Two years after the Inflation Reduction Act was passed, a report finds that a group of 33 grant makers exceeded its goals for helping communities and organizations learn about, access, and implement funding through the act.
The report, released Friday by Invest in Our Future and the What Works Plus Collaborative, found that the grant makers had provided more than $230 million to help nonprofits and communities with 1,979 IRA-related projects in 1,722 places.
The Inflation Reduction Act set aside tens of billions of dollars in grants and tax credits that can be directed to nonprofits and communities for projects that reduce greenhouse gas emissions and help address the impact of climate change. Grant makers also informed communities about the Bipartisan Infrastructure Law, which makes funds available for climate-related projects.
The group surpassed its goals in a matter of months from October 2023 to May 2024, says Sasha Beder-Schenker, program director at What Works Plus, a funder collaborative and an initiative of Freedman Consulting. “We were hoping to see a wide distribution of activities across the country,” she says. “We were thrilled to end up with activities spanning all 50 states and Puerto Rico.”
Grant makers participating in the challenge funded educational events in communities across the country. They helped groups get media coverage of their efforts, provided nonprofits and governments with assistance in applying for funds, supported work-force training, and provided matching funds or other financial support to help projects underway, among other strategies.
Some of the country’s best-known environmental grant makers participated in the challenge, such as the ClimateWorks Foundation, Bloomberg Philanthropies, and the William and Flora Hewlett Foundation. More than half of them are members of the Environmental Grantmakers Association. Many other members of that association are doing similar work on this issue, says Tamara Toles O’Laughlin, the association’s CEO.
Many Goals Have Been Met
Grant makers and nonprofits were an important part of informing organizations as diverse as hospitals, churches, schools, and city governments across the country about the act and the funds they could receive, as well as helping groups apply for support, says John Podesta, senior adviser to President Biden for international climate policy. One of the key provisions of the act allows nonprofits and other organizations to get as much as half the cost of solar panels, electric vehicles, geothermal systems, and other climate-friendly projects back from the government.
“This seems to me to be an outstanding example where philanthropy has come together, cooperated, pooled their funds, targeted the most important interventions, made sure that money got to the ground, made sure that people knew about what is really the largest infusion of money to reduce pollution, increase public health, and tackle climate change in history,” Podesta says. “The philanthropic contribution is the grease in the gears that makes the gears turn.”
Podesta says the act has met many of its goals, thanks in part to philanthropic efforts. According to the United States Treasury Department, as of the end of 2023, 75 percent of IRA’s clean energy investments had gone to counties with below median income. Many of the projects help maintain jobs in communities that have been part of the fossil-fuel economy as the country transitions to clean energy sources. More than a billion dollars has gone to plant trees. Projects that originated with community groups working with local government have been supported.
Efforts such as this challenge are important, and more are needed that engage a wider group of grant makers, says Toles O’Laughlin of the Environmental Grantmakers Association. The scale of climate change is too big for any one part of society — industry, government, or the social sector — to take on alone, she says. Philanthropy can be an important element of the response. “It will take a long-term commitment from literally everyone to maximize the impact of the resources the IRA brings to the market to make it matter in our lives,” she says.
Tribal communities could also use more philanthropic support, says Erik Stegman, CEO of Native Americans in Philanthropy, who points out that some of the act’s funds are set aside for green energy projects in tribal communities. However, tribes sometimes lack the resources and expertise required to work with federal agencies to obtain these grants.
Toles O’Laughlin says philanthropy could learn more from follow-up reporting on these efforts that includes information about grants received and future work by these grant makers, given that this challenge took place over such a short period.
Entering a New Phase
Though the Inflation Reduction Act is only two years old, it is already entering a new phase. The government has moved to quickly distribute the funds: Nearly two thirds of the IRA’s grant funding has already been distributed. Philanthropic support needs to pivot to helping support the rollout of these projects says Beder-Schenker.
The report recommends that philanthropy provide bridge funding to help more nonprofits take advantage of the act’s direct pay provision, which allows tax-exempt groups to be paid for tax credits for green projects. That way they will have enough financing to get work under way while they await government funds. Some of the grants have a very short time frame for deployment, she says, and so philanthropy can help groups move quickly. And work-force development has not received as much attention as it needs. Only 16 percent of the projects covered by the report included a work-force development component. The transition to green energy will open up tens of millions of new jobs, Beder-Schenker says, so training workers is important.
Efforts like this could encourage more kinds of grant makers to engage with climate change across all of their work, says Podesta.
“The effects on public health, the effect on education investments, the effect on poverty alleviation, the effect on gender equity on the most vulnerable populations where philanthropy has always played a role in developing strategies to lift people up and to provide them with services they need and the access and voice into governing and the economy,” says Podesta. “They need to do it now with the climate lens as well.”
