The Logical Foundation

Do you have a screening process for unhoused participants?

How are unhoused participants given guaranteed income?

When and why was the Foundation founded?

The Logical Foundation was envisioned on July 1st, 2021, during a conversation about the most important things our society needs doing in order to have a prosperous future. After much debate, it became clear that a Universal Basic Income, a stable foundation for everybody in society, is one of the most important pieces of the puzzle. With the understanding that guaranteed income is also the most cost-effective way to reduce poverty, we came up with a first-principles-based plan to build as much guaranteed income as possible through nonprofit work.

What is the grand vision?

We’ve landed on a very important idea that could transform the guaranteed income community from a scattering of pilots, to a single program that can bring in billions of dollars a year and uplift massive populations of people in need. The platform approach is fundamental to our long-term vision. If done right, we’ll be able to bring in money from every funding source interested in helping any population of people in need in any geographic region and for. And we’ll be able to do it all at the same time. Essentially, it will be the most powerful fundraising machine ever built, and all of the money will be funneled into the most powerful anti-poverty intervention. With your help, we believe we can end homelessness, and maybe even all poverty, over the next two decades.

Do you implement the program yourself or partner with other organizations?

We manage the transfer process ourselves with potential help from financial services partners. We partner with many organizations to both fund our programs and ensure that our participants have access to the pre-existing services that can help them in various ways.

Conditions: why do we give with “no strings attached”?

There’s strong evidence that paying people to take certain actions (e.g., ensuring children attend school) makes them more likely to do so. Depending on the condition and which aspects of well-being you prioritize, such conditions can be more or less worthwhile. But they can also be costly to enforce and can exclude the most vulnerable members of a community. We believe it is clear at this point that the costs, inefficiencies, and danger of fraud intrinsic to Conditional Cash Transfers outweigh the benefits.
 
“Without targeting or monitoring of conditions, the estimated long-run CTR [cash transfer ratio declines] about 40 percent, underscoring that targeting and conditioning require substantial resources.” Caldés & Maluccio (2005)
 
“By denying noncompliant (excluded) adolescent girls and young women cash transfers at precisely the moment when they are most likely to start childbearing, a myriad of potential benefits might be missed under CCT programs.” Baird et al. (2019)

Training: shouldn't you “teach a man to fish” instead?

Training is extremely expensive and unreliable. It turns out that poor people are generally capable and skilled enough to work, but only when given the opportunity to do so. That opportunity can only reliably be provided by cash because cash gives people the freedom and time to get their plans in order.
 
“Skills training and microfinance have shown little impact on poverty or stability, especially relative to program cost.” Blattman & Ralston (2017)
 
Also, the global poor often know a lot about fishing and how to start businesses.

What about the long-term effects of cash?

There is strong evidence showing that cash transfer programs and guaranteed income programs have long-term benefits above and beyond other anti-poverty interventions in the U.S. and abroad. The relevant test is not whether effects last forever, but whether they’re large enough and durable enough to be worthwhile. For example, most people would prefer an investment that returns $99 tomorrow over one that returns $1 a year for 100 years. Unlike investments, there’s no omnibus measure of returns with development programs, so aggregating impacts over time to judge how worthwhile a program is methodologically and morally difficult. We’re looking forward to reviewing and creating more evidence on this subject over the next several years, but below are some examples of these dynamics.
 
“Four years on, an experimental evaluation found grants raised earnings by 38% … We return after 9 years to find these start-up grants raised earnings and consumption temporarily only. Grantees’ investment leveled off; controls eventually increased their incomes through business and casual labor; and so both groups converged in employment, earnings, and consumption … We estimate a discounted present value of total earnings gains of roughly $665 — almost twice the size of the grant …” Blattman et al. (2020)
 
“[W]e collected … records of applicants to the Mothers’ Pension program—the first government-sponsored welfare program in the United States (1911–1935) … Male children of accepted applicants lived one year longer than those of rejected mothers. They also obtained one-third more years of schooling, were less likely to be underweight, and had higher income in adulthood than children of rejected mothers.” Aizer et al. 2016)

Do women and men spend cash transfers differently?

It seems that people in need, regardless of gender, age, or demographic, consistently spend cash on things that improve their quality of life. We consider it important to take an individual approach, giving each adult a guaranteed income instead of only giving money to one chosen household member. Not only does it reduce stress and eliminate gendered assumptions, it could empower people in abusive relationships to excape bad situations.
 
