Cash is King: Two Case Studies on the Power of Direct Financial Support During Crisis

Melissa Manwaring was working at a local coffee roaster that supplied all the main restaurants in Phoenix when she got the call. It was March 19, and all the restaurants were closing. There was no need to come in. Fresh off maternity leave with an eight-month-old baby at home, she ran through her options.

She knew the government was working on COVID-19 relief programs. But that would take weeks or months, and the rent and the bills were due now. She applied for unemployment, but dozens of follow-up calls went unanswered.

Then a friend shared an Instagram link to the RWCF COVID-19 Emergency Relief Fund, a partnership between the Restaurant Workers Community Foundation and Southern Smoke that was raising funds to help the restaurant community survive the crisis. Half the money raised was going out the door as direct grants to individuals in amounts averaging $2,000.

Manwaring found it humbling to ask for help after working “so hard for so many years,” but “had to survive.” She went ahead and applied, and now credits the fund with keeping a roof over her head—her top priority. And it’s a good thing she did. As of June 1, she was still waiting to see her first unemployment check.

The Case for Direct Financial Support

In the best of times, an estimated 59% of Americans live from paycheck to paycheck and tip jar to tip jar. Less than 40% have squirreled away an emergency fund. When the worst of times barreled in out of nowhere, low-income earners found themselves exposed, unable to cover even the basics.

As donors accustomed to giving platforms like GoFundMe clamored to put cash in the hands of people like Manwaring—and empower them to make their own decisions—funds providing direct financial support popped up, drawing tens of millions of dollars. Foundations, which often attach onerous administrative requirements to giving, began to look for intermediaries and guidance on ways to embrace the practice.

From a private foundation that pivoted to a rapid-response organization, to a corporate giant that regularly makes direct cash grants, here are two cases in point for tackling emergency need and inequality through direct financial support:

Schultz Family Foundation

In ordinary times, the Schultz Family Foundation, co-founded by Sheri and Howard Schultz in 1996, supports youth and veterans programs. While that work continues, Howard Schultz says the rules of engagement changed when the coronavirus hit, spurring philanthropists to employ fresh ideas of “collaboration and creativity to bridge the growing opportunity divide.”

Nationwide, organizations launched funds to support the restaurant industry right away, as an estimated 8 million workers were furloughed or released almost overnight. In Seattle, the foundation’s hometown, the coronavirus hit first and hit hard. Closed doors had the potential of knocking 100,000 restaurant workers out of their jobs.

From his experience leading Starbucks, Howard Schultz knew all about restaurants’ razor-thin margins and month-to-month cash flows, and the precarious position of workers. As some of the nation’s earliest stay-at-home orders took hold in King’s County, the couple realized it would be weeks before government interventions could reach them, and that the 20% of workers living outside formal systems weren’t in line at all.

Recognizing the urgency of the situation, Howard Schultz assembled a team that included former colleagues and local leaders. By mid-April, they launched the Plate Fund—a collaboration between the foundation, All in Seattle, the Seattle Foundation, and the digital platform UpTogether—that deploys $500, one-time direct cash transfers to impacted workers.

The Schultzes set a fundraising goal of $6 million, and seeded the fund with half of that. To ensure assistance reached the undocumented and unbanked, they engaged the networks of three partners: El Centro de la Raza, Falis Community Services, and Asian Counseling and Referral Services.

From idea to execution, the whole thing was up and running in just two weeks.

A social media campaign put faces and backstories to the effort, and more than 3,000 individual donors pushed the fund past $7.7 million, reaching more than 15,000 workers, nearly $2 million above the goal. At least $6 million has already been granted.

Sheri Schultz described developing a real intimacy with restaurant workers as they shared emotional stories of supporting their families. Today, the foundation is engaged in conversations to share what it’s learned with organizations in other cities.

Google.org

Google.org is an old pro at employing direct cash assistance. It’s put more than $25 million in cash in the hands of vulnerable communities since 2012, when it made its first unconditional transfers in Kenya through GiveDirectly.

The organization recently bumped its COVID-19 grants commitment from $50 million to $100 million, with an overarching focus on economic relief, humanitarian issues and promoting distance learning. A full 10% of that, or $10 million, will support direct cash transfers to vulnerable populations in the U.S. and around the world, working through four partners: Family Independence Initiative (FII), GiveDirectly.org, Give India, and the National Domestic Workers Alliance (NDWA).

Hector Mujica, Google.org’s economic opportunity lead for the Americas, says that the relationship with FII dates back to 2015, when it started helping the group expand the number of families it serves and the cities it reaches. The NDWA partnership, which works to improve the lot of nannies, caregivers and house cleaners, started in 2017. GiveIndia is a new partner.

Google.org is confident about the efficacy and ideals of direct cash transfers. Mujica says, “These programs enable recipients to spend the money in the way that best works for them, without having to justify the expenses or intentions.” As a result, it builds resilience and boosts upward mobility. He points to numbers supporting the work with FII in California, which helped families increase incomes by 22%, quadruple savings, and decrease reliance on government subsidies like food stamps by 55%.

In the context of COVID-19, Mujica sees direct cash transfers as a fast, contactless tool with a low cost of deployment. “What makes this transformative is that it provides a meaningful addition or alternative to traditional charitable models,” he said. “There is something powerful about giving individuals choices, and through those choices, power to make decisions that put them in control of their circumstances and empowers them to own the solution. Direct cash transfers acknowledge the humanity in the recipient.”

Individual donors clearly agree with that thinking. Along with other funds, they rallied to help two Google.org partners, GiveDirectly and IFF, raise a collective total of $144 million. Donor gifts of $35 and up allowed GiveDirectly to built a base of $84 million, funding nearly 80,000 families. And IFF’s first foray into crisis campaigning with Stand Together raised almost $60 million, powering individual relief in all 50 states.

As the fallout from the pandemic continues, direct cash recipients are likely to continue to struggle to get on their feet. But as they do, they’re also paying it forward. The Schultzes were surprised to see a number of the people who received cash from the Plate Fund give whatever small amounts they hadn’t used back to the fund to help the next worker up.

Rob Pasquarelli, an RWCF COVID-19 Emergency Relief Fund recipient in Orlando, echoed that sentiment. “I’m a hustler,” he said, outlining the jobs he’s been juggling to support his family of four. The cash he received gave him the “power to put the fires out” at a critical time. And as soon as he can, he said, he plans to support the fund himself.

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