Foundations and major donors who have spent years drawing up strategies to improve society are finding that the quickest, most effective way to help people during the pandemic may be to simply refill their wallets.
Direct cash giving, which has gained steam gradually over the past decade, has exploded in popularity during the coronavirus crisis. Donors have created dozens of funds across the country that give people no-strings-attached gifts of money rather than supporting nonprofits that provide services to people in need of food, shelter, and other assistance.
“There’s been a sea change in how we’re thinking about cash,” says Anne Mosle, a vice president at the Aspen Institute. For years, corporations have received the equivalent of cash relief in the form of forgivable loans or tax breaks. Now, Mosle says, families are also on the receiving end.
Rescue Plans
Channeling taxpayer money to people who have been laid off, are struggling to make rent, or are overwhelmed by medical costs gained steam as a policy proposal during Andrew Yang’s short run for the Democratic presidential nomination. Last month Congress recognized Americans needed help during the pandemic and passed a $2 trillion rescue plan that gave $1,200 to most individual taxpayers, depending on their income.
Government checks have not been sent out quickly enough for many of the 22 million Americans who have filed for unemployment benefits in the first month following President Trump’s mid-March declaration of a national emergency. Foundations and individual donors have tried to step into the breach.
The cash programs vary in size. Some, like the Together Las Cruces fund, run by the Community Foundation of Southern New Mexico, are relatively small and focused. Workers in Doña Ana County who have been laid off or experienced a significant loss of income qualify for grants of up to $500. The fund has raised about $400,000.
At the other end of the spectrum is Project 100, an effort run by GiveDirectly, which pioneered direct cash charity. The project was started with a combined $3 million donation from Google.org, Google Chief Executive Sundar Pichai, and venture-capital firm Flourish Ventures. Other donors such as Blue Meridian Partners, a donor collaborative that includes MacKenzie Bezos, Steve and Connie Ballmer, the Schusterman Family Foundation, and other wealthy philanthropists, have sped the effort more than halfway toward its goal of raising $100 million.
In mid-April, a group of California philanthropies created the California Immigrant Resilience Fund to transfer cash directly to families of undocumented immigrants who have been hit hard by the declining economy. Grantmakers Concerned With Immigrants and Refugees is administering the fund which has a goal of raising $50 million.
When it was announced, a number of donors, including Blue Shield of California Foundation, the California Endowment, the Chan Zuckerberg Initiative, James Irvine Foundation, and the Emerson Collective, had raised a total of $5.5 million.
Other groups, such as the Economic Security Project, are pushing for Congress to increase the amount families receive from the government for the duration of the pandemic. Using smaller universal basic-income projects like one in Stockton Calif., where the city gave 125 residents $500 a month, the Economic Security Project would like to take the concept nationwide.
Providing an “income floor” is the government’s job, and philanthropy should serve as a research and development arm to test different approaches to distributing cash, says Natalie Foster, co-chair of the nonprofit. Foster started the project with Chris Hughes, co-founder of Facebook.
“If we had an income floor, people would be much more resilient in this moment,” she says. “There would still be pain, but people could still put food on the table and pay rent.”
Strange Bedfellows
Making direct cash gifts has been embraced by people in different political orbits. Stacey Abrams, who failed in her bid to become Georgia’s governor and is often mentioned as a potential Democratic vice-presidential pick, has championed Project 100. She is joined by Yang, Democratic Sen. Cory Booker, and such celebrity donors as Stephen Colbert and Julia Louis-Dreyfus to push for the fund.
Meanwhile Stand Together, which was founded by conservative businessman and philanthropist Charles Koch, has raised nearly $40 million for its #GiveTogetherNow fund, which has given $500 each to nearly 80,000 individuals and families.
The cash program is driven by the idea that people experiencing difficulties have the clearest idea of what they need, says Brian Hooks, Stand Together’s chief executive.
“The people experiencing poverty are not deficient,” he says. “They have a lot to offer. Like all of us, they need help to realize their potential. They just need help.”
More than 900 donors, including Charles Koch’s son, Chase, and the DeVos Family Foundation have contributed. Blue Meridian Partners has also given to the effort.
Identifying the Needy
The donations are processed by the Family Independence Initiative, which is a member of the Stand Together Foundation’s Catalyst Network, a group of nonprofits that receive grants, training, and peer support. The initiative works with more than 100 nonprofits to identify people who are in need. The initiative can distribute codes to people who have experienced economic hardship that they use to access the funds. The money can be sent to an existing bank account, or for those without a bank, to prepaid bank cards.
