“Leaders are grappling with so many issues completely out of our control,” says Anne Pasternak of the Brooklyn Museum. Indeed, we are living through a time of high anxiety for many nonprofit executives. The coronavirus and the resulting lockdown have already brought enormous changes to the nonprofit sector, forcing organizations to rethink what they do, how they do it, and whether their business models will be sustainable over the long-term.
I recently asked a dozen nonprofit executives to talk about this reality. Will COVID-19 alter the way nonprofits operate in perpetuity? How will fundraising – the lifeblood of most nonprofits – be affected by shrinking government budgets and shifting priorities among foundations and individual donors?
There are no easy answers to these questions, of course.
As they try to adapt to changing conditions, many nonprofit leaders are forecasting a world of increased demands and shrinking revenues. They fear that they are entering a time of cash shortfalls, staff layoffs, and even more intensively competitive fundraising.
Despite this grim prognosis, nonprofit leaders also expressed a strong current of optimism. During the pandemic, many have discovered that technology can help their organizations extend their reach and improve their efficiency.
More fundamentally, nonprofit executives are sensing that the playing field is tilting in ways that may help them accomplish their institutional goals. Christine McMahon, the head of the Fedcap Group, expressed this sentiment: “The COVID pause and the reprioritizing of government spending present an opportunity for real change, measured in the economic well-being of people and communities.” The prospect of a significant shift in national priorities – toward rebuilding our social safety net and renegotiating “the social contract between government and the people,” in the words of Fountain House CEO Ashwin Vasan – has many nonprofit leaders energized.
The following are excerpts from emails sent to me by nonprofit leaders from a variety of different disciplines. They have been edited for consistency, length and clarity. A companion column looked at the impact of the Black Lives Matter movement on New York nonprofits.
Alan Mucatel, Rising Ground: The COVID-19 health crisis has already changed the way we operate, and some of those changes will be lasting. While we cannot eliminate one-on-one contact in human services, we are finding that there is a role for remote contact. For some people, “tele-care,” whether it’s tele-psychiatry or video check-ins, works really well. We can also use remote contact to augment in-person visits and thereby increase the frequency of visits. I suspect that remote contact will become more standard in elements of our services going forward.
With cuts in city and state funding, we are facing a significant loss of revenue and cash shortfalls. Even as this health crisis continues, costs are rising. For example, we’ve had to step in to provide families in need with the basics – food, diapers, wipes. To continue our essential services, we’ve purchased smart phones and iPads to virtually connect with our supported families. We have increased staff expenses in order to cover basic service needs and provide COVID relief.
Fundraising is a challenge. Our biggest fundraiser, our annual gala, will have to be held virtually in September. We are incorporating elements to make it as exciting as possible, but we can’t predict how much money we will be able to raise.
Ashwin Vasan, Fountain House: COVID has highlighted how despite trillions spent on science, most public health solutions – such as social distancing or mask wearing – are about organizing people and their behavior. In the aftermath of the pandemic, there will be a greater emphasis on sociological, psychological and social determinants of public health.
For many organizations, shrinking government funding will increase the need for private fundraising. The shift to support at-risk populations may see more, even unprecedented, investment into mental health and social services. Significant individual wealth has been lost, but also created in recent months, and trends toward family foundation and donor-advised funds giving should continue to rise and to steer resources into the human services sector. It is encouraging to see major foundations led by Ford, Doris Duke, Kellogg and MacArthur step up in unprecedented ways. But that is not a long-term solution.
Ultimately, the responsibility for the protection and promotion of social and economic rights falls on the public sector, and what is required is reallocation of government resources to rebuild our social safety net, to address and redress the root causes of the disparate impact of the pandemic, and, more fundamentally, to renegotiate the social contract between government and the people. While nonprofits often shy away from being explicitly political, we can afford this no longer, as electoral decisions will ultimately impact whether this new reality can come to pass and whether we’ll use this unprecedented time to redesign our society and its structures to protect everyone.
Kathryn Haslanger, JASA: Individuals who make meaningful yet modest gifts to show their support and appreciation will have a harder time doing that because of the increased pressures they are facing. Now is a good opportunity for donors with greater capacity to step up to help the nonprofit sector meet increased service demand from communities where the virus has hit the hardest and weather what could be very difficult times in government funding. Even with market downturns, there are New Yorkers of very substantial means, and we appeal to their commitment to make New York stronger for everyone who lives here.
JASA serves the New Yorkers who are most at risk for serious illness if they become infected with COVID-19. During this time, we are finding new ways to connect with older New Yorkers so that their isolation does not spiral into loneliness and the physical and mental health declines that come along with it. Loneliness was a growing public health crisis even before we were sheltering at home, and this pandemic has shed light on this critical need.
