Creating Wealth With ‘Baby Bonds’ – The Chronicle of Philanthropy

When Efrem Fesaha first heard about baby bonds this spring, it made him think back to when he was 17 and a senior at Chief Sealth High School in West Seattle. He was the fourth of six children, his father had just died, and he wondered, “How am I going to fund my college?”

He had to think about transitioning from high school to college, figuring out financial aid, feeding and housing himself, and the economic straits of his family.

“As soon as I arrived on campus, I was at zero,” Fesaha said of his financial status.

Today Fesaha is a member of a philanthropy-funded Washington State committee that will study baby bonds, which would establish trust funds for children at birth so they accumulate wealth to use when they are adults. If such a program had been around to help him during his childhood, his perspectives as a teenager would have been a lot different. Not only would he have breathed easier knowing he had a nest egg but his hopes for his future during his modest upbringing would have had a firmer foothold.

That is why a growing number of nonprofits and foundations are working to advance baby-bonds programs. Nonprofits focused on economic equity, like Prosperity Now, have laid the groundwork for the current moment with such programs as children’s saving accounts, aimed at helping low-income families afford post-secondary education.

The Covid pandemic and intensified focus on racial justice have given nearly a dozen state and local governments the impetus to address racial economic inequalities. And nonprofits and foundations are backing the efforts of state treasurers and governors, or even leading the charge.

Eventually, proponents hope to see a federal baby-bonds program. The idea was central to Sen. Cory Booker’s presidential run and has been proposed by Booker and Rep. Ayanna Pressley in Congress.

Nonprofits have helped conduct research on the racial wealth gap, mobilized to educate both legislators and the public, and organized local groups in support of baby bonds — support that has not been difficult to find, as many parents immediately grasp the effect such programs could have on their children’s futures.

Notable efforts around the country include a Connecticut program that has been approved by the state legislature and is expected to launch in 2023. On the other coast, the Washington State Budget & Policy Center is working with other nonprofits to support proposed baby-bonds legislation.

Jeriel Calamayan, Courtesy of Efrem Fesaha

Efrem Fesaha was the fourth of six children, whose father died when he was a senior in high school. “As soon as I arrived on campus, I was at zero,” says Fesaha, who …….

Source: https://www.philanthropy.com/article/creating-wealth-with-baby-bonds