Grantmaking Response to the COVID-19 Crisis

“Water bird” by Ray Muzyka

AmbitioUS is a new initiative of the Center for Cultural Innovation to act as an experimental arm of the artist-support sector. Throughout the initiative’s launch, Angie Kim, President and CEO, will share her observations and reflections related to this cross-sector, experimental, and systems level work.

In the past few days, Center for Cultural Innovation (CCI) has been working to provide regranted emergency relief support to the arts sector. Regranting is our specialty, but our AmbitioUS work has uniquely prepared us for this moment. AmbitioUS was meant to be the nonprofit sector’s R&D to shape a better future, and it began with an assumption that the status quo is not working for enough people. Coronavirus is both a health and a financial crisis, and the wave of layoffs and business closures is already starkly demonstrating what we already knew: that people and our economy are financially fragile.

Let’s be frank, the nonprofit sector was complicit in this condition: For years, the undercapitalization of nonprofit labor has resulted in an entire generation of Baby Boomers unable to afford retirement and nonprofit workers of all ages facing imminent layoffs because of nonprofits’ lack of reserves. Today, nearly half of all Americans are unable to cover a $400 emergency expense (according to 2018 Federal Reserve study on Household Well-Being) and the rise of a gig economy means more Americans than ever are working outside of conventional employer-conferred benefits and protections (i.e., social insurance in the form of medical and family leave, health coverage, retirement benefits, and unemployment insurance).

Shortly before coronavirus, we had started on a significant research project with the William & Flora Hewlett Foundation to re-contextualize California’s newly enacted labor law — AB5, which reclassifies independent workers as employees — as an opportunity to expand the types of workers who need to qualify for social insurance. Although AB5 is less in the news these days (conversations have shifted from how nonprofits and businesses can afford to employ contractors to how they can simply survive), this research is more pressing than ever. We need to expand who gets a safety net, because far too many people live financially precarious lives, which begets large-scale economic disasters, like this one.

Because AmbitioUS was designed to be out-of-the-box and to work at influencing systems, this work has yielded a unique perspective for making sense of this crisis moment. AmbitioUS has allowed us to build cross-sector knowledge and relationships, understand system-level issues (such as how freelance artists are considered an illegitimate and unprotected form of labor), and learn from investees and grantees who are inventing platforms and rules of the future. This work has come in handy in shaping how to perceive and act in this crises, which I share for grantmakers to avoid the worst outcomes of the last economic recession and to channel resources for a better “new normal.”

Be Motivated by Structural Solutions, Not Maintaining Status Quo

This is a “black swan” moment — unexpected, unplanned, and hugely disruptive. Such moments are opportunities for systems change. Let’s not squander this crisis. Trying to preserve or return to the status quo can not be the priority: the status quo was failing too many Americans. For progressives, we were losing, not gaining, ground. Now is a critical change moment for imagination and iconoclasm, and to fund and get behind alternatives that can change entire systems. Right now, within the AmbitioUS portfolio, investees and their projects are on the cusp of (1) solving wage theft for artists and other independent workers, (2) creating a nationally federated infrastructure of community-governed impact funds, (3) shaping the emerging digital economy so that rules and platforms are broadly owned and not controlled by profiteering corporations, and (4) building alternative investment platforms that make it possible to move retirement dollars from fund managers on Wall Street to entrepreneurs on Main Street. These projects portend improved financial safety nets and access to new types of capital for cultural anchors, artists, and all those who share their challenging financial conditions.

…we cannot be content with saving the status quo, whether that means saving all of our grantee organizations from closing (unlikely), or cutting back philanthropic spending for self-preservation.

