How ‘Response Funds’ in the U.S. are confronting Covid-19

“If a stoppage occurs in a thoroughfare, and the circulation of the public is hindered, the neighbors immediately constitute a deliberative body; and this extemporaneous assembly gives rise to an executive power which remedies the inconvenience before anybody has thought of recurring to an authority superior to that of the persons immediately concerned.”

De Tocqueville, Alexis. Democracy in America.

Covid-19 is a stoppage like no other. As De Tocqueville noted, Americans are quick to take action to remove stoppages. Even knowing the worst is ahead of us, some political leaders, including the President, are calling for America to get back to work soon. But that is not the prevailing view. As of today, Governors in 21 states have issued “shelter-in-place” or “stay-at-home” orders to limit spread of the coronavirus. I am sure more will follow suit in the coming days.

The order for Wisconsin—where I live—began today (Weds, March 25th) at 8am. But before that organisations were already making decisions about what to do without waiting for government advice or policy. The nonprofit Board I serve on decided nearly two weeks ago to close our doors over concern for the health of our 500 volunteers, many of whom are retired. We did so without waiting for our statutory partners to lead. This is how the U.S. works. This “Just Do It” attitude may still yet help the U.S. shift off its the current trajectory of cases and deaths. Keep your fingers crossed.

‘Response Funds’

So it is no surprise that the philanthropic community is springing into action to support local nonprofits. Congress is on the verge of passing its third stimulus bill, which includes $367 billion for small businesses that nonprofits can access as forgivable loans, meaning if they pass the assistance to staff they will not have to pay the loans back, effectively converting those loans into grants. But in the meantime, across the nation foundations and cities have already created local “Covid-19 Response Funds” to help local nonprofits and individuals weather the storm.

Candid, a source of information about foundations and grantmaking in the U.S., lists over 200 funds that have been created in the wake of the coronavirus outbreak. Most of these funds are to help nonprofits in specific geographies in the U.S. and are typically coordinated through one of two already existing local philanthropic coalitions, namely:

1. Community foundations. These are local grant-making charities that channel donations from local companies, churches and other organisations as well as individuals donors to local charities. There are over 750 of these in the U.S., and some of these may have set up Covid-19 response funds not yet listed on the Candid’s website.
2. Local affiliates of affiliates of United Way. These are similar to community foundations but operate under the umbrella of United Way, which has been collating funds and coordinating relief services in the U.S. for over 100 years and more recently in other countries too.

In large cities—which may have both a community foundation and an affiliate of United Way—the funds seem to coalesce around coalitions of grant-makers, private companies, donors, and sometimes the government. For example:

• the Boston Foundation, a community foundation, created its Covid-19 Response Fund in partnership with the Mayor and the city government. Its website also lists other emergency funds in the city that are more targeted, such as United Way’s Covid-19 Family Support Fund which supports families.
• the Chicago Community COVID-19 Response Fund was established by The Chicago Community Trust and United Way of Metro Chicago in partnership with the City of Chicago and over 25 other funders. It has raised more than $13.5 million since March 17th from local foundations, businesses, and donors.

In other cases, typically smaller communities, foundations are responding unilaterally. For example, The Blue Cross and Blue Shield of Louisiana Foundation has committed over $2 million to meet the needs of nonprofits in Louisiana as they respond to the COVID-19 crisis.

Based on my quick review of a sample of the funds listed on the Candid website, most are geared to helping local nonprofits respond to the crisis by: funding them to meet increased demand for emergency items such as food, shelter, and healthcare that otherwise they may not get funding for; and / or giving grants to cover unexpected costs, replace short-term loss in revenue, or otherwise allow them to keep operating in the crisis.

A pragmatic approach

In most cases the recipients are nonprofits, but some funds also provide support to individuals facing hardship, such as gig workers. The few messages I have seen or heard from funders, such as this one from the MacArthur Foundation in Chicago, stress they are trying to continue their financial and proposal processes to avoid any further disruption to their grantees, while recognizing that their grantees are having to adjust their own plans and processes. The fundraiser for the nonprofit I sit on the Board of noted that “the area’s largest funders (the local United Way & Greater Milwaukee Foundation) have gotten out in front of this crisis with communications showing support for our community’s nonprofits, setting up crisis funding, and pushing for legislative relief and funding” and we have “also received emails of support from a few other grant funders”.

Unanswered questions

This quick, thoughtful, and pragmatic response shows the U.S. at its best, but there are still a few big unanswered questions.

These funds are still seeking donations and I doubt anyone knows now how much has been raised to date. Certainly no one knows whether the amounts will be sufficient as we don’t know how the crisis will play out. We also don’t know how long foundations can continue to be supportive given they may well have constraints of their own, such as declining income and investment revenue. And there may be hard choices to make if their grantees are unable to deliver services they are funded for if the crisis continues for months or years.

As with any other crisis, those who are most vulnerable will be the hardest hit. Before the crisis there was already much unmet needs in many fragile communities across the U.S., and I worry what we will find when we get to the other side. From where I sit the philanthropic response has been positive so far, but this is a stoppage like no other.

At NPC we are working with philanthropists and partners on how they can more effectively fund charities now, and we want to hear your ideas about what more can be done. Read more.