Study Projects Impact Of $1 Billion On Mobility, Opportunity

Philanthropy can be a driving force in both helping mobilize families in impoverished areas move to areas of greater opportunity and rehabilitate blighted communities. A $1 billion investment in such work could, conservatively, bring back four-fold returns.

The projection is part of The Bridgespan Group’s latest “Billion Dollar Bets” report, which projects — using examples of existing initiatives — how far $1 billion in investment in a particular interest area could go. Focused on reducing areas of concentrated poverty, the latest report narrows in on poverty tracts — defined as census areas with poverty rates of 20 percent or higher. The number of Americans living in such locations increased from about 50 million in 2000 to nearly 77 million in 2010, according to the report.

Racial overtones sweep over the data. More than half (50.4 percent) of African Americans, 47.8 percent of American Indians and Alaska Natives and 28.2 percent of Hispanics currently live in poverty tracts. Caucasians (20.3 percent) and Asian Americans (18.3 percent) are far less likely to live in poverty tracts.

“Structural racism, I think this is the one where it’s just so clear,” said co-author Debby Bielak. “What we’re also talking about is breaking apart structural racism…this is very interwoven with racism in our society.” Families lacking in means are being pushed further and further out of city cores, added co-author Devin Murphy, creating reduced access to opportunities.

The proposal focuses on addressing issues in two ways – first by supplementing existing federal Department of Housing and Urban Development housing vouchers intended to help low-income families find secure quality housing in the private market. Discrimination has undermined the program, according to the co-authors, as such families find difficulty in identifying and smoothly transitioning to new locales.

Scaling mobility programs such as the Baltimore Housing Mobility Program to 20 to 25 cities with philanthropic dollars could help “soften the ground,” for families, Bielak said. Mobility programs’ functions would include providing counseling and support services such as in-school enrollment and assistance finding jobs, coordinating with landlords and realtors to expand public listings and incentivizing landlords to take multiple voucher families by increasing subsidy rates. Funding local community organizations to speak on behalf of community integration is another means of limiting pushback, according to the report.

The creation of a national entity, proposed to be a nonprofit, to act as a hub and share best practices is another portion of the mobilization effort. The study proposes $100 million to be spent on the entity along with $250 million in building up the mobility programs and $50 million each in mapping racial and economic makeups of communities and building community support.

The other $550 million in the “Billion Dollar Bet” is to identify issues in three to five blighted areas through community engagement and address them. Purpose Built Communities in Atlanta is a current example of this kind of work, according to Murphy. The idea would be to redevelop areas for those who are unable to leave or do not want to while avoiding the risk of gentrifying the area.

“Redevelopment is very specific, it requires a lot of subsidy from public resources,” Murphy said. “I think what we’re pushing for is to say ‘How do we produce mixed-income, mixed-racial neighborhoods?’ It needs to borrow from the capabilities of [other programs].”

The 20 to 25 mobility cities and three to five redevelopment communities would, if the plan were to be pursued, be identified through collaboration with partners such as the Urban Institute. Finding communities willing to be part of an experimental process would, too be a deciding factor, Murphy said.

The study’s projected returns are based on Moving to Opportunity experiment analysis. The experiment showed that the children of families who used vouchers to move from areas of concentrated poverty to areas of poverty rates of less than 10 percent saw an increase of $99,000 in lifetime earnings.

The proposal projects targeting 100,000 families with approximately 182,000 children. The study assumes a movement rate — based on availability and willingness to move — of between 25 and 47 percent — leading to lifetime income increases of between $4.5 and $8.5 billion for the children. The study does not estimate economic advantages of movement beyond that of lifetime income of the children or any economic benefit of redeveloping blighted areas.

Bielak explained that the underestimation was made to place a level of rigor on the report as well as focus on what existing statistics could reasonably project. “The data was there,” Bielak said.