By Joseph Antolín | December 6, 2023
Baby Bonds are an increasingly popular government policy in which every child born into poverty receives a publicly funded trust account at birth, providing them with “start-up capital” to pursue fulfilling, productive, prosperous, and self-directed lives. Follow our Baby Blogs series to learn about the vision, politics, and people behind Baby Bonds and their transformative impact on the lives of young people, their families, and communities.
A widely shared economic belief is that hard work and playing by the rules will develop into economic security and opportunities to build wealth. The post war economy through the 1960s certainly made that possible. The era’s government policy fueled prosperity—of the overwhelmingly white economic “middle” class—was realized in good paying union jobs, cheap home financing in white areas, and affordable low-debt post-secondary education. These became the paths to economic security that are still prevalent to this day.
Today, the majority of Americans understand the economic status quo is not working, the racial and gender wealth gaps are systemic, and economic reinvention is needed. The U.S. economy has systemically excluded many Black, Latinx, Indigenous, and Asian households, especially those of refugee and asylum-seeking status.
The design of our current economic system has resulted in:
- long term wage stagnation;
- the undercutting of or prevention of unions;
- the legacy of discrimination that expands the wealth advantage for whites;
- real estate and capital practices that disproportionately disadvantage women and people of color;
- the disinvestment of public funding for education, health, retirement; and
- income and wealth stripping policies (e.g., fees and fines, hospital debt collection, over incarceration, unregulated predatory lenders).
The extant embedded design preserves racial and gender-based advantages and disadvantages reflecting intentional discrimination, even as our nation and the workforce become more diverse. Indeed, to obscure the systemic nature of inequity, many in power falsely continue to explain wealth gaps as the product of individual choices.
Instead, access to a post-secondary education without debt, having capital to start a small business, and being able to buy a house are three foundations to wealth building that needs to be more readily available—and not just to those born into a household that can transfer or gift intergenerational wealth. We need an economic system where prosperity is realizable by many, regardless of race or gender, and is tied to the values of inclusion, equity, sustainability, resource opportunity, and justice. Baby Bonds are an intervention designed to advance economic reinvention.
The Asset Funders Network (AFN) exists because philanthropy has a role in advancing a values-based reinvention of the economic levers that increase opportunity and justice for all households and future generations. Our members, working with community-based providers, advocates, researchers, and movement partners:
- test new designs;
- expand access to capital and tools to increase wealth building;
- fund research to understand how and what needs to be changed to achieve equity;
- support narrative change to advance the shared value of economic racial justice; and
- support advocacy for public policy, investment, and implementation to make real change.
Baby Bonds will become more widely available as philanthropy expands its investment in this outcome.
An example of a philanthropy-fueled investment is the development of Children’s Savings Accounts, or CSAs. These accounts, supported by public and private funds for tens of millions of children, are especially important in building aspiration. Many Americans had stopped believing that post-secondary education was in the cards for their child. The biggest effect of the CSA for a child and their parents has been to build the belief that a post-secondary education in the future is possible. Nurturing that hope through regular notices—including age appropriate messages and activities and regular communication with parents and family—are key. Hope for that possible future needs to be reinforced or the many inflection points for that child and family in the education and other systems is less likely to lead to a post-secondary education or their resilient inclusion in the economy. Yet, a CSA was always an initial step.
Baby Bonds are a huge step forward in building the aspiration of an education without the fear of debt. As a trust account for children that will passively grow, the Baby Bonds model addresses racial and economic equity by increasing a child’s inclusion to participate in gaining equitable economic outcomes. The design recognizes that the landscape for post-secondary affordability without debt is and will be changing, thus by design they allow for these funds to be accessed later in the person’s life to purchase a home or start or expand a business.
There are unanswered design questions with implementation—but as with CSAs there is enough time to learn and undo unintended challenges and to build a narrative that advances Baby Bonds as a meaningful catalyst to economic security, wealth building, and prosperity. Implementation will need to develop strategies where the design fosters policies that both discourage and outlaw predatory contracts or lending schemes. To be meaningfully inclusive, regular and age appropriate communications with the child and young adult will help them develop the knowledge of options, pitfalls, available tech, and tools to foster “best uses” of the funds for entrepreneurship or home ownership.
The Connecticut Baby Bonds experiment will be joined by other states. I expect philanthropy will help fuel and support this policy as an important systemic reinvention creating a sound equity investment in the future of our children.
Joseph Antolín serves as the president and chief executive officer of Asset Funders Network (AFN)—the leading national grantmaker membership organization focused on advancing equitable wealth building and economic mobility. Joseph has led the organization through its membership phase since 2013. He is Latinx with grandparents who were Black, Latino, and Indigenous.
In October 2023, AFN hosted a webinar featuring Dr. Darrick Hamilton, Connecticut State Treasurer Erick Russell, Alexandra Cawthorne Gaines of the JP Morgan Chase Policy Center, and Mendi Blue-Paca, CEO of Fairfield County’s Community Foundation.
If you missed previous installments of our Baby Blogs series, read them here.
To share feedback on this blog, or for questions about Baby Bonds, email David Radcliffe at [email protected].
To learn more, explore our Baby Bonds resources.