COMMENTARY: Why Invest America philanthropy trumps traditional welfare

This Giving Tuesday, two American billionaires became heroes instead of villains. Though corporations give away $44 billion annually, it is often hard to see a tangible effect. Michael and Susan Dell’s $6.25 billion gift to Invest America bypasses traditional philanthropies and foundations to make a direct effect on the next generation.

The Dell family’s action sets the stage for a revolutionary approach to social mobility programs in the United States. Congressional members on both sides of the aisle are calling on corporations to build on the Invest America Act’s initial $1,000 investment for each child born between 2025 and 2028 by making a general donation or contributing to the accounts of their employees’ children.

Here are four reasons direct investment in children is superior to historical approaches to child welfare:

Invest America is a 501(c)(3) organization and not a government bureau. Government funding to Invest America accounts is nondiscretionary, meaning it is available to all U.S. citizens regardless of income and requires very little management. Most welfare programs for children and families are need-based, and government employees at the federal and state levels verify that recipients meet the qualifications for aid. Need-based programs are time- and resource-intensive. For example, households spend an average of $42 monthly on SNAP, while enrolled households receive an average of $366 in groceries. In other words, 11 cents to the dollar are spent on delivering the benefits.

Instead of earmarking the funds for food or rent payments, Invest America grants full ownership of the seed funding to American children and their families. From birth until the child’s 18th birthday, the accounts invite savings and growth. Invest America accounts inspire agency and long-term planning, a welcome contrast to other aid programs that take the form of month-to-month transfers to pay for necessities. Invest America accounts make it easier for friends, philanthropists and employers to take an important step in contributing toward a child’s future.

Because each child will be able to monitor the growth of his or her Invest America account, he or she will have a stake in the American economy. In a market economy, successful businesses mean increased access to goods and services for consumers. Seeing a growing number of personal investment accounts makes the benefits of economic dynamism tangible. If Microsoft is gaining value through new innovations and products, it’s not just the Gates family that is better off; it’s all of us.

Corporate involvement in Invest America is an opportunity to showcase the trickle-down effects of a growing economy. Government officials are incentivized to spend more taxpayer dollars to deliver the greatest benefits to their voters, such as tax credits, baby bonuses or subsidies for local industries. Unfortunately, all government programs are financed either through taxes, inflation or government debt, carrying hidden costs for future generations. Donations from corporations don’t come with hidden costs, and that is an even larger gift to future Americans.

Regardless of the long-term initiative of Congress and the White House to fund kids’ savings accounts, Invest America accounts give private companies the chance to signal their belief in the next generation. If the trend continues, future Americans can leverage their investment accounts without a one-to-one increase in taxes, inflation or debt.

The Dells gained plenty of popularity with their $6.25 billion gift on Giving Tuesday. What’s more, they initiated a welcome pivot toward sustainable investment in the next generation.

Anna Claire Flowers is a family policy fellow at the Archbridge Institute. She wrote this for InsideSources.com.