With poverty growing in Illinois and public funds tight, the public, private, and nonprofit sectors will have to work together to reduce the pain low-income families are experiencing. The three-way partnership was one of many strategies discussed at a breakfast in January for Donors Forum’s grantmaking Members and advisory Associate Members: Community Implications of the Growing Wealth Gap: The Role for Philanthropy.

The economic conditions were framed by Daniel Sullivan, an Executive Vice President of the Federal Reserve Bank of Chicago, who showed how the drop in wealth from the Great Recession and the continuing decrease in income among middle- and lower-income households have exacerbated the increase in the wealth gap. The lack of jobs in the recovery have kept incomes low, Mr. Sullivan said, and people have not recovered wealth lost when property values declined.

Mr. Sullivan said that the decline in wealth makes the social safety net even more crucial. “When people have such little wealth, they face huge amounts of risk in their consumption,” he said. “One advantage of wealth is you can cushion yourself against a shock. There is a social safety net that helps, but there is a question of whether it is enough.”

On a panel moderated by Dory Rand, President of the Woodstock Institute, Susana Vasquez, Executive Director of LISC, discussed the importance of bundling benefits and services to help relieve the burden on working families. “Getting them the right services boosts their income,” she said, adding that partnerships are critical to making sure the right services are provided in an integrated fashion. Healthcare benefits are important, but so are programs to build job skills. “The importance of integrating skills building into poverty alleviation is super-critical,” Ms. Vasquez said.

Grace Hou, President of the Woods Fund of Chicago focused on foundations’ role in increasing opportunity for low-income individuals and families. “I believe foundations have been in a situation where we have been trying to tip scales for greater balance,” she commented, also emphasizing the importance of cross-sector work to bring about that balance. “It is important for organizations to work in coalitions,” she said, “It’s not just nonprofits working together, it’s not just foundations working together, it’s cross-sector efforts.” Like large financial institutions, the population of low-income people is too big and too important to fail, she added, and they should be given the supports they need to succeed.

Sharon Bush, Senior Program Officer of the Lloyd A. Fry Foundation, said that embracing new solutions and partnerships is important. “We need to test new strategies like worker centers and career pathways,” she said. “Another role is to complement public investment — government cannot do everything on its own.” She also highlighted The Color of Wealth: The Story Behind the U.S. Racial Wealth Divide, a book by by Meizhu Lei that looks at wealth disparities through a race lens and shows the importance of wealth in shaping the political landscape, creating opportunities, and giving people the freedom to pursue their dreams. Foundations can play a role in providing these opportunities, she said.

The discussion touched on many strategies that can play a role in reducing economic inequality, including re-imagining community colleges to provide the workforce development employers need; funding worker centers that can build skills, including financial skills; expanding savings programs for low-income households; and providing a range of assistance to communities hit hard by foreclosures.

Donors Forum President and CEO Valerie S. Lies said this conversation needs to continue. “I’m feeling a little overwhelmed by the huge and persistent problems, but also excited by the opportunities laid out by each panelist. Clearly there is a role for philanthropy. And there are ways to be strategic and impactful in addressing this kind of a frame of wealth, income, and inequality,” she said, then added “I hope we find ways to continue this conversation and move it from conversation to action.”

Resources:

• CFED Assets and Opportunity Scorecard, which provides state-by-state data on household financial security and policy solutions (released Jan. 30)
• Illinois Commission on the Elimination of Poverty 2012 Annual Report

— Jason Hardy, Member Services Associate

(In the photo above, left to right: Daniel Sullivan, Executive Vice President, Federal Reserve Bank of Chicago; Dory Rand, President, Woodstock Institute; and panelists Grace Hou, President, Woods Fund of Chicago; Susana Vasquez, Executive Director, LISC; and Sharon Bush, Senior Program Officer, Lloyd A. Fry Foundation.)