Giving Compass' Take:
- Oscar Perry Abello explains how two organizations in the Alabama Black Belt Region joined forces to form a partnership to provide zero-interest financing to local governments.
- How can policymakers and donors work together to ensure that all city governments have equal access to funding from their states?
- Learn about rural development and philanthropy.
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As head of the Black Belt Community Foundation, Felecia Lucky never imagined she’d get into the business of providing short-term liquidity for local governments, but hey, that’s 2020 for you.
The need emerged earlier this year, at a meeting of the Black Belt COVID Task Force, a group convened by the Black Belt Community Foundation and two state senators representing Alabama’s Black Belt. Named for its dark, fertile soils, which also made the region lucrative for plantations worked by enslaved people, the Black Belt includes historic places like Selma, Tuskegee University, and the state capital of Montgomery.
Even with its historic significance, as a majority-Black region the Black Belt has continued to bear the brunt of continued systemic racism, laid bare by the COVID-19 pandemic. It was the hardest hit region of the state, despite being largely rural. The Black Belt Community Foundation formed in 2002 as a response to generations of neglect from those outside the region. Its tagline is “taking what we have to make what we need.”
At that Black Belt COVID Task Force meeting, local public and private sector representatives were surprised to hear that someone did remember them. The Alabama Department of Finance informed the group that out of $250 million in federal aid made available for cities and counties in Alabama as part of the CARES Act, it had allocated $18.5 million specifically for local governments in the Black Belt region.
They were not surprised, however, to hear that the funding was available only on a reimbursement basis—meaning the local governments would have to scrounge together the dollars upfront and apply to the state for reimbursement later. It’s not uncommon for states to distribute dollars by reimbursement, ostensibly as a way to prevent corruption and waste or to enforce compliance with federal guidelines on spending. But the practice leaves many of the most vulnerable and cash-strapped local governments in a bind.
Read the full article about zero-interest local government financing by Oscar Perry Abello at Next City.