Nonprofits, Victims of Coronavirus

The novel coronavirus disease, COVID-19 pandemic has left a large part of the world shutdown and practicing social distancing. As a country, we Americans have found ourselves in uncharted territory. The immediate ramifications of the pandemic will pale in comparison to the long-term impacts on our economy. The disease is creating a developing situation with wide-ranging effects. Several leading expert economists are forecasting a recovery period that could take up to five years or more. But for nonprofit organizations, it could be too little, too late. The impact of this pandemic could be devastating and could drive many nonprofits to the brink of shuttering their doors.

No one knows how long this pandemic will last. As federal and state government leaders try to flatten the curve, nonprofits are trying to stabilize and stop the fiscal hemorrhaging. According to the National Center for Charitable Statistics (NCCS), there are more than 1.5 million nonprofit organizations registered in the United States. According to a 2019 report by the Center for Civil Society Studies at Johns Hopkins University, nonprofits account for roughly 1 in 10 jobs in the U.S. private workforce. As orders to shelter in place and practice social distancing emanate from the Centers for Disease Control (CDC), and the World Health Organization (WHO), nonprofits are scrambling to find alternative methods of doing business.

The recent mandates, executive orders and health guideless have left nonprofit leaders to make some pretty drastic and tough decisions. Those decisions include ending day to day operations, canceling or postponing programming, fundraising events, and donor outreach activities. These are all the ingredients that make for the stability of an organization. As the novel disease continues to spread, volunteer-driven nonprofits are seeing a decline in volunteers, as people fear exposure and resign from commitments. With 1 in 10 persons in the United States employed by a nonprofit, local nonprofits are facing a human resources nightmare. The closure of daycare, schools and recreation centers has forced many to be home with their children.

All of this is a recipe for disruption and could cripple some nonprofits as organizational objectives have to take a back seat. I recently spoke with the leader of one of Detroit’s foremost youth-serving nonprofits. In the wake of this pandemic, they have had to lay off staff, reallocate budgets and are currently exploring other cost-saving methods to keep the doors open during and beyond. Sadly, this will be the path for most nonprofits in our community, unless of course corporations, foundations, and private donors begin making strategic moves to keep them afloat.

According to SalesForce.org, only 20% of nonprofit funding in the United States is “unrestricted,” meaning that the use of funds is not limited by the donor and is instead at the discretion of the nonprofit’s leadership to spend the donation as they see fit. In better conditions, nonprofits would be planning for annual fundraising events where unrestricted dollars are raised. However, limitations on the numbers of people allowed to gather have faced nonprofit leaders with the daunting task of canceling or postponing events.

To add insult to an already injurious situation, in-person solicitation and donor stewarding meetings have been swallowed up in social distancing. Therefore, fund development staff must explore other means to connect with donors, while establishing and maintaining authentic connection. This is not the time to love and leave your donors. Donor recognition must be the tool of choice in this situation. Nonprofit leaders are urged to begin planning for the long term by developing new ways to communicate and engage with supporters. Remember, technology is our friend. The power of a nice thank you video to a group of your donors can go a long way. In this time of self-distancing empower your board members to call donors to recognize them. And of course, a handwritten note is always in order.

Domino's & Chess

In a true domino effect, nonprofits who rely heavily on the corporate, foundation and private dollars for support will need to reallocate budgets and potentially lay off staff to survive. To lessen the financial blow to nonprofits, I believe there to be several courses of action that can be taken:

• Foundation partners should seriously consider allowing nonprofits who are impacted by social distancing guidelines to reallocate grant budgets to cover some percentage of overhead and administrative costs during this pandemic.
• Additionally, a careful review of grant terms and agreements should be completed and nonprofits are provided no-cost extensions as many have had their programming impacted.
• Corporate donors should continue with their financial support of organizations, without the traditional fundraising events, i.e. gala dinners, performances, tickets, etc.
• Individual and private donors, who can afford to, should tender their annual pledges earlier. If you are a membership holder or subscriber to an organization, such as the arts or a society, it would be a good idea to renew now. Many of those nonprofits could use the cash infusion.

As this pandemic plays out nonprofits should begin reimaging their physical space and platforms to see how they can support federal, state and local efforts.  For example, in Detroit, a number of nonprofits have physical space that can be used as testing or treatment facilities. Where applicable, leveraging resources with other nonprofits can increase impact. As a trusted voice to their constituent’s nonprofits can disseminate information provided by the CDC, WHO or other governmental agencies.

The truth is that when this is all over—and we all believe it will be over, we will need our nonprofit community organizations. I encourage nonprofit leaders to begin reaching out to foundation, corporate and private donor partners. Prepare a strategy and plan, by all means, go to the table. Tough conversations are needed in tough times.