Fundraising in Uncertain Times

The Central Pennsylvania Food Bank has seen need for food assistance skyrocket since the pandemic began. Millions of people are out of work and struggling to pay for basic needs like food and housing. Like its peers in the Feeding America network, the food bank has been operating in disaster mode since early March.

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The nonprofit quickly started to ask for support — and hasn’t stopped. At the end of March and into the beginning of April, it sent an extra solicitation telling donors it anticipated greater need for food. Fundraisers continue to appeal frequently.

“We did not back down. We continued our path of asking — and asking for more,” says Jennifer Powell, chief development officer at the food bank. That approach has been successful. “We did not get backlash, we did not see donor fatigue in those six months, and people gave, and they gave again, and they gave again.”

More than 10,000 new donors gave to the food bank, thanks in part to a partnership with a local radio station. “We are continuing to receive donations at a higher level than any year in the past,” Powell says. The food bank’s other work to recruit donors is on track to add another 5,000 new supporters to its rolls by the end of its fiscal year next June.

The Central Pennsylvania Food Bank isn’t alone. Cash and donated food and other supplies to Feeding America’s national office totaled more than $1.3 billion in the second quarter, a 77 percent increase over the same period in 2019. Those funds are sorely needed. On average, Feeding America food banks are serving around 60 percent more people over the same time last year.

Central PA Food Bank

Still, Powell, like many other fundraisers, has her eye on the end of the year when the food bank would typically raise about two-thirds of its operating budget. Things have been tough for her organization. Companies and individuals are cutting back their food donations, and major changes in how the organization distributes food because of the pandemic are further straining the nonprofit. She’s concerned that donors who gave earlier in the year may not give again. “If you ask me what keeps me up at night, that would be it.”

During the worst economic downturn since the Great Depression, it’s not a surprise that food banks and other charities that provide basic services to people in need have seen a jump in giving. But fundraising has shot up at some other organizations that don’t have direct connections to the pandemic, recession, or social unrest that has rocked the United States. The Nature Conservancy, for example, raised more than $400 million in the first six months of 2020, a 40 percent increase over the same period the previous year. That’s largely thanks to major donors who continued giving even as people who make small annual gifts cut back.

Development leaders at 116 large charities responded to a Chronicle survey about their institutions’ fundraising this year to provide a temperature check of giving in uncertain times. Some organizations provided only portions of the data requested. The 107 groups that provided sufficient data for fundraising comparisons raised 22 percent more from foundations, corporations, and individuals in the first half of 2020 than in the first six months of the previous year. Those 107 groups accounted for roughly 10 percent of the nearly $450 billion donated in the U.S. annually..

For most of the charities that provided data, that increase was bolstered by a spike in giving in April, May, and June. Giving to these groups in the second quarter surged nearly 41 percent over the same time last year, and many nonprofits said contributions have continued to grow in the months since.

Uneven Success

The survey data, combined with more than two dozen interviews with fundraising leaders, presents a snapshot of the state of giving to the nation’s largest charities.

While donations to big charities have increased over all, that success has been uneven. For large nonprofits that rely heavily on in-person events and ticket revenue, the pandemic has been a shock to the system. Thirty-one of the big nonprofits in the Chronicle study saw giving decline in the second quarter of 2020 compared with that period last year.

Across the board, organizations are tempering their expectations for the end of the year. Some fundraisers wonder anxiously whether people who felt compelled to address the crises of 2020 early in the year will continue to give as unprecedented needs spiral and donors remain concerned about their own jobs and finances. In addition, many fundraisers expect that donors will pause in their giving while they wait for the outcome of the presidential election.

“So much of the giving in these two quarters was spontaneous. People wanted to help, and they were looking for the best way to help,” says Brian Gallagher, chief executive of United Way Worldwide. United Way’s headquarters raised $60 million in the first six months of the year. That’s on top of $670 million for Covid-19 relief raised by United Ways across the country. “Now the question comes, How do you sustain that?”

