How a Data Tool Can Help with Relief Fund Planning

“How should we spend this influx of money?” That is the question on many state and local policymakers’ minds these days as they grapple with how to best allocate their portion of $350 billion that states, localities, territories and Tribal governments are receiving through the American Rescue Plan (ARP).

As policymakers think about strategies to address community and economic development using ARP funds, they may want to follow the example of a group of community leaders and policymakers in St. Louis and consider using an enhanced resource with national data from the St. Louis Fed, the Community Investment Explorer (CIE) 2.0, which shows how money from other programs has been distributed.

Which Places Get Economic Development Money?

The CIE 2.0 shows:

• Where community and economic development capital is going
• How equitably it’s being distributed
• What purpose it’s serving

The interactive tool draws on over 73 million transactions totaling over $3.2 trillion in capital from 10 programs—which have funded a range of activities—between 2012 and 2020. Included are Community Development Block Grant, Community Development Financial Institution and New Markets Tax Credit programs, among others.

From an equity standpoint, the tool shows the proportion of a program’s funds that are allocated to communities of color, or those in which a majority of the population identifies as nonwhite, and to low- and moderate-income communities (LMI), or those in which the median family income is below 80% of that of the community’s metropolitan or micropolitan area. (The U.S. Census Bureau defines micropolitan areas as those that have at least one urban cluster of at least 10,000 but less than 50,000 population.)

For example, the tool shows not only that the St. Louis metro receives, on average, over $95 million in investment from the New Markets Tax Credit program each year, but also that 75% of the funds went to LMI communities and 53% went to communities of color. Additionally, for St. Louis; Memphis, Tenn.; Little Rock, Ark.; and Louisville, Ky., regional maps illustrate the distribution of program funds by neighborhood. A November 2021 Bridges article details some findings on capital flows in the Eighth District, which includes the entire state of Arkansas, as well as parts of Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee.

A video on the Community Investment Explorer 2.0 introduction webpage explains the data available in the tool and ways to use them.

How Much American Rescue Plan Money Are Governments Getting?

The ARP appropriates the following amounts to each type of government entity, according to a U.S. Treasury Department fact sheet on the program:

• $195 billion for states
• $130 billion for localities (including counties and cities)
• $20 billion for Tribal governments
• $4.5 billion for territories

To be sure, the law dictates how some funding needs to be spent. For instance, the ARP provides over $21 billion to specifically assist households that are unable to pay rent and utilities due to the pandemic. Overall, however, the law gives states and local government entities flexibility on how to spend the funds.

Decisions about ARP funds must be made by the end of 2024, and the money allocated by the end of 2026. With a limited amount of time to spend a large sum of money, it is important that policymakers have access to relevant and timely information so that effective and equitable decisions can be made on how to allocate ARP funds.

How Are Community Development Professionals Using the Community Investment Explorer?

In an Oct. 6 webinar, Where is Capital Going and How Does the Answer Influence Your Grant Making? community development practitioners discussed how they are using CIE 2.0.

Daffney Moore, chief of staff and director of equity and inclusion at the St. Louis Development Corp., said the city of St. Louis is using the CIE in planning for ARP funding.

“We are looking at this tool to help guide us with our policy,” Moore said.

She went on to explain that the corporation is working to create an economic justice fund and uses data from the tool when asking for ARP money from the city or funding from private philanthropies and foundations.

“This tool really helps us break down the need and really makes the case of the why, and what areas are suffering more, and why we need those investments in not only SLDC but the CDCs (community development corporations) and nonprofits that are housed within these communities,” she said.

Sara Miller, senior policy analyst at Hope Policy Institute in Hattiesburg, Miss., described a recent report about the New Markets Tax Credit program, including disparities on how the funds have been allocated.

“For example, from 2012 to 2020, organizations led by people of color were awarded $3.7 billion in New Markets allocations compared with $29.5 billion for white-led organizations,” Miller said.

The CIE would “help us put that data as a whole into perspective on a geographic level, as well as show what the New Markets Tax Credit data looks like in relation to other community development tools,” Miller said.

How Do CIE Data Help Guide Strategy?

Trisha Finnegan is the senior vice president and chief strategy officer for the Community Foundation of Louisville in Kentucky. She said the first version of the CIE, which launched in 2018, pinpointed a gap on the community development financial institution (CDFI) investment for Louisville.

The tool led the foundation to invest in the CDFI infrastructure of its community—work that started three years ago and continues today, Finnegan said.

“By using the data in the tool, we were able to say—not just sort of by intuition—that we knew we didn’t have a strong CDFI system compared to others,” Finnegan said. “We were able to look at the difference in investment that our community was receiving compared to Memphis or St. Louis or Cincinnati, for example.”

The foundation now is working with other partners to try to bring more CDFIs to the community, she said.

In St. Louis, Moore said the CIE is helping SLDC staff in multiple ways with data analysts using the data in everything they do.

“I think it’s important as an agency that we are just not talking about it to the community but how do we incorporate it into every investment that is made in the city of St. Louis,” she said. “That’s one of the things that we’re trying to do with this tool.”

Editor's Note: This post was updated to include Maria Hasenstab as an author.