Nonprofits Press on As Resources Decline, Needs Skyrocket

Agencies nationwide demonstrate resilience, creativity to serve constituents

In December, nonprofits alone furloughed or laid off more than 50,000 U.S. workers because of the havoc the COVID-19 pandemic inflicted on their organizations. As of January 2021, about 1 million nonprofit employees were still out of work.

Many organizations don't expect to recover for another 18 to 24 months.

"The pandemic has been devastating to nonprofits of all stripes," said Rick Cohen, COO and chief communications officer for the National Council of Nonprofits in Washington, D.C. "Take food banks, take groups working on housing insecurity, domestic violence, and mental health. The demand for their services has gone through the roof. For arts and cultural organizations, revenues disappeared overnight."

At the same time, the communities they serve faced unrest as the result of racial and social injustice. And nonprofit leaders found themselves grappling with fundraising constraints, the loss of crucial volunteer support and unexpected expenses associated with increasing safety protocols, remote work and new virtual programming.

Nevertheless, they say the new administration, vaccines, loyal donor support and the latest relief bill provide glimmers of hope.

To gain a deeper understanding of how nonprofits fared in 2020 as well as their outlook and needs for 2021, the Ford Fund talked to leaders from a variety of sectors around the country.

"We know we will be dealing with the impacts of 2020 well beyond this year," said Mary Culler, president of the Ford Motor Company Fund. "We also know we will be steadfast in our efforts to help communities, and the diverse groups of individuals and families within them, succeed."

2020: The best laid plans and adapting to the new normal

On average, about 14 percent of nonprofit revenue comes from donations from individuals, corporations and foundations, while 32 percent of earned revenue is from government grants and contracts and 49 percent from private fees for services. So, it's no surprise that nonprofits began 2020 with their to-do lists filled with the usual tasks of raising crucial funding, acquiring essential resources, developing new programming and embarking on new strategies to fulfill their missions.

"Pre-COVID, we, as a community, had done a great job of lowering food insecurity rates, going from 1-in-4 food-insecure families to 1-in-7, and we were looking forward to expansion," said Cameron Turner, director of Institutional Giving for the Atlanta Community Food Bank.

Before nonprofits made headway on their plans, the coronavirus stopped them in their tracks, forcing some to shutter and others to ramp up their services.

Whether a cultural, entrepreneurial or human services organization, resisting change isn't an option.

"We're essential workers. You can't tell the homeless, 'Get out. We can't serve you.' You can't tell the hungry, 'We can't feed you,'" said Rev. Faith Fowler, executive director of Cass Community Social Services (CCSS).

Still, CCSS had to rethink the way it did business. Prior to lockdown orders, the nonprofit was expecting the aid of 13 college volunteer groups during spring break along with hundreds of corporate and religious-organization volunteers for the summer.

"We lost 7,000 volunteers. We rely on them to do everything from landscaping to food preparation," Fowler said.

Then, the nonprofit's Outreach team quit.

"We initially couldn't get personal protective equipment, and folks on the street don't have the ability to wash their hands. So, people were concerned," Rev. Fowler said.

After securing PPE and hiring a new Outreach team, CCSS pivoted from transporting local homeless people a few miles to the shelter to first driving them 30 miles across Metro Detroit for rapid COVID-19 tests before providing them with housing.

"We're being as cautious as we can," Rev. Fowler said.

When stay-at-home orders prevented some clients from going to the food pantry or cafeteria, CCSS began delivering free groceries. It has been delivering to about 200 households a week since March and plans to continue the program when the pandemic ends.

Mandatory stay-at-home orders closed The Henry Ford, forcing it to slash its budget and radically reduce the number of people on staff.

"In March, we employed about 1,700 individuals but had to put 80 percent of those, mainly part-time employees, on leave," said Brent Ott, vice president and CFO for The Henry Ford.

Despite the radical cuts, The Henry Ford wasn't eligible for a Payroll Protection Program (PPP) loan, because of its large size. And though the cultural organization rehired some staff when it reopened at 25 percent capacity in July, it couldn't hold revenue-generating events because of the crowds they draw. As a result, the nonprofit has seen a 70 percent year-over-year drop in earned revenue. Persevering, the cultural institution has found a niche in online events.

Four people wearing Veterans in Residence T-shirts
Veterans and their family members learn how to launch and grow successful businesses. Photo courtesy Bunker Labs

COVID-19 briefly caused worry at Bunker Labs, which hosted more than 15,000 people at in-person events in 2019.

"Our immediate thought was that we would end up $2 million to $3 million in the hole and have to fire half the staff," said CEO Blake Hogan.

Instead, the nonprofit "leaned into the challenge," went virtual and grew its impact.

