When the Mary Reynolds Babcock Foundation (MRBF) grasped the severity of COVID-19 and its likely impacts on the people and places we care about, we began to brainstorm things within our power to mitigate the harm. We asked our grantee partners about the pandemic’s implications for their work. We asked the leaders of community development finance organizations how their borrowers were faring. We sought ideas from other foundations taking creative approaches to stanch the bleeding.
What we’ve heard so far is dire. Nonprofits are cancelling vital fundraising events and outreach activities central to their missions. They tell us some foundations are pausing their support, even though our partners are not pausing their work. They are working twice as hard to help their communities weather the crisis, while continuing to advance justice in the most important political year of our lifetimes. In this strange new reality, they are figuring out different ways to advocate for policies that support low-wealth families, halt deportations, register new voters, encourage census participation, plan for redistricting, and prevent bankruptcies and foreclosures.
After consulting with our partners and countless teleconferences among board and staff members, we are starting with these four actions:
Providing immediate cash for short-term needs
We sent all current board-approved grantee partners a $10,000 grant to be used as they see fit: upgrading technology, conducting media outreach, providing childcare for their staff—whatever they need. There are no proposals or reporting requirements for these grants.
Extending most grants by one year and frontloading them
With a few exceptions, we are adding one year to each grant, so a two-year grant automatically becomes a three-year grant. We are sending them checks with the full amount of the additional year, as well as any remaining payments on their current grants. We are canceling pending due diligence visits for returning grantees and simplifying reporting requirements. This will reduce the time our partners spend on paperwork and in meetings with us—and provide an additional year of time and resources to meet the demands of this crisis.
Contributing to place-based responses across the South
Many community foundations and local funders are creating pools to support people who will be most affected by this catastrophe. For example, our neighbors at the Winston-Salem Foundation have launched a COVID-19 emergency response fund. We are making up to ten $25,000 contributions to organizations we have existing relationships with and are focused on the most vulnerable communities.
Bolstering community development financial institutions (CDFIs)
CDFIs are mission-bound to expand economic opportunity in low-wealth and rural places underserved by Wall Street banks. They are often the first line of defense against poverty and predatory lending. When the pandemic began to unfold, South Carolina Community Loan Fund contacted all its borrowers. CEO Anna Lewin told us most of them have less than three months’ cash on hand. The CEO of Hope Enterprise Corporation reports a 50 percent decline in consumer loan demand, “replaced by a stream of payment deferral and loan restructuring requests from suddenly unemployed workers, homeowners and entrepreneurs. From a pastor suddenly without steady offerings to pay his church construction loan, to restaurants, hair salons, and childcare centers, the toll is heaviest on employers of low-mobility workers,” Bill Bynum said.
Based on what we’ve learned from these leaders, we are:
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- eliminating the interest on program-related investments to free up cash
- converting 20 percent of our investments in CDFI loan funds into grants to provide operating support and strengthen balance sheets for CDFIs that need to borrow new resources
- extending the maturity of any PRI due this year by one year
MRBF CEO Justin Maxson presented our board of directors with these proposals, which will roughly double our 2020 payouts. Some measures require new spending, while others are accelerations of planned payments. Our trustees raised thoughtful questions about the financial implications of making these payments by selling holdings when the market is low, and our endowment is down significantly. Ultimately, however, they came to the same conclusion as staff: the loss of capital pales in comparison to the scale of need to cope with the worsening socioeconomic distress across the South.
Maxson was reasonably confident the board would agree, as there is precedent in the Foundation’s history, though nothing quite on the scale of this pandemic response. In 2008, for example, the Foundation poured more money into our nonprofit partners as the market began to tank and other funders retrenched. Amid rampant voter suppression and disinformation campaigns in 2016, the board approved increased support for our grantee partners focused on civic engagement. Both times our endowment took hits; both times, the benefits greatly outweighed the temporary financial setback.
“We see our assets—and philanthropy in general—as society’s risk capital,” said Maxson. “When there are real opportunities or demand, there are reasons to put more money out. This is one of those times. If not now, when?”
MRBF also signed the Council on Foundations’ pledge “to act with fierce urgency to support our nonprofit partners as well as the people and communities hit hardest by the impacts of COVID-19.” We are pleased to see the names of 370 funders alongside ours.
It is disorienting to try to grasp all the possible implications of COVID-19, though it seems likely to fundamentally reshape our economy and society. Amid the uncertainty, one thing is clear: from democracy to policy advocacy to economic opportunity, our partners’ missions are more critical than ever. COVID-19 is tearing down our current socioeconomic frameworks. With the right kinds of support, our partners are best positioned to create a more equitable foundation on which to rebuild. Even as the repercussions continue to manifest, several organizations are already pivoting from despair to opportunity. As ProGeorgia Executive Director Tamieka Atkins said, “This is the time for us to push for federal policies that were unimaginable just one month ago.”
Hopefully, once this crisis abates, Americans will begin to rethink who’s “essential” in the workforce, and therefore deserving of healthcare, paid sick leave, and respect. Maybe we’ll also reconsider the role of government, its potential to protect and provide, and reexamine the scarcity myth. And perhaps those of us with the privilege of working in philanthropy will make fundamental changes in the way we support the people doing the real work of moving us all forward.
These are only our first steps as we assess the ripple effects of this virus and determine other ways we can help. We would love to hear more ideas and actions other organizations are taking.
Let’s take good care of each other, y’all.