We Americans have always loved a good rags-to-riches story. Our movies, books, and TV serials are full of heroes and heroines who start with nothing and achieve all kinds of great things through perseverance and hard work. These are more than just stories to the Friedman Family Foundation, though. The Friedmans firmly believe that America’s poorest can lift themselves up out of poverty if they get the right kinds of help—like education, investment capital, and access to banking and credit. So through their San Francisco Bay Area-based foundation, they try to make resources such as these available to as many low-income Americans as possible, with the hope that the recipients might create rags-to-riches success stories of their own.
“I think we underestimate the abilities of low-income people,” says Bob Friedman, the foundation’s secretary. “And we’ve tended to take care of them and address deficiencies rather than build on their strengths and dreams and work and entrepreneurial abilities.”
Now, in case you're wondering, this is, indeed, the same Bob Friedman whom we profiled recently and described as the "godfather" of the asset-building movement.
Friedman is best known for starting the Corporation for Enterprise Development, the leading policy shop that has advanced asset building and other strategies for building wealth in low-income communities. We wrote about Friedman's efforts over the decades to bring new funding and attention to this work.
Less well known is that Friedman, who comes from the Levi Strauss family, has also long worked on the funding side of the fence through his family's foundation and, as well, the Levi Strauss Foundation (which recently hit a major milestone of $300 million in grants since its founding some 60 years ago).
The two tracks of Friedman's career have closely paralleled each other. Friedman and his family look at poor communities and see great untapped potential: millions of people who could start businesses and create jobs for themselves and their neighbors. Of course, starting a business requires money that most poor people don’t have. But Friedman looks for grantees that can solve that problem via services such as microenterprise programs (which give financially challenged entrepreneurs small loans with which they can start new businesses or expand existing ones), microsavings (which give low-income individuals money to start new savings and investment accounts), and homeownership aid.
“We believe in the capacity of people and in the potential of people, including low-income people,” Friedman says. “We really want to invest in strategies that remove millions of people from poverty, and often by trusting in their capacities and efforts.”
They also strongly believe in “systemic change”—that is, changing laws and socioeconomic systems to help all financially struggling people, not just the ones that the grantees directly work with. Lobbying for new laws is one way for a nonprofit to do this; hence the $10,000 grant that the Friedmans gave the California Reinvestment Committee to advocate for equal access to banking and financial services for California’s low-income communities and communities of color.
A nonprofit might alternatively put whole new systems in place. The Kiva Microfund took this route through its KivaZip program, which offers zero-percent-interest microloans to financially underserved, socially impactful small businesses in the San Francisco area. The Friedmans awarded this program a $10,000 grant (note: A Friedman grant is almost always $10,000).
Self-Help Economic Development, an Oakland, California, operation, is another systems-changing grantee. Its CT Prospera check-cashier/credit union helps individuals who don’t have bank accounts to gain financial stability. Also worthy of mention is the Greenlining Institute, a Berkeley, California, grantee that helps low-income Californians establish financial assets and also advocates for public policies to connect low-income households with fair and appropriate financial products.
The Friedmans also awarded a grant to a nationally distributed nonprofit called the Tax Alliance to assess the U.S. tax system and figure out changes to the tax code that might reduce income inequalities. The current tax code has many provisions that are supposed to facilitate asset building: the home mortgage interest deduction, pension fund exclusions, preferential capital gains, etc. But most of these, the Friedmans assert, only really benefit the rich.
“We think that the income tax expenditures are huge, regressive and counterproductive. Overwhelmingly, it’s an annual investment in wealth inequality,” says Friedman.
And this isn’t the only public policy analysis that the Friedmans have sponsored. You’ll find quite a few think tanks among their grantees, including the Aspen Institute, which received a grant to research innovations in microenterprise. And there’s the Center on Budget and Policy Priorities, another D.C. policy research institution, which received a grant to formulate policies to protect struggling families and their homes from predatory lenders and future economic crises.
“Policy is the rules of the game. If you can change some of the rules to be more inclusive, we think there is an outsize return,” Friedman says.
If you’re not a San Francisco operation, then these last two grants will strike you as great news: The Friedman Family Foundation is not just a Bay Area giver. That is true, up to a point. The foundation funds organizations all over the country. It gave grants to a third Washington, D.C., organization, the Association for Enterprise Opportunity, to offer microbusiness loans to underserved entrepreneurs throughout the United States. It also gave the First Nations Development Institute of Longmont, Colorado, a grant to offer financial services and technical training to Native American communities; and to the Boston-based Doorways to Dreams Fund to give startup capital and other financial services to low-income Bostonians.
But these organizations had to clear a very high bar. The Friedmans still spend the majority of their money in the Bay Area. If your organization is somewhere else, you have to be doing something outstanding to get their attention. Or you must be doing something that no one in the Bay Area is doing yet—the Friedmans are always on the lookout for great new ideas that they might learn from and try to implement in their region.
Friedman singled out child savings and child savings accounts as one approach that the family is considering. But really, anything that can demonstrably break longstanding cycles of poverty and help large numbers of struggling individuals and families get their financial footing is likely to raise the Friedmans’ interest.
“What we want to do is find systemic anti-poverty efforts, ones that have a capability of changing policies and systems and patterns, not just service,” he says.
So often, the debate over poverty has been cast in either/or terms: Either you focus on individual empowerment and effort as the key to climbing out of poverty, or you focus on systemic change. Of course, in the real world, both kinds of change matter, and the Friedman Family Foundation gets that.