Given those trends, the question then becomes, "Why? Why did it happen?" And I would answer by saying it's due to a combination of things. The principal reason was the decade of economic growth we experienced, which in turn created job growth and a demand for labor as well as increased tax revenues for state governments and better investment returns for foundations — all of which conspired to create the kind of intelligent investment in the potential of kids at a level that hadn't been seen in at least a generation. We also made good policy decisions at both the federal and state levels — decisions that were consistent with good economic times. But perhaps the most important cultural/policy decision we made in the '90s was to acknowledge the fact that intelligent program investments by the public and nonprofit sectors can actually make a difference in kids' lives. As a country, we came to the realization that there are some things that work better than others, and there are certain investments that actually change outcomes and life trajectories, whether that's reflected in a general consensus that schools can get better and need to get better, or in the fact that you can make a work-based welfare system actually succeed in reducing the poverty and dependence of people caught up in that system.

So, I would say that sixty percent of the credit for the improvement of child well-being in the 1990s goes to good economic times and forty percent goes to policy decisions that took advantage of those good economic times.

PND: Are those improvements reversible?

DN: I think there's a considerable risk that the momentum created in the '90s will slow, because the resources simply are not going to be available to take next steps, or even to sustain all the current support systems that are critical to kids and families. On the other hand, I think two things changed in the '90s that will prevent us from simply turning back the clock and losing much of what has been gained. The first is that the country has embraced a sense of obligation to poor families and to poor kids that's more deeply felt and more widespread than it was ten years ago. And second, we've institutionalized a lot of constructive changes that make a difference and will continue to make a difference for poor families — things like the earned income tax credit, which is the most powerful poverty-reducing instrument we've ever seen in this country. Children's issues are also better able to compete with other priorities than they were ten years ago, and that's because there's increased confidence that we can actually do things — in early childhood programs, in improved schooling, in youth development, and in welfare programs — that truly produce good results. At the same time, one would have to be foolish not to expect that, in terms of discretionary funding and the level of innovation and the expansion of even proven programs, we're in for some frustrating years because of the slowdown in the economy and changes in the revenue picture of most states.

PND: Three years ago, the Casey Foundation launched demonstration projects in twenty-two low-income urban neighborhoods as part of a new initiative called Making Connections. What was the genesis of the Making Connections initiative, and how did it illustrate the Casey Foundation's theory of change at the time?

DN: The Casey Foundation began the decade of the '90s with a primary focus on what we call "systems change" — that is, we were committed to trying to identify and promote ways of making large-scale public systems more responsive to and generate better results for children and families. Whether that involved trying to undo some of the waste in the juvenile justice system, or strengthening the child welfare system, or building the family preservation movement, or improving public schools — those were our targets. But along the way we began to realize that, when you look at all the data about the status of kids and begin to analyze what succeeds or fails for kids in this country, the two things that make the greatest difference are, one, the child's parents — that is, the extent of parental knowledge, resources, and opportunities — and, two, the health of the community in which the child is raised. Those two variables — family and community — more than any others, predict whether kids do well or poorly, whether they prosper or suffer hardship. Once we had come to terms with that fundamental fact, our next step was to figure out how we could invest in a sustained and intelligent way in strengthening families in communities where they tend to fail or are under stress. That was the genesis of Making Connections.

Eventually, we moved from the simple idea that "families matter and place matters" to something a bit more elaborate. Our "theory" was that it ought to be possible to go into a tough community and, through cooperation among residents, government and the private sector, do three things for families in that community: One, increase their access to economic opportunity; two, create greater participation for them in positive social networks and associations — whether that means church groups, politics, or community organizations; and three, upgrade the human services and institutions that are critical to families. I mean, we're talking about neighborhoods that ought to have the best schools and the best crisis-intervention programs and the most trusted policing, but instead have the least effective schools, the least reliable crisis-intervention and family support services, the worst quality daycare, and, often, the least intelligent policing. So the theory behind Making Connections was to test the proposition that if you did these three things — increase families' connections to the economic mainstream, to positive social networks, and to decent human services — the result in a decade would be much better outcomes for the kids who live in those communities.

