Policy Summary

Baby bonds are an investment vehicle that provides a trust account for every child in a community at birth. The models typically feature some form of government sponsorship (as a partial or sole investor). These accounts would accrue value by virtue of market investments and be redeemable at a later date (e.g., upon graduation) for financing such things as higher education and home purchases. Models typically feature a means-tested application with more generous funding provided for lower-income families. Family members, community organizations, or others can supplement the investment accounts over the course of the child’s life.


Case for Equity

There are 12 million children living in poverty in America. Of that number, there are 3.6 million are White (10% of all White children), 3 million are Black (31%of all Black children), and 4.3 million are Latino (23%of all Latino children) (Pew Research 2020). The effects of poverty on child development and their future trajectory are far-reaching. For example, children living in poverty are less likely to complete high school, have more negative employment outcomes, and have higher criminal justice involvement (American Psychological Association 2009).

Baby bonds would target these outcomes through the creation of an assets-based program that expands access opportunity in America by improving early childhood outcomes, K-12 school performance, post-secondary educational attainment, and future earnings potential. The universal nature of the initiative is available to all children, but directing the program to those with limited income aligning it with the principle of targeted universalism. Baby bonds aim to ensure a baseline starting point for all children in America, regardless of their family situation or neighborhood and thus improve the economic mobility prospects for everyone.

Return on Investment

With the combination of positive public revenue impacts, beneficial family and individual outcomes, as well as positive social benefits, the Return on Investment for this policy is rated as HIGH. 

With no formal implementation of a baby bonds program in the US, an assessment must rely on related literature to evaluate the potential policy impacts. Child savings account programs mirror most of the elements of a baby bonds initiative and provide a wealth of insights regarding the potential impact of a baby bonds initiative on the individual, family, and societal outcomes. The available evaluation studies show positive impacts on family wellbeing in the form of improved child socio-emotional development and improved maternal mental health (see Butrica 2015 for a review). Additionally, CSAs increase parental educational expectations in that families with CSAs have higher expectations of their children’s educational futures (GAO 2020).   Decades of research in the social sciences show that each of these individual and family benefits is associated with societal benefits in the form of lower costs for human/social services and other costs. 

With respect to educational outcomes, there is correlational evidence indicating that CSAs may have an impact on the math and reading scores of children. It may be some time before we have definitive evidence on this relationship long term; however, there is a wealth of research in the education realm showing the long-term effects of reading scores on long-term life outcomes (Elliot 2018). Research from the Nobel prize-winning economist James Heckman calculates a 13% return on investment from early childhood programming in the form of health, crime, income, IQ, schooling, and the increase in a mother’s income. Similarly, research from yet another related field of study – Individual Development Accounts (IDAs) – shows positive impacts in the form of increased educational enrollment (Garcia et al 2017). 

Moreover, research demonstrates that these effects tend to be strongest for lower-income participants, suggesting the need for targeted and well-designed programs to ensure the maximum benefit to not only participants but to the community as well.

Research Base

The research base is rated as being MEDIUM for this policy. A complete list of the research literature can be found in the Appendix.

Because baby bonds have not been implemented as a formal program in the US, there are no evaluation studies. However, as mentioned above, child savings accounts (a similar program) have an established history in America. These programs have been subjected to the highest level of research scrutiny in the form of random controlled trial studies (RCT). The conclusion from RCTs clearly demonstrates the positive effects on family/individual outcomes (parental educational expectations, child socio-emotional development, and maternal mental health). CSAs have also been studied using quasi-experimental designs. In those studies, results indicate similar outcomes as the RCT on attitudinal measures for program participants including measures notably on the importance that parents attach to higher education.  Using cross-sectional data, studies like the evaluation of the Promise Indiana Scholarship Program demonstrate positive impacts on math and reading scores among children enrolled in the CSA program. Although having a number of RCTs would be ideal, there is supportive RCT data available. We could benefit from having more long-term data; however, there is a limited time horizon because of a lack of time-lapse between the implementation of the programs and the present day. Nevertheless, the available high-quality quasi-experimental research is supportive, as is the less rigorous cross-sectional studies and studies relying on other methods of CSAs. 

