COVID-19 has put a spotlight on the fragility of the nonprofit sector. The organizations that are on the frontlines to protect the most vulnerable amongst us are now in a similar financial position of economic insecurity. According to the New York Nonprofit Finance Fund’s State of the Sector report, approximately only 25% of nonprofits have more than six months of cash reserves, and 9% have less than one month of cash on hand. This is the frightening reality for organizations around the country, and some won’t make it to our post-COVID-19 world.
Every crisis ushers in an opportunity to create a new framework for charitable giving. In response to COVID-19, we’ve seen institutional philanthropy at its finest, as foundations around the country provide rapid response emergency funds to grantees without the traditional stringent criteria of intended use, measurements, reporting and other data. We’ve also seen corporations pledge dollars in support of worthy causes. This is all encouraging news. What would be of further value is for corporations to consider giving to the oft overlooked small- to mid-sized nonprofits that may not be on their radar, or, due to their local versus national reach, are perceived to be less capable of making a significant impact.
It’s crucial for corporations that are considering giving at this time to realize that smaller, local charities often have deep relationships within the communities they serve and are best positioned to deliver the needed remedies for relief. We can draw upon many examples from 9/11 to Hurricane Katrina to the 2008 recession, where community-based organizations were the steady and familiar heartbeat that provided both hope and critical services. Smaller organizations often know the influencers in the community, in addition to those in need. They have established credibility and understand the best methods with which to affect change, not just during a crisis, but beyond.
As someone who is intimately familiar with crisis planning, as CEO of a social change agency that works closely with nonprofit organizations, I know that the decisions made during a crisis shape not only what happens in that moment, but more importantly, what happens in the aftermath. Government, nonprofit and for-profit entities each play a unique and vital role in the ecosystem of social change.
Corporate giving is critical to the viability of the nonprofit sector. While corporations may feel pressured to tighten their purse strings during this period of economic uncertainty, we need them to do the opposite and show up boldly and courageously for the nonprofit sector. Funneling money to the most at-risk organizations will not only provide support to those who are further disadvantaged because of the crisis, but is also a step toward stabilizing our shaky economy, by keeping many of the 12 million-plus employees of the nonprofit sector employed.
Last year, when more than 180 corporations signed the new Purpose of a Corporation statement, they vowed to support the communities in which they work. COVID-19 presents a painful, yet perfect, opportunity to do just that.
The urgency and uncertainty of our current crisis requires us to be nimble and proactive. There are many examples of corporations embracing innovation and disruption in their product and service offerings. That very same approach can be used in structuring their philanthropy, with a special eye toward strengthening the resources of small and mid-sized organizations. For example:
- Fund innovation. Don’t assume what has worked in the past will work now. Keep your eyes and ears open to organizations trying different approaches to solve age-old problems, that are more prevalent due to the pandemic.
- Give to COVID-19 adjacent charities. The highest priority during our crisis is ensuring that organizations have the resources needed to keep our citizens healthy. From a social issues perspective, the symptoms of this virus will linger long after things “get back to normal,” creating new challenges in educational equality, homelessness, job readiness, criminal justice reform, and food insecurity, amongst other areas. This crisis will infect every aspect of social justice.
- Be open to funding new needs. Give money to support emerging approaches to social issues. Considering funding on-demand needs. Think of the new challenges that will be faced in education by those at the lowest margins of the digital divide, or undocumented workers who are afraid to access traditional healthcare resources.
- Support inclusive leadership. Research shows that organizations led by people of color receive a fraction of the funding granted to their white counterparts. Write checks to support those organizations that have multi-cultural leadership, and provide them the runway to triage and treat the problems before they metastasize beyond the crisis period.
- Sponsor special events. Spring is the one of the busiest times of years for fundraising galas, which have now been reimagined due to COVID-19. Nonprofits, particularly the smaller ones, rely on corporations for a large percentage of the sponsorship dollars that come from table purchases. The funds from these events are often included in annual budget forecasts. Corporations must still support fundraising events, whether cancelled or postponed, as many organizations will use those dollars for annual operating or programmatic expenses.
Nonprofits of all sizes play an instrumental role in ensuring that our communities manifest the principles our country was founded upon – life, liberty and justice for all. This unprecedented crisis presents an opportunity for corporations to sustain the valiant smaller organizations providing the day-to-day support that will see us through.