Why Nonprofits Should Care and What to Do

Why Nonprofits Should Care and What to Do

Why Nonprofits Should Care and What to Do

mother and baby
Key Takeaways:
  • Welfare cliffs and marriage penalties are discouraging people from work and forming families.
  • The cliffs and penalties may mean that our clients are locked into poverty for much longer than they would be otherwise and despite our best efforts.
  • GCO has created a platform that allows anyone to see when a particular family can expect to experience benefit cliffs as they earn more money through work. 

Important Link: BenefitsCliff.org

 

If you work in a nonprofit serving the poor, you need to know that the government benefits your clients receive are likely discouraging them from working or forming a family, two things that research shows could lift them out of poverty the fastest. 

This is an especially tough problem for nonprofits, like GCO, that work to get their clients into good-paying jobs and strengthen their family relationships.

What’s going on?

These disincentives to work are often called “welfare cliffs” and the disincentives to family formation are called “marriage penalties.” Essentially, “cliffs” are generated any time a person receiving government benefits gets a raise at work that causes them to lose more in benefits than they will earn in additional income from the raise. These same individuals can face a similar financial penalty IF they decide to marry. In many cases, they will lose more in benefits than their spouse is able to provide in new income to the household.

While you would think (hope?) cliffs and penalties are rare, they are not. Instead, they are baked into the structure of nearly all welfare programs and many of the cliffs are severe. It’s also important to know that welfare recipients don’t face a single cliff or a single penalty, but they face cliffs and penalties at a number of different points as they have additional income from working or through marriage.

Why does it matter?

For nonprofit leaders, the cliffs and penalties may mean that our clients are locked into poverty for much longer than they would be otherwise and despite our best efforts. For workforce development nonprofits, cliffs could be the underlying reason why your clients don’t pick up additional work hours when they are offered or seem less than excited when they are offered a good promotion. In extreme cases, clients may quit jobs that seemed like a perfect fit simply because they panic when they learn they may lose a major benefit – like housing or childcare.

For nonprofits trying to help strengthen family relationships, marriage penalties may be driving behavior that is otherwise inexplicable, like seemingly happy couples refusing to marry or live in the same home. These dynamics can lead to stress for the couples affected and to a sense that a parent (usually the father) has abandoned the family when, if the system would allow it, he would be in the home. In these cases, children pay the biggest price.

What can you do about it?

Fortunately, we have created a platform that allows anyone to see when a particular family can expect to experience benefit cliffs as they earn more money through work. For nonprofits working with these families, you now have a tool (available for 10 states, with two more on the way) that will allow you to help your clients plan for the future. In some cases, knowing when cliffs are likely to happen will allow your clients to seek a larger raise that will help them bypass or leapfrog a cliff. In other cases, maybe the answer is seeking additional training or certifications that will get your client into a different payscale entirely – one that avoids the cliffs.

In the coming weeks, we will be adding a tool that will allow users to see the impact of penalties on couples who decide to marry. We will also be incorporating a solutions tool that will allow anyone to see how reforming our government benefit programs can actually eliminate cliffs and penalties entirely, giving recipients every reason to pursue work and form stable households.

For GCO, it is this last point – reforming the system – that remains the ultimate goal. In the meantime, we are looking for ways to mitigate the harm caused by the welfare system, so that as many people as possible can escape the system and break cycles of poverty now.



The Success Sequence provides an outline of how to reverse the cycle of poverty in our communities. GCO uses this as a framework for much of our work.

Randy Hicks on taking a bottom-up strategy to state policy reform | Overton Window Podcast

Randy Hicks on taking a bottom-up strategy to state policy reform | Overton Window Podcast

Randy Hicks on taking a bottom-up strategy to state policy reform | Overton Window Podcast

GCO’s CEO, Randy Hicks speaks with fellow think tank podcast, The Overton Window

Below is an excerpt from the Mackinac Center in Michigan. The Mackinac Center recently invited GCO’s CEO, Randy Hicks to discuss GCO’s take on State Policy Reform on their regular podcast,  The Overton Window.

Like many public policy advocates, the people at the Georgia Center for Opportunity research and write about public policy. What makes them different is that they try to bridge the gap between people working at the community level and the people working on state policy. I spoke with their president and CEO Randy Hicks about this for the Overton Window podcast.

 

“One of the things that sets us apart is that we actually spend a lot of time in the community working on those who we believe could be or are most affected by various public policies that we’re interested in,” Hicks says.

The dynamics between working on state policy and working at the community level are different, and state politics is not very conducive to collaboration.

 

Georgia Senate committee advances school-choice bill | The Center Square

Georgia Senate committee advances school-choice bill | The Center Square

In The News

Georgia Senate committee advances school-choice bill | The Center Square

The Georgia Senate Education and Youth Committee has advanced legislation that would allow Georgians to put taxpayer money toward the cost of private school tuition.

Senate Bill 601, the Georgia Educational Freedom Act, would create state-funded Promise Scholarships of up to $6,000 a year. Families of the roughly 1.7 million K-12 students in Georgia could use the money for private school tuition and other education expenses, such as tutoring and homeschool curriculum

“Promise Scholarships step far beyond a typical voucher by fully putting parents in the driver’s seat when it comes to their child’s education,” Buzz Brockway, vice president of public policy for The Georgia Center for Opportunity (GCO), said in a statement after the Senate committee approved the bill Tuesday.

