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TO: HONORABLE MAYOR FROM: Nanci Klein AND CITY COUNCIL SUBJECT: CORONAVIRUS RELIEF FUNDS DATE: January 27, 2021 FOR ARTS AND CULTURAL SECTOR Approved Date 1/28/2021 INFORMATION As part of the City of San José’s federal Coronavirus Aid, Relief, and Economic Security (CARES) Act Coronavirus Relief Fund (CRF) moneys, the City dedicated $2,493,000 to provide relief grants to a) San Jose nonprofit arts and cultural organizations, and b) San Jose artists and cultural entrepreneurs that have been negatively impacted by COVID-19. The City’s goal was to provide relief to these two vital pillars of the City’s arts ecosystem by reimbursing specific and documentable expenses and income loss due to the pandemic. A racial equity lens guided the distribution of these funds, prioritizing individuals and organizations that have been disproportionately negatively impacted by the pandemic. Through the CRF: Nonprofit Arts Grant and the CRF: Artist Grant, 73 arts and cultural organizations received grants totaling $2,285,000 and 94 artists and sole proprietor business owners in the arts sector received grants totaling $208,000, respectively. This memorandum provides information on the outcomes of the CRF Nonprofit Arts Grant and the CRF Artist Grant. BACKGROUND On August 18, 2020, the City Council approved the implementation of approximately $23 million in Coronavirus Relief Funds allocated in the 2020-2021 Adopted Operating Budget for local assistance related to the COVID-19 pandemic. On September 22, 2020, the City Council approved the disbursement of an additional $7 million in unallocated Coronavirus Relief Funds to invest in the City’s most vulnerable populations for a total of $30 million. Of these funds $3,350,000 was allocated toward direct assistance to non-profit organizations (non-arts) and $2,493,000 to arts and cultural nonprofits, individual artists and cultural entrepreneurs. The City entered into an agreement with the Silicon Valley Community Foundation to administer and expedite the payment of grant funds to nonprofit arts and non-arts organizations by the December 30, 2020 federal deadline for spending Coronavirus Relief Funds. The City also HONORABLE MAYOR AND CITY COUNCIL January 27, 2021 Subject: Coronavirus Relief Funds for the Arts and Cultural Sector Page 2 entered into an agreement with Center for Cultural Innovation (CCI), a trusted intermediary focused on the economic security of people in the arts, to administer and adjudicate the grants to individual artists and sole proprietor cultural entrepreneurs. On September 15, 2020, the Office of Cultural Affairs (OCA) released both the CRF Arts Nonprofit Grant guidelines and the CRF Artist Grant guidelines outlined below. These guidelines were distributed to OCA’s extensive list of arts organizations and artists, promoted in the OCA’s social media channels and the City’s weekly Flash Report, and posted on the City’s website. Applications were due on September 29, 2020. ANALYSIS The arts sector has been particularly hard hit as arts and cultural facilities such as theaters have been among the first to close and the last designated for re-opening in the wake of the COVID-19 pandemic. Arts organizations and artists play a vital role in the City’s unique cultural identity and economic vibrancy. As part of its designated CARES Act Coronavirus Relief Funds (CRF), the City provided $2,493,000 in grant support to artists and organizations that anchor our vitally important art communities. Grants were disbursed to the arts sector through two direct grant programs: • City of San Jose Coronavirus Relief Fund: Nonprofit Arts Organizations, grants supporting arts and cultural nonprofits with funds totaling $2,285,000; and • City of San Jose Coronavirus Relief Fund: Artists, grants supporting individual creative entrepreneurs and sole proprietors with funds totaling $208,000. The OCA managed grants to arts organizations, with contracting and disbursement administered through the Silicon Valley Community Foundation. Grants to artists were administered and adjudicated by the Center for Cultural Innovation (CCI). City of San Jose Coronavirus Relief Fund: Nonprofit Arts Organizations This program was designed to provide economic relief to nonprofit arts and cultural organizations during the pandemic and is guided by the Federal CARES Act CRF requirements. A total of 73 arts and cultural nonprofit organizations applied for and received $2,285,000 in relief funding. Awards ranged from $5,720 up to $80,030 and were tiered based on organization budget size. Recognizing the disproportionately negative economic impact of COVID-19 on communities of color, priority organizations serving predominantly communities of color were eligible to apply for funding that