During the coronavirus pandemic, government leaders and the news media have focused their attention on the economic struggles facing business. But America’s nonprofits are in the gravest danger. Organizations that help feed the hungry, fight for social justice, tend to the sick, and enrich our lives through arts and education will be irreparably harmed without urgent action from government, business, and philanthropy.
An astonishing 75 percent ofnonprofits surveyed by the Nonprofit Finance Fund do not have six months of cash reserves.In the wake of canceled fundraising events, postponed programs, and lost revenue, nonprofit leaders are taking drastic action to cut costs to save their organizations. Furloughs, layoffs, and terminationsare hitting nonprofitshard. One executive director called me recently in tears to share the news that she and her board had decided to close their doors. Many more are on the brink of doing the same.
If we fail to act, the economic toll will be devastating. Nonprofits employ more than 10 percent of the private work force in the United States, some 12.3 million people at last count, according to the 2019 Nonprofit Employment Reportfrom Johns Hopkins University.
In addition to economic harm, the loss of nonprofits would deprive all Americans of a platform we depend on to build a more vibrant and just nation. Throughout American history, social progress has been made possible by civil society — by people joining together to fight for the abolition of slavery, women’s suffrage, and civil rights. As the United States faces the most profound racial-justice crisis since the civil-rights movement of the 1960s, the loss of these institutions would result in a retrenchment of our public life and a profound weakening of our democratic republic.
How, then, do we meet this challenge? During the Great Depression, President Franklin Delano Roosevelt affirmed the need for relief, recovery, and reform, in that order.
Governments need to take urgent action. More than 400 nonprofits joined with the National Council of Nonprofits to write a letter outlining policies that governments need to enactto help save nonprofits, such as expanding grants and loans that keep staff employed and doors open.
Business Must Act
Businesses, too, must deploy the myriad resources at their disposal, from charitable giving to consultation and technology. Corporate foundations give away billions each year in cash, products, and services. But we need companies to make new commitments that go above and beyond. Last year, 181 CEOs — members of the Business Roundtable — called for a broader, purpose-minded definition of the corporation. If each of their companies contributed another $5.5 million — a pittance compared with their profit pools — we could raise $1 billion for nonprofit relief and recovery.
Already, philanthropy has stepped up. In New York, a consortium of foundations and donors created a response fund that has raised more than $105 million in emergency support for human services and arts nonprofits. In Chicago, Seattle, Atlanta, and many other communities, similar emergency-response funds have been organized.
Distribute a Bigger Share of Assets
We must do more. Foundations like mine have often provided the financial oxygen and lifeline for nonprofits. Our ordinary practice is to annually pay out in the range of 5 percent of the value of our endowments, the legal minimum. .
But this is no ordinary time. We cannot do the minimum when faced with the overwhelming threat to the survival of nonprofits and, by extension, our democracy. Foundations must use the full arsenal of tools and assets at our disposal, including our flexibility, ingenuity, and longevity. Imagine if each of our institutions distributed three or four extra pennies on the dollar. The impact would be significant.
Established by visionary industrialists — and endowed with vast resources and noble missions — America’s first foundations afforded broad powers to future generations to rise to the problems of future eras. Today, our generation of foundation trustees and leaders must take extraordinary steps to carry out these missions in the face of an existential threat to our democracy.
Much like the proverbial stool, our society rests on three legs: government, free enterprise, and civil society. To date, our collective actions toward relief and recovery have focused mostly on the first two, but insufficiently on the third.
Long before this crisis, the 19th-century observer Alexis de Tocqueville remarked on the splendor of American “associations,” groups of people who joined together in common cause for a common good. These “associations,” small and large, have served as the heartbeat of democracy.
In the 185 years since de Tocqueville’s words, American civil society has ushered in immeasurable national and global progress. But what we choose to do together and for one another is what makes us unique among nations. During the challenging days ahead, we need to once again meet the moment with common purpose and unified action to save America’s vital nonprofits.
Darren Walker is president of the Ford Foundation.
