While Atlanta is often billed as a mecca for Black entrepreneurship, new findings from the Atlanta Wealth Building Initiative reveal that white Atlanta families have a staggering 46 times more total wealth than Black ones. (The racial wealth divide nationally is not as large, but white households still have six times as much wealth as Black households.)

To close the racial wealth gap, the Georgia Resilience and Opportunity (GRO) Fund is piloting what’s called a “baby bonds” program–a concept that’s gaining some traction nationally. The GRO Fund pilot’s aim is to accelerate wealth-building for young Black adults from lower-income families by making significant sums of money available–$40,000 per participant– that they can invest in wealth-building activities such as higher education or a down payment on a house.

More broadly, publicly funded baby bonds are meant to give all young Americans the advantages that wealthy families provide their children through generational transfers of wealth–whether it’s buying a car or paying for college. As the GRO Fund notes, “wealth begets wealth.”

The GRO Fund’s accelerated pilot program is the first of its kind in Georgia. To learn more about it, Al ilmu spoke with the non-profit’s programs director, Amit Khanduri.

How does a baby bond work?

Khanduri explains publicly funded baby bonds–the advocates’ ultimate policy goal–rather simply. A baby bond is basically just a government-funded savings account or trust fund–ideally, for every child in America, he said. The government would create an interest-bearing account upon a child’s birth and then make regular contributions on an annual basis. Once children reach adulthood, they can withdraw money from the account for designated wealth-building activities.

GRO Fund Director of Program, Amit Khanduri

“It can have a really significant impact on the racial wealth divide,” said Khanduri. “It could lower the racial wealth divide for young people by about 50%.”

The concept of young people being able to access a trust fund once they reach adulthood isn’t anything new. However, it’s something that only wealthy people can do for their children.

The idea for a public, government-funded baby bond program for all American children originated with economist Darrick Hamilton, who teaches at the New School in New York. Hamilton and the New School are principal partners with the GRO fund on the Georgia pilot program.

Sen. Cory Booker (D-N.J.) and Rep. Ayanna Pressley (D-MA) embraced the baby bond notion as a way to “make economic opportunity a birthright for everyone in America.” They have introduced legislation in Congress to create a federal baby bonds program that would give every child an account seeded with $1,000 at birth–so far, unsuccessfully.

How does GRO Fund’s program work?

The GRO Fund’s accelerated pilot program for baby bonds is a little bit different. Its goal is to provide a $40,000 trust account funded by private foundations and individuals for up to 250 young people ages 15 to 24 to more quickly prove the idea’s effectiveness. The nonprofit hopes to use the pilot program’s outcomes to advocate for legislation at the state and local levels.

Khanduri said the plan is to launch pilot in one metro Atlanta neighborhood, along with one rural Georgia community. The planners are still deciding on sites, he said, but they’ll be focusing on the Black community since that is where the wealth gap is greatest.

The GRO Fund is fundraising for a six-year pilot program that makes the trust funds available to each participant after an initial, three-year planning period. In this three-year window, participants would receive financial education and counseling to plan what they will do with the money.

In the final three years of the program, the young adults can start withdrawing money from their account for purchases and investments. Like Booker’s federal proposal, participants are supposed to use the money for “wealth-building purchases.”

Uses of program funds

According to Khanduri, “wealth-building purchases” includes things like higher education, homeownership, entrepreneurship, or putting money away for retirement. However, the program strategists are trying to avoid being overly restrictive.

“We want to be a little more expansive,” said Khanduri. “As we engage with folks and community, we do want to know–what are those other barriers to wealth-building for young people? We think this will be a really helpful learning field.”

To provide the baby bond participants with a basic level of financial stability, the GRO Fund program also will pay them a guaranteed annual income of about $6,000 over the six years. That roughly $500 monthly stipend is for unrestricted use, so the young adults can meet their basic needs.

Khanduri said this is the first time a baby bonds program has been paired with a guaranteed income element. This aspect is similar to the GRO Fund’s flagship program, the In Her Hands Initiative, where mothers in the Old Fourth Ward, Clay-Randolph-Terrell Counties, and College Park receive a guaranteed monthly income of $850 to stabilize their living situation. The program is currently serving 650 mothers and will expand to 200 additional women in 2024. The expansion will focus on the neighborhoods of English Avenue and Vine City.

Fundraising and eligibility

The GRO Fund plans to launch its baby bond program early next year. Fully funding the program for 250 participants will require around $23 million, Khanduri said, adding that they’ve already raised $1.2 million. Most of the funding is from private foundations and individual donors.

“We’d like to serve at least 250 participants if we’re fully funded, and we’ll engage an evaluator for the program to help us find the right sample size,” said Khanduri.

Program strategists are still finalizing the application process and selection criteria for participants–and determining who will serve as financial consultants to the young baby bonders.

National baby bonds efforts

Booker and Pressley’s federal proposal would give every child in the U.S. an “American Opportunity” account at birth, seeded with $1,000 at birth. Each year, children would receive an additional deposit of up to $2,000, depending on their family’s income. The funds would sit in a federally insured account managed by the Treasury Department, accruing about 3% interest. Account holders would not be able to access the money until age 18–and then would be able to use it only for wealth-building investments like college or home-buying.

Booker and Pressley say that common-sense tax reforms could fully finance the trust fund accounts. When the two Congress members reintroduced the American Opportunity Accounts Act in February 2023, it gained support from 14 Democratic senators and Bernie Sanders, an independent.

Connecticut and Washington D.C. have actually started similar statewide baby bond programs. Connecticut passed legislation for its program in 2021, which provides eligible babies with $3,200 in a trust account. Washington followed suit with a program where D.C. babies’ trust accounts could grow to $25,000 by age 18. In 2022 California instituted a program that offers up to $8,000 to eligible children who are in long-term foster care or have lost a parent to COVID-19. Other states also have proposed legislation for full baby bond programs beginning at birth.

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  1. How can I get in on this?

    It is an absolute tragedy that it took until I was “today years old” as they say before I learned about this particular initiative.

    When I say “get in on this,” I explicitly mean “How can I donate mote expediently to the work of the Lord that is clearly apparent here?”

    Young me made some mistakes, but young me had the benefit of white parents who understood money. Not trying to assuage guilt here. Want to make a real difference, and being part of $x00 monthly is a damn good start.

    1. I'm trying to find out how to apply in general struggling mom of two trying to secure housing work n go to school while trying to jump start a business is haaaaaard!!!!! Lol

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