Let me pause to emphasize how much we cannot be content with saving the status quo, whether that means saving all of our grantee organizations from closing (unlikely), or cutting back philanthropic spending for self-preservation. Let’s remember that, in just a few years, foundation endowments bounced back from the 2008 recession. Boards and Presidents were not in danger of running afoul of UPMIFA laws governing proper stewardship. As I write this, we have entered a humanitarian crisis, and foundations are particularly insulated to stretch their philanthropic spending. But let’s not focus narrowly on protecting the nonprofit sector as we did in 2008. Instead, giving should expand to both protect gains of the nonprofit sector and invest in alternatives. What’s possible today is different from what was possible out of the 2008 recession: Leadership and market demands are now shaped by millenials and people of color whose numbers are growing in our nation’s demographic shift. They feel, rightly, underserved by established institutions, and so they have been working for the last few years on creating solutions that are focused on self-determination and not dependency on government or nonprofits. We will not return to normalcy post-COVID-19, nor should we. The goal should be to propel forward as far as possible: We have a real opportunity to catapult new systems (solutions that, I wish, had started yesterday).

Recommendation: Think about better ways to meet our collective wants and needs, and put resources toward making that a reality.

• For grantmakers, this means carving out, immediately during a recession, funding for long-term solutions that are more possible than ever before. And invest in people, not projects (i.e., ask less about what they do; and more about for whom they do what they do). For both grantseeking and grantmaking nonprofits, now is the time to go upstream: If you are worried about homelessness or environmental degradation, you have a reason to throw your support behind such structural possibilities as a basic income, which would unencumber labor from profiteering and extractive corporate employers.

Alternatives Outside 501c3

Nonprofits are useful but limited in what we can accomplish through them. Nonprofits were designed as a privatized vehicle for citizens to live their values through charitable action, which means that our efforts are fragmented and in competition. Nonprofits are great at calling attention to and addressing problems or issues within our current systems. Food banks, recidivism programs, and labor-rights advocacy work are examples of what the 501c3 structure does best — use a problem-focused approach to fix an issue in our systems. For systems change, however, we need to build new infrastructure, types of enterprises, and new rules and regulations; all of which requires involving and expanding beyond 501c3 efforts. We aren’t going to get to any promised lands by putting all our eggs in the 501c3 basket (to mix metaphors).

Recommendation: Recognize the limitations of the company, nonprofit, sector, and industry in which you work and intentionally go beyond it.

• Use this crisis moment to expand: Seek out and learn about the work that portends systems change, talk to those who are at the action stages of their good ideas, and support the people (not just their projects) whose perspectives and efforts should shape our collective hegemony. This requires shifting the focus from project funding and transactional behavior to being all in (attention, time, networks, and funding). Racist responses to shifting demographics have been demonstrating how much this country is wrestling with what it means to be and who gets to be recognized as “American.” This is not a question that can be solved through a thousand good projects in the nonprofit sector; rather, it’s about enabling those who should inform our hegemonic identity to set the rules of engagement in the new normal.
• For funders of long-term change (not responsive grantmakers), shift funding from project-specific, contracted-out, and transactional behavior (e.g., project funding an artist to make artwork or making a grant to provide medical attention to an at-need population) to act more like friends-and-family, “believe in you money” (as AmbitioUS grantee Runway Project always says). “Believe in you money” is long-term, multi-year, unrestricted (or flexible), and tied to the person’s capacity to have impact on their own terms and not for their contracted labor. So, ask: Who do we really need and want to be shaping my and our shared future? Those are the people to invest in, no matter the form, sector, or industry.

Whose Culture?

Think of the entirety of the money within the 501c3 sector as redistribution of wealth. Especially with the 1969 Tax Reform Act that officially recognized private foundations as a unique type of charitable entity, all this tax-subsidized money held by both grantmaking and grant-seeking organizations is actually meant to be redistributive from those who have to all those who represent the “public good.” Unfortunately, these days, the 501c3 sector is like a holding tank that confers elite status to a relatively few who exercise influence through both the distribution of resources and the ability to frame issues. And, the COVID-19 economic recession may mean that dollars will go to further entrenching 501c3 actors and systems. Let’s not re-enact what happened in the 2008 recession, which was that grantmaking became even less equitably distributed, thus indicating how much those in power stayed in power (Helicon, 2017).

