Oakland Mayor Libby Schaaf announced today an ambitious, privately funded project to provide 600 low-income Oakland families with $500 a month for 18 months, no strings attached.

Schaaf said at a press conference this morning that the goal of the “guaranteed income” project is to demonstrate a “transformative” policy that can reduce poverty, close the racial wealth gap, and allow more people in Oakland to thrive.

“We believe that guaranteed income is the most transformative policy that can achieve this vision, and whose time has come,” said Schaaf. “We believe that poverty is not personal failure, it is policy failure. Our social safety net and even low-wage jobs are not sufficient to meet a family’s basic needs.”

Called “Oakland Resilient Families,” the pilot would be one of the largest guaranteed income programs in the nation and is expected to start making payments to participants a few months from now.

Jesús Gerena, CEO of the Family Independence Initiative, which is partnering with the group Mayors for Guaranteed Income on the project, said the 600 Oakland families will be chosen randomly from a pool of applicants. Participation will be limited to Black, Indigenous, or other people of color because the economic disparities the project is attempting to address are deeply rooted in systemic racism.

From housing to policing, racial disparities are evident in nearly every aspect of life in Oakland. Harms disproportionately experienced by Oaklanders of color due to institutional racism were measured in a 2018 city report, which observed, for example, that banks tend to cluster in white neighborhoods while check-cashing establishments, which represent an industry that’s been criticized and investigated for predatory practices in the past, concentrate in nonwhite parts of the city. The median income for white families in Oakland is $110,000 while half of Oakland’s Black families earn less than $37,500. The Black poverty rate is 26% compared to just 8% for whites.

Oakland’s pilot will be one of dozens of similar projects in other cities coordinated through Mayors for Guaranteed Income. Funding for the Oakland program is being raised through Blue Meridian Partners, a non-profit organization based in New York City. Implementation will be overseen by the Family Independence Institute, which is based in Oakland.

“It’s all privately funded. It’s not using any taxpayer resources,” said Schaaf.

Oakland’s guaranteed income project differs from universal basic income, or UBI, in that a UBI program would essentially support all members of a community regardless of their means and needs. Guaranteed income is targeted only at people whose income is below a minimum amount. But Schaaf said the program is not meant to replace existing welfare and safety net programs. She called it a “supplement.”

The effects of both guaranteed income and basic income programs have been debated—mostly as hypotheticals since they’ve only really been tried in a few places—by economists and sociologists for many decades. One recent Stanford study, which reviewed research across several decades from around the world, concluded that basic income guarantees are mostly beneficial to society, improving people’s health, education, reducing poverty, and having minimal impact on participation in the job market.

In the United States, opponents of direct cash payments to alleviate poverty often claim that these programs will disincentivize work and reward bad behavior in ways that historians and critics have described as racist or inaccessible to people who need them most. In one high-profile example, Ronald Reagan famously stoked opposition to economic support for low-income families with his 1976 “welfare queen” speech while running for president. In the mid-1990s, Bill Clinton signed a national welfare reform bill that imposed stringent requirements on anyone receiving assistance under the assumption that cash and food aid was too generous.

Michael Tubbs, the founder of Mayors for Guaranteed Income and former mayor of Stockton, said today that the Oakland pilot can help dispel myths about poverty and race, such as the belief that giving people guaranteed income will disincentive work.

“[T]he issue isn’t that people don’t want to work; the issue is that the economy doesn’t work for people,” said Tubbs.

Stockton recently wrapped up its own basic income program, and according to one report about it, cash payments to low-income people improved their lives to a point where they found it easier to seek employment or a higher-paying job. Less than 1% of the money was used on tobacco or alcohol, according to the report.

“People were actually able to work more because they had a little bit of money, a little bit of breathing room to pay for childcare, fix their transmission, to buy interview clothes, to take a day off part-time work,” Tubbs said, summarizing some of the Stockton pilot’s findings. “We found that people were healthier. People were able to show up as parents, as partners, as neighbors.”

One-time $1,400 federal and $600 state COVID-19 stimulus checks recently paid to millions of Americans, mostly low-income and middle-class families, were a version of guaranteed income. Schaaf and Garena said these payments underscored the societal benefit of giving people money with no strings attached.

Schaaf acknowledged that the 600 families chosen to participate in the program will represent a drop in the bucket of Oakland’s immense economic inequality. Over 72,000 Oaklanders live in poverty, according to the U.S. Census.

But Schaaf said the point of the Oakland pilot is to help make the case for a bigger regional, state, or national program that would involve large-scale income redistribution.

“We recognize that a pilot program does not change poverty. Large-scale policy transformation is what will change poverty,” said Schaaf. “These pilots are not policy change. This is where philanthropy can be a venture investor, can help us do the evaluation and build the body of evidence, and build the stories, do that narrative change work that is so important for policy change, especially at the federal level.”