Sue Lani Madsen: Free money burns holes

When Congress passed the original CARES Act in March 2020, “free” money for COVID relief flooded across the country for distribution by states, counties and municipalities. Facing “use it or lose it” deadlines, it was a struggle to figure out how to spend it in time.

It’s hard to give away money without irritating someone. When it’s government money, it’s impossible – the best test of doing it well is probably if there’s something for everyone to be mad about.

Jason Rantz, conservative talk radio host at Seattle’s KTTH, broke a story on the Washington Equity Relief Grants program this week. He was planning a simple op-ed on wasteful government spending, following up on a December press release from the Washington Department of Commerce touting the Washington Equity Relief Act grants to small organizations. “I just kept having more questions,” said Rantz. The program was limited to groups serving Black, Indigenous or people of color (BIPOC), seeming to be at odds with Washington voters’ support for a ban on preferential treatment based on race or ethnicity. And the agency organizing the review process, Seattle-based Philanthropy Northwest, applied the same preferential screen to reviewers.

One project on the list, The Bail Project — Spokane, jumped out at him. Rantz recognized the local organization as part of a large and well-funded national organization and wondered how it made the list. In 2019, the Bail Project had $14.8 million in income and only $4.8 million in expenses, according to Charity Navigator. Not really in dire need of $50,000 in CARES Act funding. The Department of Commerce provided Rantz with the recommendation memo from Spokane’s Empire Health Foundation, which didn’t mention the group’s national ties or indicate how they’d been impacted by COVID. Rantz’s blog landed him interview spots on national TV.

As a founding board member and past chairman of the Empire Health Foundation board, I was disappointed. Now I had questions. Even though my email subject line read “An Invitation to an Uncomfortable Conversation,” the response from Zeke Smith, EHF’s new CEO as of October 2020, was immediate. He said EHF was asked only to provide information on the local chapter’s leadership, budget and programs. Smith also agreed that when an infusion of federal cash needs to go out under a deadline, there will be waste or the appearance of waste.

And it was a big infusion. The state of Washington received $2.983 billion in the first round of relief, according to the Center for Budget and Policy Priorities. $2,983,000,000 is a lot of zeros. It’s like collecting two years worth of real estate excise taxes plus public utilities taxes and having to spend it in half a year.

The Department of Commerce was tasked on June 29 with directly distributing $163 million, with $20 million specifically designated to go to nonprofits. Smith said the Department of Commerce had competitive grants accessible to organizations with grant writers and relied on networking with philanthropic organizations like EHF to find overlooked programs operating in their regions. “The Washington Equity Relief grants were a small percentage of total CARES Act money,” said Smith. “I love that DOC took a risk at trying to get resources out to organizations they wouldn’t otherwise see.”

EHF is currently working with Bail Project — Spokane and the American Indian Community Center on providing wraparound services to assure their clients can make bail, stay out of trouble and show up for court.

“There’s probably going to be things on the list that some people not only think shouldn’t be prioritized but shouldn’t be funded at all,” said Lisa Brown, director of the Commerce Department. While I could argue about the preponderance of progressive organizations on the nonprofits list, it’s gratifying to see grants awarded to a variety of faith-based organizations and funding for the Gideon Brothers Mission to distribute Bibles. Something to irritate everybody.

Setting up a $20 million grant-making process from scratch is a work of many months. Philanthropy Northwest was selected to lead the nonprofit distribution network because DOC needed a partner with the capacity to handle applications, manage reviewers, verify 501c3 standing and cut checks. “We planned everything around getting the dollars out by December 31 as directed,” said Brown.

And oh yeah, COVID impact. Proving it wasn’t required with the focus on using it before losing it. And that’s the problem with Congress tossing more money out the door for COVID relief without thinking through the purpose. It creates more debt. It will get spent. And it won’t necessarily provide relief to those who really need it.

Contact Sue Lani Madsen at rulingpen@gmail.com.