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The Cost and Return on Investment will be Predictable and Attractive

We can begin to predict how much it costs to successfully support (coaching, navigating, financial assistance, soft-skill, and hard-skill training) low, medium, and high-intensity cases into a variety of jobs. We must begin with estimated baseline metrics and refine with gathered data over time.

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Determining a Return on Investment

In 2020, graduate students from UCLA developed a return on investment calculator for Circles USA. This calculator utilizes research-based estimates to determine the financial costs to society of individuals living in poverty, both children and adults. It also considers the reduction of these costs as households transition out of poverty, earn income, and contribute through taxes.

 

To illustrate, supporting a child living in poverty for seventeen years costs taxpayers approximately $700,000. This figure includes expenses for programs like Head Start, subsidized child care, TANF, Medicaid, and school lunches. Similarly, supporting an adult parent in poverty for seventeen years amounts to around $400,000, covering services such as utilities assistance, subsidized housing, medical care, food stamps, and TANF.

For a family comprising a parent and two children, taxpayers bear a cost exceeding one million dollars to support them at the poverty level. In this situation, there is no financial return for taxpayers—only investment. However, the ROI calculator demonstrates that by investing an additional $9,000 per family through a family-led approach to prosperity, a return on investment becomes possible.

 

Here's how it works

  1. With guidance from a prosperity coach, the parent acquires the necessary knowledge, skills, and attitudes to seek and secure employment.

  2. Young children enter pre-school, becoming literate, healthier, and more socially integrated.

  3. Older youth gain job skills, complete internships, graduate, and prepare for skilled technical work

    or pursue post-secondary programs.

  4. Within six months of working with the prosperity coach, the family's income starts to rise.

    Circles' data shows that family income continues to increase at six-month intervals, while the

    need for safety net services decreases.

  5. Eventually, the family's income surpasses the threshold for TANF and other continuum of care

    programs. They transition into contributing to the return on investment by earning income, spending on goods and services previously covered by the government, and paying taxes.

  6. Each family that moves from poverty to prosperity (200% of FPL or higher) saves taxpayers nearly a million dollars annually, thanks to reduced reliance on public assistance and the additional income and taxes generated.

  7. Moreover, the children who were initially in poverty now experience relative prosperity. They receive better education, possess more social capital, and have the knowledge, skills, and attitudes to secure and advance in employment. Investing in these children through the Opportunity Pilot helps society avoid associated costs like crime, healthcare, and lost productivity.

  8. Furthermore, this project emphasizes prompt job placement, filling open positions for various benefits to employers, the economy, and the region as a whole.

The Poverty Solution collaborates with policymakers to overcome barriers, eliminate service gaps, and enhance the efficiency and family-centeredness of the entire system. These efforts ensure that more families receive timely assistance, enabling them to move out of poverty and into prosperity more rapidly.

Suppose we assist 600 families in escaping poverty and achieving long-term prosperity within three years. In that case, not only does the $25,000,000 investment get fully recouped, but an additional $575,000,000 worth of services is no longer required by these families (without considering income earned and taxes paid). This represents a significant return on investment!

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