Nonprofits go through valleys and peaks with pandemic giving

As COVID-19 and a wave of unemployment hit the country a year ago, many charities began scaling back their budgets. But Mission Triangle, a resource center for nonprofits in the Raleigh, N.C., area, encouraged them to rally instead.

“We exist to serve the community, especially in times of crisis,” Mission Triangle program director Daniel Alexander said. “It was not a time to take your ball and go home. It was a time to take the ball to the field and get it moving.” He told nonprofit leaders to “be smart about what you’re doing this year, because the community probably needs us in the future.”

By late 2020, many of the charities had received the same or more funding than they had in 2019. “It turns out to be a year of generosity,” Alexander said. “Especially within the Christian community, there was just great giving.” He does not remember any of the nonprofits Mission Triangle works with closing because of the pandemic.

But not all nonprofit organizations weathered the challenges of 2020 so well. While charitable giving stayed the same or increased in some sectors such as healthcare, food, and education, it declined in others as the country’s needs skyrocketed. The inconsistency has created uncertainty for nonprofits as the pandemic subsides.

In February 2021, Fidelity Charitable, which collects donations and passes them on to nonprofit recipients, reported its 2020 donations increased by 24 percent over 2019. As the pandemic stretched on, people directed their donations to where they saw the need: Feeding America and Meals on Wheels made it to the Fidelity Charitable list of top 20 charities, and contributions to the CDC Foundation, an independent nonprofit that supports the U.S. Centers for Disease Control and Prevention, increased by 9,582 percent. But a recent survey of more than 1,000 nonprofit leaders by CCS Fundraising found that while donations increased at nearly 39 percent of charities last year, about 44 percent saw declines. Those working in art or culture tended to receive decreased support.

The Johns Hopkins Center for Civil Society Studies estimated that the U.S. nonprofit sector lost nearly 930,000 jobs, or 7.4 percent of the total, from February to December 2020. This month, a Candid study explored a range of scenarios related to nonprofit closures during the pandemic. The more realistic estimates showed 11 percent of nonprofits closing, and the worst had 38 percent. Researchers don’t know how many have closed so far: Rick Cohen, chief communications officer for the National Council of Nonprofits, said groups that don’t file tax forms for three years lose tax-exempt status. In three years, those numbers will provide some measure of closures. Cohen pointed to early indicators: A survey in Kentucky showed 4 percent of responding nonprofits had closed by November 2020, with another 5 percent expecting to do so before the year’s end.

Meanwhile, the Evangelical Council for Financial Accountability released a December report entitled Defying the Odds. ECFA surveyed 1,289 Christian nonprofits and churches and found “remarkable resiliency and significant forward motion.” Two out of three nonprofits ECFA surveyed said 2020 giving was higher than or the same as 2019, with rescue missions reporting more and evangelism ministries tending to report less. “We were impressed by their strong optimism that God will continue to provide the funding needed to fuel gospel-motivated ministry,” the report stated.

Mission Triangle’s Alexander said that the nonprofits best positioned to make it through the pandemic are those with healthy and sustainable practices. Do they have financial reserves? Do they have strong communication with donors and solid fundraising practices? Do they have a leader with healthy personal habits and good support from a team and a board of directors? “Certainly, those with large budgets that can skim them down without having to collapse may be able to withstand financial struggles more,” said Alexander. “But I would make the case that it's more about the health and sustainability of the organization.”