Gates Sticks With U.S. Antipoverty Giving, But Deeper Structural Questions Remain

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The end-of-year “season of giving” isn’t a new phenomenon. Charles Dickens, after all, chose the winter holidays to school Ebenezer Scrooge — and Victorian England — on the scourge of poverty and the corrosive effects of wealth hoarding. The timing may be coincidental, but it seems fitting that the Bill & Melinda Gates Foundation chose this time of year to unveil an update on its efforts to tackle poverty and promote economic mobility in the United States. 

Gates announced that it will fund “new partnerships and investments” to the tune of over $100 million, part of a larger, four-year, $460 million commitment the foundation put forward in 2022 to benefit the 50 million Americans who experience poverty. The funding aims to target barriers to government benefits, help connect skilled workers without college degrees to better-paying jobs, boost job quality for workers in low-wage jobs, and provide tools that local leaders can deploy to improve economic mobility in their communities.  

Economic mobility in the U.S. is on the decline, as the Gates Foundation pointed out when it made its announcement. Ninety percent of children born in the 1940s earned more than their parents, but that number fell to only 50% for those born in the 1980s. 

Ryan Rippel, the director of economic mobility and opportunity at Gates, cited this data point during a press call announcing the new funding. “It's critical for us to focus on the downward trajectory in upward mobility in this country,” he said. “Millions in this country are struggling to maintain economic stability and build a pathway to long-term economic mobility. The foundation and its partners are focused on strategies that can make people's lives better today with near-term impact, as well as pave a pathway to long-term, sustained economic uplift for individuals and their families.” 

Gates is backing some worthy work, as we’ll explore below. But it raises the larger question: Can billionaire philanthropy ever really remedy wealth inequality in a meaningful way?

A billionaire war on poverty 

Though the bulk of the Gates Foundation’s immense grantmaking goes toward its global portfolio, promoting economic mobility in the U.S. is an issue it has been grappling with for a while. It kicked off its stateside antipoverty work in 2018 with a four-year, $158 million initiative. We also reported on its 2019 effort, along with Bloomberg Philanthropies and Ballmer Group, harnessing data-driven models to address poverty in American cities. In 2020, Gates also joined other funders in a philanthropic challenge to change narratives around poverty. Last year’s $460 million commitment was an indicator that the foundation intends to remain active in this space. But even that hefty sum still only represents a small fraction of Gates’ yearly grant outlay, which has topped $7 billion recently.

Other major U.S. foundations, including the Ford Foundation and W.K. Kellogg Foundation, have been working to mitigate poverty for a long time, and newer philanthropies like Ballmer Group, Blue Meridian Partners and MacKenzie Scott have also made significant investments in recent years — what we’ve dubbed a “billionaire war on poverty.” Still, as the country’s largest philanthropy, the Gates Foundation’s ongoing funding in this area is worth keeping an eye on, and appears to be growing.

According to Rippel, that funding is also evolving to take on more of the trust-based contours now popular among many U.S. grantmakers — with more than a hint of MacKenzie Scott in the mix. “This round of investments represents a shift in the way the Gates Foundation works with its partners on economic mobility,” Rippel said when the initiative was announced. “With these particular investments, we're moving away from smaller grants and making much larger grants to our partners, putting more decision-making responsibility and resources directly in their hands. They're much closer to the front lines of this work.” Grants in this current round of funding ranged from $15.2 to $29.2 million.

Where’s this money going?

It’s hard to talk about economic mobility initiatives without descending into the weeds — and into a mind-numbing tangle of statistics and policy jargon. The Gates Foundation tried to avoid this pitfall by breaking its new commitments into three pillars with genial-sounding names: “Making Lives Better Now,” “Creating and Sharing User-friendly Tools and Insights” and “Bringing Together Partners Across Sectors.”

“Making Lives Better Now” aims to provide immediate relief for people experiencing poverty. “There are some things that families and individuals need right now to put them on the path to long-term mobility and have a chance to succeed over time,” Rippel said. 