PND: East Baltimore, a tough neighborhood in the Casey Foundation's backyard, was one of the sites selected for the initial demonstration project. Earlier this year, news reports suggested that you'd be phasing out the program in Baltimore, as well as in Atlanta and Washington, D.C., and also would be scaling it back in eight other cities. Can you tell us what actually happened in East Baltimore?

DN: I'm going to guess that the inspiration for your question is a Baltimore Sun article that, for the Casey Foundation, was the equivalent of the "Dewey Beats Truman" headline the Chicago Tribune ran on Election Day in 1948. Actually, the foundation never contemplated scaling back in East Baltimore. To the contrary, we had actually made an internal decision about six months before that the circumstances in East Baltimore, as well as in a neighborhood we'd selected in south-central Atlanta, were such that they presented the foundation with an opportunity to become more engaged as an institution in those communities than we could anywhere else in the country. As you pointed out, we're located in Baltimore, and our trustees are primarily located in Atlanta. And even though our efforts in those two cities were aggressive, we felt we shouldn't limit ourselves to the budgetary and design and staffing constraints imposed on other Making Connections sites. So we decided to take those two sites out of the program, re-label them Civic Sites, and design an approach that really took advantage of our institutional influence in those communities. After we made that decision, word got out that East Baltimore would no longer be a Making Connections site, and, without anyone speaking to me or the trustees, the papers started to report, much to my surprise and shock, that the Casey Foundation was disappointed with its results in those two sites and was backing away from them, when in fact we had decided to make them our flagship sites over the next decade.

So for better or worse, the real story is that we concluded we have a special advantage as an advocate for and as on-the-ground participant in those two communities — so much so, in fact, that we've decided to plan and budget for them differently than we would for any of our other sites. It really was a decision to substantially deepen the accountability we have to these communities, and it got reported in precisely the opposite fashion. In hindsight, in a situation like this, I ask myself the question, "What, if anything, could we have done differently?" because it's a good example of what can happen if you don't act aggressively and proactively to tell your own story about your intentions. If you don't, as often as not other people will guess at them, and sometimes they'll be wrong.

PND: The Making Connections program has been up and running for three years now. Has your theory of change changed as a result of your experiences over that period? Are there lessons you can share with others about what you've learned, or is it still too early to draw conclusions about what works or doesn't work?

DN: First of all — and this is not merely public relations — I think it's fair to say that I'm more optimistic about the promise of the Making Connections initiative and our potential to make a constructive contribution in these communities than I was three years ago. We've been surprised by the effectiveness, by the quality of communication, and by the number of partners that we've been able to bring to this work. So lesson one is that we believe more firmly than ever that we're on the right track.

Secondly, we believe that one of the most powerful ways to make our Making Connections theory concrete is to begin with a sharp focus on access to economic opportunity. That theme, promoting family economic success and a level of stability for working families that enables them to leverage their employment into something approximating self-sufficiency, is now a fairly prominent theme in every one of our sites and drives many of our activities. It's a theme that has been embraced by mayors, by local foundations, by state governments, by the IRS, by community organizations, and residents. And we've learned that it's a very practical place to start.

But there's another piece to it. When people talk about trying to make poor families less poor and dependent families less dependent, and the importance of that for the well-being and future prospects of their kids, they tend to think, appropriately I might add, that this is a question of giving families more resources — that is, getting parents into the labor force and using all the inducements available to try to turn enhanced earnings into job security, and job security into asset accumulation. But there's another, very important side to the equation that was less evident to us three years ago, and that involves reducing the cost of living in inner-city neighborhoods. What we've found is that the economic welfare of kids and their parents depends almost as much on addressing the circumstances that result in these families paying more for most things than anybody else pays — more for credit, more for transportation, more for auto insurance, more to reconnect their phones and more for retail goods and services, more for groceries, sundries, or whatever, and, in emergencies, paying more in the form of out-of-pocket costs because they don't have any savings.

In other words, we've learned it's a two-part equation — one side is increasing income and the other is addressing the high costs associated with living in poor, disadvantaged communities. And the latter is becoming a new front in our efforts to change the day-to-day quality of life for kids in tough neighborhoods. It's also one, I think, that's going to allow us to bring in a lot of other actors, such as banks, regulatory agencies, retail concerns, and so on. And we didn't even see it three years ago.

