight and funding to align with evidence-based outcomes

"While not comprehensive, our list reflects an emerging consensus around promising philanthropic opportunities that have the potential to deliver outsized results," said Devin Murphy, a Bridgespan manager and third co-author of the study.

According to Shelton, "To take on the daunting challenge of reversing the social mobility trend lines, we can no longer think in terms of 'either/or' options -- either we improve early childhood development outcomes or we reduce unintended pregnancies. The data is clear. We've got to do both, and so much more."

Shelton points to the Social Genome Model, which was used to estimate individual economic benefits of improved outcomes, for example, improving both academic and behavioral outcomes in early childhood will on average deliver a $25,000 boost to his or her family earnings. Over a span of 50 years that return, while helpful, hardly ensures a middle class life.

"However," continued Shelton, "when we enable multiple improvements over the course of vulnerable children's lives, improving early learning and development, avoiding an unintended pregnancy, steering away from arrest and jail, finding a path to a career, and even living in an economically diverse community, the lifetime impact on family earnings grows exponentially."

Added Bielak, "These issues are inter-related -- a child with excellent early childhood supports isn't inoculated from other forces such as low quality elementary education or the stress of avoiding crime. That said, a targeted investment within these inter-locking areas could be powerful. Whether it is to build pathways to careers, reduce unintended pregnancies, transform high poverty neighborhoods or a dozen other outcomes, a funder who invests in any of these areas would do our country well."

About The Bridgespan Group,
The Bridgespan Group (www.bridgespan.org) is a nonprofit advisor and resource for mission-driven organizations and philanthropists. We collaborate with social sector leaders to help scale impact, build leadership, advance philanthropic effectiveness and accelerate learning. We work on issues related to society's most important challenges and to break cycles of intergenerational poverty. Our services include strategy consulting, leadership development, philanthropy advising, and developing and sharing practical insights.

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