Who's Backing the Nonprofit Investing Directly in Poor Families?

photo:  eamesBot/shutterstock

photo:  eamesBot/shutterstock

It’s not often that a nonprofit touts how much it isn't doing to help low-income Americans, but that’s a key pitch of the Family Independence Initiative (FII).

And funders are listening.

“We don't consider ourselves a program, a service or an intervention. We are really a learning organization,” said Ashley Conners Sherwin, FII’s vice president of external affairs.

In simplest terms, FII gives poor families access to funds that they can use however they want, which could mean buying a car or house, paying for childcare, or formalizing a small business. In exchange, families report back on how they used the money. The idea is that families and communities know best what they need to climb out of poverty. The best thing nonprofits, foundations and the government can do is to provide funds to do it and then get out of the way.

As we've reported, there's rising interest among funders and others in providing direct financial support as a means to overcome poverty. GiveDirectly, a leader in this space working in Africa, has drawn major grants from tech funders and new efforts are now underway to explore a universal basic income in the United States. But FII has been quietly developing its approach for years, offering an intriguing alternative to anti-poverty programs that have often been criticized as paternalistic and ineffective. 

“We try to stay away from the word program because what that describes is that we’re somehow doing something to these families,” Jesús Gerena, FII’s CEO, said. “What, really, is our role is co-creating an environment where we're putting power back into the hands of these families, we’re learning through their data and we’re putting resources into their hands.”

FII connects the families it works with to other participating families through an online social network and monthly meetings. Families set the meeting agendas and curriculum. FII collects data on its investments that it shares with families and others working in the space, but does not recommend to families how to spend the money.

When Paula Sammons, a program officer at the W.K. Kellogg Foundation, first came across FII in 2011, she was struck by its differences from other nonprofits.

“What, really, I was kind of baffled by was that FII wasn't doing a whole lot other than listening and documenting what they were seeing at these monthly meetings, and sort of tracking it,” Sammons said. “But they weren't necessarily guiding families or leading them to reach particular conclusions about the goals that they set.”

FII’s results were the other thing that blew Sammons away. “The data is incredible,” she said. Even though FII wasn’t following a program in a traditional sense, it achieved the outcomes Kellogg targeted.

FII invests an average of $2,400 a year in each family. FII reports that after two years, on average, families grow their annual incomes by $5,856—2.4 times the investment. They increase their assets by an average $5,031, which is 2.1 times FII’s investment. Nearly 20 percent of FII families are entrepreneurs, compared to the 13 percent national average, according to FII data; 90 percent of students have excellent, good or improving grades.

Gerena positions FII’s approach and results in contrast to government policies and philanthropic efforts built on outdated and misleading stereotypes about the working poor, and that don’t do enough to let families lead.

“If I were philanthropy, my first question would be, ‘What do I know?’” Gerena posited. “How can I lift and learn from these communities about their true assets? And who’s overcoming some of the challenges I'm trying to address? And can I invest in that first?”

Philanthropists often make the mistake of “thinking that a top-down approach can have a quicker result than what’s already happening on the ground,” he said.

Despite this, or perhaps because of it, FII has drummed up a following among foundations and some corporate funders. The nonprofit gets funding on a national level and also seeks out philanthropic and corporate partners in each new city where it sets up shop.

Its national funders include the Burt Family Foundation, the Chan Zuckerberg Initiative, the F.B. Heron Foundation, the Friedman Family Foundation, the Google Foundation, MetLife Foundation, Newman's Own Foundation, New Profit, the Ray and Tye Noorda Foundation and the W.K. Kellogg Foundation.

The nonprofit’s work in New Mexico is funded by Kellogg and United Way of Central New Mexico. In Massachusetts, the Boston Foundation, the Eos Foundation, the Janey Fund Charitable Trust, the John Hancock Foundation, the Kuehn Charitable Foundation, the Rowland Foundation and Cambridge Community Foundation support FII’s work. The Fortitude Fund, the James Irvine Foundation and the San Francisco Foundation fund work in northern California. Deutsche Bank chips in in New York. In Cincinnati, the Greater Cincinnati Foundation, the GreenLight Fund, the Mayerson Family Foundations, the SC Ministries and United Way of Greater Cincinnati support FII. The Kresge Foundation, the McGregor Fund, the Skillman Foundation and United Way Southeastern Michigan fund FII in Detroit. The Greater New Orleans and Kresge foundations support FII in New Orleans.