PND: Is the kind of place-based approach you seem to be experimenting with in the Making Connections program the wave of the future in the field of families and children?

DN: I think it's clear that there's been a growing recognition in the field that you simply can't separate the issues that affect kids from those that affect their families and their communities, and we've seen a growing movement to develop programs and approaches that reflect this. People are not just recognizing that this makes implicit sense, but that there's really no alternative if we want to have an impact on a broader scale. It's clearly the bet that we're making in our work, and I suspect that if we, and others, turn out to be successful — and I truly believe we will — there will be an increasing prominence given such approaches in the years to come.

PND: The problems facing poor and disadvantaged communities, many of which you've enumerated for us, are enormous. I mean, you're talking about changing an entire, deeply rooted ecosystem. What strategies does the Casey Foundation, which has a relatively modest annual grantmaking budget of $180 million, use to leverage its resources and enlist other stakeholders to effect change on this kind of scale?

DN: Well, the way we look at it around here — and the folks who work on these site teams say this to each other daily — is that every investment of an hour, whether it's our time or the time of community residents and organizations, and every investment of a Casey dollar has to pass a leverage test — that is, will it facilitate or give others the incentive to make additional investments? And we've been gratified that, so far, we've been able to attract, on behalf of these neighborhoods, matching multiples of dollars for every dollar we've invested. That's what I mean when I say there's something about this approach that resonates with other stakeholders. The most concrete example, but by no means the only example, is our earned-income tax credit campaigns, which can be launched in a tough neighborhood for a $100,000 but have the potential to put millions of dollars directly into the pockets of the residents of those neighborhoods. In fact, it looks like our investment of $1 million or so in this effort has already led to nearly $10 million in tax credits going to people who otherwise would not have received them.

This year, we plan to redouble our efforts to provide access to tax preparation and free assistance with filing, which incidentally speaks to the other side of the equation — the cost-of-living side. As you can imagine, commercial tax preparation services in low-income neighborhoods are not only expensive, but when people are talked into instant refunds for their child credit refund or their EITC refund, they end up with a hugely expensive loan for what amounts to a few weeks of indebtedness. In other words, the fees that people pay to these outfits so they can get their refunds two weeks sooner than the IRS would send it to them turns out to be usurious and could be avoided altogether simply by locating the IRS' volunteer tax preparation service in these neighborhoods and encouraging people to use it.

I'm also delighted with the level of local foundation, community foundation, and national foundation interest in co-investing and co-sponsoring programs for families and kids in our Making Connections sites. In fact, in virtually every one of our sites, the public and private dollars contributed by others exceed Casey dollars. Now, it's still a fair question — and you'll have to ask me again in two years — whether we can be successful enough to get to the large scale of new investment we need to reach. But I think we've made a strong beginning, knowing full well that while we, by ourselves, do not have enough money to transform these neighborhoods, we do have enough money to focus interest on and leverage investments in these neighborhoods to a degree that can make a difference in the long run.

PND: Is there a sector or a particular stakeholder on the sidelines right now that you wish you could mobilize?

DN: That varies. I'd say that one of the things we try to do every July in each of these sites as part of our annual review process is to answer that question, but the answer varies from city to city. Now, that's partly our responsibility. I think we have been slow, in some of our sites, to reach out to the business community — not so much the employer community, which we've thought hard about in terms of trying to build bridges between potential employers and the labor pool in these neighborhoods — but the business community as a whole in terms of getting it to understand our theory of change and maybe appreciating how the decisions they make about where they locate their branches and retail outlets can make a significant difference in the quality of life in poor neighborhoods.

Similarly, in some cities we have been less effective than we should be in getting state human service agencies to pay attention to the profound concentration of need in these neighborhoods. For example, we need to help state governments realize a better return on their child welfare investment by acknowledging that, in a particular city or neighborhood, a disproportionate percentage of kids enter foster care. This ought to lead to system change in child welfare. We could probably say the same about state-funded employment systems in several of our sites. Put simply, there are ways of using public system reforms to strengthen the economic and social fabric of these neighborhoods, and I think it's fair to say we haven't yet made that case with as much vigor as we could.

