For philanthropy, it is the best of times and the worst of times. The coronavirus pandemic has spotlighted the important work done by charities to heal the sick, feed the hungry, help the elderly, and address other suddenly existential concerns. But the crisis has also stretched the resources of some of these organizations to the breaking point, forcing many to make drastic changes in how they operate or to shut down altogether. With the world’s economy in a tailspin, the pandemic has created deep uncertainty about the future of the nonprofit world.
But as serious as these problems are, philanthropy has reason to be hopeful. Dwelling exclusively on the challenges may not only cause needless anxiety but also lead us to overlook opportunities that are emerging from this crisis.
Take giving. Hardly a week goes by without newspaper stories or surveys reporting that charitable giving is dropping.
Last month, for example, Gallup unveiled a poll that found “a new low” in Americans reporting they donated to charity.
However, the decline tracked by Gallup — from 79 percent in 2009 to 73 percent in April of this year — is not statistically significant. It may also have causes other than the current pandemic, such as the lasting effects of the Great Recession a decade ago or the 2017 tax law’s change in charitable-deduction rules that reduced the tax benefits of giving for most moderate and low-income people. Although it wasn’t highlighted in the press release from Gallup, the poll also produced the encouraging finding that 25 percent of Americans intend to increase their donations next year, while 66 percent plan to keep them the same and only 7 percent plan to reduce them.
A survey by Campbell Rinker for Dunham and Company produced a similar result: 81 percent of respondents said they intended to continue giving during the pandemic. Moreover, in this poll, as in Gallup’s, those who planned to keep giving were people with higher incomes or education — groups that are already generous and less likely to be affected by the economic slowdown. Nonprofits can build on this reliable base to help them recover from their present losses.
The Campbell Rinker poll turned up another hopeful sign. Donors, it found, are becoming more confident in charities, with 60 percent now saying they do “good” or “excellent” work, compared with 48 percent in 2018. (The Edelman Trust Barometer’s spring update reported a similar finding.)
Nonprofits Are ‘New Heroes’
In recent years, catastrophes have not been kind to charities. Following disasters such as the 2010 earthquake in Haiti, nonprofits were criticized for mismanaging contributions of money or supplies. But so far, that has not happened in the coronavirus pandemic. Instead, we are applauding health care providers and food-pantry operators as our “new heroes.” Unlike in the past, if that outlook continues, nonprofits will not need to mend their tattered reputations to recapture lost support.
Foundations are also showing more confidence in their grantees. Regardless of their own priorities, many grant makers have given to emergency funds set up in their communities to meet coronavirus needs. And more than 700 grant makers, including many of the nation’s largest, have promised to allow recipients of restricted grants more flexibility in how the money is used, including, if necessary, for general operating expenses. Donor-advised funds, according to administrators such as Fidelity Charitable, have stepped up their giving, especially to organizations providing social services.
To be sure, though, these kinds of donations are just a small share of support for most charities, and restricted grants already underwrite many types of operating costs, such as scholarships.
What may be more important than the dollar amount is the principle these foundations are endorsing. Traditionally, such grant makers have been reluctant to provide a full share of the administrative costs associated with their grants or to help their grantees build capital funds that could tide them over through crises. As a result, half of the organizations surveyed by the Nonprofit Finance Fund in 2017 had reserves equal to no more than three months of spending.
Now, by allowing more funds to be used for operating expenses, foundations and donor-advised funds are acknowledging the importance of sustaining organizations during an exceptionally difficult period. Is there any reason that they should go back to “normal” when this crisis is over?
Lessons of the Great Recession
How soon the current challenges facing nonprofits will subside depends on what happens to the economy. We can’t yet predict the depth of the recession or the speed and scope of the recovery because we don’t yet know how well we will deal with the Covid-19 virus itself. However, nonprofit leaders need not feel pessimistic or helpless.
During the economic downturn of a little more than 10 years ago, giving declined by 7.2 percent in 2008 and another 8 percent the following year. Most organizations found ways of adjusting to these unprecedented reductions, even though that took a lot of hard and challenging work.
Some of the strategies may still be useful. And some may not — it’s hard to hold a conventional fundraising event when you’re social distancing. Back then, once the economy started to revive, giving did as well, returning to prerecession levels within four years. If the United States successfully reopens, the Gallup and Campbell Rinker surveys suggest the same pattern might recur.
Or perhaps a better one. Often lost within the gloomy news about the pandemic and the economy is how successful our collective efforts have been in keeping the crisis from becoming even worse. For many years now, we have worried that Americans were becoming too individualistic and too inclined to put their own interests ahead of those of their fellow citizens and communities. Yet most of us, at least so far, have proved willing to bear burdens that would have been inconceivable six months ago.
Sheltering in our homes, putting on masks, and staying six feet apart from people on the street may seem a long way from giving to charity or volunteering. But these acts are rooted in the same spirit. They should give real comfort and hope to those who work in the nation’s hard-pressed charities.