What Does Segregation Cost? And How Can Funders Counter It?

For anyone still wondering whether bad policies can stick around long after they’ve been officially reversed, consider segregation. Dividing students, residents or customers by race was outlawed decades ago, but most American neighborhoods remain segregated. So do our schools, at a rate comparable to 1954, when the Supreme Court decided Brown v. Board

Consider also the rising tide of economic segregation in American cities, pushing low-income residents away from good jobs and opportunities. In tandem, racial and economic segregation exert a high cost. But exactly how high? And what would it take to reverse one of America’s most deeply entrenched social ills?

Those are the questions behind a deep dive into segregation in Chicago, funded by the MacArthur Foundation and the Chicago Community Trust. Led by Chicago’s Metropolitan Planning Council (MPC) with research expertise from the Urban Institute, the project’s first phase identified just how big a hit Chicago takes from its pervasive residential segregation. 

The findings are sobering, but also somewhat inspiring. If segregation between black and white Chicagoans were reduced to the national median (still hardly an ideal target), the homicide rate would drop by 30 percent, 83,000 more residents would get bachelor’s degrees, and the city’s economic output would increase by $4.4 billion. That’s not even factoring in lower segregation of Latino and Asian American residents. 

The historical patterns of housing discrimination, redlining in lending, and other forms of legalized bias that divided America by race—including big northern cities like Chicago—are complex. (Richard Rothstein just published a groundbreaking book that unfolds some of this history, The Color of Law.) But whatever the backstory, it’s useful to have some tangible metrics on just how much ground is lost when people refuse—or aren’t allowed—to intermingle. 

According to Ianna Kachoris, who leads MacArthur’s work on housing research, the project arose from the foundation’s concerns about inequality. “We wanted to better understand the effects and consequences of inequality,” Kachoris says. “And when MPC approached us regarding segregation, ‘what’s the cost to all of us?’ was an interesting question that few were asking.”

As we've noted before, residential segregation—which typically undergirds educational segregation—tends to get short shrift in the foundation world, perhaps because it's too well entrenched and politically divisive. There just aren't easy wins here for funders. But as a consequence, philanthropy often ends up working downstream on problems that are caused, at least in part, by high levels of segregation—like failing schools, high crime rates, joblessness, and lack of access to financial capital. 

Research is one way to draw more attention to the underlying problem. But MPC’s effort isn't meant to stop there. The next phase, says Kachoris, “is about identifying a set of policy solutions that could reduce Chicago’s segregation and its broad costs to the region.” She emphasized that while the team will use Urban Institute tools to model how policy interventions might perform, MacArthur wants to fund a bottom-up process. Ideas should arise in consultation with local stakeholders, from within the community, considering real costs.

MacArthur, as we’ve reported, has lately been reaffirming its hometown commitments with grants for economic development, arts, youth and policing. It's also leading a big impact investing initiative, Benefit Chicago, a $100 million collaboration with CCT and the Calvert Foundation. With its deep segregation dive, MacArthur joins funders like Kellogg and Ford, which have long backed research on the intersection of race and housing. 

Going forward, what might some of these anti-segregation policies look like? For one thing, while racist residential covenants and explicit housing discrimination aren’t legal, exclusionary zoning is still alive and well. Low-rise, lily-white suburbs are a testament to that. New zoning practices that allow multi-family housing and mixed uses can introduce more racial and economic diversity into segregated communities. So can housing mobility programs, which funders have explored with some success. New strategies to advance school integration is another potential front

In the end, anti-segregation policies will need to compliment each other. There is unlikely to be any one solution here. Local funders and MacArthur are well positioned to back public engagement and figure out what menu of practices work in particular cities. The important thing is to move the issue of segregation higher up on philanthropy's agenda. Because without progress on this challenge, a range of other efforts to build a more equitable society will remain stalled.