California will soon receive 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 help with economic and public health recovery from the COVID-19 pandemic — and $48 billion from the Infrastructure Investment and Jobs Act (IIJA), totaling $93 billion in federal investments. Another $46 billion will come from the state’s Economic and Community Resilience Fund (CERF) and the state’s budget surplus.

While some of the stimulus funds are earmarked for specific uses, what’s left is flexible, letting states allocate resources as they see fit, as long as they follow 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 most vulnerable communities. affected by the pandemic.

“While some state relief efforts have focused on equity, many others have failed to prioritize those hardest hit by the crisis, such as low-wage workers, communities of color and small businesses,” the CBPP found.

So how can Californians ensure that these flexible funds are allocated to the communities that need them most? Addressing this issue is crucial, both because Black and Latino communities are most affected by the pandemic, and because communities of color and BIPOC-led organizations are often excluded from accessing benefits of federal funding, as Lois DeBacker and Joe Evans of Kresge pointed out in Nonprofit Quarterly earlier this month.

Philanthropy can play an important role in ensuring that public funding helps eliminate systemic inequalities, and a new fund seeks to do just that. The Sierra Health Foundation Center and the James Irvine Foundation today announced a $15 million Community Economic Mobilization Initiative (CEMI). The program will work to diversify and increase the number of community organizations that receive funding through these public investments and increase their capacity to participate in the design of economic development implementation plans.

“As we took stock during the pandemic of what the economy might look like post-pandemic and in light of racial reckoning and other crises in our state, it has become increasingly clear that there is would have a huge amount of public investment to help recover and rebuild our economies across the state. And we have begun to prepare our own thinking about how we can help communities prepare for these investments,” said Don Howard, president and CEO of the Irvine Foundation.

CEMI is pronounced “see me,” which is intentional, according to Sierra Health Foundation President and CEO Chet Hewitt. “We want the communities that have been disproportionately underinvested to be seen, especially as we think of a period of recovery from the global health crisis,” he said. “For the first time in my career…we actually have the resources to do some of the things that a lot of us have long dreamed of.”

The full $15 million was 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 also expressed interest in contributing to CEMI.

The operational portion of the fund will be managed by the Sierra Health Foundation Center, which focuses on racial equity and social justice. The first round of grants will be awarded in late summer this year.

Disparities in the distribution of public funding

Organizations led by and serving communities of color are often excluded from accessing federal funding benefits. The reasons are twofold. 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 from ARPA and other public sources are “investments in systems that were built on structural racism”. Ongoing organizing and advocacy is therefore needed to ensure that these investments contribute to closing racial equity gaps rather than exacerbating them.

“We often talk about economic development and a lack of investment in certain communities as a red line,” Hewitt said. “This whole system has excluded entire communities and specific populations that live in their communities from the kind of connections you need to succeed in local and regional economies.”

Last year, the UCLA Latino Policy and Politics Initiative and the UCLA Center for Neighborhood Knowledge released a report that found there were significant disparities in how Paycheck Protection Program (PPP) funds ) were distributed in California. These funds were intended to help small businesses stay afloat during the pandemic.

According to the report, PPP loans were issued to wealthier congressional districts with larger white populations at much higher rates than lower-income districts with predominantly black and Latino populations. These disparities in PPP lending further deepened systemic pre-pandemic inequalities along racial and class lines.

The second reason for this exclusion is that many of the nonprofits closest to the people who live in these communities often lack the expertise and technical knowledge to effectively participate in conversations about how funding will be allocated. .

“I want to make sure that I separate that notion of ability from ability, because they have the ability to participate,” Hewitt said. ” That’s what it’s about. But you need the kind of technical support and training to do it effectively.

Fight for inclusive economic development

To ensure fair allocation of resources, it is crucial that community voices are a key part of the distribution and decision-making process related to these funds. CEMI’s goal is to help nonprofit organizations be essential partners in designing and ensuring that economic development implementation plans are inclusive.

“For people to be able to show up for these efforts, to be able to fully participate in them, and to have power in these conversations, it really needs more money and some skill building,” Howard said. “That’s what CEMI is looking 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 adopt a curriculum-based approach that will provide organizers with the language and knowledge necessary to access federal funds. CEMI will also provide ongoing advisory assistance, which will sometimes take place on a one-to-one basis.

“We know this is changing rapidly,” Hewitt said. “We want to make sure that fast doesn’t mean excluding and bypassing both communities and populations that could benefit from the kind of investments that are going to take place.”

Procurement opportunities from public funding sources, for example, often have complex accounting requirements. For small grassroots organizations, this can be overwhelming, even damaging. According to Howard, CEMI will provide “back-office capabilities to help these organizations accept government funding and help them report on it in a way that will then enable them to participate not only as advisors, but also [as] implementers of the plans that are put in place.

The role of philanthropy

Although operating in the private sector, philanthropy can do much 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 the capacity of nonprofit organizations that serve these communities, and they can serve as a connection point for communities and local, state, and federal governments.

“Our beneficiaries do the work; philanthropy is not doing the job,” Howard added. “Our job is to find the best leaders with the best ideas who are truly accountable to their communities, and give them the money and trust their experience, their wisdom and their proximity to the challenge and their knowledge of the solution.”

CEMI’s work is part of a larger effort by California donors to influence public spending to be more efficient and equitable. Through its Latino Power Fund, the Latino Community Foundation (which receives funding from the Sierra Health Foundation and the Irvine Foundation) seeks to ensure that public and private funds go to the communities and families most in need. support. In conversations with Inside Philanthropy, several other leaders and organizers highlighted the difficulty black and brown-led organizations face in securing government funding.

“Let’s make sure these communities aren’t left behind once again,” Hewitt said. “To me, this notion of diversity, equity, and inclusion as it relates to economic opportunity, economic mobility, and the space of inequality is intended to ensure that as we build the next era of the American economy , everyone can come. Wouldn’t that be amazing?