It’s an intriguing idea: Give a student $10,000 to invest when he or she is as young as 5. Fast-forward to when he or she is 25 or so, and — thanks to professional money managers and accrued interest — there could be roughly two and a half times that amount to spend.
There are strings attached. The money can go only for projects that would add to the students’ net worth, like the down payment on a house or an apartment. Nothing frivolous.
A nonprofit called the Harlem Children’s Zone is raising private capital for the program, called Wealth Builds. I asked Stefanos Chen, a Metro reporter who writes about the job market and the changing business landscape in New York City, to explain the promise of the program.
Who will get the $10,000? How are the recipients being chosen?
The entire student body at two K-12 charter schools that Harlem Children’s Zone runs, called Promise Academy — about 2,200 students in all.
Most of them didn’t know until we published an article about the program last week. Only about 100 recent graduates of Harlem Children’s Zone schools had been told before that.
But that’s only $22 million — a lot of money, but less than 10 percent of the $300 million that Harlem Children’s Zone is looking to raise.
Yes. Harlem Children’s Zone has already raised over $50 million for these grants as part of a broader, multipronged initiative that they hope will roll out nationwide. The plan is to invest on behalf of about 5,000 students in New York City — including future students at the charters and children who are enrolled in the Harlem Children’s Zone after-school programs — and another 5,000 in 10 other cities, including Atlanta and Minneapolis.
Where is the money coming from?
Harlem Children’s Zone is an influential nonprofit in the education world — President Barack Obama created a federal grant program that replicated some of its antipoverty programs. That reputation has attracted wealthy philanthropists from across the political spectrum, including Stanley Druckenmiller and Ken Langone, billionaire investors who have backed Republican presidential campaigns. Druckenmiller, a hedge fund manager who was a protégé of George Soros, told me he will help manage the fund for free.
But the philanthropy approach has limits. Harlem Children’s Zone is hoping it will provide proof of the concept for state and federal government to join in or craft their own versions of the model.