6 Steps for Grant Makers to Take Now to Ensure Nonprofits Recover From Coronavirus Spread

ALISHA JUCEVIC/THE COLUMBIAN

By Antony Bugg-Levine
CEO of Nonprofit Finance Fund

Tacoma Community House has been helping immigrants and refugees thrive since 1910. For more than 3,200 clients a year from 115 countries of origin, they are a lifeline and a family. They are also less than an hour’s drive away from Kirkland, Wash., the center of the first cluster of Covid-19 cases in the United States.

When I called this week to check in with its leader, Lauren Walker Lee, she was steadfast in the face of a threat that has led many others to panic.

“We have served our community for 110 years, and we will be here for the next 110. We serve everyone with the same dignity and respect and do not discriminate based on where someone is from.”

Organizations like Tacoma Community House and leaders like Lauren are the fabric our social safety net is woven from and will be essential parts of how we get through this public health crisis. But they operate in a flawed funding system that does not cover the full cost of services and places crippling restrictions on how they can use the funding they receive. As a result, too many lack adequate financial reserves or the flexibility to navigate the disruption that this health crisis could bring. 

Donors need to act now to ensure these organizations can not only help us through the crisis but also be in a position to rebuild our communities in the future.

Direct funding to support coronavirus response and research is only one part of what’s needed.  Foundations focused on a broad array of causes need to consider the impact the crisis could have on our communities and the nonprofits that serve them. The ability of organizations to weather other recent crises, such as the temporary abandonment of downtown Manhattan after the 2001 terrorism attacks or donation drops after the 2008-9 financial crisis, provide limited lessons. In this case, service and revenue disruptions could persist much longer and cover entire regions.

Cash on Hand

Any prolonged moves to limit social interaction will threaten the survival of nonprofit social-service groups. Half of these organizations have three months or less of cash in hand to cover expenses. Child-care centers like Head Start that rely on government contracts that pay only after proof of daily attendance will risk losing that funding. So too will elder-care organizations, job-training programs, and meal-delivery services. And theaters and museums will lose the ticket revenue they rely on.

Others will face increases in demand for services without the accompanying revenue that for-profit businesses could charge. Parents of children no longer receiving free meals in schools that are shut down will turn to food banks. And free health clinics will struggle to manage increased patient loads.

The burden of both lost wages and high-risk, unremunerated extra work will be borne disproportionately by the women of color who make up the bulk of the frontline workforce in many social-service groups. And many of those organizations are not equipped for remote work or capable of delivering a full range of client services remotely.

Already organizations are telling my team they’re seeing unexpected reductions in client, patient, and patron traffic. What is now a stress could become an existential threat to many organizations.

Action From Donors

So, what can donors do to support these organizations now and create the conditions in which more can get through this crisis and bounce back to play the role we will need them to in the recovery?

Check in with your grantees. Listen to them and thank them for the essential work they do. Recognize the pressures they are under. Mutual trust and respect are the basis for improving how well we all turn donations into results for our communities. This is a great opportunity to build that trust.

Provide unrestricted funding and remove restrictions on existing grants. Even if your foundation or government agency does not provide unrestricted funding in normal times, remove those restrictions for now. Launching that new program you were excited about is likely less important than keeping the doors open. Your grantees will know better than you what the community needs in this dynamic situation. And paying staff even if attendance drops will be essential to keeping the organization together and to support families who can’t afford unemployment.

Pay full costs. Your grantees are in a precarious position because they operate with funding that typically does not pay what it actually takes to provide services. Many cannot build reserves that would allow them to respond and weather this crisis. The best time to upend this dynamic would have been decades ago. The next best time is now.

Suspend reporting requirements and evaluative site visits. Any hour an organization spends filling out donor reports or preparing for donor visits distracts from planning and responding to this crisis. By all means, contact them to show your solidarity and ask how you can support them. And genuinely inquire about how their work is going. But limit the tax you impose on your funding by making them produce information that serves your compliance rules rather than their community.

Maintain funding levels. I know a drop in the stock market is scary for foundation leaders concerned with ensuring their assets exist in the future. I was a program officer at a foundation when the endowment shrank in 2008. But your support during this crisis will be essential to allow many of the organizations you plan to fund in the future, and their dedicated staff, to survive. Remember the 5 percent spending rule is a floor, not a ceiling. The stock market will rebound. The organizations, staff, and communities they serve might not rebound without your support.

Mobilize recovery grants. In the aftermath of the 2001 attacks, New York foundations such as the Ford Foundation, New York Community Trust, and United Way came together with national private and corporate grant makers like the Kresge Foundation, Citibank, JPMorgan Chase, Prudential, and U.S. Trust to set up the New York Recovery Fund. The fund, run by my organization, Nonprofit Finance Fund, channeled crucial grants (averaging $70,000 and ranging from $5,000 to 500,000) to affected nonprofits, with a rapid turnaround and quick assessment to determine what losses resulted directly from service disruptions after the terrorist attack. Many were able to bounce back only because of this support.

While we do not know how bad this will be, we have the advantage we lacked in 2001 of being able to plan in advance. Now is the time for grant makers to act quickly and collaboratively to respond to this fast-growing crisis.

Tacoma Community House and other nonprofit service groups across the country will be an essential part of how we get through this crisis as they have been for the crises that preceded this one. Donors can take action now to position them best to reduce the pain this latest crisis will inflict and to set them up to accelerate our communities’ recovery.

Original article from The Chronicle of Philanthropy 6 Steps for Grant Makers to Take Now to Ensure Nonprofits Recover From Coronavirus Spread