Federal Funding: Where Has it Gone — Where Could it Go?

It’s been a year since the Inflation Reduction Act (IRA) was passed, nearly two since the Infrastructure Investment and Jobs Act (IIJA) passed, and almost three years since President Biden established the Justice40 Initiative. Every state, D.C., and several territories have received funding for projects ranging from transportation upgrades, workforce development programs, climate resiliency projects and more. But some significant questions have hung heavy in the air ever since their passage: Will these investments truly advance justice? Who is receiving this money? Are programs supporting our most historically oppressed communities? In this month’s newsletter we take a closer look, and share where there is room for improvement.

IIJA

About 80% of IIJA funding is distributed as formula grants, the structure of which rarely changes. This means that much of IIJA funding reinforces historic investment patterns when it comes to transportation and affordable housing, and it is not designed to help communities that want to change these patterns. IIJA formula grants also tend to disproportionately benefit states with lower populations of color. On the other hand, the IIJA’s competitive grants are distributed to a small subset of communities nationwide, but the funding is concentrated in communities of color. Both types of grant structures tend to underfund lower income communities. Recommendations put forward in the Urban Institute’s recent report on the subject urge federal agencies to review program formulas to better match current conditions and provide technical assistance on funding applications for historically disinvested communities.

IRA

A review out this month by Heatmap found that roughly 10% of IRA funds - about $11.8 billion - have already been disbursed, and the pace of funding is about to get quicker. The vast majority of this funding has supported pre-existing federal programs and helped expand government capacity, such as buying new electric delivery vehicles for the Postal Service, funding agricultural programs including the Conservation Stewardship Program, and financing the decarbonization of federal buildings and the hiring of conservation scientists. The DOE’s Loan Programs Office has given out an additional $13 billion in loans to build new EV and battery plants. Thus far, relatively little money has been passed through for new programs established by the IRA, like the EPA’s Greenhouse Gas Reduction Fund and USDA’s Rural Electric Cooperatives. The holdup chiefly comes down to the logistics involved in standing up and staffing entirely new programs. The rules governing two rebate programs under DOE have yet to be finalized, and few states have received the funding necessary to run rebate programs. While being thoughtful about program design is critical to advancing equitable investments, it may also lead to delays and backups down the line as individuals, nonprofits, companies, and state and local governments must wait to participate.

Justice40

Even though this executive order was signed by President Biden nearly three years ago, recent polling by Data for Progress suggests only a small minority of the public knows about the Initiative. But once informed of its major components, a majority of voters approve of Justice40. This public awareness and buy-in is crucial to ensuring Justice40 opportunities are equitably administered and distributed. Research last year from the Roosevelt Institute found that grassroots policy work has exerted significant influence in the design of Justice40, yet many advocates would rather see its 40% investments in disadvantaged communities as a starting point, not an end goal. They also found that initial J40 investment programs appeared disconnected from current frontline investment needs. More recent interviews conducted with state agency staff that have been taking part in Justice40 programs illustrate the need for simplified and streamlined grant applications, the expansion of technical assistance, and convening spaces for eligible groups to information-share.

What Else is in This Month's Climate Action Update?

So much more! In October's Climate Action Update, we shine a light on exciting climate innovations - big and small - that are taking shape across the nation and around the world. From cities making huge strides towards housing affordability to movement toolkits for creating multiracial cross-class coalitions, this newsletter covers it all! We’ve also summarized over 15 new funding opportunities for cities, nonprofits, and Tribes. Take a glance through the October Update and follow the links to the resources that are most valuable to you. We encourage you to forward the Updates to like-minded colleagues and allies.

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