On: February 24, 2026

In early December, tech billionaire Michael Dell and his wife, Susan, announced a $6.25 billion gift that will take the form of a $250 deposit into the savings accounts of 25 million children. The accounts into which the Dells plan to deposit their billions are Trump Accounts, tax-deferred savings accounts created by the One Big Beautiful Bill Act. You might have caught the ad for them if you tuned into the Super Bowl.

The administration’s explainer on the accounts notes that parents and guardians can set up an account for any child under the age of 18, but that only those born between 2025 and 2028 will receive the $1,000 deposit from the U.S. Treasury. However, anyone with an account could receive contributions from employers or philanthropic gifts like that from the Dells, which is intended to go to kids under the age of 10 who live in ZIP codes with a median family income below $150,000.

While specific details of how this Trump version of Child Development Accounts (CDAs) will work are yet to be fully determined, they appear to function like tax-advantaged individual retirement accounts from which kids can withdraw money once they reach the age of 18. The money can then be used for anything, but unless it’s used for pre-determined purposes like a down payment on a home, education, or starting a small business, withdrawals will come with a higher tax rate.

While the administration, like proponents of CDAs more broadly, touts the program as something of an equalizer that will give the next generation “a big jump on life,” the economic reality is more complicated.

The idea behind CDAs is that, by providing an investment at an early age, the accounts can help promote economic parity by closing the gap between kids born into more and less abundant economic circumstances. The problem is that even if or when all children receive the same investment at birth, their economic circumstances still determine how far that investment will go.

Assuming average stock market returns for a baby born in 2026, the Council of Economic Advisers (CEA) estimates that the government’s initial $1,000 investment would grow to $5,800 by age 18 and $18,100 by age 28 if no additional contributions are made.

For a well-off family who can contribute the annual maximum of $5,000, though, the CEA expects the initial investment to balloon to $303,800 by age 18 and $1,091,900 by age 28. That is a massive difference, and one that is driven by the economic circumstances into which a child is born.

On the surface, sure—in terms of an absolute dollar amount accessible to one individual, $5,800 or $18,100 is better than zero dollars. But when those baseline amounts are compared to the $303,800 or $1,091,900 that another child whose family is able to contribute fully will get from the same initial investment, the equality argument starts to fall apart.

There’s another issue with CDAs, too, which is that they lack the self-determination and empowerment that fuel trust-based philanthropy.

The term “trust-based philanthropy” was introduced in 2014 by San Francisco’s Whitman Institute (although it was certainly practiced before then). In 2020, the Whitman Institute along with the Headwaters Foundation and the Robert Sterling Clark Foundation launched the Trust-Based Philanthropy Project, and the movement toward shifting the power imbalance between grantors and grantees has been on the rise ever since.

Trust-based philanthropy operates on the principle that no one knows what a person needs better than themselves. It’s also an inherent refutation of the “temptation goods” myth—the notion that recipients of unconditional investments like cash transfers will opt to spend it on things like alcohol, tobacco, and other purchases that offer immediate pleasure but detract from long-term goals linked to economic prosperity.

This myth persists despite the fact that global literature reviews have disproven it. In fact, study after study has shown that cash transfers either make no difference on the consumption of temptation goods, or they actually lead people to decrease their spending on temptation goods.

There’s another lingering myth surrounding cash transfers, too, which is that if people receive money with no strings attached, they’ll stop working. That hasn’t been proven. One study on households in Spain did find a 20% decrease in labor participation among those receiving cash transfers; importantly though, the results were concentrated in homes that had children, required more caregiving responsibility generally, or both. These findings suggest that, rather than allowing them to ditch work, the extra money helped these families meet their caregiving needs.

Unconditional cash transfers work because of the knowledge that lies at the heart of trust-based philanthropy: That people know what their needs are and they know how to meet them. They just need the resources to do so.

Unconditional cash transfers are more than an economic investment that help lift people out of poverty. They also empower recipients to better control and make the decisions that shape one’s life.