Our challenge is to build on what we have been learning about how to support older New Yorkers even when we cannot gather for meals and classes in community centers as we have in the past. In some ways, virtual activities can actually be more inclusive than in-person activities. People with walkers and wheelchairs can more easily join the virtual table. We need new solutions for New York neighborhoods living on the wrong side of the digital divide, as our need to connect across generations for family life, schools, medical care, volunteer engagement and fun relies so much on reliable internet access.
Jocelynne Rainey, GOSO: As a member of the board of a cultural organization, I have seen that exposure to cultural/arts institutions is crucial to underserved minority communities and must be funded to do more in underserved school districts. Young people have better life outcomes when exposed to the arts and we must start talking about the positive outcomes for people of color when cultural organizations are funded to do work in those communities. Higher education must also be centered on closing the education gap by focusing on Black and Brown student success.
Anne Pasternak, Brooklyn Museum: Leaders are grappling with so many issues completely out of our control. How will public policy impact when we open our businesses and how? When will COVID shut us down again? How will audience behaviors change for the long term? Global markets will only get more erratic with a pending national election, record-high unemployment rates, and steep municipal budget cuts – not to mention the long-term impact on endowments and cash reserves. Donor priorities will inevitably shift to support the crisis at hand. Adding to the challenges of this chaotic time, we have to alter the way people have been visiting museums for centuries with new social distancing standards.
Christine McMahon, Fedcap Group: Independent of COVID-19, nonprofits face structural challenges that limit our progress in improving the economic wellbeing of marginalized populations. The pandemic has only exacerbated and amplified our difficulties in advancing meaningful change. At some point, we must come to terms with the stark reality of how not-for-profits are capitalized.
It is often said that nonprofits are slow to pivot to new opportunities, as compared to our for-profit counterparts. Our culture is criticized as one that does not set relevant and measurable impact goals. Clearly, we are at great disadvantage in terms of pricing our services; we are dependent upon government and philanthropic funding to achieve impact. For-profit companies have extraordinary opportunities to raise capital and make investments in technology and innovation which most nonprofits are simply unable to do. Moreover, banks and other lenders apply different standards to our organizations. All that said, the COVID pause and the reprioritizing of government spending present an opportunity for real change, measured in the economic well-being of people and communities.
In recent years, some fundraising has shifted to technology-driven platforms. Organizations that have invested in these technologies and “digital relationships” will evolve new forms of engagement. Many, however, continue to rely on face-to-face, large-scale events, and these organizations will be compromised in their fundraising at least in the near term, potentially resulting in serious cash shortfalls and poor results.
George McDonald, Doe Fund: Social entrepreneurial organizations that understand the need for public-private partnerships will thrive in this environment. Organizations that rely too heavily on government funding will not. That being said, as our country confronts inequities laid bare by the pandemic, the fallout from incidents of police brutality, and the need to address systemic racism, government will hopefully create funding streams in the areas of racial and economic justice and criminal justice reform.
COVID-19 has laid bare the gaping inequities of our nation. While the virus does not discriminate, the systems in place to safeguard Americans do. Nonprofits will only survive by putting increased attention – within the confines of their missions – on aiding the communities hardest-hit by this pandemic: the millions of Americans out of work, as well as the communities of color whom our economic, educational, and health care infrastructures have failed.
Nonprofits will also have to adjust to operate with a greater digital infrastructure for delivering services and for virtual fundraising. While this will be a struggle for many organizations, it also presents a great opportunity to reach new audiences they may not have otherwise.
Justine Zinkin, Neighborhood Trust: From the start of the pandemic, the most dramatic day-to-day change for many organizations was the rapid shift to remote work. At Neighborhood Trust, we had the incredibly fortunate advantage of having invested in remote coaching infrastructure over the last two years. From an efficacy standpoint, this experience underscores an important lesson for the field: the need for philanthropic support for organizational infrastructure, including tech systems and talent.
Investment in user experience and back-end technology can allow an organization like ours to maintain human touch and personal relationships, even as our coaching happens over the phone or Zoom. However, tech-enabled services are not one-size-fits-all, nor does remote access inherently preserve a sense of connection and trust between provider and client. Those who need our help most also require the most effort to reach. If we are serious as a sector about using technology to provide help in a nimble and adaptive way, we have to be intentional about how we account for language barriers, the digital divide, and other barriers to access.
Funders who are looking to make a long-term impact should consider supporting build-outs of tech infrastructure, and our fundraising approaches should emphasize that project, as both an investment in infrastructure and a mission-driven commitment to equity.
Rehana Farrell, Youth INC: The impact of COVID-19 on Youth INC’s network of nonprofits has been both devastating and swift. Once schools closed, many nonprofits were left wondering if they would be solvent for the remainder of the current year. Initial statements by city officials that all contracts would be honored were later revised and, in many instances, reversed, leaving many nonprofits without a stable source of recurring revenue. More challenging still, the New York City budget for the next fiscal year looks incredibly bleak for youth-serving nonprofits.
