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How Cities Across the U.S. Are Using Philanthropy to Combat Inequality

All over the country low-income citizens are struggling to attain more economic mobility. A new program funded by two large foundations is working to address that.
Residents walk past one of the few remaining Chicago Housing Authority Cabrini-Green public housing buildings January 12th, 2005, in Chicago, Illinois.

Each year, about 40,000 people in Essex County, New Jersey, get evicted. Almost half of them are in the city of Newark, where more than three-quarters of the population are renters.

As housing in Newark, spiked by a surge in interest from priced-out Manhattanites, grows more expensive, evictions keep getting filed—"sometimes arbitrarily; sometimes because of poor management," said Newark's mayor, Ras Baraka, who's trying to balance his city's reviving fortunes with the needs of its many low-income residents. And sometimes, "simply because landlords want to lease it out in order to raise the rent for other folks."

Last year, Newark became one of only three cities in the country to pass legislation that provides free legal assistance to all low-income renters facing eviction through an Office of Tenant Legal Services, with the ultimate goal of reducing the number of evictions citywide by a quarter. Now Newark's anti-eviction program is getting a boost that Baraka hopes will help the city aim even higher: The city is one of 10 in the United States that will participate in an 18-month national economic mobility initiative funded by Bloomberg Philanthropies, the Bill & Melinda Gates Foundation, and Ballmer Group.

The program, sustained by a $12 million grant, will support local projects intended to improve residents' economic health at various stages of life. It's a goal inspired by Bloomberg Philanthropies' 2018 American Mayors Survey—in which many city managers and mayors identified economic issues as their local key challenge—and by Harvard University economist Raj Chetty's Opportunity Atlas, which highlighted how widely economic potential can diverge for children living in different zip codes.

Chosen for the strength of their intervention ideas and their commitment to data-driven solutions, as well as their need, the participating cities represent a geographically and economically diverse selection of urban areas wrestling with various shades of inequality. In the Northeast and Rust Belt, Newark is joined by Rochester, New York; Cincinnati and Dayton, Ohio; Detroit and Lansing, Michigan; and Racine, Wisconsin. Further afield, New Orleans, Louisiana; Albuquerque, New Mexico; and Tulsa, Oklahoma, round out the list of participants getting a philanthropic boost. These are places where the economic pain of residents isn't necessarily captured in unemployment rates or growth numbers.

"We know that city leaders are trying to help address this issue of rising income inequality and economic challenges, [but] the research says that traditional indicators of local economic success, like job growth, don't always translate into greater upward economic mobility," said Andrea Coleman, who works on government innovation programs at Bloomberg Philanthropies. "If they can't just look to job growth, what should they be looking to?"

Each community is hoping to find its own answer by executing projects that fall into three broad categories: education (both early and continuing), housing affordability, and jobs training and financial planning.

Newark's pilot will focus on continuing to connect at-risk tenants with legal resources, says Natasha Rogers, Newark's interim deputy mayor and director of the Department of Economic and Housing Development. That effort should reduce the number of eviction filings, she says, as well as increase the number of eviction appeals won. Detroit, where one in five renters face eviction, is addressing housing, too, by connecting low-income residents with programs to foster economic stability.

Rochester's plan involves connecting low-income families with regular cash assistance—the same principle that undergirds Stockton, California's universal basic income (UBI) project pilot. Many households in the upstate New York city are eligible for tax rebates through the Earned Income Tax Credit, but don't know to take advantage of it, so they turn to payday lenders or pawn shops for short-term support. Rochester's pilot will teach more families about how to claim this cash and also help stagger the annual payouts, UBI-style: All families will be able to accept the full EITC payment upfront, but they'll be incentivized to put 20 percent into a city-run savings account that is paid out every three months.

Besides helping people save, says Rochester Mayor Lovely Warren, the initiative aims to protect low-income residents from for-profit tax preparers, who have a high error rate. To gauge the effectiveness of the program, the city will run a long-term randomized evaluation of its impact and meet with the cohort of cities to swap best practices throughout the year. The ultimate goal, the mayor says, "will be to be able to help people remain out of poverty for the rest of their lives."

Albuquerque, too, will try nudging youth away from payday lenders or damaging financial habits, by setting them up with bank accounts early. Tulsa, already a pioneer when it comes to data-driven city initiatives, will connect unemployed and out-of-school young people with job training. Racine, where one in four adults lack a high school diploma, will focus on supporting adult education, while Dayton will focus on early childhood education interventions.

Collectively, the cities involved in the economic mobility initiative are trying to build a better pipeline of opportunity. "We're thinking about both what we're doing to help people climb the socioeconomic ladder, but also [about] actually helping individuals not have a single negative event in their life derail their futures," said Simone Brody, the executive director of Bloomberg Philanthropies' local government empowerment initiative, What Works Cities.

Can an 18-month-long project really be expected to move the needle on long-term—often systemic—problems? To find out, Bloomberg Philanthropies expects participants to take their baseline economic temperature and track any Bloomberg-funded bump using data from the Opportunity Atlas, an interactive measure of economic health developed by Harvard with help from the U.S. Census Bureau. They've also been matched with advisers from Results for America and the Behavioral Insights Team, along with experts from Johns Hopkins University's Center for Government Excellence, the Harvard Kennedy School's Government Performance Lab, and the Sunlight Foundation.

As Warren of Rochester says, one of her city's pervasive problems is that they're "program-rich but results-poor"—a lament likely to resonate in many American cities where non-profits play a powerful-but-hazily-defined role. That's one reason why this initiative, organizers say, so emphasizes measurable impacts.

"This is not an issue that's going to be tackled overnight, or through a single policy," Coleman said. "At the end of 18 months, it's about assessing the results, sharing what's been learned, and potentially scaling what works to other cities as well."

This story originally appeared on CityLab, an editorial partner site. Subscribe to CityLab's newsletters and follow CityLab on Facebook and Twitter.