“While one might expect differences in outcomes depending on the gender of the main recipient, based on the four studies included in this review, for most of the indicators in this review there does not appear to be strong support for differences arising from specifically targeting either men or women.” Bastagli et al. (2016)

Spillovers: how are non-recipients affected?

By definition, cash programs affect both recipients and those around them. After all, a dollar spent is a dollar earned by someone else. Because of this, cash gretaly increases economic activity. When participants buy goods & services from non-participants, that’s good for the non-participant’s business and their overall welfare. Unfortunately, there may be a negative psychological impact on seeing someone else receive a windfall when you do not. That’s why we advocate for Universal Basic Income as the logical end-state.
 
We show that the program benefits ineligible (non-recipient) households who live in treatment villages by increasing their food consumption level by about 10%, approximately half the size of the increase in food consumption for eligible households. This consumption increase is financed through higher loans and transfers from family and friends, and through a reduction in savings.” Angelucci & De Giorgi (2009)

“Importantly, we document large positive spillovers on non-recipient households and firms, and minimal price inflation … Despite not receiving transfers, [non-recipients] exhibit large consumption expenditure gains: their annualized consumption expenditure is higher by 13% eighteen months after transfers began … driven largely by increases in wage labor earnings.” Egger et al. (2019)

How do you decide to whom to give cash transfers?

Our goal is to build guaranteed income, or cash transfer volume as quickly as possible and get it to as many people in need as possible. We landed on our pilot helping homeless individuals in Arizona because they are one of, possibly the most, vulnerable community in America. There is a 10% death rate for homeless individuals in Arizona, 3-4 times higher than anywhere else in the country, so the homeless in Arizona should not only be recognized as the most vulnerable group of people in the U.S. but as multiple times more vulnerable than the next-most vulnerable group of people. Cash assistance has been proven to be extremely powerful in helping homeless people re-enter society compared to other homelessness interventions, and targeting the most vulnerable group with the most powerful intervention should result in the most impactful anti-poverty program in the U.S.
 
Our future plan is designed such that we can get as much money from funders as possible into the hands of impoverished people overall. We will therefore be fundraising from a variety of sources and giving cash to various different groups of people in need. We may maintain a rigorously vetted list of vulnerable communities, and encourage donors to designate their donations to help the most vulnerable groups in their geographic region, nationally in the U.S., or even internationally.

Do you give money to men, women, or both?

We give money to both men and women. Innovations for Poverty Action produced an experimental comparison of transfers to men and women and found some modest differences, but overall, both genders used money responsibly. We seek to avoid selecting one person per-household to assist because the contents of various households differ drastically. We intend to be highly individualized, ensuring that each person gets money tied to them (or in the cases of children and certain disabled adults, to a designated guardian). How could it be fair that a program gives a household with 1 working adult the same amount as a household with 1 working adult and 3 kids?

How much do recipients get?

Our pilot program assists homeless individuals with $Each participant will receive $1,000 per month for 6 months, and participants with children will receive an extra $500 per child per month. Participants will be able to request the first five transfers ahead of time for large costs such as down deposits or several months' rent.
 
Structuring transfers this way helps to ensure that we don’t lose contact with participants, and also ensures that participants can use the money in the best way to fit their needs.
 
In the future, our Basic Income Network will likely spend $500 or $1000 per person per month. It is still up for debate.

Do recipients need to have a mobile phone to participate?

No. We will ensure that each participant gets a smartphone if they don’t have one already.

How do you prevent corruption?

Our pilot program has one staff member that is also our executive director. There are two primary reasons it would be incredibly stupid for him (me) to do something corrupt. First, we have a dedicated auditor. The Young Writers Foundation is our fiscal sponsor and is obligated to ensure that nothing untoward is going on in our pilot. Our pilot will have a very small amount of participants (24 expected), making it incredibly easy for them to check with all of our participants that the program is being carried out as intended. Second, my incentives are extremely aligned with maximizing the positive impact of our pilot. The results from our pilot will be extremely important for building the Foundation into a sustainable organization, and the better our results (the more people in our pilot that achieve stability), the easier it will be to grow our organization faster. There’s no way in hell I’d jeopardize the best opportunity I’ve ever come across to do a huge amount of good while creating my own career path.
 
