Communities Are Still Facing Disruptions: Is Recovery in Sight?

2021 Federal Reserve’s Community Impact Survey

In early 2020, at the start of the COVID-19 pandemic in the United States, the Federal Reserve System began fielding a survey to monitor how community development organizations and the low- and moderate-income (LMI) communities they serve were faring. Throughout 2020, all 12 Reserve Banks fielded the survey four times.

A year later, the Fed again sought to capture the scope of the crisis facing community development organizations and LMI communities. In August 2021, the Fed’s community development function and eight national partners fielded the Community Impact Survey. This survey provides insight into economic conditions and disruptions as well as expected recovery time. The survey garnered 3,681 responses from organizations across the nation.

This survey is a convenience sample, so although questions across all surveys are similar, the national and Fifth District results of the 2020 surveys are not directly comparable to the 2021 iteration.

Fifth District Responses: An Overview

Three hundred forty-eight organizations reported serving communities in the District of Columbia, Maryland, Virginia, West Virginia, North Carolina, and/or South Carolina. This survey was open to organizations that provide direct services for individuals, families, or small businesses as well as those that provide indirect services. Eighty-two percent of Fifth District respondents were direct service providers, working on issues including child welfare and family well-being (44 percent), housing (44 percent), health (41 percent), and workforce development (40 percent).

The COVID-19 pandemic upended many aspects of normal life since March 2020 — causing sudden and drastic changes in the economy. Ninety-eight percent of district respondents reported their communities were still experiencing disruption at the time of the August 2021 survey, about the same as the peak of COVID-19 disruption (99 percent). However, a much smaller share reported they were still experiencing significant disruption (41 percent) than at the peak (86 percent), which indicates conditions are moderately improving.¹ Within their communities, 55 percent of district respondents reported severe disruptions to small businesses, 54 percent to services for children, 49 percent to financial services, and 46 percent to housing stability.

If respondents indicated that conditions at the time of the survey were worse than pre-pandemic conditions, they were then asked how long they expected it would take for their communities to return to pre-pandemic levels. For example, if a respondent said that in their community, access to services for children declined during the pandemic, they were asked how long they expected availability of early child care and education, access to child welfare services, and adequate access to K-12 education to return to previous levels. Most respondents estimated it will take between one and three years for their communities to recover to pre-pandemic levels for each issue they were asked about. (See chart below.) However, more than 40 percent of respondents estimated it could take more than four years for housing security (i.e., evictions, back rent, foreclosures, and homelessness) to recover — or never return to pre-COVID-19 conditions.

Challenges Facing Fifth District Communities

Over the course of the pandemic, federal, state, and local governments have deployed various relief efforts intended to help businesses and individuals. Fifth District respondents expressed that all of the pandemic relief that the survey asked about were critical resources for the communities they serve. More than 90 percent of respondents said that small business support and stimulus checks were critical (68 percent and 66 percent specified they were very critical, respectively).

Although respondents indicated that relief for individuals — including unemployment benefits, stimulus checks, and relief for mortgages or rent — provided much needed support during the height of the pandemic, people continued to face multiple challenges. This survey inquired specifically about challenges with employment and access to financial services or assistance.

Most district respondents revealed that returning to work posed a significant challenge for their clients (68 percent). Hardship revolved around child care support, public transportation, and risk of exposure to COVID-19. Research suggests that the COVID-19 pandemic has afflicted people of color worse than the general population, and this survey revealed similar findings. Seventy-six percent of respondents who reported serving communities of color said their clients felt significantly challenged returning to work, a larger share than the overall district sample.

Additionally, while the survey reported that access to financial services and resources presented challenges for all district communities, respondents that serve urban areas and communities of color reported a greater share of significant challenges for their clients in accessing government funding, establishing/maintaining relationships with banks to access capital, and applying for funds. This finding is particularly notable as it not only suggests unequal access to pandemic relief for populations in the district that have historically been subject to disinvestment, but also supports research that shows that people of color face considerable challenges in accessing financial services.

Effects on Fifth District Organizations

In addition to questions about the communities they serve, the survey asked respondents how the pandemic has affected their organizations. Across the district, 30 percent of respondents indicated that the pandemic is still causing significant disruptions to their organizations (though this percentage has decreased from 66 percent at the peak of the COVID-19 pandemic).¹ Fifth District respondents, on average, reported similar levels of current and peak disruption to respondents at the national level (32 percent and 69 percent, respectively).

When asked about how revenue streams changed over the pandemic, 61 percent of respondents reported a modest or significant increase in government funding. Compared to urban respondents (57 percent), a larger percentage of rural respondents (61 percent) indicated an increase in government funding, though there was no difference between organizations serving communities of color and noncommunities of color. For most organizations, the fees they charge for services remained unchanged or declined. However, many reported modest or significant declines in donations both from individuals and corporations.

While the onset of the pandemic precipitated a decline in demand for many industries, demand for social services has increased throughout the pandemic. When asked to compare their current situation to pre-COVID-19, 70 percent of district respondents revealed that demand for their services has increased since February 2020. However, they reported mixed results for their ability to provide services and to staff their organizations. Moreover, the majority of firms reported an increase in their expenses (68 percent).

Conclusion

The Fed’s Community Impact Survey revealed that pandemic-related challenges are lessening, but communities still have a ways to go before returning to pre-pandemic conditions. Respondents in the Fifth District expect that a complete recovery will take one to three years, and many respondents anticipate a longer road to recovery when it comes to housing security. Interventions in the form of pandemic relief programs were helpful to individuals and businesses that received them but were not equally accessible. With a perspective from Main Street, this survey further develops the story of the ongoing and uneven pandemic recovery across our district.