Guaranteed income in Sacramento: 100 families are receiving $300 no-strings payments

In direct deposits to their bank accounts, prepaid debit cards and electronic gift cards, 100 families in Sacramento County have begun receiving $300 a month — no strings attached.

A first-of-its-kind initiative in the county that began in June, the Direct Investment Program in Sacramento, or DIPS, is the latest experiment in the world of guaranteed income designed to lift families out of financial instability.

Operated and funded by local nonprofit United Way California Capital Region, in partnership with Oakland-based nonprofit UpTogether, the program will provide monthly stipends over the next two years.

The philosophy of the program is in line with other guaranteed income initiatives that have run across the country, perhaps most notably in Stockton: Invest in families living in underinvested communities, and trust that they know how to best use the money for a better quality of life.

“The targeted group is those who are not in a crisis, but are a $400 unexpected expense away from going into poverty because of a sudden car expense, or they’ve no savings built up,” said Kula Koenig, director of community impact at United Way California Capital Region.

Guaranteed income programs like DIPS serve as a kind of buffer for families who find themselves constantly bouncing in and out of government welfare programs, unable to transition into economic stability, said DIPS project lead Cameron Collins.

“We’re not here to posit a future in which we abolish all forms of state accountability for public welfare,” Collins said. “We’re here to supplement and empower individuals, and give people the tools they need to make their way.”

United Way opened up applications for low-income families to apply to the program earlier this year and tapped into the networks of major community coalitions such as La Familia and the Black Child Legacy Campaign to cast a wide net.

Participants had to meet a specific income requirement, Collins said — roughly 150% of the federal poverty level, meaning a family of four making less than $40,000 would qualify. In Sacramento County, about one in eight people live below the poverty line, and about a third make less than $50,000 per year, according to U.S. Census Bureau data.

Just under 500 people ultimately applied, and from there United Way selected 100 households through a random lottery.

DIPS will conduct regular surveys to get a sense of what participants are spending their money on and to learn how the extra money each month is impacting their lives. But unlike other government welfare or assistance programs, there will be no need for families to reapply every few months or enroll in financial literacy classes and job training.

“We’re betting on the families themselves, because nobody understands what it’s like to face the conditions of poverty than the people who live in it,” Collins said. “When you give people money, it turns out they kind of know how to spend it.”

The program has been fully funded for the first year, Collins said, and the nonprofit is committed to fully funding the second year and is seeking additional partners.

While the United Way had been in early talks with staff from the city of Sacramento about running a pilot program prior to the pandemic, DIPS is run independent of local governments. But there has been renewed discussion about starting a similar program with city and state money.

Members of the Measure U Community Advisory Committee, which provides recommendations for how the city should spend money raised from a voter-approved sales tax, expressed interest in the idea of guaranteed income during their May meeting.

Flojaune Cofer confirmed last week that the committee, which will be keeping a close eye on how DIPS progresses, is still interested in potentially leveraging the new state funding and Measure U money to operate a similar program.

Guaranteed income programs

Guaranteed income pilot programs have operated for years in cities across the country, touted by advocates as a simpler, more effective and dignified way of addressing wealth inequality and providing government benefits.

UpTogether, an organization previously known as the Family Independence Initiative, has implemented programs in several cities to promising results: On average, participating families increased their monthly income by 22%, and decreased their use of government assistance such as food stamps by 42% after two years.

Perhaps the most famous example of a guaranteed income experiment in the United States was the one run in Stockton, which began in February 2019 and gave 125 people $500 a month.

Results from that first year of the program showed that participants who received payments were employed at a higher rate, were happier, were healthier, and were more able to weather sudden expenses compared to non-recipients in the control group.

And though universal basic income was a major campaign platform of former Democratic presidential candidate Andrew Yang, unconditional financial assistance was still relatively controversial, Collins said. But after the coronavirus pandemic devastated the global economy, now the tide has turned.

The federal government has poured billions into the bank accounts of Americans. Local nonprofits and governments sent checks to residents unable to pay rent, sick workers and families struggling to otherwise weather the pandemic. No-strings-attached assistance has become more normalized.

“You can only imagine what it’d look like without unemployment benefits and several $1,000 checks,” Collins said. “Those were real lifelines.”

Evidence from previous experiments, coupled with the unprecedented economic turmoil of the last 16 months, have led to a surge of interest in the potential of guaranteed income programs.

Earlier this year, Gov. Gavin Newsom announced a $35 million plan over five years to help cities and counties administer pilot programs for universal basic income. The proposal was later approved by the state legislature as part of this year’s budget, making California the first state to fund such an effort at a statewide level.