The two main corruption risks that typically arise in transfer programs involve (a) manipulation of the list of eligible recipients and (b) diversion of transfers sent to eligible recipients. When we are ready for larger efforts, we will address the first by putting into place a comprehensive audit process, using multiple independent checks to ensure that recipients are eligible and have not been charged bribes to get on the list. These checks will include in-person visits by different staff members, in-person audits by senior management, remote data audits, and phone calls with each recipient, all prioritized using modern analytics. We will address the second through identity-matching between our records and those of our payment providers, through comprehensive follow-up calls to ensure money is reaching the intended recipients, and in some cases through in-person checks.

How do recipients use the transfers?

By design, cash transfers let recipients use the money for whatever is most important to them. According to Foundations For Social Change, cash assistance given to homeless individuals was spent almost exclusively on basic needs such as rent and food, while retaining $1,000 in savings even after a year. There is a large body of research from around the world documenting the astpnighingly large impacts of cash transfers on low-income households.

Do recipients spend on alcohol or tobacco?

Foundations For Social Change, despite giving over 100 homeless participants $7,500, recorded a 39% total reduction in spending on drugs and alcohol. In fact, every experiment giving cash to impoverished and homeless individuals has found a reduction in drug spending. It seems that when people are given freedom and hope, they no longer feel the need to blunt the pain of crushing poverty through drug use.
 
These results present an interesting theory. Most people assume that drug addicts would spend cash assistance on drugs and fail to improve their lives at all. That it would be a total waste of money and possibly cause additional harm. These assumptions, it seems, have not been tested at all, because no one seems very inclined to go out and test them. It is very possible that those claims are false, and many drug addicts (if not all) would spend direct cash assistance on getting to rehab, or elevating their quality of life such that they stop feeling the need to constantly numb their agony with drugs. Could giving money (and social connection) to drug addicts be the most effective way to help them escape drug addiction?

Do transfers create conflict or tension between recipients and non-recipients, or within households?

We are slightly concerned that participants in our homelessness pilot could become big news in the homeless community, and potentially be taken advantage of. We want to ensure that our participants don’t feel any pressure to spend money on other people, and focus on uplifting themselves. This is another reason why we advocate for Universal Basic Income, which would leave none excluded from having economic security.
 
The available evidence on tension within households suggests that transfers actually reduce it substantially. Studies suggest that conflict is driven by the hard choices that poverty forces: for example, which child should be allowed to starve. As one woman put it, “there is no peace in the family when there is no food to eat”. In developing nations (although we would expect similar results in the U.S.) Innovations for Poverty Action’s evaluation found “suggestive evidence that cash transfers reduce domestic violence and increase female empowerment in both recipient households and other households in the same village” ( Haushofer & Shapiro 2013).

Is giving cash sustainable?

Usually, when the word “sustainable” is applied to charity, it means that a gift “keeps on giving” and that donors need not continue to make gifts to the same recipient. Since many of our participants will use some or all of the money to invest in getting jobs, we believe cash can qualify as sustainable. Indeed, one study of unconditional cash transfers in Mexico found that household incomes increased by between 1.5 and 2.6 times the amount of the transfers due to the returns from increased investment (Sadoulet, Elisabeth and Alain de Janvry, and Benjamin Davis. “Cash Transfer Programs with Income Multipliers: PROCAMPO in Mexico.” World Development 29(6) pp. 1043-1056, 2001), suggesting that cash transfers are more than sustainable. Beyond short-run income changes, investments in adequate food, proper clothing, better health, or more education for children may be “sustainable” in the long run; even though it will require charity until that child is done with school, he or she will grow up much better off and in need of much less assistance than his or her parents.
 
Not all recipients will invest the money, however, and it will be gone once it is spent. Donors who prefer to give a gift that is guaranteed to be sustainable in the sense that it will provide a steady income stream to the poor will be able to do so. For designated large one-time donations and planned gifts, we will set up a Basic Income Endowment which will ensure that generations into the future have guaranteed basic income. We can envision a future where this endowment grows to billions, and can support entire towns, cities, or even countries with (universal?) basic income.

Why not put conditions on what people have to do to get transfers?

