New Findings Show That New York City’s Conditional Cash Transfer Initiative Reduced Poverty and Hardship, Boosted Graduation for Some Better-Prepared High School Students

Research Results Used to Develop New Conditional Cash Transfer Model in NYC and Memphis

(New York, September 25, 2013) — A new report on Opportunity NYC–Family Rewards, New York City’s three-year conditional cash transfer (CCT) initiative for low-income families, shows that, while in effect, the program reduced severe poverty and material hardship, including access to food, and it helped some families increase savings. It also had positive impacts on educational outcomes for better-prepared high school students. In particular, it increased on-time graduation rates for ninth-graders who were academically proficient readers when they entered the program — a rare achievement for a reform effort not targeted at schools themselves. The program also substantially raised families’ receipt of dental care. But its reductions in poverty and material hardship began to fade once the reward payments were no longer available. Lessons from this initiative motivated a second demonstration, now underway, that is testing a revised version of the CCT approach that aims to have broader and longer-lasting effects. The report was released by MDRC, a nonprofit, nonpartisan education and social policy research firm. 

Inspired largely by Mexico’s pioneering Oportunidades program and similar initiatives in Latin America, Family Rewards was the first comprehensive CCT program in a developed country. Launched in 2007 as a privately funded, three-year initiative by New York City’s Center for Economic Opportunity (CEO), Family Rewards offered cash assistance to low-income families to reduce immediate hardship. However, they only received this money if they met certain pre-defined milestones intended to build up their “human capital.” This was intended to help reduce their risk of longer-term poverty and the chances that their children would grow up to be poor as adults. The program tied more than 20 cash rewards to activities and outcomes in children’s education, families’ preventive health care, and parents’ employment. It operated as a pilot program for three years, concluding, as planned, in August 2010. 

More Detail on the Findings

All families earned rewards, with payments averaging more than $8,700 per family over the three years. The study uses a rigorous random assignment research design to compare families in the program with similar families in a control group. It found that Family Rewards had effects in some areas and for some groups but not others. In particular, the program: 

  • Reduced current poverty and material hardship, including hunger and some housing-related hardships, although those effects weakened after the cash transfers ended.
  • Helped parents increase savings and reduce reliance on families and friends for cash loans.
  • Did not improve school outcomes overall for elementary or middle school students.
  • Had few effects on school outcomes for high school students overall, but substantially increased graduation rates and other outcomes for students who entered high school as proficient readers. This may have resulted, in part, because the program changed how some teenagers spent their non-school time, getting them to devote more attention to academic pursuits.
  • Did not increase families’ use of preventive medical care, which was already high, and had few effects on health outcomes.
  • Substantially increased families’ receipt of preventive dental care.
  • Increased the likelihood of self-reported full-time employment but did not increase employment in or earnings from jobs covered by the unemployment insurance system. 

Building on lessons from Family Rewards, CEO and MDRC launched “Family Rewards 2.0,” a separate follow-up demonstration project in Memphis, Tennessee, and the Bronx, New York, in 2011. The new model targets low-income families with children in grades 9 and 10 only, rather than including children in elementary and middle school, as in the original program. It offers fewer rewards, disburses payments more frequently, and rewards report card grades in addition to attendance and test scores to provide a more immediate incentive for better school performance. It also adds a one-on-one family guidance component to help families achieve the rewards; the original program was “incentives-only,” with no services provided. Family Rewards 2.0 is an initiative of the federal Social Innovation Fund, sponsored by the Corporation for National and Community Service. Like the original model, Family Rewards 2.0 is being carefully tested using a randomized control trial. An initial report on the sites’ operational experiences and information on some early impact findings is planned for release in late 2014.

Contact: John Hutchins, Communications Director, 212-340-8604, [email protected].

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Funders of Opportunity NYC–Family Rewards include Bloomberg Philanthropies, The Rockefeller Foundation, The Starr Foundation, the Open Society Institute, the Robin Hood Foundation, the Tiger Foundation, The Annie E. Casey Foundation, American International Group, the John D. and Catherine T. MacArthur Foundation, and the New York Community Trust. 

Headquartered in New York City, with a regional office in Oakland, California, MDRC is a nonprofit, nonpartisan research organization with 40 years of experience designing and evaluating education and social policy initiatives.