When the nonprofit sector gets national media attention, you can generally assume that the news will not be good. Last week offered a case in point: “1 in 3 Nonprofits in Danger of Closing Due to Pandemic” was just one of the headlines that emerged after a report was released by Candid and the Center for Disaster Philanthropy (CDP). Though most of you don’t need research to confirm the challenges you’re facing, the study (found here) is worth your time and consideration. It is sobering but reminds us of the generosity of Americans during a crisis. Plus, you’ll find ideas for raising money as you work to recover from the pandemic.
The Bad News
Thousands of nonprofits will close: Many media outlets reported the sensational conclusion that as many as 38 percent of nonprofits will close because of the pandemic. That’s not an accurate reading of the study but the news is not good. The study’s multiple scenarios estimated between 12,000 and 120,000 closings, with 35,000 closings cited as the most likely outcome. The arts, especially organizations that rely on ticket sales, will be disproportionately affected, but all types of nonprofits are at risk.
We’ve lost nearly a million jobs: The report referenced research by Johns Hopkins Center for Civil Society Studies measuring nonprofit sector job losses: 960,000 as of the end of January. The Center estimates the sector will need about two years to recover these losses.
The Good News
The Candid and CDP report, written primarily for funders, emphasized that pandemic-induced damage would have been much worse if not for the generosity of Americans. The study tracked about $20.2 billion in COVID-related giving—and that doesn’t include billions more from individual donors who also increased their financial support in 2020. Several philanthropic highlights were identified:
Corporations stepped up: Corporations accounted for 44 percent of COVID-related giving. It is unlikely that companies can sustain this level of support (corporate giving declined in the second half of 2020) but they provided essential resources early in the pandemic.
Foundations gave more: Independent foundations more than doubled their giving, to $4.7 billion, in 2020. Community foundations made the most grants, though in smaller amounts (averaging about $10,000). These small grants were critical in supporting the more than 1,000 local COVID-19 response funds launched around the country.
Individual giving trends: The 2020 giving data explains the importance of donor-advised funds and Giving Tuesday in modern philanthropy. The major donor-advised funds reported 22-35 percent year-over-year increases in the money granted in 2020. And $2.5 billion was gifted on Giving Tuesday, an uptick of 25 percent compared to 2019.
Thank you, Mackenzie Scott: The ex-wife of Amazon founder Jeff Bezos gifted $4 billion to 384 different organizations. The money was unrestricted; hopefully more donors/funders follow her lead.
Among other recommendations, the report urges funders to give more money; provide more unrestricted and flexible grants; and do more to fund operational and administrative expenses. These are all great ideas—and not just because of the pandemic.
The biggest pandemic-related threats may yet be on the horizon and will test the generosity of Americans. “Pandemic fatigue” is a real thing, and it’s going to affect donors, too. Last year’s uptick in donor dollars helped offset lost revenues but the sector needs a repeat performance in 2021 (and maybe 2022). This report offers a fundraising map of sorts. It explains who gave and how they did it; now it’s up to nonprofits to follow the money trails and make their case for support. Let’s hope they’re successful, because right now this country needs a healthy nonprofit sector more than ever.