Pilot Program Fights Poverty With Cash Incentives

from WNYC

NEW YORK, NY August 28, 2007 —New York City is about to embark on a new experiment in fighting poverty. Some 2500 low income families will be chosen for a pilot program that will pay them cash in exchange for completing certain activities. WNYC’s Beth Fertig has more on the program’s roll-out.

REPORTER: Some time in July, Harlem resident Sandra Killett got a large, colorful postcard in the mail.

KILLETT: Opportunity NYC offers cash payments of up to $4000 per year. You can receive payments for things like helping your kids stay in school, taking your kids to the doctor, and keeping a full time job.

REPORTER: It described a new program called Opportunity NYC aimed at low-income parents like herself. As a 45 year old single mother receiving welfare, Killett says she was curious.

KILLETT: Absolutely! I could tell you, you sit down and you hope you don’t have to go to the doctor because what about the car fare?

REPORTER: Killett called the number on the post card and met with recruiters. Then, this month she got a letter saying she was selected. She’ll receive 25 dollars for every month her son has good attendance in school, 50 dollars for getting a library card, and 100 dollars for taking him to a doctor. Killett says she’s grateful for the opportunity. But she says financial rewards won’t change her parenting style.

KILLETT: It doesn’t for me because my son already has a library card. It doesn’t for me because I already participate in my child’s schooling. It doesn’t for me because I keep up with his dental. It might for another family. I can’t say.

REPORTER: That’s the question the city hopes to answer by targeting families in six of the poorest communities in Harlem, the Bronx and Brooklyn. Linda Gibbs is the city’s Deputy Mayor for Health and Human Services.

GIBBS: Can a cash incentive change the outcomes in a dramatically different way than the outcomes we’re getting right now in these households in these communities.

REPORTER: By creating a checklist of factors, such as education and good healthcare, she says the city is rewarding behavior that can move families OUT of poverty. New York City modeled the program after similar cash rewards in about 20 countries including Mexico, South Africa and Chile. It’s aiming to get a total of 5100 families registered. Half of them will be chosen for a 2 year pilot program; the other half will form a control group. An outside research firm will track them all to see if cash incentives cause the families to make different choices.

When Mayor Bloomberg announced the $53 million dollar privately-funded this year, some critics called it a band aid solution to poverty. Others were rankled by the suggestion that poor families need a financial encouragement to be good parents. Commissioner Gibbs takes the opposite view:

GIBBS: It can be really tough to do the right thing when you’re living in a poor household in a poor community and every day a choice of one right thing compromises another right thing. And the family members that I talk to, I think, actually felt more respected and acknowledged for the difficulty of their situation rather than insulted.

RECRUITER: We’re gonna work with that, OK. Now, this program is designed to give families cash rewards, incentives for doing things for the children that they already do.

REPORTER: At Catholic Charities, recruiters are still signing up families before the program rolls out next month.

RECRUITER: And the workforce is for the adults whereas is you work full time over a 2 month period you can receive incentives for that

REPORTER: Catholic Charities is one of 6 community groups that have a contract to recruit the families. Each week, they get 500 names culled from the list of children who receive free school lunches. Enrollment officers use magic markers to check off who they’ve contacted and who’s come into the office. But after 2 months of phone calls and home visits, there are still a lot of unmarked names, acknowledges Eileen De La Cruz, the project director for Catholic Charities.

DE LA CRUZ: It’s challenging because even though that you’re offering literally free money as a gift, there is a process and people are a bit skeptical about scams, with identity theft and things like that. But I think once people hear the details of the program and actually give it a second they usually tend to come in and sign up.

REPORTER: The city says the pace has picked up in the past few weeks, as the word has spread, and it’s now almost half way toward its goal. At Groundwork in East New York, Youth and Family director Erica Ahdoot says door to door visits were more effective than phone calls. She hopes the Opportunity program will help families untangle some of the complicated issues of poverty – especially in areas like East New York, where local graduation rates are less than 50 percent.

AHDOOT: Maybe just historically there’s been some barriers between families and the schools, just really feeling comfortable to advocate effectively for students or to really understand what goes into testing. Or what is actually indicated on report cards or what does it mean to pass a Regents. And so this might be a way to really push not only parents but community organizations.

REPORTER: But first things first. In Harlem, Sandra Killett’s twelve-year old son Simeon had one thing in mind when he heard his mom will be getting extra money from the city.

SIMEON: I want to get a game called Pokemon Diamond. It’s really cool cause you can trade Pokemon from across the world.

REPORTER: Simeon is after all, a twelve year old boy, content to spend a summer afternoon playing video games. But when school starts, his mother says he’ll be hitting the books, as usual, and getting good grades - REGARDLESS of how much money she’s paid by the city. But since the city IS paying, Killett says she hopes the program will shine a light on a very important issue.

KILLETT: You know, people need a little bit more to help their families get by and maybe this will get some flags up, and will do something for people who are no-income low-income or living in poverty.

REPORTER: The first cash rewards will be paid in about a month. The city has recruited banks to help the families open no-fee accounts. The next phase of the program will also start in a few weeks. That part involves thousands of fourth and seventh graders who will be paid a small amount each time they pass a periodic assessment test, to see if these rewards have any effect on their big annual exams. For WNYC I’m Beth Fertig.