"At a time when people are trying to figure out what life looks like, there's this group of military leaders leaning into the fight and helping people launch successful businesses," Hogan said.

Ford Fund also adapted, directing more than $3 million in grants to support nonprofits responding to hunger, housing and other pressing needs.

In addition, Ford has been delivering medical-grade face masks to at-risk communities throughout the country and plans to deliver 120 million masks by mid-year, Culler said. Ford also turned its global Ford Resource and Engagement Centers into food and critical-service distribution hubs and used idle employee shuttle vans to transport meals to hospital workers.

Increasing needs: Bridging gaps old and new

There's nothing like a disaster to reveal holes in systems and processes and disparities between socioeconomic classes.

For example, the number of people facing eviction notices and unemployment skyrocketed as companies that endured slowdowns and shutdowns laid off and furloughed workers.

    The number of unemployed people in the U.S. rose to 10.7 million in December 2020 from 5.7 million in February 2020, according to the Bureau of Labor Statistics.

"Tack on a pandemic with low-income clients who already were disproportionally disadvantaged, and we've seen an increased need for our services," said Tanzalea Daniels, director of Finance and Administrative Operations for The Legal Aid Society of Cleveland.

In response, the Legal Aid Society implemented worker and the tenant information phone lines and partnered with the community to launch Right to Counsel – Cleveland, which provides legal assistance for people facing evictions. Of course, like most organizations, its work became complicated by the inability to meet in person.

"There were a few courts meeting in person because each county sets the rules for its own jurisdiction, but most were virtual," Daniels said. "And not everyone has the proper equipment to access Zoom legal hearings from home. We have allowed clients to meet with us in a safely distanced conference room to log into a Zoom meeting and fight for their rights."

Likewise, Humble Design, which has been fully designing and furnishing homes for the recently homeless since 2009, has had a dramatic increase in requests for school-related supplies since school doors closed and kids began virtual learning.

Female prepares toys and study items for donation
Staff and volunteers design and furnish homes for recently homeless people living in Detroit, San Diego, Chicago, Seattle and Cleveland. Photo courtesy Humble Designs

"The homeless move into these homes with nothing. It's imperative now that we also bring a computer, a desk, books and school supplies for those with children. The families also don't have movies or toys for toddlers stuck inside, so we bring those too," she said.

When COVID-19 struck, leaders at the Atlanta Community Food Bank examined their capacity, assessed their partners' needs and sought ways to do more, because they knew the pandemic would escalate the numbers of people going hungry.

"We knew we needed to evolve and change," Turner said.

Changes included adding nontraditional partners, creating more distribution opportunities and developing new programs, including getting food to kids who couldn't access school-based breakfasts and lunches while in virtual-learning environments.

While food banks are primarily business-to-business operations that make distributions through partner nonprofits, Turner said they decided to introduce additional mobile pantries with new collaborators, including the Georgia Restaurant Association and the Georgia Hotel & Lodging Association. The Food Bank, in partnership with other nonprofits and large catering kitchens, also created the Atlanta Community Kitchen project. This public nonprofit alliance has allowed 500,000 meals to be prepared for the hungry while employing furloughed or laid off restaurant and hospitality workers.

Money, money, money, money in the time of COVID

Across the board, organizations that typically held major fundraising events canceled them or moved them online, depending on how quickly they were able to adapt, Cohen said. Yet, some were stuck with significant cancellation fees, and a lot of groups brought in a quarter or half of what they expected.

Instructors and children mid-exercise
Michigan Science Center, which has STEM-related exhibits and learning experiences, needs audiences to return. Photo courtesy Michigan Science Center

"Individual donors still want to support you, but they may not be able to give at the same levels they have given in the past," said Christian Greer, president and CEO of the Michigan Science Center. "Many corporate and nonprofit foundations have shifted their giving to address issues related to racial justice, homelessness, food access and the digital divide. That means that some of the funds we would normally be able to apply for STEM projects have been directed to other areas of need."

The Science Center was still able to meet its original fundraising goals in part because its board and long-term corporate supporters, like the Ford Fund and DTE Energy, stepped up early, Greer said.

Bunker Labs was hoping to hold its third in-store campaign with a large corporate sponsor last year. But the fundraising partnership was put on hold when the store closed due to pandemic restrictions.

Although corporate giving is down for The Henry Ford, Spence Medford, vice president and chief advancement officer, said the nonprofit raised more money than ever for its unrestricted annual fund.

"We raised easily over $2 million, which we haven't done before," said Medford, attributing the success to the birth of volunteer fundraising and virtual fundraising activities. "They built a sense of community in a way we would not have thought of otherwise."

