Nonprofit Leaders Say ‘Stop Protecting Endowments’

Nonprofits that rely on gifts from individual donors or earned revenue are having a harder time during the COVID-19 crisis than those supported by foundation funding, according to a survey from the Center for Effective Philanthropy (CEP).

At the same time, COVID-19’s impacts have been felt most deeply among nonprofits that provide direct services and whose clients are in historically disadvantaged communities, with 88 percent of direct service providers saying this has been the case.

Asked for comment as part of the survey, nonprofit heads stressed the need for more unencumbered funds … now. As one put it, “Stop protecting endowments for the future – the future isn’t going to matter for so many if they don’t get the support they need now.” Another requested unencumbered funds, which would allow the organization to focus on its mission, as opposed to fundraising in what is seen as a difficult economic landscape.

Overall, nine in 10 have cancelled or postponed fundraising events, while eight in ten have either reduced programs or services or drawn from reserves. Only 82 percent of nonprofits had reserve funds to draw from in the first place, and of those, half had four or fewer months of funds before the pandemic started.

The CEP surveyed 172 CEOs from nonprofit, grant-seeking organizations during May 2020. The responses showed nearly two-thirds (62 percent) have reduced staff hours, wages or employee benefits, and 49 percent have laid off or furloughed employees.

Funding has fallen off as well. Some 43 percent of respondents reported gifts from major donors – those who give a minimum of $7,500 annually to an organization – have fallen, while gifts from smaller donors are off by 51 percent. Among those that receive grants from staffed foundations, 30 percent said these grants have fallen, but 31 percent report they have increased during the pandemic.

A lack of communication might be hurting a subset of nonprofits. Major donors are three times less likely to have had discussions with women-led nonprofits about future support, the survey found. Among foundations, 86 percent have had direct, personal contact with a nonprofit staff member, similar to the 85 percent of major donors who have done so. In both cases, more than three-quarters have had conversations about how the pandemic is affecting communities the organization serves.

Some discussions focus on the future. Foundations indicated that 63 percent of the time talks turned to changes in future support for the organization, as did 57 of major donors.