In 2019, the Chicago Resilient Cities Task Force released a report laying out a roadmap to increase economic stability for struggling Chicago families—nearly half of whom lacked a basic safety net to weather emergencies.
The task force–which was created by the Chicago City Council and included the Trust’s President and CEO Helene Gayle and Director of Community Impact Anna Lee—recommended direct cash transfers to help families achieve greater financial freedom and security. In 2020, as COVID-19 deepened economic instability for already-vulnerable households, cash assistance emerged as a critical tool to help people meet their basic needs.
Recently, the Trust hosted a virtual Donor Dialogue, convening a panel of local experts to discuss the role of cash assistance in supporting economically vulnerable families and growing household wealth in the region. These dialogues bring our donors and supporters opportunities to connect with civic leaders and learn and engage on the most pressing issues facing our region.
The panel included:
- Moderator Joanna Trotter, senior director of community impact at The Chicago Community Trust
- Carmelo Barbaro, executive director of the UChicago Poverty Lab
- Ameya Pawar, senior fellow at the Economic Security Project and former alderman of Chicago’s 47th Ward
- Ebony Scott, the partnership director at Family Independence Initiative (FII) National
Here are some highlights of the conversation:
Addressing Urgent Needs
In the wake of COVID-19—as entire industries abruptly shuttered and tens of thousands of jobs were lost—many families living in a fragile Chicago economy needed immediate assistance. Panelists noted that cash transfers, which provide income to recipients with few strings attached, are a proven intervention and can be mobilized more quickly than other kinds of benefits to help households make ends meet.
In response to the pandemic, the Family Independence Initiative—an organization that supports low-income families in building community and accessing tools to achieve financial goals—shifted the focus of its operation to providing emergency cash transfers to families. FII partnered with almost 70 organizations across Illinois—including the Trust, which supported the organization’s efforts with $750,000 in grant funding through the Chicago Community COVID-19 Response Fund.
The need to rapidly deploy funds to households highlighted the importance of philanthropic dollars in responding to a large-scale crisis, Ebony Scott noted.
“FII raised just over $7 million locally that we pushed out in cash assistance, and only $2 million of that was government money. So, we continue to have this [situation] where philanthropy is having to fill in that gap,” Scott said. “For our region in particular, it’s an indicator to me that there’s definitely more work to do.”
The Case for Cash Assistance
Ameya Pawar, who chaired the Resilient Families Task Force, noted that the task force had made several recommendations to increase economic security for Chicagoans. Solutions included modernizing the Earned Income Tax Credit in Illinois and expanding it to support students and unpaid caregivers. The task force also outlined a pilot program that would provide 1,000 low-income Chicagoans with $1,000 a month in guaranteed income for 18 months.
Scott noted that, contrary to concerns sometimes raised about putting dollars directly into family coffers, studies show that cash assistance does not discourage people from working.
“Our research and data that we’ve collected over the years show that [families that receive cash transfers] actually take on more work. They take on different forms of work, and they take the better job that actually requires more of them because now they have some agency and some choice,” she said.
Scott noted that FII also focuses on supporting people in building the kinds of professional and community networks that lead to opportunity and economic mobility.
“We’ve always taken the approach that the key levers are a combination of cash plus social capital. And so you have to give folks access to flexible dollars that they can invest in ways that make sense,” Scott said.
Panelists also noted that programs to provide cash assistance must avoid pushing families off the “benefit cliff,” which occurs when small increases in income lead to reduction or loss of other needed benefits.
“With every additional dollar that you earn as a poor person in this country, you have a little bit of your Medicaid taken away, and a little bit of your healthcare assistance—and these things compound and are particularly acute for individuals who may be in multiple programs,” Carmelo Barbaro said.
Pawar added: “Direct cash is not a replacement for services, it’s an addition to the safety net.”
“Even before the pandemic hit, nearly 70 percent of Americans didn’t have [enough in the bank] to cover basic needs in the event of an emergency, one in three parents couldn’t afford diapers, and one out of every three Americans were living paycheck-to-paycheck,” Pawar noted.
“We can’t go back to the economy that we had pre-COVID… my hope is that we rewrite the rules and start thinking about how we support people and give them dignity, and think about a new social safety net.”
In June, 11 mayors from across the country—including Los Angeles, Atlanta, Stockton, Calif., and Newark N.J.—created a coalition to explore cash payment programs in their cities in the wake of COVID. Members of the panel said they were optimistic that the initiative could lead to a broader national solution to help struggling families.
Trotter noted that The Chicago Community Trust is leading a coalition of organizations that is a finalist for the Lever for Change Economic Opportunity Challenge—a competition for a $10 million grant to improve economic opportunity for low-income individuals within the U.S. The Chicago Asset Building for Children (Chicago ABCs) project would build on recent public commitments from the state to establish savings accounts for Illinois children, and the City of Chicago’s Family Connects visiting nurse program for newborns, with additional deposits into savings accounts for children and direct cash transfers to families.
Learn more about the Trust’s Growing Household Wealth strategy and how it connects to the organization’s 10-year commitment to closing the racial and ethnic wealth gap. Our Donor Dialogues are held regularly throughout the year. We look forward to engaging our community further in the critical work the Trust, its partners, grant recipients, and other regional leaders are doing to build a stronger Chicago region. In 2020, these conversations will build a deeper understanding of our strategic focus and will connect donors with opportunities for action.