State & Local Ease of Implementation


1. Deciding on a model and administration authority

2. Craft legislation and enabling instruments

3. Secure funding stream

This Policy is rated as having a MODERATE level of difficulty to implement


The programs are a mixture of publicly/government-led initiatives and public-private partnerships. Program administration similarly reflected a range of models including administration housed primarily by state treasury departments as well as initiatives led by private-sector financial institutions. It is worth mentioning that program administration was noted in a GAO report as being one of the more difficult challenges to overcome for national scaling. The Governor of New Jersey proposed a statewide Baby Bonds initiative in his FY2021 budget.


Regarding the tools of policy action, communities leveraged the authority of city administrations, state-level legislation, executive branch authority, and in some cases, the sheer will of philanthropic entities to build the necessary structures for implementation.  In 2020, the State of California passed a bill (AB-15) enacting the creation of a statewide child savings account program. In 2019, the State of Washington passed similar legislation. At the municipal level, the City of New York established its NYC Kids Rise program in 2017 in partnership with the nonprofit community.

Models Critical Stakeholders/Who Made it Happen Other Agencies Legislation & Other Mechanisms
Oklahoma Kids (SEED OK  SEED OK was implemented by the Oklahoma Treasurer’s Office, in conjunction with the Center for Social Development (CSD) at Washington University in St. Louis and RTI International. State of Oklahoma Department of Health, and the Oklahoma College Savings Plan The private experiment aimed to inform universal, progressive asset-building policy with potential for national application. The initiative uses the Oklahoma 529 program as a vehicle for action.
Promise Indiana


The concept was formulated through a grassroots public-private partnership between Wabash County YMCA and Wabash City school leaders; now operates using a public-private model throughout the state. The State of Indiana & Indiana Education Saving Authority The initiative is community-driven via local MOUs between schools, colleges, philanthropies, and employers via arrangements, and state-supported via the Indiana 529 saving program.
Save for College
Program (NYC)
NYC Kids RISE partnered with the City of New York to implement this program. NYC Department of Education Public-private partnership between the City of New York and the Gray Foundation
Prosperity Kids
of Albuquerque
(New Mexico)
Grant funding from the Kellogg Foundation & funding from the City of Albuquerque sustains this program. Receives additional funding from Partnership for Community Action, and other partners; collaborates with financial institutions across the state. Driven by the non-profit sector & supported by the city government and philanthropic community.

Models & Design   

Federal Reserve Bank of Boston 
Policy Agenda for Child Savings Accounts  

New America Foundation 
Policy Design Considerations for Nationalizing CSAs   

Washington University Center for Social Development
Key Design Elements Report 


References & Further Study

Grinstein-Weiss, M.; Sherraden, M.; Rohe, W.; Gale, W.; Schreiner, M.; Key, C. 2012. Long-Term Follow-Up of Individual Development Accounts: Evidence from the ADD Experiment.     

By Deja Thomas and Richard Fry. 2020. Prior To Covid-19, Child Poverty Rates Had Reached Record Lows In U.S. 

American Psychological Association. 2009. Effects of Poverty, Hunger and Homelessness on Children and Youth 

Butrica. 2015. A Review of Children’s Savings Accounts. Urban Institute  

Government Accountability Office. 2020. Children’s Savings Account Programs Can Help Families Build Savings and Envision College. Washington, DC 

Elliott, W. 2018. Children’s Savings Accounts: Increasing the Postsecondary Payoff for Low-Income Children. Midwest Higher Education Compact.  

Garica, J., Heckman J., Leaf, D. Prados, M. 2018. Quantifying the LIfe-Cycle Benefits of a Protoypical Early Childhood Program. National Bureau of Economic Research  

Beverly, S.; Clancy, M.; and Sherraden, M. 2016. Universal Accounts at Birth: Results from SEED for Oklahoma Kids. Center for Social Development  

Elliott, W.; Kite, B.; O’Brien, M.; Lewis, M.; Palmer A. 2016. Initial Elementary Education Findings from Promise Indiana’s Children’s Saving Account Program. Center on Assets, Education, and Inclusion. The University of Kansas 

21st Century Homestead Act

Cash Aid