There are several studies and organizations that have already established the case for reparations and are actively advocating for various legislative proposals. American Freedmen Foundation was established to collaborate with various advocacy efforts to promote a simplified, less patriarchal reparations platform that:

1. Does not rely on a government agency to administer

2. Requires little administrative overhead

3. Gives agency to reparations recipients

4. Does not include means testing

5. Can be applied equally to all qualified recipients

6. Reduces bureaucratic barriers for qualified applicants to go from application to enrollment

7. Mitigates the risk of causing inflation

8. After initial funding, is capable of funding itself in perpetuity 

9. Includes a mechanism for wealth to be transferred to future generations

Guaranteed Wealth vs. Guaranteed Income

There’s a $50 trillion Black wealth gap to close, and, as laid out in the book From Here to Equality, no amount of superhuman effort by Black folks will close it. Every single Black family can make all the “right” financial and life choices, and the gap with still never close. We could close the gap by $1B per month, and it would still take over 4,000 years to close. An intentional, concerted effort mobilizing and leveraging large amounts of concentrated capital will be required. In other words, reparations. However, with the American Freedmen Foundation’s Guaranteed Wealth Program™ it will require neither additional taxes nor a 1:1 spending plan. In other words, for every $1 in wealth gap, we will not need $1 in reparations budget. In fact, with our plan, it’s closer to a 22:1 ratio.

Furthermore, rather than providing a one-time lump sump, or even a guaranteed income, our program is designed to guarantee wealth. One’s financial wellbeing is best measured and determined by wealth vs income.  Wealth can be used to generate income, so guaranteeing wealth is a more sustainable and resilient option to address wealth gaps instead of guaranteeing income and hoping it gets converted to wealth at some point. The  Guaranteed Wealth Program also reduces the burden of government and philanthropy on continuing payments into perpetuity, because, as demonstrated in the proposal below, contributions stop after a certain point, compound interest takes over, and the program becomes self-sustaining.

Membership Eligibility

First, everything in this section may change before the actual program launches, so consider this the debate period. That said, this program is for descendants of Freedmen who were also victims of Jim Crow, redlining, and other economically discriminatory actions taken specifically against this population in the United States before the passage of the 1965 Voting Rights Act. Specifically, children (1-3 years old) those who can trace their lineage directly to a person who identified as Black, African American, Colored, or Negro before the passage of said Act. We will attempt to subsidize genealogy services for people that need it, but many of us have people in our family who were born during or before that time period and are still alive, so the “research” might just be a matter of getting their birth certificates. Admittedly we expect this process to be complicated in significant numbers of cases where genealogy is harder to determine or records were destroyed, and inevitably some people might slip through the cracks as with any national program. However, all Black people, and the US economy as a whole for that matter, will benefit from the economic boost this program will provide even if we cover a fraction of the population, disproportionately impacting Black communities the most.

Why this group? Three reasons:

1. Admittedly, any eligibility requirements could be construed as subjective or arbitrary. Someone needs to make a decision and organize people around it. We made one, but we attempted to at least make it logical and based on requirements that are provable and account for financial constraints.

2. This is not a global reparations program and is targeted specifically to benefit descendants of people who were enslaved under the chattel slavery system in the United States, were the beneficiaries of the Bureau of Refugees, Freedmen, and Abandoned Lands (aka Freedmen’s Bureau), and subject to further theft of wages, property, and life during the Jim Crow Era and Civil Rights Era. Each country that also suffered under similar systems will need to sue for reparations from the entities that enslaved their ancestors.

3. Since a key part of our program is permanent life insurance, it is cheaper to insure babies soon after birth (1-3 years old). After a human lifetime, the entire community will be covered with a guaranteed sum of wealth, and the gap will be closed (all else being equal). If we exceed our funding target, we can open the eligibility to older age groups.

4. Our case is specifically against the United States government under the current Constitution, which is the only entity that can afford to fund an almost trillion-dollar program, was both in existence and is directly culpable during the entire period in question (1789 to 1965) when actions that directly resulted in the wealth gap were sanctioned by the federal government. There was a very minuscule amount of Black immigration into the US before the 1960’s, therefore, anyone who identified as one of those labels mentioned above before that time period is likely a descendant of Freedmen.

