Inside a Harlem charter school's unprecedented plan to give students $10,000 to invest—'the parents will definitely lose their minds'

Debuting its new take on baby bonds, the national organization is raising $300 million for a program called Wealth Builds, wherein almost 10,000 students will receive $10,000 each to build wealth, according to The New York Times. With $50 million raised so far—enough for 2,200 students, or two charter schools—the goal with these funds is to address the racial wealth divide and set students up for future financial success. 

The catch with this program is that the $10,000 grants will be invested on behalf of students, and that money won’t be accessible until the child turns 25 years old. The idea is that the money will grow as the kid does, by around 5% annually, according to Kwame Owusu-Kesse, CEO of The Harlem Children’s Zone.

“The parents will definitely lose their minds,” Owusu-Keese told the Times.

The amount of money students accumulate might balloon even more. Billionaire backer of Harlem Children’s Zone, Stanley Druckenmiller, said the 5% interest is a “conservative” estimate. As it stands, a student receiving said funds as a kindergartener could end up with around $26,000 by the time they’re a young adult.

There are some hoops involved in this program. Students will receive said money after graduating college, and also after taking financial-literacy classes called “cradle to career” programs. “Students who don’t reach all the milestones would still be entitled to part of the money,” according to Chen. And once they get the money, a board is set up to approve the potential usage as it must be used for “wealth-building purposes.”

Generally, charter schools in America are polarizing. Privatizing education means certain nonprofits like Harlem Children’s Zone are profiting a fair amount; the group made $135 million in revenue, according to a June 2022 tax filing. Often advertised to low-income households as a way to get through underfunded public-school systems, these schools have actually been shown to often increase racial segregation despite promises otherwise. 

Harlem Children’s Zone’s program, though, is a step in an increasingly advocated direction when it comes to addressing disparity; similar programs have been outlined recently as a way to address growing racial wealth inequality. Since the pandemic, the disparity has only become more pronounced, as white individuals outpaced Black and Hispanic individuals in real net worth by 30% and 9%, according to New York Federal Reserve Bank data from 2019 to 2023. Even though Black wealth has made gains, gaps in housing ownership and equity contributed to a pervasive and widening gap. 

“While growth in Black ownership of businesses and homes is a positive step forward, it is not enough to combat the compounding effect of wealth,” explain the authors of a Brookings report, citing a long history of prejudice that cannot be untangled without new legislation.

Baby bonds have entered the sphere as a potential way to address some of this generational privilege and the wealth gap. This strategy involves setting up universal savings accounts as funded by the government. Those with the lowest incomes would be given the largest endowments, and children wouldn’t access the trust until adulthood. Later, the money could be used for pathways to build wealth such as homeownership or the pursuit of higher education. 

“In order to live up to the American promise of economic opportunity and upward mobility for all, we need a bold solution such as a substantial child trust account that provides seed capital to purchase the economic security of an appreciating asset for all Americans,” note economists and professors Darrick Hamilton and William Darity Jr.