The Google IPO event of the nonprofit world.

Who's giving, who's getting.
June 2 2008 3:23 PM

The Best Poverty-Fighting Bet

The Google IPO event of the nonprofit world.

Single Stop logo

If any good comes out of the misguided farm bill passed last month, it will be the recognition that Americans are hungry. Amid the egregious agricultural subsidies, the bill earmarks billions of dollars to food banks, where demand is up 20 percent from a year ago, and to food stamps, which now help feed a record 28 million Americans. (According to the latest Department of Agriculture figures, more than 40 percent of people using food stamps live in working families, up nearly one-third in 10 years.)

"Food insecurity" is part of a larger constellation of hardships, and in this uncertain economic climate, spending on new government initiatives to address all of these woes is unlikely. The nonprofit sector also typically scales back in harder times as corporate giving recedes, foundations grow cautious, and donors think twice about charitable gifts. Herein lies the recessionary rub: Just when Americans need relief most, it is hardest to come by.

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This truth about nonprofit belt tightening makes the national rollout of SingleStop USA, a poverty-fighting startup, all the more extraordinary. In less than nine months, SingleStop has raised $35 million from some of the smartest philanthropic investors, including Tipping Point Community, the Robin Hood Foundation, Atlantic Philanthropies, and the Blue Ridge Foundation. This is the Google IPO event of the nonprofit world. It suggests that SingleStop's blueprint is effective and replicable—and also means that these foundations are betting on tougher times ahead.

SingleStop's operating model is simple: With a Turbo Tax-like software and legal and financial counseling, it helps people tap into public benefits (tax credits, food stamps, child care subsidies, and health insurance) that they're eligible for but aren't using. Since 2001, a New York City pilot version of the program has connected 70,000 low-income residents to hundreds of millions of government dollars. Nationally, estimates put the figure for unclaimed assistance at $65 billion. Research from the Urban Institute indicates, strikingly, that 25 percent of the working poor receive no benefits at all, despite their eligibility, and that only 7 percent of these families access all four of the major supports (tax credits, Medicaid, food stamps, and child care subsidies). So SingleStop has lots of room to run.

When the Robin Hood launched SingleStop in 2001, the foundation found that the primary reasons the working poor failed to claim public benefits were that they either didn't know about the programs or didn't know how to apply for them. Often, applying meant visiting a series of different government offices—no easy undertaking for people working multiple jobs or with limited child care and transportation. As an antidote, SingleStop developed a quick one-stop shop at 59 sites across New York. In 15 minutes, the organization's software tools calculate a family's eligibility for a host of benefits—public assistance (TANF and other welfare-to-work initiatives), food stamps, Medicaid, housing and child care subsidies, health care, school lunch programs, heating assistance, Social Security disability, and tax credits. SingleStop counselors then provide families with tailored legal and financial advice—how to stave off eviction with new rent money or vouchers, how to consolidate debt and begin to pay it off, how to open a savings or IDA account.

The concept of a benefits calculator isn't new. Nor is the one-stop-shop approach. But many existing outreach programs start people off on the benefits process without seeing them through. (Examples: the State Assistance and Referral Process in Houston, or economic development nonprofits in California that employ a "Self-Sufficiency calculator.") SingleStop goes further; after clients determine what they're eligible for, counselors walk them through the application process, help obtain the benefits, and then provide specific guidance about them.

Data consistently show that helping families keep themselves housed, fed, and healthy is a better investment than managing a crisis that's already begun. This is the case for Section 8 housing assistance over homeless shelters or health insurance over emergency-room treatment. In addition, the value of providing different supports in tandem is greater than the sum of their parts; food stamps and Medicaid promote general health, and together also help keep children in school, parents at work, and translate into more stable earnings (food on the table, money for rent). Child care subsidies help parents hold down these jobs, advance in them, and begin to save. Over the long term, savings can mean purchasing a home or a child's higher education. This is the hoped-for ladder out of poverty.

All of this helps explain SingleStop's appeal to national philanthropies that view their grants as strategic ventures and seek measurable results. They are also drawn to SingleStop's scorecard. According to a McKinsey & Co. study of the New York pilot, the average family in a SingleStop program recouped $1,800 in tax credits and $5,000 in benefits that they weren't previously receiving. For the typical SingleStop beneficiary—a single mother with two or more children, earning less than $10,000 a year and receiving no public assistance—this money can mean the difference of raising children above, rather than below, the poverty line. And for SingleStop's underwriters, these outcomes mean substantial returns: For every $1 invested, the program gives clients $3 in benefits, $4 to $13 in legal counseling, $2 in financial counseling, and $11 in tax credits.

By helping families wring more from existing government programs, SingleStop has won the support of mayors like San Francisco's Gavin Newsom and Newark's Cory Booker. Their cities have tight budgets and a growing number of working families filing for food stamps or in need of financial counseling about home foreclosures. In New York, Mayor Michael Bloomberg has supported the pilot, and the SingleStop staff is now racing around the country to meet with other city and state officials. Lots of places want them; they just can't roll the program out everywhere at once. Over the next two years, sites are planned for at least three new states, including California, New Jersey, and New Mexico. The five-year goal is to lift 1 million people out of poverty.

That's an ambitious aim, and SingleStop is still working out the expansion kinks. In contrast to New York, where the organization has based its sites at other nonprofit organizations, it may make more sense to work out of public agencies or even with a large corporate employer of low-wage workers (like McDonald's). SingleStop must also attract national funders for local efforts; it is unlikely that every city on its own will find a Robin Hood-esque patron. Despite the challenges of a national rollout, however, SingleStop's tested model—leveraging existing resources to help people out of poverty—is about as good a philanthropic bet as they come.

Georgia Levenson Keohane is a writer and consultant in the fields of social policy and philanthropy who often works with nonprofit organizations. She lives in New York City.