We choose to provide unconditional, rather than conditional, cash transfers for two reasons. First, empowering the poor to make their own decisions advances our core values of respect and dignity. Second, imposing conditions requires costly monitoring and enforcement structures be put in place. One detailed estimate put the administrative costs of a conditional cash transfer scheme as high as 63% of the transfers made over the first three years of the program (Caldes, Natalia, and John Maluccio. “The Costs of Conditional Cash Transfers.” Journal of International Development 17 pp. 151-168, 2005). Our read of the existing experimental evidence comparing the impact of conditional to unconditional transfers is that there is little evidence to suggest these added costs produce commensurate benefits. Essentially, why waste a ton of money on a bureaucracy when that money would be better spent by participants?

Why not make micro-loans?

The evidence on the impact of cash transfers is far stronger than that for micro-loans, whose impacts have generally been below expectations. We think that micro-loans are likely beneficial for the poor, but given the evidence, see no reason to incur the added costs of administering them.
 
We suspect that the disappointing track record of micro-loans may have to do with their structure. These loans often bear high-interest rates, reflecting the high costs of administering and monitoring them, which in turn limit their benefit to borrowers. They also tend to have short-term structures and require borrowers to begin making repayments shortly after borrowing. These features make micro-loans less useful for financing the kinds of long-term investments (e.g. education or durable goods) that recipients often make with grants. It’s also completely ridiculous to go around to the poorest people in the world and attempt to collect on debts gone wrong. A debt collection scheme is necessary for any debt-based system, but you can’t affordably, ethically, or effectively conduct debt collections on extremely impoverished people.

How can I raise money for the Foundation?

Several ways. First, talk to friends about whether they give money directly to those living in poverty. Starting that conversation is a huge step. Second, create a fundraiser on Facebook, our name is (The) Logical Foundation and we’re in Tempe AZ under human services, its a quick and easy way to reach out to your network. If Facebook does not work for you, you can also use Instagram.

Can I partner with the Foundation?

Potentially. We partner with various organizations to promote guaranteed income, increase funding for programs, connect our participants with available services, generate new evidence on impacts, etc. Contact us at info@thelogicalfoundation.org with a description of what you have in mind.

Can I use the Foundation’s logos for fundraising?

Please contact us at info@thelogicalfoundation.org explaining how you’d like to use it, and we’ll evaluate requests on a case-by-case basis.

How can I stay updated on your work?

Several ways: sign up to get updates by email and follow us on Twitter, TikTok, LinkedIn, or Instagram

Can I volunteer or intern at The Logical Foundation?

Yes! We have way more need for volunteer work than we do volunteers.

Are you hiring?

We’re always looking to meet exceptional people who are excited about our vision. However, we are currently an all-volunteer team so we cannot offer pay. If you want to help us solve the most important problem in the world, please reach out to us. We can work with you to help you make an impact and potentially become employed once we have the budget.

Can I apply to receive money?

At this time, we are not accepting applications for cash assistance. In the future, we will open a fast and easy application portal. After people apply, our system will randomly pick eligible participant groups (individuals and families) as funding comes in. We will take great care to ensure that our system is easy & accessible for all.

Can I choose which person receives my donation?

Not if you want to make a tax-deductible donation. According to IRS rules, cash transfers for specific individuals, even if they are in need, are no different than person-to-person gifts and therefore not tax-deductible. If we allowed you to donate to specific people, we would risk being regulated as a money transfer service and losing our charitable status.
 
However, the ultimate goal of our work is Universal Basic Income, so we may eventually partner with a money transfer service company or a 501(c)(4) social welfare organization to facilitate non-tax-deductible basic income to individuals and gifts that are more specific than allowed by the IRS or state rules.

Where does the Basic Income Network send funds?

The Basic Income Network is a platform. As such, our goal is to be capable of delivering funds anywhere in the US at first, with eventual global expansion. Most people and organizations primarily want to make a difference locally, so ‘locally’ will most often be the answer.

Don’t donations go further overseas?

Objectively, a dollar will have more impact on a Kenyan living on $1.5/day than an American living on ~$40/day. However, most people want to make a difference in their local community. Fundamentally, for the first time ever, we will give funders the opportunity to combat poverty in their target area, and in whichever group they are most aligned with, with the most impactful and proven intervention. However, we will enable people that want to maximize the global anti-poverty impact of their donations to send money overseas.

Can I make a one-time donation?

We prefer subscribed annual or monthly donations, however, all donations are welcome.