The voices of Urban Institute's researchers and staff
November 22, 2017

The keys to America’s economic growth are in low-income and marginalized communities

November 22, 2017

The American economy is nearing full employment, and job growth is accelerating, but this encouraging progress is leaving many behind. Wage growth remains stagnant, 6.5 million people are unemployed, and wealth inequality is worsening.

Marginalized groups—like people leaving prison and low-income communities—could dramatically boost the economic prosperity of localities and the entire country, but they need support from the private, public, and social sectors. At a recent event cohosted by the Urban Institute and the Citi Foundation, national and local leaders discussed innovative programs that help low- and moderate-income residents succeed and access economic prosperity.

Their conversation revealed four strategies to unlock economic potential in communities:

1. Support people who want to work but face societal barriers

People who were recently incarcerated face many obstacles to accessing stable employment, ranging from a lack of opportunities to prohibitive background checks. The Roberts Enterprise Development Fund (REDF) assists these people and those in similar situations by linking them to jobs and employment opportunities.

REDF CEO Carla Javits said that we need more avenues for recently incarcerated people to enter the workforce. “I’ve been to prisons and talked to people who are getting out,” she said. “They all want to work, but many told me that they are nervous about working because they haven’t had a legitimate job, and they want to start working in a company that has a supportive environment, so they can be successful.”

Javits noted that everyone can support this issue. “Obviously, we are in a time of incredible divisiveness,” she said. “But everyone wants to see folks go to work, and everyone wants to reduce recidivism, incarceration, and homelessness.”

2. Deliver services to the people who need it most

While people who are struggling financially need support, they are often too burdened by work, family, and other commitments to seek support. In Florida, Catalyst Miami overcomes this challenge by taking their services directly to low-income families, whom they help reach financial security through tax preparation, credit building, and financial coaching.

“A few years ago, we began thinking about how we could transition from a clinic model to a one that’s more mobile, and where we could meet people where they are, and where we could open a conversation with them about their financial lives,” explained Gretchen Beesing, the organization’s CEO.

Catalyst Miami has partnered with Baptist Health’s Homestead Hospital to deliver “financial checkups” to patients visiting the emergency room. “Sixty-five percent of people living in the hospital’s catchment area are living at 200 percent of the FPL (federal poverty level) or below. So their client profile matched our client profile,” explained Beesing.

3. Ensure growing industries lift up everyone

The American energy system is shifting from relying on centralized power plants toward incorporating distributed, sustainable sources like solar panels. The environmental and cost-saving benefits of this movement, however, has largely left low-income communities behind, though these communities stand to gain the most.

Elevate Energy seeks to address this problem.

“We do clean energy projects in low-income communities and provide ownership opportunities to those communities,” explained Anne Evens, Elevate Energy’s CEO. For example, the organization employed contractors to install solar panels, while ensuring that the electricity the panels generated was credited against electricity bills for people in that community.

“Historically, when looking at how we address environmental challenges, we’ve been approached with a false choice: we either invest in things that protect the environment or invest in things that lead to economic development,” Evens said. “I think we’re smarter than that.”

4. Believe in the power of changemakers, no matter their circumstances

The Local Initiatives Support Corporation (LISC) bridges the gap between community organizations and funding opportunities to forge resilient and inclusive communities. Their work is built on partnering with people who are creating change in their communities, despite challenges.

“Every day, we see the power and talent of people in our communities,” said Maurice Jones, president and CEO of LISC. “They need partners. They need patience, they need capital, they need investments in their skill set, and most importantly, they need someone who is navigating their journey with them, whether that journey is overcoming drugs or alcohol, recovering after incarceration, or improving financial literacy.”

The philanthropic sector can do more to support these efforts

Brandee McHale, president of the Citi Foundation, which funds these and other organizations through unrestricted Community Progress Makers grants, said flexible support for social change can shift the status quo for good. Unrestricted grant funding allows organizations to flexibly implement solutions and strategically build their capacity, with less burdensome reporting to the grantmaker on impacts and progress.

“Ultimately, I think we’ll look back at this period in the history of philanthropy and see we have inadvertently stifled the catalytic innovation process because we’ve overemphasized short-term performance,” she said.

She added, “I think too much of the philanthropic money available to address social needs is used to maintain the status quo, because it’s given to organizations who are primarily wedded to improving their current solutions, delivery models, and current recipients.”

The result of funding-as-usual, according to McHale, is driving incremental improvement at the margins. She said, “I hope we can broaden the conversation from ‘models that work’ to ‘models that change the status quo.’”

The Citi Foundation is looking for the next 40 Community Progress Makers. Eligible organizations can apply by December 18, 2017

Families walk past an abandoned home after eating a free meal at the Atlantic City Rescue Mission on August 26, 2015 in Atlantic City, New Jersey. Photo by John Moore/Getty Images.

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