Will Emergency Microgrants Catch Fire Among Campus Donors? Let's Hope So

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Attention, four-year colleges: If you’re interested in providing your low-income students with help meeting sudden financial emergencies, there are at least a few funders who work in this space. What’s more, this still-small niche of higher ed funding has lots of potential to gain traction given how it can boost college completion rates. 

For many of us, unexpected expenses such as a major car repair or a medical bill are little more than expensive inconveniences. For low-income students, who are often juggling work and school, expenses like these can be the difference between staying in school or dropping out.

Studies show that a shockingly high number of U.S. households don't have the funds to meet unexpected expenses of just a few hundred dollars. One 2015 report, by the Federal Reserve, found that 47 percent of Americans couldn't handle a $400 expense without selling something or borrowing money. Young people, especially of color, tend to be in especially precarious situations. But being forced to drop out of school because of a short-term financial emergency can translate into a long-term setback, including never returning to college. 

By offering a lifeline at critical moments, microgrant programs can deliver a lot of bang for the buck compared to other forms of higher ed funding. A report released last year by the Coalition of Urban Serving Universities and the Association of Public and Land-grant Universities looked at how micro-grant programs work at 10 different schools. Among other things, the report found that Georgia State University estimates that it gets a 200 percent return from a program offering emergency grants of up to $2000. 

That report was funded by the Lumina Foundation and Great Lakes Higher Education Corporation, the two funders who've demonstrated the keenest interest so far in microgrants. It should be read widely among campus development officers looking for ideas to excite alumni donors. As we often report, donors love stuff that's cutting edge and they also like the notion of getting a high return on their gifts. Microgrants check both boxes. 

Great Lakes is on the vanguard of microgrant efforts. Since 2012, it has committed $3 million to support Dash Emergency Grants at two-year colleges. Schools participating in the program have reported that the Dash Emergency Grants have helped low-income students stay in school and graduate at higher rates than the national average. Data cited by Great Lakes indicate that 73 percent of recipients of emergency grant funds either graduated or remained enrolled in college, compared to a 59 percent nationwide retention rate for students in public two-year institutions. 

The funder now wants to extend this program to four-year colleges and universities. Great Lakes announced this new opportunity on its website recently, and has invited four-year institutions in Arkansas, Iowa, Minnesota, Ohio, North Dakota and Wisconsin to participate. The funder will select up to 32 colleges and universities to participate in the emergency grant program. Fundraisers at four-year colleges in these states have until March 23, 2017, to apply. The grant period will run from June 15, 2017, to August 31, 2019. This will include a three-month period for setting up the program and training staff to administer it.

The emergency grant program is simple enough in concept: Students facing an unexpected bill apply for a grant directly from their school. Within 48 hours of the approved application, the expenses are covered. By removing this financial distraction and source of stress, students are free to focus on their studies and continue to progress toward degree completion. If it is found that underlying financial issues are responsible for the unexpected bill, students will be referred to school and community resources for assistance.

Great Lakes’ goal for this program is to gain knowledge of what successful emergency grant programs look like. The funder plans to use the experiences of the funded schools to develop a framework of best practices and institutional requirements for colleges interested in operating such programs. Let's hope it also shares its findings widely with other funders. 

We’ve written about Great Lakes in the past, and this program is another example of how the funder has carved out a niche for itself with a focus on the types of supports needed to help low-income and first-generation college students succeed in college and graduate ready to begin successful careers. Other programs funded by Great Lakes have supported the creation of paid internships so that financially struggling students can benefit from the experience and networking opportunities provided by internships.