United Way of Central Carolinas (UWCC) has warned partner agencies to expect grant funding to be reduced this year — barring any unforeseen change — and eliminated altogether in the coming years.
“It’s a commitment to them to be as transparent as we can be,” President and CEO Laura Clark said in a telephone interview with The NonProfit Times this month. “Hope springs eternal to bring in more dollars,” she said, but it’s the awkward time after the end of the campaign season but before the fiscal year end (June 30) and it was important to prepare funding partners for any changes.
Some 70 partner organizations should brace for cutbacks of 54% to 68% across the board. The Charlotte, N.C.-based affiliate is likely to eliminate impact grant funding entirely by 2023 and replace it with more targeted initiatives. It’s increasingly difficult to get support for the general fund and collective giving funds, Clark said. “We’re finding targeted initiatives attracting more revenue and donors,” she said. Over the past decade, affiliates across the country have shifted to more diverse fundraising, including major gifts, as workplace giving declined.
A year ago, Clark said the organization budgeted for a $1-million revenue loss because of the pandemic but that wasn’t conservative enough, likely to be down an additional $2 million.
“A couple of months into the pandemic last spring, we still didn’t know how bad it was. We thought we were being conservative,” Clark said. Then a spring golf tournament was pushed to the fall with the hope that it could be held but it never happened. A Paycheck Protection Program (PPP) loan of $675,000 last summer helped to avert layoffs and she is optimistic of getting another in the second draw this year.
In partnership with the Foundation for the Carolinas, United Way raised $25 million for a COVID relief fund, without taking administrative fees, and nearly all of that restricted funding has been distributed, Clark said.
Clark said the United Way affiliate started communicating with partners several years ago about a likely reduction in donations as a result of continued losses in workplace giving. The affiliate is more focused on economic mobility and racial equity through its United Charlotte and United Neighborhoods initiatives.
Central Carolinas had been dipping into reserve funds since the Great Recession to bridge the gap between what it was raising and what it was giving out, including $3 million last year because of the pandemic. “I think we’ve done as much as can to keep funding levels at consistent levels. We’re no longer in a position to do that,” she said, noting that the reserves are now at $10 million — essentially the amount derived from the sale of the nonprofit’s building in 2018.
“We were clear with partners, we were not going to be able to do that much longer,” Clark said. “Everything we shared with them this week is a continuation of what we’ve been saying.”
In recent years, Central Carolinas reduced grants by 10% in 2018 and 25% in 2019 and still dipped into reserves. That’s in addition to staff layoffs in 2018 and 2019 that reduced the number of employees from 50 to 34.