How it works

The Guaranteed Wealth Program we are proposing has three primary components, and we are currently building the capacity and technology platform to make it easy to implement:

• A permanent capital structure that uses a multi-asset, multi-stage strategy to increase productive capacity and generate income from assets rather than from government appropriations alone.  This would be like a pension fund or endowment that has a mandate to generate income while ALSO increasing supply along with demand.  So instead of issuing payments directly to people, this endowment would be funded, make investments, earn returns, and then distribute dividends to people.  This is more financially sustainable, just like an individual who "lives off the interest" vs having to earn a wage to live.  And this investments would also provide a counterbalance to the job/wage destruction being brought on by the Fourth Industrial Revolution.

• Instead of getting these dividends as direct payments, they would go towards overfunded group whole life insurance policies with an increased cash balance limit and guaranteed annual yield.  This locks in a certain amount of wealth through the death benefit since we know death is guaranteed (at least for now), which can then be passed onto heirs without being taxed, which is the primary enemy of generational wealth.  You can lose ANY amount of wealth in just three generations simply due to estate taxes, even assuming your children and grandchildren do everything "right."

• Attaching a credit limit and asset management accounts (including retirement accounts) to your insurance account, so you can easily borrow against your cash balance to make investments and/or pay expenses. 

This solves for three primary concerns related to guaranteed income:

• Tax implications of income vs capital gains. The initial contributions to the insurance accounts might get taxed, but the growth in those accounts will not and borrowing from them to get money out is also not a taxable event.  Also, again, the insurance payout to your heirs upon death is not taxed.

• Securing the wealth of future generations instead of providing fleeting income.  This is the nature of life insurance and should be self explanatory.  If you were simply paid an income, it would not guarantee a wealth transfer to your heirs.  

• Reducing inflationary pressures.  By funding this strategy via a permanent capital pool that makes investments into private capital markets, we address supply along with demand.  If you stimulate demand without a counterbalance on the supply side, you cause inflation.  Basic economics that many proponents of guaranteed income typically gloss over.  

Assumptions

Using the assumptions listed below, by the age of 18, each recipient would have an additional net worth of $587,468 ($400,000 death benefit plus $187,468 cash value), and by age 65, that number would be nearly $1,883,857.

• Target Funding Amount to Fully Fund Endowment: $2.2T (but the program can start with as little as $10M)

• Number of Recipients: 400,000 in year one with 3% growth rate in successive years assuming a fully funded program.  

• Target Annual Return: 6% (years 1-10); 5% (years 11+)

• Endowment Reinvestment Rate: 65%

• $400,000 whole life insurance policy per recipient

• Estimated Annual Premium: $3,690 (paid over 10 years)

• Additional Annual Contribution: $750 (until year 18)

• Guaranteed 4% yield on cash value in insurance policies

• Estimated Annual Premium: $9,840 (paid for 10 years)

• Additional Annual Contribution: $600 (until age 18)

• Guaranteed 4.5% yield on cash value in insurance policies

How to Support

1. If you are eligible for membership, sign up for the waitlist

2. If you are NOT eligible for membership, but still would like to support, sign up here.

3. Donate here.

Research

The Black Wealth Gap

Books

• Baradaran, M. (2017). The Color of Money: Black Banks and the Racial Wealth Gap. Harvard University Press.

• Darity Jr., W., & Mullen, A. K. (2020). From Here to Equality: Reparations for Black Americans in the Twenty-First Century. University of North Carolina Press.

• Hamilton, D., & Darity Jr., W. (2017). The Political Economy of Education, Financial Literacy, and the Racial Wealth Gap. Federal Reserve Bank of St. Louis Review.

• Oliver, M. L., & Shapiro, T. M. (2019). Black Wealth/White Wealth: A New Perspective on Racial Inequality (2nd ed.). Routledge.

• Rothstein, R. (2017). The Color of Law: A Forgotten History of How Our Government Segregated America. Liveright.

Articles and Research Papers

• Aliprantis, D., & Carroll, D. R. (2019). "What Is Behind the Persistence of the Racial Wealth Gap?" Federal Reserve Bank of Cleveland Economic Commentary.

• Bhutta, N., Chang, A. C., Dettling, L. J., & Hsu, J. W. (2020). "Disparities in Wealth by Race and Ethnicity in the 2019 Survey of Consumer Finances." FEDS Notes. Washington: Board of Governors of the Federal Reserve System.

• Darity Jr., W., Hamilton, D., Paul, M., Aja, A., Price, A., Moore, A., & Chiopris, C. (2018). "What We Get Wrong About Closing the Racial Wealth Gap." Samuel DuBois Cook Center on Social Equity.

• De La Cruz-Viesca, M., Chen, Z., Ong, P. M., Hamilton, D., & Darity Jr., W. A. (2018). "The Color of Wealth in Los Angeles." Federal Reserve Bank of San Francisco.

