Billion-dollar investments in six key areas could potentially deliver returns of $3 to $15 for every $1 invested, or more than $55 billion in increased earnings for affected populations, according to a new study.
The Bridgespan Group’s report, “Billion Dollar Bets to Create Economic Opportunity for Every American,” framed research around the question: “How could a philanthropic investment of $1 billion dramatically increase upward social mobility for low-income individuals and families?”
Between 2000 and 2012, one in five philanthropic investments of $10 million or more went to social-change organizations, according to the report. “Philanthropists have lacked the sightlines into shovel-ready projects and they’ve lacked the confidence that large investments would actually impact the economic lives of many people,” the report said.
The report was co-authored by Bridgespan partner Debby Bielak, Bridgespan manager Devin Murphy, and James Shelton, former deputy education secretary and a Bridgespan Fellow.
Targeted investments in programs and policies that are already working can potentially deliver returns of $3 to $15 for every $1 invested. The estimates don’t claim to be precise but provide a sense of what’s possible when large investments seek to increase upward mobility for low-income citizens. The six big bets identified in the report are:
- Improve early childhood development ($5.5 billion to $11 billion in increased lifetime earnings);
- Establish clear and viable pathways to careers ($7.3 billion to $14.7 billion);
- Decrease rates of conviction and incarceration ($4.3 billion to $8.6 billion);
- Reduce unintended pregnancies ($3.2 billion to $6.4 billion);
- Reduce effects of concentrated poverty on the lives of people living in distressed neighborhoods ($4.5 billion to $8.5 billion); and,
- Improve the performance of public systems that administer and oversee social services ($3 billion to $6.1 billion).
Overall, the report estimates increased earnings of between $27.8 billion and $55.3 billion for affected populations.
The intent was to create a series of roadmaps that illustrate how $1 billion-dollar investments might improve the lifetime earnings of millions of low-income Americans. “We began by identifying four promising areas where large investments of private capital would likely catalyze population-level change,” the authors wrote. They then evaluated “scores of concepts for restoring the meritocratic ideal to many more Americans.”
With the help of an advisory board, Bridgespan selected 15 concepts as illustrative big bets spanning the four investment areas:
- Build skills and assets;
- Confront cultural and structural inhibitors;
- Transform communities; and,
- Build infrastructure to implement and scale “what works.”
An investment road map estimates the costs and potential impact of each $1 billion investment, as well as differing contexts for size and scope of the challenge, barriers to success, opportunities for impact, feasibility, level of risk, and different approaches that philanthropists might take.
Seven out of 10 people are born to parents in the “bottom two income quintiles will remain trapped in the bottom of the economic throughout their lives,” according to the study.
“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 said.
The issues are inter-related, according to Bielak. “A child with excellent early childhood education supports isn’t inoculated form other forces such as low-quality elementary education or the stress of avoiding crime,” she said.