PND: The Casey Foundation has an office in Lower Manhattan and, as a result, was fairly directly affected by the events of September 11. Given your special perspective, do you think organized philanthropy responded in an effective fashion to the events of September 11 and their aftermath?

DN: Absolutely. I think individuals and organized philanthropy responded with great generosity and admirable dispatch, flexibility, and compassion to the events of September 11. Across the board, it seemed, people made an effort to find ways to participate and position themselves to be of assistance, and I think it was an admirable moment for individual and organized philanthropy....

PND: I detect a "but" at the end of that sentence. Could or should the field have done something differently?

DN: You know, I'm not sure I have an answer for that question. In retrospect, it's clear that this was one of those rare occasions where the commitment of resources and the expression of generosity preceded an informed and deliberate debate about how to target and sequence the distribution of those resources in the most effective way possible. I say that because there's abundant evidence that it took a while to clarify all the needs created by the attacks, to sort out how to best sequence the assistance to meet those needs and deliver that assistance, and to explain all this in a way that was persuasive and clear to donors. Nobody who looks at the confusion that attended the initial efforts to explain how the money would be deployed could deny that.

But I'd add two things. First, I think a certain amount of it was inevitable, given the speed and magnitude of the response. And one of the things I think the field learned is that we should have been more candid — with ourselves, with the media, with donors, and with the public — about the fact that there was no magic bullet, no simple way to alleviate the suffering and put things back together overnight, that it was going to require time, and information, and the creation of mechanisms to help coordinate this effort. I told our trustees, after they authorized $3 million for September 11-related work, that I was happy to pledge that money because I knew there were needs, but I didn't want to promise how that money was going to be used, should be used, or when it was going to be used. And that was an easy conversation, because it was an internal one held among colleagues. But as a sector, we probably should have been sending the same message to the public at large.

Having said that, I think it's increasingly clear that the intelligent commitment of resources is making an important difference to the families affected by this horror, as well as in the recovery of Lower Manhattan, and that they've also been used in a meaningful way to rebuild the capacity of organizations that are important to the social and cultural fabric of New York and, to a lesser extent, Washington. For example, I think the mental health benefit that was ultimately crafted out of the resources is a very thoughtful one, and one that will make a difference not only right now but for years to come. But nobody would have had designed it on September 19 or 20, and the whole recovery effort probably would have been better served if we had said up front that it's going to take us a while to figure out how to buy as much relief and recovery as we possibly can with the amount of money that was pledged.

PND: A final question: How, if at all, did September 11 change the Casey Foundation's approach to its work with children and families?

DN: I gave a speech in New York a couple weeks after the eleventh that probably answered that question better than anything I could say now. At the time, I tried to point out that Casey's work — long before 9/11 — was focused on kids whose families had been devastated or fractured by the absence or incapacity of a parent or caregiver and whose chances of realizing a happy, productive life had been compromised as a result. In a way, the nation's fundamental generosity and its capacity to empathize with kids facing that kind of burden was made abundantly clear in the wake of September 11, and we simply have to learn how, short of a horrific tragedy, to make it more apparent to people that they can also make a compassionate difference in the lives of thousands of poor and disadvantaged kids whose suffering is equally real, if less visible. Finding a way or analogy to convey the invisible suffering that goes on among kids in this country day after day and making that suffering more visible is an important piece of the work we do at Casey — it's an important piece of the work that all advocates for kids do — and we're wrestling with how we can do it better.

The second thing September 11 did for us was to affirm that money by itself, resources by themselves, cannot respond to individual human or family suffering if they aren't packaged within thoughtful and respectful interventions. The ideas that motivate one human being to help another, or that turn a resource into something that enables a family to succeed where it otherwise couldn't, are every bit as important in making a difference as are the dollars themselves. And while September 11 proved that we can raise dollars, it also showed that, in some ways, figuring out how to use them effectively is an equally challenging task.

PND: And on that note, I'm afraid we'll have to leave it. Thanks very much, Doug, for taking the time to speak with us this afternoon. And continued good luck and good results with the important work you're doing.

DN: Thank you. It was a pleasure.

Mitch Nauffts, PND's editorial director, interviewed Doug Nelson in early October. For more information on the Newsmakers series, contact Mitch at mfn@fdncenter.org.