Today, with the privatization of services, erosion of worker power, and the growth of a gig economy, all us need to act on wealth, particularly racialized wealth, disparities. Prioritizing equity outcomes while using a redistribution framework would mean investing in (going beyond project funding) the very people who should define what it means to be American. And their goals are not the same as conventional nonprofit goals. For this growing majority, they are impatient with the nonprofit sector’s bureaucracy, fickleness, loss of one’s own power, and institution-to-institutionalizing type of support; rather they have larger and urgent goals of realizing independence, opportunities, and self-determination for their marginalized peoples. The Trump Administration’s ethno-nationalism makes clear that his brand of conservative elites are fighting to hold onto and hoard these outcomes for only those who look like them. This is the nature of today’s culture war. Who has power shapes all our rules of engagement. Their cultural identity (i.e., their shared priorities, frameworks, and goals) becomes our nation’s hegemony. (Consider, for example, neoliberalism as a present-day manifestation of Protestant Pilgrim’s hard-work ethics and Manifest Destiny individualism.) Grantmaking with a “Whose culture to empower?” lens is imperative in battling racism and also in shaping the architecture, participants, paradigms, and rules of our systems of education, civil society, commerce, economy, justice, and governance. Without equality and equity lenses, we cede power of our systems. It is not just the “right thing to do” to fund equitably; it is imperative that marginalized and exploited populations become our leaders in order to enact a shared American identity and concomitant prosperity.

Recommendation: In all cases, use distinct equality and equity lenses to distribute resources widely and to especially help the most financially vulnerable — black, indigenous, immigrant, trans, and those with disabilities.

• These are groups that have been historically marginalized, who have had alternative forms of work that do not qualify for unemployment insurance (e.g., part-time, part-time worker for a contracted service provider, domestic worker, gig worker), and who will be the most financially harmed during this recession when most relief spending will flow through conventional employers to employees. For an example of how we at CCI targeted financially vulnerable populations (and expanded beyond conventional 501c3s), check out the language of the San Francisco Arts and Artists Relief Fund that we are administering.

Recommendation: If you are contemplating starting or donating to a COVID-19 relief fund, (1) Expand grantmaking relief programs to not only go to nonprofits but also to individuals (community anchors and system trailblazers), collectives, mutual aid societies, community-owned assets, cooperatives, and other types of intentional communities (and use an intermediary if you are restricted from giving outside of 501c3s and fiscally sponsored projects).

• Such communities’ collectivism reflects the kind of cultural values that need to be normative. (2) Restrict organizational relief funding to paying payroll, which helps employers continue to operate and qualifies workers for much-needed social insurance (benefits and unemployment insurance). And (3) Expand grantmaking portfolios or re-allocate funds now so as to invest in the new normal, while employing an equity lens, so that this crisis moment begets a better tomorrow and not a return to a problematic status quo.

This COVID-19 and economic crisis demands moving from influencing change within existing systems to actually implementing the changes we want to see in the world. But we need both — a strong 501c3 sector to continue to build on gains and monies to enact new and alternative systems authored and held by those who have been the most harmed by current for-profit and nonprofit systems.

There are serious threats to the projects and institutions we have depended on for everything from our social-change ambitions to our paychecks. Such a threat makes one go reactively into survivor mode. But surviving should also be about thriving, and this is the best time to envision possibilities. This is a leadership moment, and about listening, learning, and relying on the voices of those who have been the most under-served and extracted from. There’s a cacophony of voices right now — urgent pleas for contributions, get-out-the-vote campaigns, and relief efforts — but for all those who urgently need systems change, this is the moment to get clear on their long-term visions of the world, reject the status quo, and get “seven generations” ahead in decision making. Go upstream in both actions and dollars, support both 501c3 and alternative forms of cooperation as directly as possible, and put investment-behaving resources in the hands of those who represent, and can realize, the changes we seek.