New York۪s Cash to Needy Program is a Model for Public-Private Partnerships
Billionaire financier and philanthropist George Soros did something remarkable in New York last week. To address the recession۪s impact on low-income New Yorkers, Soros, along with the state of New York, gave $200 to every child between the ages of 3 and 17 whose family receives temporary assistance or food stamps. The money, to be used for the purchase of back-to-school supplies, was placed directly on Electronic Benefit Transfer (EBT) cards.
Even more remarkable was how Soros put his generous plan into action.
It worked like this: under the federal American Recovery and Reinvestment Act (ARRA), states can apply for TANF emergency contingency money in three categoriesbasic assistance, subsidized employment and one-time grants. For every dollar the state puts up to increase spending in these areas, the Feds provide four towards the effort. A total pot of $5 billion is available to the states. But states are slashing budgets left and right, and while the federal dollars provide an incentive for states to act, most states are only drawing down a small portion of the money potentially available to them. Enter Soros. With a new special poverty alleviation fund, Soros and his staff at the Open Society Institute (OSI) offered to put up New York State۪s portion of the program. So with a philanthropic check for $35 million, the state devised a $175 million initiative to provide every qualifying low income family with an allowance on their EBT card to buy back-to-school supplies.
Soros is happy because his investment is highly leveraged and he has provided some immediate relief to families in need. The state gets to draw down federal funds and bring $175 million into its economy, just as the stimulus bill intended. Given that the Obama Administration is looking for leverage with the private sector in a number of areas such as the newly established Social Innovation Fund, this strategy might prove a useful lesson for advocates, philanthropy and government officials alike. (For a working list of other government partnership opportunities click here.)
Since many foundations are having a tough time with decreased endowments, replicating this approach might mean creating collaborations of funders and individuals who come together to leverage stimulus funding. But in lean times, funders love leverage. So, this opportunity could be an appealing option. And, money can be drawn down at the county level, not just through statewide programs. For example, businesses, foundations and individuals could put up funding for a similar “holiday bonus” for those on food stamps or public assistance in a certain community. Or communities could devise one-time funding pots to help low-income families evicted from foreclosed rentals get settled in new homes, prevent utility shutoffs, provide emergency food, or create subsidized jobs.
A few notes of caution if you plan to pursue a funding partnership: Keep an eye out for artful budget officials who would love the philanthropic money to help cover budget cutsyou don۪t want a funder to be supplanting what a state would be doing on its own. You also shouldn۪t be surprised by negative reactions in some quarters to a one-time benefit. Check out the New York press hits on the Soros program and you۪ll find phrases like “free money giveaway” and references to welfare expansion. (See for example the New York Daily News “Back-to-School Spree” ).
Despite such potential challenges, during these difficult times there is a role for creative partnerships to address the immediate needs of those who are struggling most. The stimulus bill provides a unique opportunity for us all to seize the day and use whatever tools we can to make a difference.
Finally, one disclosure: I have been working with OSI on this effort, so admit that I am a bit biased about the benefits of using the ARRA funding.
Posted by Shelley
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