May 22, 2020

How to Sustain Charitable Organizations on the Front Line of the Pandemic

Philanthropic and charitable donations need to work smarter as total giving contracts

In the weeks following governmental responses to the accelerating COVID-19 outbreak, as major economies across North America, Europe, and Asia slowly ground to a halt, donors strengthened their resolve to maintain contributions to charitable causes. According to a survey by Fidelity Charitable in March, 25% of surveyed donors reported plans to increase donations with health and human service focused organizations receiving the largest lift in planned donations1. A majority of respondents expected to maintain giving levels. The data, in short, were quite positive.

A new reality, however, is beginning to set in. While some non-profits and charitable organizations report sustained contributions since the start of the outbreak, a majority have seen a dramatic turn in fortunes. The Charities Aid Foundation of America reports a dramatic decline in contributions and volunteer hours among over 500 affiliated organizations worldwide. Over 70% of affiliate organizations report a “dramatic decline” in contributions received, and an expected budgetary shortfall of 20% or more over the course of the next year2. This ultimately impacts their ability to deliver on core missions. It also highlights the need for measured, clear-eyed planning to navigate the coming months. Things will likely get worse before they get better.

Non-profits and charitable organizations have a critical role to play in our response to the outbreak, at both local and global levels. They have already stepped in to help sustain key social safety nets beginning to show strain under the weight of the current social and economic disruption. From healthcare, to education, to food security, there is no shortage of mission-critical causes. Layoffs and uncertain economic performance are shrinking the pool of potential donors and total pie for charitable donations. Philanthropic institutions and the private donors who can continue to sustain contributions should take immediate action to safeguard the short-term viability of non-profits delivering critical programming:

  • Ease program-administration funding pressures. Grantees and non-profits are being driven to trim overhead to razor thin percentages of total operational spend. More and more funding is being channeled to program delivery these days, and it simply will not work in the current fiscal climate. Funds will need to be raised for unrestricted operational support- laying off staff or shedding other key infrastructure will only compromise organizations ability to deliver programming for a longer period of time. This is easily the most common solution sought by respondents to CAF America’s survey of non-profit and grant receiving organizations1.
  • Mobilize emergency response grants. Philanthropic organizations should engage their own private donor and institutional networks to help raise additional funding for short term aid and funding relief. Priority should be given to organizations and essential services directly responding to the crisis.
  • Develop contingency planning for socially distanced program delivery. Organizations are attempting to keep pace with CDC guidelines for contact-free service delivery. Sustaining charitable services will require continued evolution in “distanced services” such as staff retraining, stakeholder education, and distribution of PPE. Many organizations will require both financial and administrative aid to meet these needs, which may require cross-sector partnerships with public sector institutions to be successful.

In the long-term, philanthropies and donors must work with grantees and partners to ensure they have the support and resources they require to stabilize financially and course correct programs. Philanthropic organizations and donors must develop tools to identify distressed organizations and intervene with additional programmatic support. Decisions around the transition to remote workforces may provide more sustainable cost-structure for organizations in the long-term, but other short-term responses may need to be revisited. Philanthropic organizations should revisit existing benchmarks for unrestricted operational funding/administrative spending. Additionally, charitable organizations must make difficult decisions on where to cut operational expenditure to protect the long term viability of programs.

¹ “COVID-19 and philanthropy: How donor behaviors are shifting amid pandemic” Fidelity Charitable, March 2020
² “The Voice of Charities Facing COVID-19 Worldwide” CAF America, May 2020

Related team members

Richard Crumb
Managing Partner & Co-Founder Menlo Park
Jaime Batista
Principal Yarmouth
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