Billionaires vs. Poverty: Behind a Push to Use Data to Boost Economic Opportunity in Cities

True nature/shutterstock

True nature/shutterstock

Editor’s note: This article first appeared on November 17, 2018.

The philanthropies of several of the country’s wealthiest people are teaming up to advance a data-driven approach in cities to bring economic opportunity to struggling residents. 

The Ballmer Group and the Gates Foundation joined Bloomberg Philanthropies to put up $12 million toward an offshoot of Bloomberg’s What Works Cities initiative, which will focus exclusively on economic mobility.

The mix of funders here is interesting. Steve Ballmer, Michael Bloomberg and Bill Gates have a combined estimated net worth of nearly $185 billion. Yet just a few years ago, none of these men were backing domestic U.S. anti-poverty work as part of their philanthropy. That all are now involved in such funding—along with other super-wealthy newcomers to this space like Mark Zuckerberg, Google co-founder Sergey Brin and Jeff Bezos (who recently pledged to $2 billion for homelessness and early childhood education)—says a lot about the rising salience of inequality as a top national concern.

Emerging Anti-Poverty Funders

Among these new donors, the Ballmer Group has the longest and most varied track record when it comes to economic mobility grantmaking, but it’s still only been engaged in anti-poverty work for several years. While it’s channeled many of its grants locally in Los Angeles, the Pacific Northwest and Detroit, the Ballmer Group has also made a number of big gifts to national organizations like StriveTogether, and is part of Blue Meridian Partners, the high-powered funding collaborative taking on child poverty.

Until recently, the Gates Foundation focused most of its domestic giving on education. Earlier this year, the foundation waded into anti-poverty work with a $158 million initiative. Since then, every few months, Gates has revealed new details about its grantmaking in this field. 

Bloomberg hasn’t done much work specifically on economic mobility, but the funder’s penchant for data-driven philanthropy and city-level change is well known. Also, with a commitment to giving away most of his $50 billion fortune, Mike Bloomberg has been steadily expanding his philanthropy in recent years, so it’s not surprising to find his foundation dipping into domestic anti-poverty work.

The Quest for Better Data

This new project will have close ties to Bloomberg’s What Works Cities initiative. The initiative dates back to 2015 and works with city leaders and residents to come up with data-driven solutions to solve local problems. In the past, some of those local projects included distributing GPS-enabled asthma inhalers to track air pollution and using data to reduce the number of blighted houses in New Orleans.

This new initiative will focus specifically on economic mobility. The $12 million will support work in 10 cities, yet to be chosen. As part of the grants, municipal leaders will work with a team of advisors from the What Works Cities initiative. Together, they will use data to measure the scope of economic inequality and then develop, test and share evidence-based strategies to increase economic mobility for the city’s residents.

“Currently, it’s hard to understand the impact of government spending on the lives of individuals and communities,” said Jeff Edmondson, the Ballmer Group’s executive director of community mobilization. “Concern over lack of real-time data on what works and what doesn’t is raised in nearly every meeting we attend with elected and agency officials, philanthropies, grantees and other community leaders.”

The What Works Cities initiatives received $42 million earlier this year to continue its work. According to Bloomberg, the new offshoot focused on economic mobility is the first of several issue-specific programs that the funder plans to roll out over the next three years. 

As part of the economic mobility initiative, cities will also have access to the Opportunity Atlas. Launched earlier this year, the Opportunity Atlas is an interactive online resource developed by Opportunity Insights, a new research and policy institute housed at Harvard University in partnership with the U.S. Census Bureau. The Atlas maps anonymous data from more than 20 million people to examine barriers to economic mobility. City leaders will also have access to experts who work at the institute. 

Related: Behind a New Institute for Economic Mobility: Powerful Data and Billionaire Donors

Raj Chetty, one of today’s most influential economists working on economic mobility, founded Opportunity Insights earlier this year. Chetty is known for spearheading the movement to use data to track mobility, which makes him and the institute he leads an apt fit for the new What Works project. 

Opportunity Insights already has ties to Bloomberg and Gates. Gates put up $15 million to fund its launch. Bloomberg kicked in $3 million. The Chan Zuckerberg Initiative and Overdeck Family Foundation also made significant contributions.

The Limits of Local Work

The emergence of new billionaire donors taking on poverty is a big deal, and the influx of new money, especially from the Ballmer Group, is already changing the nonprofit funding landscape in this space.

But it’s hard to say how impactful these new resources and approaches will be. Despite decades of work to fight poverty in the United States by government and philanthropy, not much has changed. If anything, the gap between the rich and poor has grown.                                                                                                                                                    
Locally focused initiatives like this one have their advantages. For starters, they engage local voices. They allow residents to have a say in the work and changes funded in their communities. It’s a move away from the top-down approach that’s lately gone out of style in philanthropic circles. 

Local approaches also allow solutions that are tailored to local contexts. Poverty in Los Angeles looks different from poverty in Detroit. It would make sense that solutions would look different, too. Engaging with city leaders and residents ensures that approaches are appropriate to their local contexts. And, to be sure, better data on what’s happening on the ground can make a difference.

However, local work also has significant limits, offering limited traction on the big structural forces and systemic conditions that keep people from getting ahead. The fortunes of unskilled workers have cratered in recent decades amid trends like globalization and automation, as well as the decline of unions and the weakening of federal labor regulations. Lax government oversight paved the way for the 2008 financial crisis and the predatory lending that preceded it, which devastated urban low-income communities. That crisis showed that local economic gains can be wiped out by a national meltdown. Meanwhile, exclusionary zoning works to lock poor families out of suburbs where they might find better schools and more job opportunities. The outsized role of money in U.S. politics, along with growing obstacles to voting, has made it harder for the voices of low-income Americans to be heard in public policy debates.

Local efforts to promote economic opportunity may yield some gains, but unless the new billionaire donors taking on poverty engage the larger structural forces arrayed against low-income Americans, they’re likely to have limited success in expanding upward mobility.