Coronavirus, Boom and Bust Election Funding, and an Impending Recession

Wednesday, March 11, 2020

It’s safe to say that at this point, the nonprofit sector has been pulled into a discussion about COVID-19, as leaders urgently strategize about how to slow the outbreak and help those directly affected.  

However, beyond the need to fund cure, care and containment, we also have a responsibility to the movements and causes that we hold dear to think through how the outbreak will affect our sector more broadly — specifically the intersection of achieving our mission and financial sustainability.

A perfect storm of nonprofit challenges

The economy, natural disasters, big breaking news, election cycles, etc. all make catching potential donors’ attention and investments more difficult. In the course of a normal year, these dynamics are commonplace and even anticipatable. We know how to reschedule campaigns, we’re getting better at planning for the boom and bust of electoral cycle funding and have learned to lean into more resilient sources of independent revenue like sustainer giving to get us through the ups and downs.

But what happens when a boom election year, a global pandemic and a looming recession are on a collision course with your fundraising plans and will ultimately impact if you can fully deliver on your mission in this moment? 

Most of the progressive nonprofit staffers with whom we spoke are not seeing impacts on their revenue just yet, but they are seeing increased demand to deliver on their missions. Jobs With Justice (JWJ), an NCRP nonprofit member that recently secured a $1.3 million planned giving commitment from a project funded by the Progressive Multiplier Fund, is grappling with how hourly workers will be affected by the economic impact of the public health response. JWJ Development Director Brenden Sloan says that the current crisis provides an added sense of urgency to the state and local coalitions work that they are doing on the ground with low-wage workers and other members who don’t have paid family or medical leave. “We have been in talks for a while now about starting a national hardship fund to give direct support to groups of workers affected by natural disasters or events outside of their control,” said Sloan. “This outbreak really puts more urgency on finding funding for that.”

Andrea Hermann, director of development at Clean Water Action and Clean Water Fund, is immediately concerned with how crisis response will impact the organization’s recruitment of members and donors that can help move the political needle in 2020. “We have a pretty diverse revenue source between our field operations, phone operations, direct mail, online, major donors, foundations and corporate donors – but the field is our a significant way of getting new donors in and achieving our programmatic goals in 2020,” said Hermann.  

For the immigrant justice community, the coronavirus outbreak has only added to the constant, fast changing challenges from white nationalists, hate groups and the Trump administration. Even previously agreed to legislative efforts, like the language enshrined in the House’s NO BAN ACT that would stop President Trump’s Muslim ban, are being slowed down by the crisis response.  A full floor vote on the NO BAN ACT that was expected this week now hangs very much in doubt.

“The House Judiciary Committee is adding language in response to the coronavirus that would open up executive authority to exercise discrimination by exploiting public health concerns,” said Lakshmi Sridaran, Executive Director of South Asian Americans Leading Together (SAALT), who has been a leader in promoting the NO BAN ACT. “Our coalition is working hard to fight back, but there is strong bipartisan consensus around this language.”

How philanthropy should respond

Organizations like SAALT are already under-sourced. According to NCRP’s Movement Investment Project brief, the State of Foundation Funding for the Pro Immigrant Movement, less than 1% of the giving from the 1,000 largest foundations went to work that is intended to benefit immigrants or refugees even though immigrants make up 14.4% of the U.S. population.

How can philanthropy help?

Rapid response funding

As this current crisis demonstrates, what organizations need most are additional flexible funds that will quickly allow them to deal with the immediate intersectional challenges posed by the coronavirus outbreak. Funders should specifically provide rapid response funds to organizations or intermediaries such as the Emergent Fund who can move money quickly to the grassroots efforts that focus on areas where:

  • The Trump administration may use this crisis to push an agenda against the will of the American people (i.e. Muslim ban).
  • Corporations may act in such a way that exacerbates the problems that we face (i.e. not paying hourly employees).
  • We can push our own agenda (the need for universal health care, paid leave and more).

A stimulus package for nonprofits

With a potential recession approaching, the philanthropic community must seriously consider moving resources into supporting a nonprofit stimulus package that would diversify and scale nonprofits’ revenue generation. A combination of grants, recoverable grants and loans could help nonprofits raise a multiple of the dollars invested through a variety of techniques. The investment does not need to be more than the annual 5%, although we would encourage that. The Progressive Multiplier Fund, which funds revenue generation efforts, is helping its grantees raise nearly $4 for every $1 that the PMF grants out.

What can nonprofits do now?

While it’s not time to panic, it’s definitely time to prepare, even if that preparation is just in the “form of thought experiments and what-ifs to think through the possibilities and get aligned around the possible outcomes and impacts,” as direct marketing and fundraising consultant Miriam Magnuson said in a recent blog post.

Three things that they should immediately consider doing:

1. Make sure there are no holes in the current revenue generation bucket and learn into sustainable revenue resources.

2. Talk to your organization’s management about revenue forecasts: Whether it’s a shifting internally of resources from fundraising to mission delivery, or a downturn in foundation support or a dip in individual giving as the stock market stumbles, it’s highly likely your fundraising forecast will need to change.

3. Talk to funders specifically about what you need: You will need more funds of course. Take the time to prepare the business case that supports what you need to meet this moment.

At this moment of need, it is our ability to reach out and help each other that will help organizations and the communities continue to do the work of making this world better. We owe it to the long sustainability of these vital movements to not just help the public survive the current challenge, but to also help organizations come out stronger for the future.

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