“The funds could be used for private-school tuition, but there is added flexibility depending on each family’s unique needs, extending to paying for things like tutoring, specialized therapies, or homeschool co-ops,” Brockway said. “Passing Promise Scholarships would put Georgia at the forefront nationally of giving all children the opportunity for a great education.”

Georgia Senate committee advances school-choice bill | The Center Square

Could guaranteed basic income replace the welfare system? | Daily Citizen News

In The News

Could guaranteed basic income replace the welfare system? | Daily Citizen News

Georgia is the latest state to experiment with something called a “guaranteed basic income.” It will be interesting to see if these pilot projects can avoid the same pitfalls as the welfare system they’re intended to supplement — and might be better off simply replacing.

The premise of the guaranteed basic income is that there should be a minimum level of income for all Americans. Those who fall short with what they earn from their job would receive a monthly supplement funded by taxpayers…

My friends at the Georgia Center for Opportunity have done as much work on this particular topic as anyone I know. They call the traps built by our system “welfare cliffs,” because of the sudden, sharp drop people experience when they take a small financial step forward.

Georgia Senate committee advances school-choice bill | The Center Square

LETTER TO THE EDITOR: Appreciating Republican response to COVID | Independent Advocate

In The News

LETTER TO THE EDITOR: Appreciating Republican response to COVID | Independent Advocate

All Iowans can appreciate the work done by the Republican government in the recovery from the pandemic.

As long ago as last September, Iowa had the third quickest rate of recovery from Covid-19 in the United States.

Last month, the Georgia Center for Opportunity measured the severity of the responses of the states to the pandemic and the effect the responses had on the economy and the pandemic.

 
Lockdowns Were a Failure. What We Do Next Doesn’t Have To Be | Real Clear Policy

Lockdowns Were a Failure. What We Do Next Doesn’t Have To Be | Real Clear Policy

In The News

Lockdowns Were a Failure. What We Do Next Doesn’t Have To Be | Real Clear Policy

There is new proof government-imposed shutdowns prompted by the COVID-19 pandemic have done more harm than good. A better choice would have been to keep the economy open so people stay connected to work and targeting resources to vulnerable populations.

A new meta-analysis from Johns Hopkins University underscores this truth, revealing that lockdowns in America and Europe during the first pandemic wave in spring 2020 only reduced the death rate by 0.2% on average. Researchers concluded that lockdowns “have had little to no public health effects” while imposing “enormous economic and social costs” and should be “rejected as a pandemic policy instrument.”

While businesses were shuttered, people were forced to stay home, and schools remained closed, the unintended social and economic consequences were clear: rising unemployment, learning loss among students, spiking rates of domestic violence, and a pandemic-level rise in drug abuse and overdoses. All of that social and economic devastation yielded a minimal impact on health-related suffering due to COVID-19.

The new research from Johns Hopkins mirrors our own findings in a recent nationwide study, which found that overreaction by states did substantial damage without much benefit in reducing the effects of the pandemic.

The research shows a statistical correlation between how severe state governmental actions were in shutting down their economies and negative impacts on employment more than a year after the pandemic began. This was the case even after controlling for a state’s dependence on tourism or agriculture, population density, and the prevalence of COVID-19 infections and hospitalizations.

Our research found no correlations between the severity of shutdowns imposed by state governments and the rate of reported COVID-19 hospitalizations or deaths. States like Hawaii, New York, California, and New Mexico that imposed harsher economic restrictions generally have greater job losses even today than those states that were less harsh, such as South Dakota, Iowa, Nebraska, Missouri, and Utah.

For example, New York was 10.2% below its trajectory in October 2021 while Nebraska was just 2.4% below.

The bottom line is that while policymakers were likely working in good faith to do their best in a challenging situation, it’s crucial we learn from these past mistakes so that we don’t repeat them. And make no mistake about it — those mistakes have driven untold amounts of human suffering during the past two years.

The worst part is that the government-imposed shutdowns created even more barriers for people who were already struggling. Every American was impacted, of course. These interventions created challenges and burdens for the middle and upper classes, but for our poorest communities they were outright damaging.

Protecting the rights and opportunities of workers to earn a living is obvious. Equally important are the psychological benefits that come with the dignity of work. And there are socio-economic benefits from work that positively impact everyone, such as building social capital and gaining skills, which are especially important for those in marginalized communities who were most impacted by the shutdowns.

As the states look for a long-term strategy to deal with the pandemic, it is paramount that they consider the empirical evidence and not impose burdensome restrictions — such as business closures, stay-at-home orders, school closures, gathering restrictions, and capacity limits — on economic activity that have proven to do more harm than good.

Instead, policies need to be crafted more carefully to expand opportunities for the poor and preserve jobs in an open economy in which entrepreneurs can solve problems while taking measures when necessary to protect vulnerable populations.

These are the policies that should have been done all along to avoid the severity of the shutdown recession and the effects on lives and livelihoods thereafter. Let’s not make another mistake when so many are already suffering.

This Article Originally Appeared in Real Clear Policy