During his State of the Union speech last week, President Joe Biden urged Congress to pass an extension of last year’s expanded child tax credit. Most people watching likely viewed it as a futile gesture. America’s political polarization, the thinking goes, has made the passage of such major social legislation nearly impossible.
After all, the expanded child tax credit, which provided a monthly allowance of $250 to $300 per child to most families, was allowed to expire during the impasse over the Build Back Better legislation — despite receiving uniform praise for cutting child poverty by nearly 40 percent.
But the end of the expansion — or, with any luck, its temporary pause — does not negate the success it represented for policy making that embraces a range of ideologies, nor the need for long-term philanthropic support for such efforts. On the contrary, the willingness of grant makers to support a diverse array of voices and arguments across the political spectrum was critical to the tax credit gaining broad buy-in. If a bipartisan expansion of the credit becomes the most viable path forward in the months ahead, this kind of ecumenical and forward-thinking philanthropy will be a major reason why.
I should know. I have conducted research and advocacy on the child tax credit for the past six years from an unconventional, conservative perspective. In the process, I have seen firsthand how smart philanthropic investments aimed at reaching new audiences helped unlock political possibilities, including a policy improvement that many of my colleagues once thought was audaciously out of reach.
Regardless of the final outcome, the credit’s success to date provides important lessons for how philanthropy can transcend partisan polarization and lead progressive and conservative policy makers toward common ground.
Build a base of evidence. Widely hailed as a revolution in U.S. social policy, how did monthly child allowances finally find their way into the American mainstream? And why now? A major factor was philanthropic support for research demonstrating the effectiveness of the tax credit.
The child tax credit always had a bipartisan pedigree, but until recently it took a backseat among antipoverty advocates and nonprofit groups to more targeted programs such as the earned-income tax credit. In the long shadow of the welfare-overhaul debates of the 1990s, conventional wisdom in Washington, D.C., held that the child tax credit and earned-income tax credit must be tightly linked to work requirements. This led many advocates to pre-emptively discount the potential for converting the child tax credit into a European-style child allowance.
Evidence gleaned from the expansion of the Canada Child Benefit in 2016 helped change that thinking. It showed that such benefits don’t significantly reduce work incentives and may even promote work by helping parents afford child care. Philanthropies such as the Joyce, Russell Sage, William T. Grant, W.K. Kellogg, and Doris Duke Charitable foundations played a crucial role in funding research that drew on this evidence, culminating in a landmark 2019 report by the National Academy of Sciences titled A Roadmap to Reducing Child Poverty. Citing the experience of Canada and others, the report found that a child allowance was among the most effective policies available to cut the U.S. child poverty rate in half.
Appeal to a range of values. The success of the child tax credit demonstrates why it’s important for those in philanthropy to break out of their ideological bubbles. Child benefits are a textbook example of what is known as “transpartisan” — an approach to policy debate that acknowledges the validity of different political perspectives and seeks to synthesize them into an inclusive and pragmatic solution. Not to be confused with the split-the-difference bipartisanship associated with painful legislative compromises, transpartisanship occurs when the left and right converge on a common issue or idea despite being motivated by distinct values and interests.
For example, while advocates and nonprofits on the left have emphasized the impact of the child tax credit on poverty and racial equity, conservative supporters are typically drawn to its pro-family potential. When Sen. Mitt Romney, a Utah Republican, released a child allowance proposal of his own in 2021, he emphasized that child benefits maximize parental choice, reduce marriage penalties in the tax code, and may even reduce abortion rates.
I highlighted those arguments in a report I co-wrote for the Niskanen Center titled The Conservative Case for a Child Allowance. Romney’s proposal and our research subsequently helped spark a national debate about work requirements and the adequacy of America’s system of family economic security. Importantly, that work was only possible thanks to support from grant makers such as the Annie E. Casey, Robert Wood Johnson, and Rockefeller foundations, which, despite leaning left, understood the value of promoting distinct but converging perspectives.
The misgivings Sen. Joe Manchin, the West Virginia Democrat, has expressed about work incentives have stalled progress on an extension of the child tax credit, but that only reinforces the need for diversifying the ideological and strategic orientation of antipoverty advocates. Simply reiterating talking points aimed at a progressive audience won’t do the trick and, if anything, can even have a chilling effect on moderate lawmakers who relish perceptions of their implacability.
Coordinate outreach and encourage flexibility. As any seasoned advocate will attest, the old adage about war being long periods of boredom punctuated by moments of sheer terror may as well describe the policymaking process. Alas, Congress is under no obligation to match its legislative agenda with the grant schedules of America’s major foundations.
Acting on narrow windows of opportunity takes flexibility and coordination on the part of grant makers. Fortunately, the community of donors working on the child tax credit understood this. At the onset of the Covid-19 pandemic, I watched as our funding partners swung into action, helping research and advocacy organizations like the Niskanen Center coordinate their existing work around important relief efforts.
The pandemic saw lawmakers become increasingly comfortable with the concept of direct payments to adults and children in particular. School and daycare closures only added to the case for a child benefit that gave families the greatest flexibility. The organizations working on refundable tax credits had a timely policy on which to focus their efforts. When two Democrats won Georgia’s special Senate election in January 2021, they were poised to quickly push an expanded child tax credit to the top of the incoming Biden administration’s legislative agenda.
With congressional approval of the child tax credit expansion, the important role of philanthropy was just getting started. Millions of families across the country were now newly eligible for the tax credit, but either lacked awareness or weren’t used to filing the tax return needed to claim it. Many were reachable only because of an enormous grassroots outreach initiative that enlisted the support of dozens of foundations and hundreds of nonprofits across all 50 states and the District of Columbia. Such focused outreach remains vital going into the upcoming tax-filing season.
Of course, none of this was foreseeable in 2019. Predicting the future of the childhood tax credit is no easier. But whatever happens next, 2021 will go down in history as the year the United States chose to slash child poverty and demonstrate the power of cash to help families thrive.
Foundations should be proud of the role they played; they should also reflect on all that was learned in the process. Like any major change, securing a $100 billion win for kids didn’t happen overnight. It took years of work to build the strong base of evidence on child allowances and to bring together the ideologically diverse coalitions necessary to shift conventional wisdom in Washington. And when the opportunity for change presented itself, it required being ready to rapidly translate evidence into action, while coordinating with hundreds of distinct organizations and stakeholders, including think tanks, advocacy groups, and direct service providers.
Likewise, while expanding the child tax credit will help build a more just world for America’s children, it won’t happen automatically. If there’s any big takeaway from the ups and downs of the past year in social policy, it’s that achieving durable social change requires persistence above all. In that sense, our work has just begun.