History of Philanthropy Case Study: Center on Budget and Policy Priorities and State EITC Programs

In this post, “we” refers to Good Ventures and the Open Philanthropy Project, who work as partners.

Suzanne Kahn, a consultant who has been working with us as part of our History of Philanthropy project, recently finished a case study on the role of the Center on Budget and Policy Priorities (CBPP) in state-level Earned Income Tax Credit (EITC) programs. This report is a follow-up to her earlier report on CBPP's founding and early growth, and investigates CBPP's claim that CBPP "created the concept of state EITCs and… developed state issue campaigns to secure their adoption. Before we started this work, no state had its own EITC; today, 26 do."

The report finds that:

  • CBPP and its network of state-level organizations have probably been the largest advocate for, and defender of, state EITC programs. It seems likely that CBPP is an important cause of some states' EITC programs, though causal attribution was more difficult in this case study than it has been in some previous studies.
  • CBPP wasn't involved in the very earliest state EITC programs. However, when the Center began working on state EITCs, no state in the country had a state EITC in effect that it had knowingly adopted. Moreover, the earliest state EITC programs (in Rhode Island and Wisconsin) were non-refundable, meaning that (unlike the federal EITC program) these programs didn't pay tax filers the amount of the credit they earned beyond the taxes they would've otherwise paid, but instead only zeroed-out the filer's taxes. CBPP has tried to ensure that state programs offer refundable tax credits, and 6 of 7 states that have switched from a nonrefundable to a refundable credit had a CBPP state partner working in the state at the time.
  • In half of the 30 states that now have a state EITC, there were no state organizations affiliated with CBPP's efforts before the adoption of that state's EITC. However, in some of the states without a CBPP affiliate, the Center worked with others on creating a state EITC program.

The report is also an interesting case study with respect to the question of "active" vs. "passive" funding. For the most part, funders of CBPP's work on state EITC programs followed CBPP's lead with respect to strategy in the space. However, the Rockefeller Foundation played a somewhat more active role at one point by commissioning a 1990 evaluation of CBPP's work, which concluded that CBPP's state-level work was not comparable to its federal work, and recommended abandoning the state work or hiring someone to rethink the approach. In response, CBPP hired Iris Lav, who radically rethought CBPP's strategy for state policy work — including EITC programs — and secured funding for the new strategy from the Ford Foundation and others.

Read the full case study here (.pdf)