FII’s rejection of a traditional top-down model was a big reason for Kresge’s interest. The foundation supports FII in Detroit and New Orleans. “FII is a leader in the growing movement for shifting our support systems away from ‘expert-’ driven, transactional services to assets-based and mutual support systems, practices and approaches,” said Sandra Ambrozy, a senior fellow at the foundation.

As for why Kellogg came on board, Paula Sammons said, “We, as a foundation, are always looking for innovations, pilots, things that are a little bit outside the box. After observing the families, I felt like there's something real here that's happening with these families that I can't quite explain, but I know it's real and it's getting to the results, so I definitely wanted to invest.”

“I was able to talk with our leadership and just say, ‘You know, from the initial findings from some of their sites, there’s something happening, here,’” she said.

System-wide Transformation

The Kellogg Foundation includes policy and system change as a priority in its work to eradicate poverty, most notably in its grantmaking aimed at influencing national and state labor policies and empowering low-wage workers. The Ford Foundation, Open Society and a handful of other small foundations also engage in this work. (In contrast, as we recently noted, many funders shy away from these arenas for advancing equity, sticking to more local and service-oriented efforts.) 

The perception of FII as an organization that didn’t deal directly with systems change initially worked against it with Kellogg, Sammons said. She was concerned about “optics around us supporting something that seemed like a bootstrap strategy; that we believed that all people could just pull themselves up by their bootstraps.”

“We know that people have very different starting points in life, so part of our work is really targeted at addressing structural [inequities],” like racism, Sammons said.  Through conversations with FII’s founder Maurice Lim Miller, she grew comfortable enough to invest.

While FII is intently focused on its work with families, it isn’t completely shut off from policy and system work. The nonprofit was started on the notion that social systems are built on the basis of misleading stereotypes about the working poor. The data FII collects from families goes to dispelling those stereotypes.

This information is critical to “disrupt the current narrative that is happening about the working poor and show the true face through the data of their stories, of their successes, to ultimately change policy to better support these households,” said Gerena.

That can mean sharing the stories with policymakers and advocacy groups, Gerena said. It also means dismantling the outdated assumptions philanthropists operate under.

Sammons found that working with FII has influenced how she approaches other initiatives. “I think that's the biggest insight,” she said. “Families know what they need and what they want.  We need to trust that and respect that and not take that lightly.”

It’s an attitude that Sammons brings to Kellogg’s broader policy and systems work.

“If we know that families are creating true change through this model, how can we think about policies that don’t get in the way and bring a family-centered lens into how you help parents and children advance with both social capital, and with programs and with policy that create a supportive environment for that to happen?” she said.

Since partnering with Kellogg, FII has also become involved in more system-wide work. FII talked to city leaders about adopting the nonprofit’s approach and using some municipal funding to invest directly in families. The organization has an agreement in place with a county in Oregon.

Sammons is hopeful that partnerships with city governments will make FII’s methods available to more families. Even with deep pockets like Kellogg’s, there’s a limit to philanthropy’s ability to scale.

“I think there's ways to include policymakers and different stakeholders to take notice of this, and learn from how you work with and respect the voice of families and their own journeys and pathways to long-term sustainable change,” she said.

Foundations and nonprofits working against poverty are fighting an uphill battle. In the mid-1970s, the top 1 percent of households earned about 9 percent of the income in the U.S. Their share has risen to around 22 percent, without much movement in the median wage for the average worker. For low-skilled workers, including those trying to climb out of poverty, wages and benefits have fallen over the past 40 years as unions have disappeared and labor policy has failed to keep up with changes in the economy, like the rise of contracting.

Fifty years into the War on Poverty, we don’t seem to be winning, Genera said. “People are frustrated and they are seeking alternatives. Usually, when they start doing that, they find us.”

With the many funders in FII’s corner, and early moves to engage local policymakers, as well as the broader growing interest in a universal basic income and related ideas, it will be interesting to see where this effort goes.