Giving Divide Widens

The pandemic economy has favored the wealthy. The stock market has gained back most of what it lost early in the crisis. As a result, major giving is going strong.

“The rich are still the ones that are doing fine and can give, so groups whose business model is still attuned to the rich are doing better during the pandemic as well,” says Josh Birkholz, CEO of BWF, a fundraising consultancy that works with many large charities.

Of the 95 charities that answered a survey question about major giving, 62 reported an increase in the number of gifts from wealthy donors in the first six months of 2020.

Many of the large gifts that have come in during the pandemic are from longstanding relationships with donors. Fundraisers have made it a priority to check in with their high-net-worth supporters — and those calls are paying off.

Some fundraisers say they’ve been talking to their supporters about giving through donor-advised funds. Fifty-five groups that responded to a survey question about donor-advised funds said they’ve had an increase in the number of contributions from DAFs in the first half of 2020 compared with the first half of 2019. Twenty-nine charities said the number of DAF gifts stayed the same, and nine said that they decreased.

Though some fundraisers remain frustrated that donor-advised-fund holders aren’t required to release details about their giving, others are more pragmatic and have embraced DAFs with the understanding that they hold more than $120 billion in assets. That’s the case for Unicef USA, which has encouraged donors to make gifts from their funds, says Ann Putnam Marks, vice president for major gifts.

“If you’re a major donor who has invested their assets in a donor-advised fund, you’ll be able to spend them at any time, and they’re kind of protected from the volatility of any economic downturn,” she says.

Economic inequality was already at a historic high, and Gallagher, of United Way Worldwide, fears that the pandemic and the downturn will further deepen economic and philanthropic divides. “High-net-worth people were driving giving for the last decade anyway,” he says, adding that he believes it will be easier to retain those major donors into next year.

“The people who had good jobs, good incomes, had assets — they recovered just fine in most cases, but poorer people, lower-income people, people of color have gotten decimated,” Gallagher says. “Anyone who’s in a position to give is giving the same or more. But you’ve got tens of millions who aren’t in a position.”

Some fundraisers are particularly concerned about affluent people who give a few thousand dollars or more each year but who may need to cut back more than the wealthiest Americans.

“Those are donors who may have been making other choices about where to give during the pandemic, deciding to refocus their philanthropy on things that had more immediate impact around health care, food security, social services,” says Sharon Marine, vice president for alumni relations and development at the University of Chicago.

University of Chicago

“A number of the donors who give at that level are probably more susceptible to impacts of the economy than donors are at the upper end,” she says.

The university saw a strong response to emergency appeals to support health care workers, assist students with unexpected costs associated with remote learning, and provide meals to people in need in the neighborhoods near its campus. Giving to student financial aid has also grown.

“It wasn’t outsized dollars by a scale of what we normally raise,” Marine says of the campaigns. “But it did draw in a lot of lower-end donors and in some cases new donors that maybe wouldn’t have supported us.” Over all, giving to the university was down 13 percent in the first six months of the year, though fundraisers expected a slight decline after finishing a $5.4 billion campaign at the end of 2019.

At The Associated: Jewish Federation of Baltimore, donations for the first six months of the year were roughly even with what it raised during that period in 2019. Second-quarter revenue, however, declined by nearly $3 million year over year.

The group blames Covid-19.

“Since the pandemic, about 8 percent of our constituency is finding themselves either unemployed or underemployed,” says Marc Terrill, the organization’s president. He says that’s based both on anecdotal evidence and increased demand for the services the federation supports, such as interest-free loans, grief support, and financial assistance for burials.

Terrill worries that some longtime midlevel donors will stop giving as the economic downturn continues. Without in-person fundraising events, the group is having a hard time connecting with new donors. That means it’s leaning harder on donors who have previously made annual gifts of $500 or more, Terrill says.

“We’re asking them to do more because we know that some that may be making gifts of $300 — and that’s a fabulous gift for them — may not be able to do so, given their current reality and that they’re seeking service,” Terrill says.

Rush of Small Gifts

Despite those concerns, small-gift donors have stepped up big in 2020.

