Mid-Term Report: Ideas for Making “Billion Dollar Bets” to Improve Social Mobility

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By Debby Bielak and Devin Murphy

The American Dream is illusive. It can be invisible and virtually inaccessible based on where you are born, your race, and your parent’s income. The data is clear. Social mobility has remained largely stagnant for nearly half a century, which means that if you were born into the middle class or higher, you’ll more than likely remain in the upper income quintiles for the rest of your life. But if you were born into the bottom 40 percent of the income distribution, it’s almost a given that you will stay stuck on the bottom rungs of the ladder — especially if you are a person of color or live in a low-income community.

Despite that gloomy reality, we believe and our research supports that the American Dream can be within every American’s reach.

Despite that gloomy reality, we believe and our research supports that the American Dream can be within every American’s reach. As demonstrated by their rhetoric and, more importantly, their investments, political, business, and philanthropic leaders are committing to creating economic opportunity for all Americans. Some recent examples: the May launch of Acumen America, which is tackling poverty in the United States by investing in social enterprises. In February, The Urban Institute, with support from the Bill & Melinda Gates Foundation, announced its US Partnership on Mobility from Poverty, which aims to identify opportunities to “create permanent ladders out of poverty.” And, politicians have been sharing policies for economic opportunity in debates and formal proposals, including Paul Ryan’s heavily discussed proposal on “Poverty, Opportunity and Upward Mobility” released on June 7.

Building on earlier posts, we’d like to share an update on a research project we led with Jim Shelton as a Fellow that sought to answer this question: How could a philanthropic investment of $1 billion dramatically increase upward social mobility? Recently, Bridgespan.org launched a series of concept papers that map out pathways for making big, strategic investments to increase upward mobility. Our first in the series, “‘Billion Dollar Bets’ to Increase Early Childhood Development,” focuses on investments in technology research and innovation as drivers to support more effective adult-child interactions across all ages and care settings. Five more papers will follow over the next three months, each mapping out promising investments to help improve social mobility. The concept papers are part of the core research for our report, Billion Dollar Bets” to Create Economic Opportunity for Every American, featured in The Atlantic magazine online article, “How to Bet Big on the American Dream.” That research sought to explore the potential philanthropy has to make lasting impact in the lives of millions of low-income Americans.

Why philanthropy? A range of players, including government, social sector actors, and private industry, need to act boldly to ensure that all Americans can achieve their full potential. We believe philanthropy — with access to capital that is flexible, adaptive, and risk tolerant — has a critical role to play in catalyzing change and restoring economic opportunity to every citizen. We know, too, that philanthropists’ intentions to support social change are not matched by significant investments — in no small part because they need more clarity on what investments could truly have an impact.

What did we do? To better understand how philanthropists can best support efforts to increase upward mobility for millions of low-income individuals, we assembled an advisory board comprised of 18 leaders of nonprofits, think tanks, and foundations; reviewed research from over 200 reports, policy briefs, and books on the topic of social mobility; conducted dozens of interviews with practitioners to test theories against on-the-ground realities; and appealed to the public for concept papers to surface promising ideas that we might have missed.

What did we find? We identified four sprawling opportunities for philanthropic investors to help ensure that far more Americans have a chance to reach their full economic potential. The first two areas of investment focus on the individual by supporting efforts to build broad, developmentally appropriate skills from childhood to early adulthood, so as to ultimately be career-ready. We also looked at removing cultural and structural barriers that hinder progress toward the middle class. The second two investment areas seek to transform communities where poverty is concentrated and build the foundations for scaling “what works.”

Source: “Billion Dollar Bets” to Create Economic Opportunity for Every American, The Bridgespan Group, May 2016.

These investment opportunities are based on a wealth of research, including the Social Genome Model, which identifies major milestones across life stages that are statistically tied to earning potential, and work on geographic and regional variation in social mobility outcomes authored by Raj Chetty, Nathaniel Hendren, Patrick Kline, and Emmanuel Saez. We should note that none of these four areas of investment stands alone. A systemic problem like stagnating social mobility demands a comprehensive approach that leverages all four areas of investment.

A systemic problem like stagnating social mobility demands a comprehensive approach that leverages all four areas of investment.

We then developed “billion dollar bets”: collections of investments that could build pathways to careers, overcome obstacles to the middle class, restore communities where poverty is concentrated, and scale what’s already working. From a list of 15 bets, we developed six in greater detail.

The six bets are:

  • Support the scaling of low-cost technology applications that enable parents and caregivers to better help very young children develop
  • Shift market incentives and support providers as they make the transition from “seat time” and degrees based on a series of courses to degrees and credentials based on the skills that students actually develop
  • Incentivize government behavior through a grant competition to reduce conviction and incarceration rates
  • Influence funding flows and healthcare provision by promoting access to long-acting reversible contraceptives and providing training to expand family counseling among primary-care providers
  • Support greater economic integration of communities by buttressing housing voucher programs with additional mobility assistance supports and removing blighted conditions in distressed neighborhoods
  • Shape government oversight and funding so it’s aligned with evidence-based outcomes

Working with experts within each topic area, we developed an investment road map for each bet. The road maps estimate the corresponding costs and the potential impact of each $1 billion investment, as well as differing contexts for the size and scope of the challenge, critical barriers to success, opportunities for impact, feasibility, levels of risk, and different approaches that philanthropists might take (such as collaborating with public agencies or pursuing a technology-driven solution).

We believe these investments have a high potential to deliver out-sized results, so long as funders take into account the challenges and risks that accompany each opportunity.

We believe these investments have a high potential to deliver out-sized results, so long as funders take into account the challenges and risks that accompany each opportunity. Our ROI calculations, drawing from estimates from the Urban Institute using the Social Genome Model, estimate direct economic benefit ranging from $3 billion to $15 billion for every $1 billion invested. Together, these bets begin to illustrate a range of ways that philanthropists could help to dramatically improve the economic lives of millions of Americans, by seeding new solutions, partnering with government, investing in technology, and scaling effective programs and products.

Our intent was to ground each investment in outcomes that we now know are tied to economic mobility–and remain open to finding the most effective ways to maximize each bet’s ROI. Yet these ideas barely begin to surface the potential for large philanthropic investments to deliver equal economic opportunity to many more Americans.

We will continue to explore the most promising ways to bet big on the American Dream.

We hope some will refine and pursue these bets and others will put in the work to develop even more promising bets of their own.

Debby Bielak is a partner in The Bridgespan Group’s San Francisco office, where her co-author, Devin Murphy, is a manager.