A Funder Effort to Fight Poverty—One Taxpayer at a Time

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Over the last few months, Vanessa Valdes has spent much of her time traveling around New Hampshire, attending meetings in community centers and church basements, and passing on a simple message: “File your taxes. We can help.” 

Valdes is on the front lines of an effort to make sure low-income families are accessing tax benefits they qualify for — and getting the information and support they need to do so. Valdes is a community educator with 603 Legal Aid, which received funding for the outreach work from the New Hampshire Charitable Foundation (NHCF), a community foundation that operates throughout the state, as well as other partners. Valdes and NHCF’s work is part of an on-the-ground effort coordinated by national and community foundations, and — while it has received little fanfare or attention — is helping put money into the pockets of some of the nation’s poorest families. 

One of the main engines behind this effort is the EITC Funders Network, an organization that works with foundations “to make a positive impact on economic security for individuals and families through tax credits, specifically the child tax credit (CTC) and earned income tax credit (EITC),” according to the organization’s website. Launched in 2004, the EITC Funders Network provides information-sharing and networking opportunities for its approximately 300 member organizations — including national, regional, local, corporate and family foundations, as IP has reported.

When the Biden administration unveiled its American Rescue Plan in 2021, it included significantly expanded tax benefits targeting low-income families, including the child tax credit (CTC) and the earned income tax credit (EITC). To help get word out to eligible families, the EITC Funders Network helped mobilize a national philanthropic effort.

The philanthropic case for tax credit outreach is simple and compelling. Letting low-income families know about tax savings opportunities already available to them lets funders magnify the effect of limited grantmaking budgets, potentially securing more dollar-for-dollar assistance for families than more direct forms of aid.

On its outreach effort, EITC worked with national foundations including the Annie E. Casey Foundation, the David and Lucile Packard Foundation, the Rockefeller Foundation and the Charles and Lynn Schusterman Family Philanthropies, among others. According to Ami Nagle, who directs the EITC Funders Network,  “One of the things that the foundation community realized pretty quickly was that making sure that the expansions rolled out well, and that every family who was eligible for them was able to access them, was going to be a pretty monumental job. We all needed to be rowing in the same direction.” 

The campaign featured billboards, flyers, radio ads and other public education outreach. While it gained some traction, by mid-summer the partners realized they weren’t reaching many of the people who qualified for benefits.

“We had this missing link, we began to think of it in the broadband parlance of the ‘last mile.’ We needed some way to really get it down to the local level,” Nagle said. “It occurred to us that our community foundation partners fund local grantees — whether it’s food banks, diaper banks, community centers, Boys and Girls Clubs — and that we could design an effort that connected the national effort to this local effort. The linchpin was our community foundation partners.” 

The EITC Funders Network and its foundation partners put together a pool of funds to support outreach efforts by 24 community foundations across the nation. “It’s something we’ve never done before,” Nagle said. “We put some money on the table with the idea of driving as much of those resources as possible into the hands of local organizations to do that last-mile work.” 

Reaching people where they live

If you haven’t followed the latest ins and outs of U.S. tax policy, you aren’t alone. Taxes are a topic most Americans would just as soon avoid. But especially after the American Rescue Plan was introduced, avoiding the topic meant money left on the table for many low-income Americans.

Under the American Rescue Plan, more families qualified for an expanded child tax credit, and more low-income working people were eligible for the earned income tax credit in 2021. To access these benefits, individuals and families had to file a tax return. The problem is, many of those who qualify don’t file taxes because their earnings fall below the income threshold. For Nagle and the national and community funders she works with, the goal was to reach those qualified individuals and families and help them get their taxes filed before the tax deadline so they could access the expanded benefits. 

On the ground in towns like Manchester and Nashua, New Hampshire, this meant reaching people where they live. 603 Legal Aid’s Vanessa Valdes met with representatives of immigrant communities, people with disabilities, faith leaders, care providers, churches and community groups. She and her colleagues and partners got the word out on social media, recorded radio spots and placed articles in local newspapers.

Valdes pointed to some of the barriers that prevent people from accessing benefits. “One is misinformation about tax credits or no information at all, which is a huge problem,” she said. “And then lack of access to basic resources like — oh, I don’t know — a computer and the internet.”

In addition, many immigrants are wary of filing taxes because they fear possible repercussions for themselves and their families. “We’re seeing a lot of distrust in the system, even in populations who have been in this country for a while,” Valdes said. “The former administration’s take on immigration really set us back, and there is a lot of work to do when it comes to rebuilding that trust.”

Valdes has received training so she can assist people with their tax returns; with her laptop, she can act as a one-person mobile tax clinic. At pop-up tax clinics, she has worked with a small army of volunteer tax preparers to provide assistance and answer questions. 

Connecting with families about filing taxes is also an opportunity to inform them about other available benefits, like emergency rental assistance, said Deborah Schachter, senior program officer and policy advisor at the New Hampshire Charitable Foundation. “We knew that a lot of households were facing the threat of eviction for non-payment because of the economic fallout of the pandemic,” she said. “In New Hampshire, affordable housing is scarce. Losing housing is disruptive for kids and families in its own right, of course, but it really puts families at peril of homelessness, because we don’t have enough places for people to go.” NHCF worked closely with partners and grassroots groups to make sure families who were receiving tax information were informed about emergency rental assistance, and vice versa. 

Basic needs — and new tires

The tax credits make a significant difference for the people Valdes works with. “An incredibly high percent of our population cannot afford a $400 emergency,” she said. “That’s true nationwide, but in New Hampshire, a lot of people are one popped tire away from trouble.”

Research makes it clear that tax credits for low-income families improve lives. After the expanded child tax credit ended in December (the Biden administration wanted to extend the CTC, but was unable to do so after Sen. Joe Manchin joined Republicans in opposing it), there was an almost immediate 41% uptick in child poverty, according to Columbia University’s Center on Poverty and Social Policy. An earlier report found that families spent CTC funds on food and other basic necessities, and that the benefits reduced food insufficiency. 

The earned income tax credit has also been shown to convey a broad range of benefits, including boosting health outcomes, improving student performance, and fueling the economy, according to the Center for Budget and Policy Priorities. (The EITC Funders Network website provides additional resources on the health and other benefits of the EITC). 

Death and taxes 

This year’s April 18 tax deadline is almost here. Still, Nagle of the EITC Funders Network believes that recent, widespread efforts to reach low-income families will continue to produce benefits when changes in tax policy and other programs are rolled out in the future. “We’ve learned this year — or rather re-learned — the incredibly important role of local community organizations in that trusted messenger position,” she said. “We saw it during the Census and during the vaccine outreach, and we re-learned it during the tax return outreach, as well.”

Meanwhile, the EITC Funders Network continues to push for more states to enact their own statewide earned income tax credits (30 states, as well as the District of Columbia, Guam, Puerto Rico and some municipalities already have EITC programs). Nagle sees tax credits as a tool to chip away at poverty — a tool that philanthropy should seize and run with. Helping low-income families access tax benefits already available to them is an excellent way for anti-poverty funders to magnify the effect of limited grantmaking budgets.

“I think this is an incredibly important area for philanthropy to focus on,” she said. “In the last year, there’s been a renewed and increased focus among philanthropy on the opportunities that the tax credits present in terms of poverty alleviation.”