Of the 94 organizations that answered a question about small gifts, 55 said they’d seen an increase in the number of small donations in the first half of 2020. And 67 of the 97 organizations that answered a question about online giving reported an increase in the number of online gifts.

One possibility for the increase: The Cares Act, passed in March, offered a tax deduction for up to $300 in charitable gifts by people who don’t itemize on their taxes. Otherwise, only people who itemize can write off their gifts, and that is a tiny percentage of Americans.

But so far, that incentive is just for the 2020 tax year. As negotiations for an additional coronavirus relief package continue — albeit shakily — Congress is considering whether to extend and increase the deduction to $600 for individuals who don’t itemize.

Whatever their motivation for giving, individual donors have been a reliable support for many charities. Midlevel and small-dollar donors have flocked to public media stations, and monthly giving has continued to grow. That’s thanks to more people streaming broadcasts and reading news stories online. “Public-media listeners use public media as their most trusted source of information about what’s happening locally with coronavirus,” says Joyce MacDonald, chief executive of Greater Public, an association of public-media fundraisers.

During April, May, and June, fundraising revenue at 164 public media stations increased by a median of 6.6 percent compared with the second quarter of 2019, according to Michal Heiplik, president of the Contributor Development Partnership, which assists public-media organizations with fundraising. Stations have also seen their donor ranks grow.

“Retention held up, and new people were joining in,” he says. “Sustainers, they really are the headliner of the story.”

Still, some public-media fundraisers are uneasy about the future. “There have been plenty of layoffs,” Heiplik says. “It’s not a rosy picture.”

Corporate underwriting has plummeted, and many nonprofit radio and television stations are struggling to make up the losses. “That’s where public media has been hit the hardest,” says MacDonald.

The biggest stations are feeling the tightest squeeze. Some have seen 20 to 50 percent drops in corporate giving since the pandemic began, according to MacDonald.

Uncertain Corporate Support

Corporate giving is a source of concern for nonprofits of all kinds. Some, like Sue Swan, chief development officer at the American Lung Association, fear companies may funnel all of their charitable dollars into emergency-response efforts, rather than supporting existing grantees.

Longtime business supporters backed the lung association’s Covid-19 Action Initiative, a three-year, $25 million push for public-health education, research, and care. “It remains to be seen whether or not those dollars are just really moving money around or if they will support the Covid-19 Action Initiative while still supporting what they typically have supported with us, like smoking cessation,” Swan says.

For now, the American Lung Association is playing it safe. The charity lowered its expected total contributions from corporate donors by 20 percent for the 2021 fiscal year. “We’re not seeing a lot of existing partners walk away from our work, but we have heard from a number of partners that their level of support is or will go down,” Swan says. Over all, the nonprofit raised $43.5 million in the first half of 2020, a 16 percent decline from the same time last year.

Birkholz, with the consultancy BWF, speculates that some companies will be less generous if the downturn continues. “A lot of companies are going to have a year that ends in a loss,” which may mean they don’t need to claim a charitable deduction, he says. Still, many companies are continuing to do well through the downturn, and some have stepped up their giving to racial-justice efforts since the summer.

Adriana Zehbrauskas, The New York Times, Redux

Corporate cash contributions have dropped sharply at the National Park Foundation, says Will Shafroth, its CEO. Many of the companies the organization works with were hit hard by the pandemic. “We’ve leaned more into some of those businesses who had an ability to continue to contribute funds,” he says. “We recognize that others are going to be in a much more challenging place.” Over all, donations to the organization rose 42 percent in the first half of the year compared with the same time in 2019.

But the nonprofit has seen growth in marketing support, like donated ad time, which boosted second-quarter in-kind contributions by about 600 percent over the same time last year. The messaging campaigns target the many people who are driving to national parks this year. One campaign, called Recreate Responsibly, encourages people who go back into the public lands to be mindful of their impact on the environment and other people — in the latter case, by wearing masks and social distancing.

