Income inequality is growing, in the U.S. and around the world. Previous research has shown that high levels of income inequality lead to inefficiencies, thus several countries (e.g., Finland, India, Italy, Netherlands) have begun to implement Universal Basic Income Schemes (UBIs) that transfer incomes to the poor. However, little is understood about how these transfers will impact individuals’ relationships with each other. We investigate if inequality-reducing transfers help to integrate the poor and the rich and enable them to cooperate to enhance community well-being and efficiency. We use laboratory experiments as they allow us to gather clean causal data on alternative policy options at a low cost. In our setting, individuals make monetary contributions to public goods in repeated interactions, which we consider a proxy for decisions such as volunteering, donations, or investments in human capital that generate positive externalities for others.