By Kelli Garcia

People in a grocery store.

December 14, 2022

Staff members at Springboard To Opportunities heard repeatedly from their clients that the thing they needed to successfully reach their goals was more cash. In response, the Jackson, Mississippi, organization launched the Magnolia’s Mother’s Trust in 2018. It couldn’t have been simpler: for 12 months, it provided low-income Black mothers with $1,000 cash, no-strings attached, each month. According to Aisha Nyandor, the chief executive at Springboard To Opportunity, “We launched with the bold idea that you can trust individuals with money, you can trust Black women with money, you can trust financially vulnerable Black women with money.” Trust was at the center of this idea, and the ultimate key to the program’s success.

Over 100 similar guaranteed income programs—sometimes called guaranteed basic income—have been launched across the country. Although there is considerable variability in the amount and timing of payments, most distribute monthly payments ranging from $500 to $1,000 to people living at or below certain income thresholds, many of whom are members of historically marginalized groups. Participants are able to purchase the things they need, on their own terms, to improve their lives—from food security to investing in durable goods, such as a car or a refrigerator, and seeking education and training that creates longer-term economic security.

Providing these resources can have a profound impact on families’ lives. Deontrez, a 23-year-old father of a one-year-old daughter, explained, “The funds have helped me pay for things that my daughter needs like diapers and wipes and some household needs. Due to receiving these payments, I was able to pay for my test to get my Commercial Driver’s Licence, which is how I provide for my family. These payments have helped me set the foundation for my family.” Friends and family members in the recipient’s network can also benefit from the increased resources.

Giving People Cash Relieves Stress and Creates Bandwidth

Unconditional cash transfers support dignity and self-determination by placing decisions about how to spend cash in the hands of those experiencing poverty. Unlike other benefits programs, guaranteed income programs recognize that poverty is a context—not a personal failure. Unconditional cash transfers help change that context.

People living in poverty experience chronic scarcity, a continued lack of key resources—such as time, money, food, and other resources. Experiencing chronic scarcity is particularly harmful to mental bandwidth because it causes tunneling—a narrow focus on addressing the acute lack of resources that can lead people to ignore or deprioritize other needs. If rent is due, for example, you may focus exclusively on paying that bill to keep a roof over your head. As a result, you may not be able to pay for your driver’s license renewal. In the short term, the decision makes sense. But, in the long term, it can have dire consequences. Late fees will add up. Driving without a license can even lead to jail time.

Unconditional cash transfer programs directly address chronic scarcity by simply freeing up bandwidth and letting people focus on longer term goals.

Such programs work by giving people the primary resource they lack—cash—and letting them use the money where they need it most. And because they don’t require people to complete multiple rounds of complicated paperwork or travel to and from offices, or spend hours waiting for appointments, they give people an often overlooked but incredibly important resource—time. Halimah, a single mother of two who participated in the I.M.P.A.C.T. program in Atlanta, which provides participants with monthly payments of $500, described it this way: “I have worked since I was 16 and now I am 40 years old still working hard—this past year I didn’t have to feel like I was just scraping by, I could actually breathe.” Unconditional cash cuts the costs to participate in the program and creates slack by providing cash that people can use when and where they need it most.

Policy Makers Should Expand Guaranteed Income Programs

Worldwide, cash transfer programs have been successful in helping people reach their financial goals and build resilience. ideas42 has worked extensively to help countries in the Global South implement behaviorally informed cash transfer programs that help people make the right choices for themselves. Giving people the money they need, to use how they need it, works. Momentum is building in the United States to expand guaranteed basic income and other unconditional cash transfer programs.

Most guaranteed income programs in the United States have been implemented by local governments or community organizations. States should fund guaranteed income programs, as California has recently done, and more localities should adopt these programs.

No-strings-attached cash-benefits programs check all the boxes for behaviorally sound policy, as they recognize that families are experts in their own lives and meet them where they are. Giving them the resources they need to use how and when they need them helps them build long-term economic stability, while freeing up their time and reducing chronic scarcity.

Watch our recent panel discussion, Basic Income Programs: Successes, Challenges, and Policy Solutions, to learn more.