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Thinking about Guaranteed Income? Here is what you need to know.

As the lead product provider in the country's first two county-and city-driven guaranteed income (GI) programs, we know that when you give people cash, they spend it on the things they need the most. Here is what you need to know to make sure funds get to people’s pockets.

Cash Gives People the Means to Solve Their Own Problems

Reflecting over the past year and the many challenges our community faced, one thing was made clear: we don’t have a safety net that people can truly rely on in the United States. Within the last year, millions of Americans visited food banks for the first time in their lives, faced eviction, and filed for unemployment. All the while, unemployment benefits only reached one out of eight Black Americans and one out of four White Americans, and SNAP benefits only reached two out of three Americans living in poverty. Amidst all the system failures, the one thing that has provided some economic relief to Americans has been the direct cash assistance from the stimulus funds.

As the lead product provider in the country's first two county-and city-driven guaranteed income (GI) programs, we know that when you give people cash, they spend it on the things they need the most. CFR’s involvement in cash assistance and GI programs continues to prove this point. For example:

  • Of our COVID-19 Emergency Response program, in which we have deposited over $1.8M to over 4,000 families, 99% of spending was on family essentials such as food, housing supplies, and utilities.

  • Preliminary findings from our partnership with the Stockton Economic Empowerment Demonstration (a GI initiative that gave 125 randomly selected Stocktonians $500 per month for 24 months) show that 40% of the GI was spent on food, 25% on sales and merchandise, and 11% of utilities.

In 2020, we saw over 5,000 low-income households receive over $9M in the first round of economic stimulus and tax refunds via direct deposit through CFR’s Focus Card. An additional $1.8M was distributed to 2,093 households in the second round of stimulus. And most recently, we saw $4M hit the accounts of 2,014 households in this third round of stimulus payments in one day. Unsurprisingly, the stimulus funds have had a positive impact on millions of Americans: 66% of Americans used the check to keep food on the table, over half used it to cover utility costs and necessary daily expenses. Eighty-eight percent of the money was recirculated in local economies.

We can’t say it enough: direct cash payments are a highly effective way to provide financial stability to families.

While we know that cash assistance and GI programs have gained a lot of popularity and traction this past year, we also know that methods for payment facilitation and distribution are largely absent from the conversation.

How are these funds getting into people’s pockets?

In a blog post we wrote last summer discussing the innovative GI pilots taking and/or beginning to take place, we posed the question: how are people going to receive these funds? We shared that most GI advocates seem to rely on one significant assumption; they assume recipients are banked. In a similar vein, the tech sector largely promotes the assumption that, if people don’t have banking, they are comfortable and willing to use digital wallets. We know from decades of working in the financial inclusion space that it is critical that low-income households are banked, able to receive funds via direct deposit and have the agency to safely use and access their money any time and any way they want, including ATMs to make withdrawals.

There have been many lessons to be learned from the now three rounds of stimulus distribution. Many Americans struggled to receive their stimulus over issues of lacking direct deposit information, others were issued paper checks, many of which still haven’t been received, during a time in which disbursing emergency funding through physical checks comes with unprecedented health risk. At CFR, we know that the best way to get cash to those that need it most is through safe, affordable financial tools that enable participants to get assistance through direct deposit – the first step to achieving financial stability.

CFR is thrilled to see the traction GI has gained over the past year, but from our experience working with GI partners such as Paycheck Plus, the Stockton Economic Empowerment Demonstration, the County of Santa Clara, and other upcoming GI pilots, we know that GI solutions must have practical tools for implementation.

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