Gates Foundation takes on poverty in the U.S. with $100 million commitment

The Bill & Melinda Gates Foundation announced Thursday that it will donate $100 million to expand its work on economic mobility in the U.S. The country’s largest foundation says the commitment represents a change in how it operates by putting more power in the hands of grantees

In recent years, city leaders in Grand Island, Nebraska, observed that many workers and students were walking or biking long distances to their jobs or schools. So when city administrator, Laura McAloon, learned of an opportunity to study the development of a bus system to meet those transportation needs, she jumped at it.

The opportunity was funded by the Bill & Melinda Gates Foundation, in collaboration with the International City/County Management Association, a network of local government administrators. And it sent McAloon to Washington along with other local leaders to learn about strategies and policies to lift people in their community out of poverty.

The Gates Foundation announced Thursday that it will donate $100 million to expand its work on economic mobility — a move that the country’s largest foundation says is a change in how it operates, putting more power in the hands of grantees and looking to accelerate the speed at which its gifts have impact. The commitment is part of the $460 million the foundation said in 2022 it would donate over four years to this part of its portfolio.

Ryan Rippel, the founding director for the Gates Foundation’s economic opportunity and mobility strategy, said the grants represent an important and deliberate change in how it works, with large grants going to organizations that will have a great deal of autonomy in directing their own work and the work of subgrantees.

The strategy, he said, is a result of feedback they heard from speaking with others in the field and the people they hope to help.

“I went to a conference in Washington and was very proudly talking about a data investment that we had made that we think could actually help governments make very different decisions about allocating resources,” he said. “And a woman stood up in the back of the room and she shouted, ‘I just need a tank of gas.’ And that really stuck with me. And it stuck with our team as a profound lesson that these are very concrete, daily needs.”

The portfolio is a small portion of the foundation’s overall budget, which was $7 billion last year, but it’s grown significantly. Rippel said that is because they’ve learned so much about the strategies, interventions and organizations that can lift people out of poverty. The continued expansion of their work, he said, depends on whether they meet their goal of improving economic mobility for 50 million people in the U.S. who earn 200% of the poverty level or less, which is $29,160 in annual income for an individual.

The foundation will fund organizations working to expand support for local government implementing evidence-based policies, connecting people with skills but without college degrees to jobs, helping people claim government benefits and influencing small- and medium-businesses to adjust working conditions to help people balance personal and work commitments. The grantees include Opportunity@Work, Families and Workers Fund, Prosperity Now, Pacific Community Ventures, Results for America and the Urban Institute.

It was at a meeting in Washington in May where the Urban Institute introduced the tools and research they’ve developed to help cities and counties understand barriers to economic mobility that McAloon from Grand Island realized that her city of 53,000, located about 150 miles west from Omaha, needed to collect more information.

“We looked at each other and said, we don’t know that we have the data, the metrics, to show that this problem exists that we said we were going to come up with a solution for,” said McAloon, of her colleagues from the local community college and public school district who were with her.

By the end of the conference, they’d altered their objectives and launched a data collective and analysis project, which included surveying local residents with the help of translators at a summer festival and consulting with the human resources departments of major local employers.

What they learned is that transportation had been a problem for workers but when the meatpacking plant and other manufacturers raised wages during the period of low unemployment after the pandemic, many households were able to afford cars. Now the issue, the employers said, was housing.

“It’s a multi-pronged approach to actually creating opportunities for economic growth and personal income growth,” McAloon said. “There’s just no one silver bullet. There’s no one problem. You have to address all of it in order to make really significant change.”

The Gates Foundation is far from alone in this field with large funders, like philanthropist MacKenzie Scott and Blue Meridian Partners, also making multimillion dollar commitments, sometimes to the same organizations, in recent years.

Last week, Blue Meridian Partners announced it was granting $50 million each to three municipalities, San Antonio and Dallas County in Texas, and Spartanburg County, South Carolina, who each also raised at least $50 million from other sources, to support specific interventions like doubling the number of young adults making a living wage and increasing the percent of high schoolers who enroll in further education.

Jim Shelton, president and chief investment and impact officer at Blue Meridian Partners, said that while the interrelated issues that hold people in poverty are complex, there is a growing body of evidence for policies and programs that can have an outsized impact on people's life trajectory.

“Once you start to disaggregate the problem that way, you start to recognize that there are all over the place, pieces of solutions that actually work,” he said. “But what we lack is the coherence to bring it all together in a way that consistently change people’s lives.”

When asked whether growing inequality in the U.S. played a role in its decision to increase funding for economic mobility, the Gates Foundation said, "Our increased investment is based on promising work from partners in the early years of the strategy and our belief that the foundation can play a unique role in improving systems that help people get back on their feet in times of need and get ahead economically.”

At the close of Grand Island's research study this fall, McAloon said they determined it won't be possible to set up a bus system, in part because of federal funding rules. Instead, they are exploring a van pool that is partially funded by employers and with state funds.

But, because of the new communication and coordination across agencies, schools and local organizations prompted by the study, her office heard that a lack of plumbers and electricians was holding up new housing developments. She reached out to the community college, which is now setting up a technical training program to funnel high school students into those trades.

“It was a matter of a couple of emails,” she said. “And they’re already working on developing the curriculum and creating an apprenticeship program that hopefully will start making an impact on that issue that’s keeping us from building more houses.”

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