By Ashley Burnside and Jesse Fairbanks

Michael and Susan Dell recently announced a $6.25 billion donation to the new “Trump Accounts” for children up to age 10 living in zip codes with median incomes of under $150,000. Media outlets have heralded the Dell family’s generosity, but this donation—and Trump Accounts generally—won’t end wealth inequality for families with low incomes.

Trump Accounts are tax-advantaged savings accounts seeded with $1,000 from the federal government for babies born between 2025 and 2028. Families are eligible regardless of their income, but children must have a Social Security number. Families or employers can invest up to $5,000 per year, and government entities and nonprofits can make additional contributions. At eighteen, the child can make withdrawals for expenses like college tuition or a down payment on a house. Unlike 529 savings accounts, money from Trump Accounts is taxable, as are contributions.

This policy sounds promising because it symbolizes an investment in America’s children. However, Trump Accounts effectively make the rich richer and widen wealth gaps.

Apart from the initial $1,000, the federal government makes no additional contributions to the accounts. Families with low-wage jobs will be less likely to work for an employer that offers up to $2,500 in annual contributions because these employers generally offer fewer benefits. These families may also struggle to invest in the accounts personally, while higher-income families—or their relatives such as grandparents with generational wealth—can take advantage of this option.

When children turn 18, families who contributed the annual maximum could have an account of more than $190,000, while children who only received the initial $1,000 could have an account as low as $4,000. Young adults with the means to leave the account untouched because of other savings can allow their Trump Account to mature as a traditional individual retirement account, furthering the wealth divide. These children could turn $190,000 in their Trump Account into an estimated $4.8 million by the time they’re 60.

The Dells’ contribution is income-targeted geographically, in that only children living in counties with a median income below $150,000 will receive the $250. Their donation will miss families with low incomes who live in wealthy areas. Furthermore, without additional investment, the small contribution of $250 could grow to just $450-$900 depending on the child’s age. That’s not generational wealth. Future donors could better target their donations by setting a lower qualifying median income threshold to provide a larger one-time contribution.

Trump Accounts are not designed to help families with low incomes build wealth. The accounts don’t allow philanthropic and government donors to income-target by picking recipients based on family income. Thus, donors like the Dell family who are dedicated to narrowing wealth gaps must use imperfect geographic measures to target their contributions. The Dell’s donation could have better served children without wealth if federal guidance allowed them to provide a greater one-time investment to families with extremely low incomes. Federal guidance could also allow contributions to certain populations that face economic barriers, such as foster youth.

Connecticut’s state baby bond program is a promising example of income-targeting. Babies there born on or after July 1, 2023, and eligible for Medicaid are automatically enrolled in a state-managed trust fund that’s seeded up to $3,200. Because a child must receive Medicaid to be eligible, the program is income-targeted. State officials estimate over 15,000 children are enrolled annually and set up to receive $11,000 to $24,000 as young adults.

Trump Accounts aren’t baby bonds because their goals differ. Baby bonds aspire to reduce wealth gaps, especially between white and Black people living in the U.S., by seeding more money into the accounts of children from families experiencing poverty. Through Trump Accounts, conservative policymakers aim to invest in “a new generation of capitalists” without regard for how the current design might worsen wealth gaps.

It’s promising to see a national, bipartisan conversation about promoting wealth-building for children, but Trump Accounts fail too many children. By design, the Trump Administration has limited the ability of private and public donors to target their investments by family income. Donors committed to closing wealth gaps should instead consider investing in state and local initiatives with positive outcomes for children that allow for precise income-targeting, such as New Mexico’s baby bonds program or local guaranteed income pilots. To create a country where all children have generational wealth, lawmakers and donors need to invest in cash programs that effectively target families based on income and wealth.