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The Radical Change Needed in Philanthropy: Invest Directly in People

Date: July 27, 2023

Jesús Gerena

CEO, UpTogether

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At the beginning of the pandemic, it was clear we faced an unprecedented crisis. COVID-19 was not only taking lives, but destroying livelihoods too, with Black and Latine communities hit the hardest.

At UpTogether, we experienced this moment in a unique way: an opportunity to provide immediate relief to families suddenly thrust into financial instability. As an organization that demonstrates the value of direct investment through unrestricted cash grants to people facing financial hardship, UpTogether responded to the pandemic by launching #GiveTogetherNow, raising more than $100 million which we completely dispersed to 200,000 households in all 50 states, the District of Columbia, and Puerto Rico. The majority of the dollars were given as one time $500 payments.

Many families supported by UpTogether received funds just three days after submitting their applications. These funds were a lifeline and provided a moment of reprieve to the scarcity faced by many. This was possible because philanthropy was moved to accelerated action, providing unrestricted support without making us jump through a lot of hoops, allowing for the rapid dispersal of money that made an immediate impact in people’s lives.

The UpTogether team also witnessed our funders adjust to the crisis by streamlining applications and providing operational support — shifts in the system that have been further documented by The Center for Effective Philanthropy’s (CEP) latest report, Before and After 2020: How the Pandemic Changed Nonprofit Experiences with Funders. Based on data from CEP’s Grantee Perception Report (GPR), the report provides yet more evidence of the changing relationships between funders and nonprofits.

These changes, both procedural and philosophical, are long overdue in the sector. The COVID-19 crisis affected us all and allowed for philanthropy to act urgently in response to overwhelming need. It was an acknowledgement of their ability to lean into the principles of Trust-Based Philanthropy as a way to address the pandemic’s effects. With the pandemic behind us, will philanthropy maintain the momentum to address the crisis of wealth inequality and its many symptoms?

The findings of CEP’s new report indicate there is some slight improvement, including showing “the average proportion of grantees receiving general operating support (GOS) increased slightly from 23 percent to 30 percent after 2020.” This movement is, in my opinion, a result of CEP’s work to provide feedback through the grantee survey to foundations.

Although some changes in foundation giving are evident and show improvement, the report as a whole is not encouraging. The truth is the kind of incremental progress described has little to no effect on the lives of everyday people. As a sector, we need foundations to abandon archaic practices if they truly want to have a meaningful impact in people’s lives.

The success of our work in alleviating the financial pressures of the pandemic was a direct result of an increase in giving by philanthropy, alongside unprecedented relief provided by the federal government through the American Rescue Plan Act (ARPA). In short, it was the result of radical change.

Last year we saw philanthropic giving drop along with the end of ARPA. Yet, we have seen no significant change in US poverty levels, inflation, rent, fuel, and other common goods. Pandemic recovery will take a lot longer than one calendar year, and this does not account for the decades of disinvestment and racist policies that brought us enormous wealth disparities in the U.S. prior to the pandemic.

An important acknowledgement by philanthropy during the pandemic was a recognition that direct cash is the quickest way to affect households facing financial hardship or a lack of cash. At UpTogether, we have always known this, and our movement is growing. Organizations like GiveDirectly and Mayors for a Guaranteed Income, along with UpTogether, have raised the evidence that direct giving works.

One proponent of this strategy is also one of our donors — MacKenzie Scott. She is renowned for giving to nonprofits the way UpTogether gives to our members — cash with no strings attached. She understands that philanthropy needs to change and is using her immense wealth to give unrestricted grants with few reporting requirements, if any. In studying Scott’s impact on nonprofits, CEP found that “large sums of unrestricted gifts have allowed organizations to fulfill basic, unmet needs — from expanding programs to strengthening financial sustainability to improving operations.” That is how you impact the lives of people — getting resources quickly into the hands of organizations and the people they serve.

For conditions to change for those facing financial hardship in the U.S. we must make deeper and sustained direct investments in families, and this will require change in philanthropy. We must challenge funders to be the radical change-makers they showed us they could be during the height of the pandemic. Nonprofits like UpTogether, working with funders like Scott, are demonstrating what is possible.

Can we get a critical mass of funders to adopt the principles of Trust-Based Philanthropy and give in record numbers to address root causes of wealth inequality in the U.S.? If they do, we have a real opportunity to not only change the lives of so many people across the country, but prove that a system based on trusting and investing in people works.

Jesús Gerena is CEO of UpTogether (previously Family Independence Initiative). Find out more about UpTogether here.

Editor’s Note: CEP publishes a range of perspectives. The views expressed here are those of the authors, not necessarily those of CEP.

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