Finance

Guaranteed Basic Income Programs Seem To Benefit Those With Concrete Goals

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Long time readers know I tend to pay attention to news about guaranteed basic income programs, particularly those that have artists as a target group. Thanks to a CityLab link to a story on Los Angeles’ recent foray into providing guaranteed basic income, there is more data about what approaches are most effective. This program didn’t target artists as a group, but it has some good insights.

Like most stories on the subject, there were many heartening stories about the successes people had and continued to experience after the program ended. However, this article also mentioned those who were doing well while they were receiving the $1,000 month funds, but once the program ended found themselves faced with living in their cars. Anecdotally, at least those who had problems after the funding ended weren’t spending that much differently than those who continued to thrive. (i.e. the biggest spurge spending was on rather modest once a week meals)

What seems to be the differentiating factor is whether people had concrete goals they wanted to achieve prior to receiving the monthly payment:

Participants that do achieve a measure of economic mobility, she said, are those who already had concrete goals or plans.

“What happens with guaranteed income is that it smooths that income volatility … and it creates predictability,” Castro said. “When you have that floor, that scarcity starts to go away. And we know that it calms the mind, it calms the spirit, and it creates space for people to re-imagine an alternative future, or to maybe take steps toward a goal that they’ve always had but have not been able to actualize.”

Abigail Marquez, general manager of L.A.’s Community Investment for Families Department, which ran BIG:LEAP, called guaranteed income “one effective strategy” for ending generational poverty in L.A. Such programs must be paired with workforce development, economic development and housing strategies, she said.

Knowing this, one concern I would have is that guaranteed basic income programs not gradually evolve guidelines similar to foundation grant programs where candidates for receiving the money have to provide evidence of having goals they are pursuing and just need a little bit of help gaining stability. Unfortunately, it is easy to imagine this happening because the folks putting up the money want to hear success stories and know their funds are being used effectively. Little by little, the unrestricted use nature of guaranteed basic income can become a little more restricted.

On the other hand, I feel like guaranteed basic income for artists becomes an even better idea since artists generally always have projects in mind they want to pursue. Though I am sure there are some who would say some of those projects aren’t as practical as the goals people in the L.A. Times story were working on.

Competition Among Donor Advised Funds Is Constricting Charitable Giving

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I am always interested in news about how donor advised funds (DAF) are operating. On the whole, their use hasn’t gone as intended and they have reduced, rather than increased or incentivized charitable giving.   A few weeks ago Vu Le linked to an article that examined how the differences in the way DAFs are promoted is an indicator of whether they are distributing or sequestering funds. (emphasis original)

National sponsors that spend more time talking about donor benefits on their websites have more assets, take in a much higher proportion of noncash contributions, and pay out grants at much lower rates than sponsors that spend more time talking about charitable giving.

[…]

But our analysis predicts that a hypothetical national sponsor with a strong emphasis on charitable grantmaking on their website would pay out at 53 percent, while a hypothetical national sponsor with a strong emphasis on donor benefits would pay out at just 2 percent. And those lower payout rates have ripple effects when it comes to the buildup of assets: Our model predicts that the highly charity-focused sponsor would have assets of just $34 million, whereas the highly donor-focused sponsor would have assets of $2.7 billion.

Something to note is that the analysis focuses on national sponsors of DAFs rather than regional and local sponsors. The author of the piece, Helen Flannery, notes that since national sponsors tend not to have the specific focus, whether it be geographic region or cause, they often need to work harder to make a case for people to arrange their giving through them. Flannery seems to suggest that the those that tout financial benefits to the donor are able to make a more compelling case than a more charitably focused sponsor without a specific focus.

Flannery calls for a more specific evaluation and regulation of DAFs on an individual basis rather than looking at the aggregate giving of sponsors since the really generous ones tend to make the parsimonious ones look better due to averaging.

The analysis we present in our paper quantifies this phenomenon. It measures the degree to which sponsors have financialized what was originally intended to be a nonprofit instrument, and it measures just how intense the competition has become among the very largest DAF sponsors in this country.

Another Effort At Efficiently Crunching 990 Data

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Thanks to the Non-Profit Law Blog’s weekly curated link list, I learned that there is a new collaborative working on a way to provide a clearinghouse for raw, clean, and standardized nonprofit tax data gathered from Form 990 filings.

While that may not sound like it is relevant to your daily life at all, being able to easily access that day will make researching non-profits much easier, hopefully resulting in data which will support better decision making.

Drew McManus painstakingly extracted data from 990 filings from 2005 to 2022 for his annual Orchestra Compensation Report project on Adaptistration. He would frequently grumble about the fact that the data was not available in a machine readable format that would make that data so much easier to process and shift through. If I recall correctly, his go to source was the Pro Publica Non Profit Explorer which is contributing their data to this new clearinghouse.

Having good data about things like compensation can help advance equity and inclusion goals. The Association of Performing Arts Professionals (APAP) is engaged in an Art Compensation Project for some of these very reasons.

Better data crunching capabilities can also facilitate the study of differences by region and discipline for revenues, expenses, impact of private vs. public & government based grant making, etc.

Given that there have been so many groups who have attempted to serve as a clearinghouse for 990 data, the biggest question perhaps is whether this new collaboration can make it work better than in the past.

Give A Kid A Culture Voucher And They Buy Books As Well As Experiences

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I have been keeping an eye on the cultural voucher programs various European countries employ to encourage young people to get out and engage in different experiences. The program differ in detail. There are some that provide rail passes to allow people to explore different geographic areas, including outside their own countries. Others are focused on arts and cultural experiences within the country.  I have written about Germany’s KulturPass before, but I recently caught a story about the most recent round of the program.

According to a recent article, as of August 9, in terms of units purchased since this year’s KulturPass program began on June 14, books and other printed materials have lead the way by far.  Then cinema tickets, concerts and theater, museums and parks, musical instruments, audio media and then sheet music.  In all, about 200,000 units have been purchased in the last two months. About 136,000 German 18 year olds have activated the passes worth €200 (US$219)

In terms of amount spent, concerts and theater lead the way given the greater cost. “….at something around or above €12 million (US$13.2); books follow with so €11 million (US$12.7 million); and cinema tickets follow in third place with €461,000 or more (US$505,900).”

Lest you think Germans are particularly bookish with 49% of voucher funds being used to purchase tomes, Italy has seen similar results with their pass.

“…Italy’s corresponding “18App”—the original “culture voucher” for young citizens in Europe. There, in 2021 specifically, the publishers association reported that 18-year-old Italians were spending 80 percent of their €500 vouchers on books during January and February of that year.”

Obviously, there may be differences in the design and implementation of the pass in Italy that encouraged larger purchases of books. The fact these numbers come from a period 10 months into the Covid pandemic when there were reduced opportunities for other activities likely influences the numbers as well. However, these programs are good examples of a tool to provide bottom up funding to provide a little stimulation to arts and culture organizations.