A Bold Ask to Tech Companies and VCs: Match Our $1M Donation to Struggling Families
By Emmalyn Shaw
In six weeks, the United States shifted from a 50-year-low unemployment rate to likely the highest one since the Great Depression. No economic downturn has happened as rapidly as this one triggered through COVID-19, and our most vulnerable Americans are suffering the greatest blow.
We’re pleased that the US government acted fast by approving a stimulus package that will send direct payments to millions of individuals and families, but we know from the collective experience of Flourish’s portfolio companies and our investment team, which advocates for Americans who live paycheck to paycheck, that one $1,200 relief payment is simply not enough. What’s more, speed is of the essence. Government relief payments may not reach Americans in time, or at all. If individuals do not have direct electronic deposit arranged with the IRS, the Brookings Institution estimates that it could take another month or more for paper checks to arrive.
Given both the time lag to distribute such support and the many who will not be eligible, there is a need for a broad range of actors — across the ecosystem — to help supplement government relief efforts in the short term. At Flourish, we decided to act creatively and quickly. We agreed to contribute $1 million to Fresh EBT and GiveDirectly’s initiative to deliver $10 million immediately in the form of $1,000 payments to American families on food stamps.
We are now calling on fellow venture capitalists, technology companies, and other funders to join this effort and donate immediately, either through our chosen campaign or through their own network. If you choose to join with us, our collective financial might can put another zero on the GiveDirectly COVID-19 Relief Fund goal. This week, the fund received commitments from Google and Stephen Colbert.
Why We Decided on This Donation Strategy
As a global venture fund that invests in innovative financial technology companies that advance financial health and economic resilience, our core focus is on supporting and closely advising our portfolio companies and ultimately helping their customers. In deciding to provide this unprecedented donation to support the Fresh EBT/GiveDirectly initiative, several criteria were important to us:
● Targeted, immediate impact: Propel, maker of the Fresh EBT app for managing food stamps and other benefits, enables 2.5 million users to better handle their SNAP benefits. According to research from this Flourish portfolio company, at least 88 percent of their working customers are making less than they were on March 1, and 29 percent have lost their jobs completely. These families’ SNAP benefits and the one-time $1,200 checks coming from the government will help, but it’s not enough. And the poorest families, who did not make enough money to file taxes last year, will not receive a stimulus check unless and until they file a return.
● Trusted partners, proven instruments: We know the leadership teams at Propel and GiveDirectly. They are mission-driven entrepreneurs and technologists with proven track records of delivering cash aid where it’s needed most in a crisis. GiveDirectly has delivered $160 million to people affected by Hurricane Maria, the Ebola outbreak, and other disasters.
● Verification capabilities: Fresh EBT is able to channel funds toward the most vulnerable households on SNAP. All users’ identities are verified, and most are single mothers. GiveDirectly has the technology to transfer money digitally or on prepaid cards, and can validate that the correct amounts are delivered to the correct individuals.
A recent study conducted by the Federal Reserve found that only 29 percent of US households were financially healthy prior to the current downturn. Roughly 40 percent of Americans report that they could not cover a $400 emergency expense or would have to do so by borrowing or selling something. That reality is our organizing principle, and this month the whole country is going through that nightmare scenario together.
In these drastic circumstances, the most efficient and most valuable deployment of our capital is to millions of families trying to make it to the other end of April. In addition to this GiveDirectly and Fresh EBT COVID-19 Relief Fund, we’ve been working closely with our portfolio teams to support them through the recession, and help their customers, who include some of the most financially vulnerable families in America. We are in it for the long run. Beyond making these immediate contributions for crisis mitigation, we are also committed to helping our portfolio entrepreneurs navigate the crisis, and we stand ready to continue contributing for long-term financial well-being for everyone.
We are in uncharted territory. Capital support by all constituents will be critical to meaningfully support our most vulnerable Americans. We hope you’ll join us in this effort with the GiveDirectly COVID-19 Relief Fund or in another way that benefits your constituency.
