Baby Bonds 101
Historically, wealth-building assets have been out of reach for Black, Brown, Indigenous, AANHPI children and communities of color. Nationally, the racial wealth gap reflects the same ratios today as in the 1960s Civil Rights era, with white families having seven times the wealth of the average Black family. In California, a state with massive economic inequality, the racial wealth gap is egregious. In Los Angeles, for example, Black and Mexican households have only 1% of the wealth of white households.
Children born into low-income households don’t have the financial flexibility or cushion of their wealthier counterparts; this immediately restricts which opportunities they have access to, constrains the choices available, and limits the ability to dream, much less do.
Closing the racial wealth gap requires targeted and innovative strategies. One of the most compelling policy solutions on the table is baby bonds.
Baby bonds are government-seeded child trust accounts. Established at birth for children born into low-income households, they mature alongside a child. As adults, recipients now have savings to prepare them for their next steps in life. The benefits of this investment include:
- Breaking cycles of poverty, which cause trauma across generations
- Promoting financial stability through the intergenerational transfer of wealth
- Following through on opportunities that would otherwise be out of reach due to lack of funds
- Financial independence to support overall health and well-being
- Alongside other interventions, have the potential to close the racial wealth gap
- And more!
Baby Bonds in Action
California was the first state to create and fund a baby bonds program, HOPE Accounts. GRACE and ECPCA co-led the successful baby bonds advocacy campaign in 2022. Our present focus is program implementation, where we work closely with nonprofit partners; baby bonds advocates found in government, academia, community, and foundations; and with the state agency overseeing HOPE Accounts, the State Treasurer’s Office.
Currently, HOPE Accounts will support eligible youth who lost a parent or caregiver to COVID and long-term foster youth. We are discussing strategies for expansion to the HOPE program, as well as how we can promote and support the creation of baby bonds programs in other states and at the federal level. Ultimately, our goal is automatic enrollment of all eligible children at birth, a reassurance that the wealth, or lack thereof, of a child’s family will not automatically limit their future success.
ECPCA engages in lobbying and direct and grassroots advocacy activities via the GRACE End Child Poverty Institute.