The Poverty Management System is Failing Your Community

poverty alleviation Jan 28, 2025

The Poverty Management System 

There’s a poverty management system in every community, including yours. This system isn’t held accountable for reducing poverty rates, so little changes from year to year. The cost of living increases, as does the complexity of accessing subsidies. If you work in human services or education, you already know what this chaotic program landscape feels like. It’s frustrating, discouraging, and time consuming for people trying to survive. The effort needed to maintain access to subsidies leaves little room for individuals to focus on improving their long-term prospects. 

The Benefits Cliff 

One of the biggest obstacles is the benefits cliff. As people earn more income, they risk losing benefits such as childcare or housing assistance, creating a net loss. For instance, John, a widower from Utah with three children in childcare, found a job, but after receiving an offer for increased hours and a raise, he discovered he’d lose more than $700 a month in benefits. His employer, frustrated by the system, provided a larger raise to cover the difference, but that’s a rare exception. More often, individuals fall back into the system or remain stuck where they are. 

Funding the Poverty Alleviation System’s Innovation 

The poverty management system sustains itself on $1.1 trillion annually without needing to reduce poverty. In any other industry, around 7%-10% of revenue would be invested in research and development to improve outcomes. In this case, that would amount to $70-$100 billion. However, the federal government invests far less in research and development to innovate the system. Even if it increased its innovation investments, without accountability to reducing poverty rates, any new research would likely just maintain the status quo. 

In Tennessee, we received a call from Richard Taylor, president of a data software company committed to reducing poverty rates. He introduced us to Mark Farley, executive director of the Upper Cumberland Human Resources Agency and Development District, which focuses on human services and economic development across the 14 counties between Nashville, Chattanooga, and Knoxville. Mark was concerned that they were not able to help very many families out of poverty. He was also concerned with providing businesses with qualified workers. We conducted a community and organizational assessment, then assisted them in securing a $400,000 planning grant to develop a poverty alleviation system. Following this, we helped them secure one of the six $25 million awards from the state’s Temporary Assistance for Needy Families program. 

Philanthropy’s Role 

One of the strategies of The Poverty Solution is to create a new magnet to attract innovative funding. We helped engage the local hospital foundation to boost the number of grant writers and fundraisers working on poverty solutions. With more than 700 families now enrolled in Tennessee’s new poverty alleviation system, known as Empower Upper Cumberland, we have a strong pilot to learn how to reform both local programs and state regulations to reduce poverty rates. Empower Upper Cumberland is also networking with national organizations to broaden its funding base, ensuring that successful elements of the pilot can be scaled. 

According to Giving USA and Philanthropy Roundtable, around $90 billion is spent annually on poverty-related issues—about the amount needed for substantial research and development. In my experience working with hundreds of foundations, there’s often keen interest in new ideas, but less focus on scaling and sustaining those innovations long-term. However, major players such as the Gates Foundation, Ford Foundation, and Blue Meridian Partners are making long-term investments that drive meaningful change. If they have the necessary channels to influence state and federal policy, they can significantly contribute to reducing poverty rates. 

 Disconnect in Academic Research 

It’s important to build a strong relationship with post-secondary institutions that can provide both education as well as research efforts to reduce poverty rates. We enrolled Tennessee Technical University, the largest institution in the region, as a partner for The Poverty Solution. With their help, our job pathways now include a strong educational assessment built on the interest, skills, and wherewithal for Empower Upper Cumberland participants to land better jobs.  

Universities that research poverty often lack the channels to influence policies and programs affecting people in poverty. To bridge this gap, they can take several proactive steps, including community engagement, applied research initiatives, interdisciplinary programming—especially between the business, human services, and government sectors, policy advocacy and curriculum development to inform the next generation of poverty alleviation leaders. Strong examples such as the Poverty Research Institute at Harvard University and the University of Chicago’s Inclusive Economy Lab head in the right direction. Programs such as Participatory Action Research can empower communities by involving them directly in the research that affects them. 

Universities can play a crucial role in securing long-term funding for innovative projects that address poverty. Establishing partnerships with foundations and government agencies can help create sustainable funding streams for impactful initiatives. The Annenberg Foundation, for instance, supports academic institutions in developing programs focused on community development and poverty alleviation. 

By adopting these strategies, universities can transition from being passive observers to active participants in the fight against poverty. For real change to occur, academia must break out of its siloed existence and engage deeply with the communities they aim to serve. 

Shifting System Goals 

To achieve meaningful change, leaders need to focus on high-leverage points. Providing more services through the existing poverty management system is the least effective solution. Changing regulations to improve those services is a step forward, but the most powerful action we can take is shifting the system’s goals entirely, creating pathways that support people off subsidies and into the workforce. Community leaders must advocate at state and national levels for funding that helps people move entirely out of poverty, not just maintain their status. 

In the next blog we will look at why we must address the benefit cliff effect or have a phantom workforce forever.  

-Scott C. Miller 

Founder, The Poverty Solution 

Curious about how we can transform your community? Let’s chat! Book a no-obligation introductory call and take the first step toward lasting poverty alleviation. 🚀

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