ARPA’s $350 billion opportunity and what philanthropy can do

byDarius Graham, Program Director, Baltimore |

Originally published by Philanthropy News Digest

In March 2021, President Joe Biden signed the American Rescue Plan Act (ARPA), which provides $1.9 trillion in funds across federal, state, and local governments. The funding streams are numerous and most funds flow through existing programs and agencies to bolster health and economic recovery — for example, $28.6 billion for the Small Business Administration‘s Restaurant Revitalization Fund and $21.6 billion to continue rent relief. While it would be impossible to identify any one source as more important than another, there is a portion of the funding that presents a unique opportunity for governments and place-based funders to ensure that local communities’ urgent needs are prioritized — equitably and strategically — in both the immediate and long term.

Included within ARPA is $350 billion in State and Local Fiscal Recovery Funds (SLFRF) that will be allocated to state, local, territorial, and Tribal governments with no specific predetermined use.

According to the U.S. Treasury Department, the SLFRF’s goals are to:

  • Support urgent COVID-19 response efforts to continue to decrease spread of the virus and bring the pandemic under control
  • Replace lost revenue for eligible state, local, territorial, and Tribal governments to strengthen support for vital public services and help retain jobs
  • Support immediate economic stabilization for households and businesses
  • Address systemic public health and economic challenges that have contributed to the unequal impact of the pandemic

Notably, these funds offer substantial flexibility for governments to meet local needs and can be used to make investments in water, sewer, and broadband infrastructure. These flexible funds, which must be committed by the end of 2024, provide governments with the opportunity to fund immediate needs, fill gaps, and/or make strategic investments.

The potential uses of the funds are numerous and broad. And the processes for how governments will allocate these funds vary widely. For example, in San Francisco and Chicago, mayors are allocating funds via their annual budget processes and including a substantial portion to close budget deficits. By contrast, in Baltimore, which will receive approximately $641 million, Mayor Brandon Scott has created an Office of Recovery Programs to allocate, monitor, and report on spending. While the city has set aside about $131 million for budget stabilization and another $10 million toward running the office, the remaining $500 million will be awarded to city agencies and nonprofit organizations through a competitive application process — with the goal of making strategic investments and not just back-filling revenue gaps. Funding requests must have an equity lens and focus on youth, public safety, neighborhood development, health, or responsible stewardship of city resources.

Understanding a community’s priorities and processes for allocating SLFRF can provide context for place-based funders’ current and future grantmaking in the following ways:

    1. Staying apprised of how the funds are allocated can provide funders with a better understanding of local leaders’ immediate and long-term priorities.
    2. Understanding the limitations of SLFRF along with other portions of ARPA can help funders identify opportunities where a grant can help local government agencies or nonprofits fill gaps and leverage funds.
    3. In places such as Baltimore, where nonprofits are eligible to receive funds, there will likely be opportunities to support nonprofit technical assistance providers. Technical assistance for nonprofits receiving funds will be important to ensure that funds are used responsibly, any program expansion is done sustainably, all federal audit requirements are met, and evaluations are conducted to understand the impact of the additional funding and any related program changes.
    4. There may be opportunities to support the capacity of local government agencies to implement and monitor plans to use SLFRF or wider ARPA funds — for example, by enhancing staff capacity by supporting temporary positions or consultants.

To start, funders should look to their community’s recovery plan. The Treasury Department requires communities with populations of more than two hundred and fifty thousand to submit a plan describing how the funds are being used and to make those plans publicly available online. The recovery plans and the points above can help place-based funders better understand the opportunity these funds present our communities.

It’s incumbent upon funders to support their communities in getting the most from this unique funding source so the investments made by state and local governments can be strategic, equitable, and sustainable.