Loosened Restrictions for Now

Foundation grants have been a steady stream of support for many organizations in our survey. Of the 107 organizations that answered a question about foundation giving, 61 nonprofits said the number of grants they received in the first half of 2020 increased compared with the same period the previous year. Twenty-six nonprofits said it had remained stable, while only 20 groups said it had decreased.

An $11 million grant from the Humana Foundation to the national office of Volunteers of America was a big reason contributions more than doubled in the first half of the year compared with the same period the previous year. “We’ve been courting this funder for quite a while, and finally we got traction,” says Evelyn Miyasato, chief accounting officer for the national office.

The foundation awarded the grant in two parts. In May, it made a hasty $2 million grant to shore up Volunteer of America’s response to Covid-19. “They gave us all the leeway of how we’re dealing with it,” Miyasato says. “There’s no reporting requirement.”

But she doesn’t expect that flexibility to become the norm. “This year, we have that opportunity for foundations to provide us with unrestricted funds just because of the Covid-19 pandemic,” she says.

In June, the foundation gave the headquarters another $9 million, money that’s earmarked for health care programs over three years. Proposals for those programs had accelerated talks between the two groups before the pandemic hit.

Volunteers of America is not alone. The Chronicle asked organizations whether grant makers had loosened restrictions on their support in 2020. Half of the 100 nonprofits that answered said they had.

Volunteers of America Chesapeake

Gideon Herscher, interim head of fundraising at the American Jewish Joint Distribution Committee, which provides aid to Jews in need around the globe, says foundations are unlikely to continue to allow nonprofits to use earmarked grant money to cover unexpected operating costs, as some did this year. “I don’t see any reason for that to happen again,” he says.

Even so, Herscher expects the flexibility foundations showed this year to have a lasting impact on grant making. “There’s going to be openness on behalf of certain individuals and foundations to accept proposals that have built into them an unrestricted component,” he says. Over all, donations to the Jewish organization in the first half of 2020 was up more than 25 percent from the same time in 2019.

Uncertainty — the watchword for 2020 — has some development leaders worried about the reliability of foundation support. They fear grant makers will shift priorities, which could hurt certain causes.

“If the world continues to be on fire in the way that it has been, then institutional funders will need to be responsive to that,” says Clyde Jones, senior vice president for institutional advancement at the Metropolitan Museum of Art. The museum declined to provide specific numbers, but Jones expects overall 2020 fundraising will be steady with last year. “We’ve seen some funders who have said that their focus will move toward social justice or toward hunger or health relief, necessarily, because those are huge issues right now and those coffers are not limitless.”

For now, those foundations aren’t pulling away from the museum, but Jones expects they might reduce the size of the grants they award.

“If they’re making those kinds of choices, then perhaps their support of cultural institutions will be diminished,” Jones says.

‘Uncharted Waters’

Planning for the future is never easy, but the unknowns nonprofits face this year are daunting. If organizations are wrong in predicting how long the pandemic will last or when the recession will get better — or if it will get worse before it gets better — they want to err on the side of caution.

“Even though we’re knocking it out of the park, we have very modest fundraising expectations for the remainder of the year because there are so many unknowns,” says Shelley Diamond, chief marketing officer at Unicef USA. The charity raised more than $396 million in the first half of 2020, a 16 percent increase from the same period last year. “Because it’s completely uncharted waters, we are being very modest in what we expect this year versus a year ago.”

Mental Health America, which has seen a surge in demand for its mental-health screening program, is wary, too.

Many corporations and individuals have acknowledged the need for more support in mental-health services and screening because of the impact of the coronavirus crisis and recession. Giving to the organization surged more than 155 percent in the second quarter of 2020 compared with the same period in 2019. Now the group is looking ahead.

“The real question is what is going to happen in 2021,” Jessica Kennedy, the organization’s chief of staff, wrote in our survey. Like many other nonprofits, Mental Health America is trying to draw on what it learned from past crises. “The recession happened in 2008, but a lot of nonprofits had their funding committed for the year; 2009 was the year where the field was really in a lot of pain.”

Eleanor Walsh, Karenna Warden, and Soolgi Hong contributed to this report.