There have also been increasing calls for foundations to spend more and widen the scope of their grantmaking in the wake of COVID-19, which has disproportionately impacted communities of color. This is the right conversation to be having but now it also needs to lead to more action. Corporations are now standing up for racial equity as well. This kind of immediate action is unprecedented in my experience and I have been impressed by the strong level of understanding of the nature and scope of the problems that companies are bringing to this moment.
Jill Eisenhard, Red Hook Initiative: Nonprofit organizations will need to diversify funding streams and lean more on private foundation and individual donor support. Government grants have rarely covered 100% of costs, but now there will be less funding and bigger gaps. The one benefit that can come from increasing private funding is that it may become easier for organizations to respond to challenges that emerge from their clients when they are not bound by the stiff parameters of a government contract.
I think people will think twice about in-person meetings, long after COVID-19 is gone. Where can people save time by not traveling to hold a 1:1 meeting for an hour? Do people need to be in the office every day to maximize production? Where can organizations save on employee time and real estate costs if some of the remote work model is maintained?
Donald C. Notice, West Harlem Group Assistance: COVID-19 will indeed change how we operate. The changes we are making now will more than likely have to be sustained to some degree in the future. We are working on digitizing many of our processes and transactions that would have been high contact in the past.
Our budget is largely influenced by what the city allocates to housing. If the proposed capital cuts to affordable housing become a reality, it will threaten our ability to contribute to a better and more inclusive real estate market in Harlem.
Lisa David, Public Health Solutions: The pandemic has forced many nonprofit organizations to overhaul fundraising plans and seek new funding sources as they face potential city and state budget cuts and the loss of other previously reliable funding streams. The short-term fix offered by the federal Paycheck Protection Program will go only so far. Now more than ever, individual and corporate donor support is essential. At Public Health Solutions, we converted our annual gala – which brings in over half of our annual unrestricted giving – to an online fundraising campaign, rebuilt our donor receptions into virtual platforms, and created a COVID-19 response fund to support the ever-expanding rise in New Yorkers turning to us for services.
Because of the grim funding picture, many organizations have had to make difficult staffing decisions around layoffs and furloughs. Other questions are on every nonprofit leader’s mind too: “When do we return to the office? And when we go back, what can we do to keep our employees safe?”
At Public Health Solutions, we have neighborhood health centers throughout the city – some of which are essential workplaces and have remained open – where we need to ensure the safety of both staff and clients. In addition to providing PPE, we are refurbishing our sites with protective plexiglass screens and reframing layouts to accommodate social distancing. For other services, the pandemic forced us to find creative ways to virtually provide for our clients and we found that our telephone and telehealth visits have been very well received. Now the question is what should return to in-person workplaces versus telehealth and other virtual operations. Our goal is to preserve the flexibility of virtual service delivery while ensuring in-person services where they are more effective. That being said, it’s likely some degree of remote services will be permanent.
Myung J. Lee, Volunteers of America-Greater New York: These are undoubtedly tough economic times. We understand that government is facing difficult budget challenges, and we anticipate that the inevitable across-the-board cuts will impact human services providers like VOA-Greater New York. But we hope our elected officials understand that we provide life-saving, essential services. More than 1,000 VOA-Greater New York staffers were on the front lines of the pandemic when the City needed us – in homeless shelters, working with families and children, assisting veterans with behavioral health problems, protecting domestic violence survivors, and supporting fragile formerly homeless older New Yorkers. And, we’ll be here when the City needs us again. We are as essential as it gets. Government cannot do this alone. Equally true, however, is that nonprofits can’t survive without critical government support.
On the private philanthropic side, this is a very crowded field. We will have to diversify our funding base and work creatively to identify new sources of support. But we’ll also ask our existing funders to dig deeper. Our needs will be bigger and greater. While this has been a real wake-up call, as an optimist, I truly believe that every challenge is an opportunity. I want to move our clients out of poverty. I have every faith and confidence in our team members, supporters and government partners, that together we will accomplish this.
On a very basic and practical level, we are operating in a new norm. It can no longer be business as usual in our shelters, supportive housing programs, group homes, and schools. The public health precautions we’ve been taking – wearing masks, washing hands, frequent sanitizing, social distancing – will be with us for the long haul, perhaps forever.
Interestingly, one lesson we learned from the pandemic was that technology is essential and will become increasingly important to our future operations. We need to think about technology in new and nimble ways. But we also learned that in many of the black and brown communities where we operate, like Bushwick and East New York, local infrastructure has suffered from decades of systemic neglect. It’s intolerable that in some of our programs when it rains, the phones go out, through no fault of our own. There’s a clear need for us to work with government and elected officials to address the conditions that make our job and our clients’ lives harder than they should be.