California will soon be on the receiving end of billions of dollars in public funding for economic development. An estimated $42 billion will come from the American Rescue Plan Act (ARPA) — the $1.9 trillion stimulus package designed to aid economic and public health recovery from the COVID-19 pandemic — and $48 billion from Infrastructure Investment and Jobs Act (IIJA), totaling $93 billion in federal investment. A further $46 billion will come from the state’s Community Economic and Resilience Fund (CERF) and from the state’s budget surplus.
Although a portion of the recovery funds are designated for specific uses, what remains is flexible, leaving states to allocate the resources as they see fit, so long as they comply with federal guidelines.
The Center on Budget and Policy Priorities (CBPP), a nonpartisan research and policy institute, has encouraged states to invest in economic relief and development programs that center racial and economic equity to support the communities that have been most impacted by the pandemic.
“While some state relief efforts have centered equity, many others have failed to prioritize those most acutely harmed by the crisis, such as low-wage workers, communities of color, and small businesses,” CBPP found.
So how can Californians ensure that these flexible funds are allocated to the communities that need them the most? Addressing this is crucial both because those most impacted by the pandemic have been Black and Latino communities, and because communities of color and BIPOC-led organizations are often excluded from accessing the benefits of federal funding, as Kresge’s Lois DeBacker and Joe Evans pointed out in Nonprofit Quarterly earlier this month.
Philanthropy can play an important role in ensuring public funding is working to undo systemic inequity, and a new fund is looking to do just that. The Center at the Sierra Health Foundation and the James Irvine Foundation announced today a $15 million Community Economic Mobilization Initiative (CEMI). The program will work to diversify and increase the number of community-based organizations that receive funding through these public investments and increase their ability to participate in designing economic development implementation plans.
“As we were taking stock during the pandemic about what the economy might look like after the pandemic and in light of the racial reckoning and other crises in our state, it became increasingly clear that there was going to be a tremendous amount of public investment to help recover and rebuild our economies across the state. And we began to prepare our own thinking about how we can help communities prepare for those investments,” said Don Howard, president and CEO of the Irvine Foundation.
CEMI is pronounced “see-me,” which is intentional, according to the Sierra Health Foundation’s President and CEO Chet Hewitt. “We want communities that have disproportionately been underinvested in to be seen, particularly as we’re thinking about a period of recovery after the global health crisis,” he said. “For the first time in my career… we actually have the resources to make some of the things many of us have dreamed about for a long time happen.”
The full $15 million has been raised, with the Irvine Foundation investing $14 million and the Sierra Health Foundation contributing $1 million. The California Endowment has also pledged to support the fund, and several other foundations have expressed interest in contributing to CEMI as well.
The operational end of the fund will be managed by the Center at the Sierra Health Foundation, which focuses on racial equity and social justice. The first round of grants will be awarded in late-summer of this year.
Disparities in how public funding is allocated
Organizations led by and serving communities of color are often excluded from accessing the benefits from federal funding. The reasons for this are two-fold. First, the inequitable distribution of resources is part of the nation’s history of exclusion.
In a blog post, Funders Together, a network of funders working to find solutions to the homelessness crisis, wrote that investments coming in from ARPA and other public sources are “investments in systems that were built on structural racism.” Continued organizing and advocacy, therefore, are necessary to ensure that these investments help close racial equity gaps rather than exacerbate them.
“We often talk about economic development and a lack of investment in certain communities as redlining,” said Hewitt. “That whole system excluded whole communities and specific populations who live in their communities from the kind of connections you need in order to be successful in local and regional economies.”
Last year, the UCLA Latino Policy and Politics Initiative and the UCLA Center for Neighborhood Knowledge published a report that found there were significant disparities in how Paycheck Protection Program (PPP) funds were distributed in California. These funds were meant to provide assistance for small businesses to stay afloat during the pandemic.
PPP loans, the report found, were awarded to wealthier congressional districts with larger white populations at much higher rates than lower-income districts with majority Black and Latino populations. These disparities in PPP lending further widened pre-pandemic systemic inequalities along racial and class lines.
The second reason for this exclusion is that many of the nonprofits that are closest to the people who live in these communities often lack the expertise and technical knowledge needed for participating effectively in conversations about how funding will be allocated.
“I want to make sure that I separate this notion of capacity from ability, because they have the ability to participate,” said Hewitt. “That’s what CEMI is about. But you need the kind of technical assistance and training to do so effectively.”
Fighting for inclusive economic development
To ensure equitable allocation of resources, it is crucial for community voices to be a key part of the distribution and decision-making process related to these funds. CEMI’s goal is to help nonprofit organizations to be essential partners in designing and ensuring economic development implementation plans are inclusive.
“For folks to be able to show up at those efforts, to be able to participate in them fully, and to have power in those conversations really requires more money and some skills-building,” said Howard. “That’s what CEMI seeks to do, is to provide those resources.”
These resources include providing organizations with technical assistance and training programs to better access federal and state funds. On the technical assistance side, CEMI will take a curriculum-based approach that will provide organizers the language and knowledge to access federal funds. CEMI will also provide ongoing consultative assistance, which will sometimes take place on a one-to-one basis.
“We know this is moving fast,” said Hewitt. “We want to make sure that fast doesn’t mean exclusion, and bypassing both the communities and populations who could benefit from the type of investments that are going to take place.”
Contracting opportunities from public funding streams, for example, often have complicated accounting requirements. For smaller grassroots organizations, this can be overwhelming, even damaging. According to Howard, CEMI will offer “back-office capabilities to help those organizations accept public funding and help them account for it in a way that then allows them to participate as not just advisors, but also [as] implementers of the plans that get put in place.”
Philanthropy’s role
Despite operating in the private sector, there is much philanthropy can do to ensure equitable allocation of public resources. As Hewitt notes, funders can amplify the voices of those who have “borne the brunt of underinvestment in poor health in America for the past 50 years.” They can build capacity for nonprofit organizations that serve these communities, and they can serve as a point of connection for communities and local, state and federal governments.
“Our grantees do the work; philanthropy doesn’t do the work,” Howard added. “Our job is finding the best leaders with the best ideas who are truly accountable to their communities, and giving them the money and trusting their experience and wisdom and proximity to the challenge and their knowledge of the solution.”
CEMI’s work is part of a broader effort by California funders to influence public spending so that it’s more effective and equitable. Through its Latino Power Fund, the Latino Community Foundation (which receives funding from the Sierra Health Foundation and the Irvine Foundation) is seeking to ensure public and private funds go to the communities and families who most need support. In conversations with Inside Philanthropy, several other leaders and organizers have stressed the difficulty Black and brown-led organizations face in securing government funding.
“Let’s make sure that those communities don’t get left behind once again,” said Hewitt. “For me, this notion of diversity, equity and inclusion as it relates to economic opportunity, economic mobility, and inequality space is to ensure that as we are building out the next era of the American economy, everybody gets to come. Would that not be extraordinary?”