The Henry Ford also raised about $5 million to bring back Detroit Central Market, the oldest farmers market in the country; formed a donor society that raised $1 million, nearly five times the fundraising goal; and created a drivers' club that raised $325,000.

While some food banks and human-service organizations have seen some increases in giving, Cohen said those increases are not keeping up with demand.

When COVID broke, the national food supply chain weakened, requiring the Atlanta Community Food Bank to increase spending on food purchases from about $160,000 monthly to about $1 million a month from April through June 2020. Although the cost has decreased recently, Turner said the nonprofit is still spending $600,000 to $800,000 a month on food.

"We had an abundance of produce and fresh food items because restaurants and hotels were not accessing that. But grocery stores, manufacturers and others that usually donated shelf-stable food no longer had the excess product leftover to donate. Grocery store shelves were empty," Turner said. "This past November was our highest distribution month of all time. During this same month in 2019, we distributed about 6 million pounds of food. In 2020, we distributed over 12 million pounds."

One saving grace last year, nonprofits said, was the way donors allowed them to use their grants.

When interest rates dropped to almost zero, funding to the Legal Aid Society from one donor's Interest on Lawyer Trust Accounts decreased dramatically.

"Thankfully, we had some funders change restricted funding to unrestricted funding," said Daniels and others.

While fundraising makes up a large portion of nonprofit revenue, many organizations also rely heavily on earned revenue from ticket sales, events and space rentals.

"All of that goes away when you are forced to close," said AAM Executive Vice President Arthur Affleck III.

Arts and culture organizations lost, on average, about $850,000 each and their directors were anticipating losing 35 percent of their budgeted operating income by year end, an October 2020 AAM survey revealed.

CCSS generates income from its activity center and puts that income back into the services it offers. But it lost more than $500,000 when the activity center shut down.

2021: What does the future hold?

COVID-19, racial and social injustice, and other events in 2020 made it a year of unmatched disruption for individuals, communities and the nonprofits that serve them, Culler said. Those hardships didn't stop with the new year, leaving nonprofits' vital work unfinished.

As cities and states attempt to balance their budgets, National Council of Nonprofits' Cohen said, nonprofits will see further cuts to resources, even as demand for their services continues to grow. This will force many nonprofits to close their doors this year, he said, adding that nonprofits' biggest immediate need is another relief deal, one that also helps nonprofits with more than 500 employees.

"It's not about preserving organizations," he said. "It's about preserving the work they are doing. So many people rely on them."

Legal Aid's Daniels said more support would greatly benefit not only organizations, but also their client communities, particularly since so many disparities are magnified by the pandemic.

Welding student
Transitioning service members and veterans receive advanced manufacturing training, certifications and job placement assistance. Photo courtesy Workshops for Warriors

Workshops for Warriors' COO Gruny agreed. When the job market decreased and training needs increased, the need for Workshop for Warriors to expand its physical footprint also grew.

"The plan is to build an additional facility with six new classrooms and three machining labs to triple the size of the machining program," Gruny said. "This facility, combined with the existing welding program, will brings us closer to being financially self-sufficient. It will enable us to train a sufficient number of trainers to make a dent in creating a larger skilled workforce."

Although the majority of arts and cultural nonprofits locked their physical doors for part of 2020, AAM's Affleck said many remained open online by creating digital content that benefited members of their existing communities and attracted younger audience members and audiences from other parts of the world.

"We are not a complete people without access to our culture," Affleck said. "We want to continue to push for support from the government, the private sector and our citizens. It's just so important."

Although The Henry Ford gained 1,400 new donors because of virtual programming, and the Michigan Science Center's virtual audience increased more than 10,000 percent, they need in-person audiences and more funding to survive.

"We're in a different spot right now," The Henry Ford's Ott said. "We really need support for our operations. We need more unrestricted dollars to allow us to get back on our feet the way we were before. We know our donors have a choice in the institutions they choose to support and ask, if they have the bandwidth, to think of us too."

If a vaccine makes people feel safer about venturing out and if people wear their PPE more vigilantly, audiences will definitely come back, the Science Center's Greer added. "We'll have lines out the door, because people will have been cooped up for a year-and-a-half by this summer."

If audiences don't return soon?

"Things will be really challenging for us. We will need even greater support from the philanthropic community to continue to connect with our audiences and engage our communities effectively," he said.

Still, nonprofit leaders hold on to hope—hope that they can continue stretching, that community collaboration and donor support will endure and grow, that relief bills will increase aid and that the pandemic will end soon.

There's no doubt that nonprofits have the resilience necessary to provide support and resources to communities in times of need, Culler said.

"Together, we will remove barriers that limit access to physical, social and economic health. Together, we will build pathways and accelerate opportunities that create a future that drives us forward."