Money

Facebook co-founder helps give 20 struggling moms in Mississippi $1,000 a month free cash

VIDEO11:4211:42
Elon Musk and Andrew Yang support Universal Basic Income — here's what it...

Mississippi's state healthcare system ranked dead last in America on a 2018 scorecard by The Commonwealth Fund. It has the 46th highest unemployment rate in the country (4.7 percent), according to the Bureau of Labor Statistics' most recent data. Mississippi also came in last in a 2018 ranking of the level of education of the people living in each state by WalletHub.

The telling rankings make Mississippi a good place to test the efficacy of universal basic income, or free cash handouts, and that's what one group is doing with a pilot project for struggling black mothers. The Magnolia Mother's Trust is giving 20 black Mississippi moms who live below the federal poverty line $1,000 a month for one year to spend however they see fit.

One supporter of the program is Facebook co-founder Chris Hughes, who is one of several donors to the Economic Security Project, an advocacy organization that gave $75,000 to get the program off the ground.

The first checks went out to 16 women in December, and thanks to a recent anonymous donor, 20 moms are in the pilot as of January.

The program is the brainchild of Aisha Nyandoro, the CEO of Springboard To Opportunities, a Jackson, Mississippi-based organization that helps families living in affordable housing.

"We have all seen the [rankings] ... and we are well aware of our history of slavery, segregation and inequity along racial lines," wrote Nyandoro in an op-ed for the Jackson-based Clarion Ledger. "But there is another story from Mississippi's history I do not think we tell often enough of low-income, black women who organized to create stronger communities and better outcomes for their people."

Aisha Nyandoro, the CEO of Springboard To Opportunities in Jackson, Miss.
Photo courtesy Inherent Good Documentary

That story is personal to Nyandoro: "My grandmother was born a sharecropper and only through other social service organizations she was able to pivot our family out of poverty," she says in an NBC Left Field short documentary released in December.

The moms in the program each have an average annual income of less than $11,032 (including other subsidies like food stamps and subsidized housing), which puts them below the poverty index, Nyandoro tells CNBC Make It, and they range in age from 25 to 46 with an average of two children each.

The decision to only include black mothers was considered and intentional. "You cannot have a conversation about economic justice without talking about racial and gender justice," Nyandoro explains to CNBC Make It. "African American mothers are at the center of this narrative."

The pilot program is an example of universal basic income, in which a government gives all its citizens cash, regardless of employment status, with no stipulations as to how it can be spent.

"Families need more cash. A minimum wage job simply does not provide enough income to support a family, and the system for obtaining supplementary benefits is stressful, dehumanizing, and time-consuming," says a post on the Springboard Opportunities website describing the program.

"Our hope is that with a little extra breathing room and not constantly having to operate in survival mode, our families will have an opportunity to dream about goals for their own lives and, just like the incredible women before them, become leaders who help organize for change in their communities," Nyandoro wrote in the Clarion Ledger.

The idea of UBI has been getting an increasing amount of attention in recent years. In 2016, tech titan Elon Musk told CNBC universal basic income would be a necessity because automation would put so many people out of work. Facebook CEO Mark Zuckerberg, billionaire Richard Branson and Y Combinator president and self-made multimillionaire Sam Altman have all publicly voiced support for cash handouts as well. Silicon Valley start-up incubator Y Combinator is currently "in the planning and piloting phase" of its own study, Alex Nawar, its basic income research manager tells CNBC Make It.

UBI has even hit politics: Venture capitalist Andrew Yang is running for President in 2020 on the at ticket largely centered on the idea that all American citizens between the ages of 18 and 64 should be paid $1,000 per month.

Presidential hopeful Andrew Yang with the Fassi family.
Photo courtesy Andrew Yang.

And in Stockton, California, Mayor Michael Tubbs, 28, has launched the Stockton Economic Empowerment Demonstration, or SEED, a universal basic income test program for the city. Researchers will randomly select 100 Stockton recipients who meet initial qualifications (occupy a residence within the city, be at least 18 years old and live in a neighborhood where the median income is at or below $46,033) to get $500 a month for 18 months. Stockton is "close" to selecting the candidates for the pilot program, Daniel Lopez, public information officer for the office of the mayor, tells CNBC Make It, and by Feb. 15, Stocktonians who are participating in the program should have their first deposits.

Magnolia Mother's Trust is the result of a partnership between Springboard Opportunities and the Economic Security Project, which is also collaborating on the Stockton UBI program. Nyandoro raised additional money for the Mississippi program through private philanthropy.

Chris Hughes, co-founder of Facebook.
Olivia Michael | CNBC

Of course, there are objections to the idea of a universal basic income: namely that it is expensive and will remove motivation to work.

Because the program is new, Nyandoro knows it is a risk.

"Nothing quite like it has ever been tried before, and we do not have data and numbers to prove to funders this model will work. But what we do have are the stories and words of our families who have told us this is what they need, and we believe them," Nyandoro writes.

For example, recipient LaKeshia Jones, a mom of four, who works as a nanny with unpredictable hours, says the money can offer security for her family.

"For the most part, I want to save it, so I know I will have money when I need it," Jones told Rewire.News. "I'll be able to pay the bills on time and not have to get extensions. In the future I know the kids want to start doing more things at school and I'll be able to pay for that. I'll be able to pay for a tutor for my son. It's going to help a lot."

But not all moms felt that way. Out of 110 women eligible for the cash payment, only 37 entered the lottery, NBC Left Field reported. That's in part because the increase income would mean a decrease in benefits from other federal subsidy programs.

"The reality is in this country it is virtually impossible to exit poverty. And that is because all of our benefits are punitive. So whenever you have an increase in income, your benefits automatically decrease," Nyandoro says to NBC Left Field.

What is really changing for these women living in extreme poverty who have opted to take part in the program is they are able to decide what to do with the cash. Fundamental to the idea of universal basic income is the idea that individuals know what they need and will make the best decisions for themselves and their family.

"We believe all people have the strength and capacity to be the authors of their own lives," Nyandoro writes in the Clarion Ledger. So The Magnolia Mother's Trust seeks "to continue the story of dignity, empowerment and collaboration that also defines Mississippi."

See also:

Facebook co-founder's new $10 million initiative to test if cash handouts will help fix America

This California city's 27-year-old mayor will give residents $500 free cash per month

Presidential hopeful Andrew Yang is giving this New Hampshire mom $1,000 a month to show cash handouts work

VIDEO0:0000:00
Elon Musk: Robots will take your jobs, government will have to pay your wage

Like this story? Like CNBC Make It on Facebook!

make it

Stay in the loop

Sign Up

About Us

Learn More

Follow Us

CNBC.COM