• McKernan, S. M., Ratcliffe, C., Steuerle, C. E., & Zhang, S. (2013). "Less Than Equal: Racial Disparities in Wealth Accumulation." Urban Institute.

Reparations

Books

• Berry, M. F. (2005). My Face Is Black Is True: Callie House and the Struggle for Ex-Slave Reparations. Alfred A. Knopf.

• Brophy, A. L. (2006). Reparations: Pro and Con. Oxford University Press.

• Coates, T. (2014). Between the World and Me. Spiegel & Grau.

• Craemer, T. (2018). International Reparations for Slavery and the Slave Trade. Routledge.

• Robinson, R. (2000). The Debt: What America Owes to Blacks. Plume.

Articles and Research Papers

• Coates, T. (2014). "The Case for Reparations." The Atlantic.

• Craemer, T. (2015). "Estimating Slavery Reparations: Present Value Comparisons of Historical Multigenerational Reparations Policies." Social Science Quarterly, 96(2), 639-655.

• Darity Jr., W., & Frank, D. (2003). "The Economics of Reparations." American Economic Review, 93(2), 326-329.

• Feagin, J., & Ducey, K. (2019). "The Case for Reparations in the United States." Souls, 21(1), 14-31.

• Williams, A., & Nasir, N. (2019). "The Case for Reparations: How the U.S. Could Enact Meaningful Restitution for Slavery and Systematic Discrimination." Harvard Kennedy School Review.

Guaranteed Income Programs

Books

• Ferguson, J. (2015). Give a Man a Fish: Reflections on the New Politics of Distribution. Duke University Press.

• Standing, G. (2017). Basic Income: And How We Can Make It Happen. Pelican Books.

• Stern, A. (2016). Raising the Floor: How a Universal Basic Income Can Renew Our Economy and Rebuild the American Dream. PublicAffairs.

• Van Parijs, P., & Vanderborght, Y. (2017). Basic Income: A Radical Proposal for a Free Society and a Sane Economy. Harvard University Press.

• Widerquist, K., Noguera, J. A., Vanderborght, Y., & De Wispelaere, J. (Eds.). (2013). Basic Income: An Anthology of Contemporary Research. Wiley-Blackwell.

Articles and Research Papers

• Castro, A., & Basic Income Lab. (2019). "Insights from Guaranteed Income Pilot Programs." Stanford Basic Income Lab.

• Hoynes, H., & Rothstein, J. (2019). "Universal Basic Income in the United States and Advanced Countries." Annual Review of Economics, 11, 929-958.

• Jones, D., & Marinescu, I. (2018). "The Labor Market Impacts of Universal and Permanent Cash Transfers: Evidence from the Alaska Permanent Fund." National Bureau of Economic Research Working Paper No. 24312.

• West, S., Castro Baker, A., Samra, S., & Coltrera, E. (2021). "Preliminary Analysis: SEED's First Year." Stockton Economic Empowerment Demonstration.

• Wilson, D. S., & Pickett, K. (2020). "The Case for a Targeted Basic Income for African Americans." Boston Review.

Intersection of Racial Wealth Gap, Reparations, and Guaranteed Income

Books

• Conley, D. (2010). Being Black, Living in the Red: Race, Wealth, and Social Policy in America (10th Anniversary ed.). University of California Press.

• Katznelson, I. (2005). When Affirmative Action Was White: An Untold History of Racial Inequality in Twentieth-Century America. W.W. Norton & Company.

• Shapiro, T. M. (2017). Toxic Inequality: How America's Wealth Gap Destroys Mobility, Deepens the Racial Divide, and Threatens Our Future. Basic Books.

Articles and Research Papers

• Akee, R. K. Q., Jones, M. R., & Porter, S. R. (2019). "Race Matters: Income Shares, Income Inequality, and Income Mobility for All U.S. Races." Demography, 56(3), 999-1021.

• Hamilton, D., & Darity Jr., W. (2010). "Can 'Baby Bonds' Eliminate the Racial Wealth Gap in Putative Post-Racial America?" Review of Black Political Economy, 37(3-4), 207-216.

• Meschede, T., Thomas, H., Mann, A., Stagg, A., & Shapiro, T. (2016). "Wealth Mobility of Families Raising Children in the Twenty-First Century." Race and Social Problems, 8(1), 77-92.

• Zewde, N. (2020). "Universal Baby Bonds Reduce Black-White Wealth Inequality, Progressively Raise Net Worth of All Young Adults." The Review of Black Political Economy, 47(1), 3-19.