A $500 Lifeline: Pandemic Cash Grants Help Low-Income Americans Survive a Summer of Uncertainty
Within a month of the COVID-19 pandemic shuttering American life, SaverLife sprang into action to provide critical one-time emergency grants of $500 or $1,000 to almost 5,000 families struggling to make ends meet in the face of overnight income disruption and rising expenses.
A comparison of SaverLife transactional data of cash grant recipients vs. non-recipients clearly demonstrates the effectiveness of these grants in stabilizing family finances during the early months of the pandemic. In addition to providing immediate financial relief, SaverLife found the grants had a stabilizing effect that lasted several months. The results are in: direct relief works.
In addition to cash grants, SaverLife partnered with Neighborhood Trust to facilitate onboarding and recruitment of vulnerable families and provide one-on-one financial coaching to help cash recipients make a financial plan.
Together, SaverLife and Neighborhood Trust began to distribute cash grants and provide financial coaching to those most in need of support. Recipients included SaverLife clients across the United States; Neighborhood Trust clients including residents of the Bronx, home health care workers, and food-service employees; and, small business owners and their employees through partnerships with Accion Opportunity Fund, AEO MainStreet Rise, and the United Way of Newark.
Funding for this project was provided by Humanity Forward, MetLife Foundation, Prudential Financial, Target Foundation, Wells Fargo, and individual SaverLife contributors.
Cash Grants Boost Savings Balances— Protecting Against Continued Uncertainty
For many recipients, a $500 cash grant in the late spring built a savings cushion in preparation for continued economic uncertainty. With enhanced CARES Act unemployment benefits ending in July, and 83% of SaverLife members reporting incomes below pre-pandemic levels, SaverLife members had the foresight to save and prepare for an unpredictable summer.
Take Rachel, for example. She lost her job as an office manager and was struggling to find a new job with commensurate pay. She put her SaverLife grant straight into her emergency savings account. She hoped the additional savings would help her weather future financial turmoil.
“I have been a regular saver but I didn’t have six months of living saved up or anything like that.”
For those who received a $500 cash grant from SaverLife, the cash provided a starting place to build a larger savings cushion.
SaverLife Members who Received Cash Grants Made Higher Credit Card, Loan, and Mortgage Payments, a Good Sign for Housing Stability
The data shows a steady level of spending on loans and mortgages amongst cash grant recipients, which may be a proxy for housing security overall. In May, the median spending on loans and mortgages for grant recipients was $300, a 1% increase from the average in January through April. Those who didn’t receive cash grants saw a median decrease of 11%.
“It helped me catch up with the creditors”
Tara used money from her grant to pay off the debt she incurred from her COVID-19 medical expenses.
In May, cash grant recipients who made credit card payments were 28% more likely to pay over $500 than those who didn’t receive them. In June, that trend continued, with grant recipients being 17% more likely to make payments over $500.
Cash Grants Promote Food Security, Especially for Those who Need it Most
While grocery spending is up across the board since the pandemic began, people who received cash grants increased spending on groceries by 5% in May, and then again by 7% in June, compared to people who didn’t receive cash grants (down 5% in May, and flat in June).
This change is especially visible for SNAP recipients, whose nutrition expenses are subsidized by the government. Because many schools and childcare facilities are not yet fully reopened, many people are needing to spend more money to feed their families— without a corresponding increase in assistance from the federal government. SaverLife members who received SNAP assistance and also received a cash grant were 19% more likely in June, and 8% more likely in July, to spend over $250 on groceries versus SNAP recipients who didn’t receive a cash grant.
The Results Are in: One-Time Cash Grants Built Financial Security
This financial boost offered critical support to help people survive the continued unpredictability of the pandemic, a precarious economy, and an increasingly volatile political climate. SaverLife transactional data demonstrates that a one-time cash grant in the middle of an unprecedented pandemic had a significant impact on the wellbeing of low-income families. Not only did it help members save for an uncertain future, but it also ensured they could put food on the table, stay current on bill payments, and keep a roof over their heads—none of which can be taken for granted in 2020.