One grantee, the Families & Workers Fund, helps eliminate barriers to accessing government benefits. An astonishing $80 billion in public benefits go unused every year, according to Rachel Korberg, executive director of the Families & Workers Fund. The funding from Gates will go toward eliminating practical and bureaucratic obstacles that prevent families from receiving funds for which they qualify. “If we can make today's already agreed-upon government public benefits programs work better, we can make millions of lives better, too,” Korberg said. 

Another grantee, Opportunity@Work, provides employment opportunities for skilled workers who lack college degrees. Such workers make up 50% of the U.S. workforce. Meanwhile, grantees Prosperity Now and Pacific Community Ventures work with small and medium-sized businesses to improve benefits and job quality for workers earning low wages. 

Bulbul Gupta, president and CEO of Pacific Community Ventures, highlighted one of her organization’s clients, a Spanish-immersion preschool that was able to expand and now provides good jobs and benefits for over 38 employees, many of them recent immigrants. 

What about “Creating and Sharing User-friendly Tools and Insights?” Another grantee, the Urban Institute, which has been partnering with Gates since 2016, developed an Upward Mobility Framework that helps local governments identify and invest in evidence-based interventions. Meanwhile, grantee Results for America enables local leaders to access data and tools like the Urban Institute’s framework and its own Economic Mobility Catalog. 

“With support from this grant, we will be able to give government leaders these tools and resources so they will know which policies and investments will have the greatest impact for residents,” said Lisa Morrison Butler, executive vice president and chief impact officer at Results For America. 

Finally, there’s the goal of bringing partners together. “One of the things we seek to do is create a space for more collaboration and alignment around shared goals and efforts in this space,” Rippel said. “We believe we can play an important role in helping facilitate that coordination through meaningful partnerships, backing those who've been at this work a long time and getting them to work together in even more powerful ways.” The Urban Institute will support this goal by identifying metrics for economic mobility and barriers to impact, and fostering collaboration.

The limits of the billionaire anti-poverty program

In his book “Poverty, by America,” sociologist Matthew Desmond described in vivid terms what poverty is costing us all: “It’s there in the morning paper, on our commute to work, in our public parks, dragging us all down, making even those quite secure in their money feel diminished and depressed… Poverty infringes on American prosperity, making it a barricaded, stingy, frightened kind of affluence.” 

Desmond argued that we have the resources to mitigate poverty in the United States: Simply eliminating tax avoidance by corporations and wealthy families, for example, would yield more than $1 trillion a year. Adopting a fairer tax code, one that taxes wealthier people at a proportional rate, would make a huge difference. According to Inequality.org (a project of the Institute for Policy Studies), “The rate of taxation of America’s richest .01 percent of households, as a percentage of their wealth, decreased by over 83 percent between 1953 and 2018.” (A recent guest post by the Institute for Policy Studies’ Chuck Collins and Helen Flannery illustrated the many ways taxpayers subsidize giving by the very wealthy).

To be fair, Bill Gates has argued that the government should raise taxes on wealthy people like himself. And commitments like these from the Gates Foundation will no doubt improve many lives. Nevertheless, deeper structural realities continue to stymie any real movement toward progressive tax reform in the U.S., not to mention a variety of other root-level poverty fixes.

With that in mind, it’s doubtful whether a “billionaire war on poverty” can — or would — ever tackle the more fundamental power divides keeping so many Americans broke. After all, big philanthropies like Gates and its peers have a long history of tiptoeing around the structural factors that lie behind skyrocketing wealth inequality in this country, instead favoring technocratic tweaks that do little to threaten a status quo that provides them tremendous benefits.

It’s unlikely philanthropy will make much headway against poverty in the U.S. as long as the immense gap between rich and poor continues to grow — and funders continue to do so little to address the structural factors that allow that to happen.