was approximately $10,000 higher than the maximum otherwise set for their budget category. Of the 73 organizations that were funded, 33 organizations (45%) serve predominantly communities of color. Of that number, 24 organizations -- one-third of the total number of HONORABLE MAYOR AND CITY COUNCIL January 27, 2021 Subject: Coronavirus Relief Funds for the Arts and Cultural Sector Page 3 organizations funded -- are led and governed by communities of color, often with organizational missions that focus on the cultural expressions deeply rooted in their communities. In accordance with the federal coronavirus relief guidelines, eligible expenses under the arts and cultural nonprofit relief grant program included reimbursing the following costs of business interruption incurred between March 1, 2020 through December 30, 2020 and directly necessitated by COVID-19: • Lost income due to cancelled performances, classes or services; • Rent/lease/mortgage and utility payments for business facilities; • Personal Protective Equipment (PPE), sanitation or health safety equipment; and • Costs of digital technology equipment required to transition existing programs online. Arts and cultural nonprofit organizations based in San Jose were eligible to apply, with priority consideration given to the following groups: • Arts and cultural organizations that submitted applications in the City’s regular annual arts grant process for the FY2020-2021 funding cycle, including those that submitted applications using a nonprofit fiscal sponsor. Due to ongoing and extensive outreach, the OCA’s annual arts grants programs attract a large pool of qualified applicants representing various disciplines, budget sizes and diverse cultural communities. In early spring 2020, almost 100 applications were evaluated by qualified panels comprised of arts professionals, local artists, and community laypersons, but due to an unprecedented drop in Transient Occupancy Tax receipts, most recommendations were unable to be implemented. • Arts and cultural organizations centered in communities of color that have been disproportionally negatively impacted by COVID-19. Organizations that predominantly serve communities of color are particularly vulnerable to the negative impacts of COVID-19 due to historic funding patterns and income disparities that exist in most communities of color. It is important that the City retain the partnership and participation of arts organizations of color in shaping the City’s unique and diverse cultural landscape. • Cultural organizations that steward City-owned regional cultural facilities and/or historic assets. The pandemic has significantly impacted these organizations’ operations due to high fixed costs associated with facility operations. Supporting their sustainability mitigates risk of loss of critical services to the community and financial loss to the City. Prior to finalization of the grant guidelines, the OCA conducted community outreach, seeking input from nonprofit arts and cultural organizations, Arts Commission, and arts philanthropy colleagues on the general guiding principles for the arts organization grants through an on-line survey. An overwhelming majority of the 56 respondents expressed support for the general guiding principles which included: HONORABLE MAYOR AND CITY COUNCIL January 27, 2021 Subject: Coronavirus Relief Funds for the Arts and Cultural Sector Page 4 • Prioritize arts organizations that applied for annual arts funding for FY2020-2021. • Utilize an equity lens for organizations centered in Coronavirus-vulnerable communities. • Establish tiered funding categories that recognize differing financial capacities. • Automate funding decisions to the extent possible for efficiency and objectivity. The grant guidelines set forth several funding tiers based on organizational budgets to maximize the possibility that all eligible applicants with priority could be funded. Given the extent of economic disruption in the arts sector, had these pre-set maximum tiers not been in place, the total funds requested would have exceeded the funds available. Due in part to the strategic funding tiers and a modest allocation of additional funding after the grant guidelines were released, all arts organizations that applied for relief funding were able to be funded. One organization, whose mission was more closely aligned with social services, opted to withdraw from consideration and submitted a successful application for the non-arts Nonprofit Relief funds. City of San Jose Coronavirus Relief Fund: Artists In addition to the City’s support for the nonprofit arts ecosystem, the City offered relief grants to artists based in San Jose, with targeted outreach to those who are from historically underserved communities and have been made financially