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THE CORONAVIRUS has thrown many of the ills of American society into sharp relief: slow decision-making, inequality and a safety-net full of holes. A superpower that should have been well prepared to fight the pandemic is floundering instead. Yet the virus has also shown how far Americans will go to help one another. The country’s philanthropic sector, the biggest in the world, has leapt into action. Its response to the crisis so far has revealed both its immense propensity for goodwill and its flaws.
The amount of money raised in response to the pandemic and attendant economic crisis has been staggering. Candid, a watchdog that tracks charitable giving, reckons that by April 24th American foundations, corporations and individuals had donated at least $5.3bn in grants to more than 1,200 organisations around the world. Of that, $3.1bn came from companies and corporate-giving programmes alone. Individual donors also account for some 21% of the giving (see chart). Jack Dorsey, chief executive of Twitter and Square, has pledged to devote $1bn—nearly a third of his total wealth—to fighting the virus. Amazon’s boss, Jeff Bezos, donated $100m (remarkably, less than one-tenth of 1% of his net worth) to Feeding America, a hunger-relief organisation.
Big gifts from billionaires are easy to track; countless news stories are written about the beneficence of the mega-rich in times of crisis. But philanthropy takes many forms. Harder to keep tabs on are the landlords waiving rent payments for some of the 26m Americans who have so far applied for unemployment insurance; or the neighbours making lunches for the local children who relied on their schools for a good meal. “There are everyday people who are being philanthropic on a daily basis,” says David Maurrasse, president of Marga Incorporated, a consulting firm that advises charitable foundations. “When we look at low-income communities and communities of colour, often the only kind of philanthropy they know is supporting each other at a grassroots level.”
To fight the pandemic and its knock-on effects, organisations that bridge the gap between big donors and hyper-local efforts have become increasingly important. They include community foundations, which largely pre-date the virus, and new emergency rapid-response funds set up by some of the hardest-hit cities like Seattle, New York and Washington, DC. Tonia Wellons, president of the Greater Washington Community Foundation, which focuses on local philanthropic efforts in counties around the capital, says her staff have received gifts from people donating their now-unused commuting budgets or making contributions of as little as $10. Because her foundation has served the region for decades, they knew which non-profit organisations needed support. It funnels money to groups disproportionately affected by the virus: poor people, black and Hispanic Americans and the homeless.
How does the global philanthropic response to the coronavirus crisis compare with past disasters? The money the sector has already raised to fight covid-19 is almost four times more than was collected in the wake of four previous calamities combined: the September 11th attacks, the Ebola outbreak in west Africa, Hurricane Harvey in 2017 and the financial crisis of 2007-09. But the comparison is tricky. Today’s crisis is global, rather than localised like a hurricane or terrorist attack. It is also multi-faceted: a public-health crisis that causes a financial crisis will prompt donations to more varied causes than a recession would alone.
Still, there are lessons to be learned from philanthropists’ response to the global financial crisis. According to an analysis by the National Committee for Responsive Philanthropy (NCRP), a watchdog, grant-making by America’s 1,000 biggest foundations dipped by 5% in 2008 and then by 14% in 2009, and stayed down by 10-15% until 2014, when funding climbed back to 2007 levels. Given this precedent, it seems likely that grants will again contract as falling markets shrink foundations’ endowments, and thus their capacity to keep giving at the same rate.
The NCRP and the Centre for Effective Philanthropy, a similar outfit, are urging private foundations to take measures now to maintain their funding levels—even if the covid-induced downturn is even deeper and longer than feared. There are three ways, the groups say, to help non-profit groups through the crisis.
First, foundations can increase annual payout rates from the 5% of the value of their assets, the minimum level mandated by America’s Internal Revenue Service. During the financial crisis, for example, the Bill & Melinda Gates Foundation increased its payout rate from 5% to 7%. The Gates Foundation, however, aims to spend down its vast $46.8bn endowment within 20 years of its founders’ deaths. Other foundations, that are meant to exist for ever, are wrestling with the need to respond to the current crisis while making sure they can survive it. Crystal Hayling, executive director of the Libra Foundation in San Francisco, says the organisation will double its grant-making in 2020, while acknowledging worries that a recession may eat into its $500m endowment.
Second, foundations can engage in “asset averaging”. Instead of basing grant levels on the past 12 months, for example, in which a recession might have hurt revenues, foundations can take a rolling average of their assets over the past three to five years. This paints a more holistic picture of how much they can actually give. Third, foundations can ease reporting requirements for NGOs and relax restrictions on how and where recipients spend their grant money.
By Candid’s accounting, most of the money raised so far will go towards immediate disaster relief, such as the Centres for Disease Control and Prevention’s efforts to test and trace the virus, and medical services. This is not surprising. Data from the Centre for Disaster Philanthropy show that in 2017—when Hurricanes Harvey, Maria and Irma wreaked havoc across America and the Caribbean—59% of giving went to organisations, such as the American Red Cross, that helped with emergency assistance. Only 25% of funding in 2017 went to preparedness, mitigation and recovery efforts combined. After a pandemic, “recovery” and “preparedness” funding might go towards bolstering hospital capacity in rural areas, curbing domestic violence or building better digital infrastructure in schools.
Donations to immediate coronavirus relief efforts can make a huge difference, but will do nothing to tackle the structural problems the virus has exposed. And though impressive, the billions that philanthropists can muster is just a sliver of the trillions that the American government can unleash in stimulus packages. That the virus has hit vulnerable groups hardest is one of the long-term consequences of social and economic inequality, says Ms Wellons. When society does rebuild, she adds, “we should not want to go back to normal.”