The process is based on the relationships that the Family Independence Initiative has developed with members of its nonprofit network and the connections those groups have made among different communities. As a result, trust is key to make it work, Hooks says.
“The more philanthropy learns that those closest to the problems are often the ones that have the best solutions, the more effective philanthropy will be,” he says.
Research Goals
Like Hooks, Tyonka Rimawi says foundations have to “lean into the trust” they have in nonprofits when they make direct cash contributions to individuals and families. Rimawi, program officer at the Robins Foundation in Richmond, Va., worked with the city and other local grant makers to create a nearly $1.2 million fund to provide direct support for area residents in need.
The wide-scale use of cash grants during the pandemic could provide a valuable research opportunity into their effectiveness, Rimawi says.
“It’s going to be interesting to understand the impact and the lessons learned,” she says.
Project 100, for example, could serve as a crucial test. GiveDirectly will be able to collect the “core metrics” of the project, including the amount given and the number of recipients, says Joe Huston, the nonprofit’s managing director. Huston says his team will be able to collect information about users’ experience making a donation and will collect feedback from people receiving cash. But, he says, those efforts won’t result in a complete evaluation.
“The need to move quickly in response to the pandemic and the associated problems constrains how much rigor you can use,” he says. “We won’t end up with a full randomized-control trial, but we will do our best to give people a sense of where the cash support is going and where it is most helpful.”
GiveDirectly has a history of projects in African nations and smaller projects in the United States following disasters. Huston hopes the pandemic prompts foundations to rethink what they do.
“Some funders are getting their first big experience with direct cash relief,” he says. “Maybe in the future they’ll question whether they should spend on a strategic priority or a complicated model versus just handing over the cash.”
Blue Meridian
Blue Meridian Partners, which was spun out of the Edna McConnell Clark Foundation in 2018, has contributed “tens of millions” of dollars to various direct cash efforts, according to Jim Shelton, the donor collaborative’s chief investment and impact officer. Shelton declined to specify how much Blue Meridian has given, but he says the group has set a goal of $100 million, most of which will go toward direct cash transfers.
In addition to Project 100 and GiveTogetherNow, Blue Meridian has made grants to the National Domestic Workers Alliance, One Fair Wage, and the Workers Lab. Several Blue Meridian partners, including the JPB Foundation, the Schusterman foundation, and the David Tepper Charitable Foundation, have increased their annual giving to the collaboration to support the effort, Shelton says.
Since its founding, Blue Meridian has celebrated its “rigorous” investment approach. The group develops a deep knowledge of its grantees and other nonprofits and funders that can help take small efforts “to scale” and succeed regionally or nationally. Nonprofits must meet performance goals to trigger additional grants.
Cash assistance seems almost the opposite of that approach.
Shelton says Blue Meridian might explore aspects of the cash choice at some point, including the use of technology to get money to people directly, a “channel that seems incredibly powerful,” Shelton says.
But the basic premise that propels the group’s philanthropy remains unchanged: that donors can use their limited assets to leverage more broad-based support.
“This is an emergency response that’s not meant to be the same kind of long-term systemic strategy,” he says. “The scale of need on any given day is greater than our own philanthropic resources.”
Special Circumstances
Seeing a need in their own backyard, Howard and Sheri Schultz gave $3 million from their foundation to help start the Plate Fund to support Seattle restaurant workers who are facing hardship.
The couple worked with the Family Independence Initiative to develop a technology platform to distribute $500 each to restaurant workers making less than $62,000 annually who had been laid off. To allow undocumented workers to maintain privacy, the fund allows recipients to create a credit-union account or use gift cards that don’t require proof of citizenship. Restaurant owners may also give out access codes to workers who may not know the gifts are available or who may be wary of identifying themselves.
The cash grants are a different type of giving than the Schultzes are used to. The couple has focused on helping veterans transition from the military to the private sector and on helping young people acquire job skills.
Howard Schultz says businesses and nonprofits are faced with a crisis “the likes of which we haven’t seen in our lifetime.” To respond, philanthropy had to innovate and adopt an entrepreneurial mind-set. That doesn’t mean, Schultz says, that he and Sheri will continue to make cash grants after the chaos recedes.
“We had to do something dramatic that was fast and nimble,” he says, “and it didn’t matter whether or not it was strategically linked to our core purpose.”