The Need to Up Giving Levels Even When You Have Less
“Funders are taking action now,” read the text I received Tuesday from Cathy Moore, executive director of ECHOS in Houston. “Collaboration with other funders also occurring.”
This was welcome news. Over the weekend, I had talked with Moore and then written about the challenges facing ECHOS as they seek to serve their population of “poverty-stricken, vulnerable families.” Closing wasn’t an option for ECHOS staff — or for the many similarly situated small, community-based nonprofits across the country. And, like many similar organizations, ECHOS was struggling with a drop off in volunteers on whom they rely to provide vital goods and services, including food from their food pantry.
As of Saturday, Moore hadn’t heard from any funders or donors. But, having moved their operations to remote work, a number of foundations are now trying to figure out how to best help their grantees. At the same time, at least some others seem to be disappointingly focused first and foremost on protecting their assets in a time of crisis.
Moore shared with me a thoughtful communication she had just received from the Greater Houston Community Foundation about a survey to “ask about your current and anticipated needs, your decision to continue service to the community or not during this trying time, how the philanthropic community can support you in the near term, and your thoughts about the potential impacts on the communities you serve.”
Nonprofits are taking stock of just how bad things are and could get — and how quickly they have had to change and may need to change. I reached out to UTEC, another organization that, like ECHOS, I got to know doing research for my book, Giving Done Right: Effective Philanthropy and Making Every Dollar Count, to see how they were faring.
UTEC’s mission is “to ignite and nurture the ambition of our most disconnected young people to trade violence and poverty for social and economic success” and the organization works in Lowell, Lawrence, and Haverhill, Massachusetts. I had written about UTEC and its CEO, Gregg Croteau:
Any given day finds Croteau and UTEC’s ‘street workers’ sitting at a bedside at a hospital after a shooting, visiting a gang member in prison, or attending a funeral. These are the places where UTEC staff find they can best begin the process of recruiting a young person to leave street life behind.
That was then. But, in the wake of COVID-19, UTEC’s leaders felt they had no choice but to close the site where they run their programs — though they’re seeking to provide as much structure as they can to the young adults in their programs remotely. They are staying connected through texts and phone calls and are delivering food daily to the young adults’ homes.
“Our biggest need right now is flexible funding to offset any gaps, cover for the unexpected costs, and help us keep all young adults on payroll, which we have assessed to be at least $83,000 for the first month,” Croteau told me over email. “We run social enterprises, which account for 15 percent of our annual revenue. Our catering and events business has already lost roughly $50,000 in cancelled events over the 30 days. And our cafe is now closed, which will likely result in another loss of about $6,000 per month. This will only increase over the coming weeks.”
Most shocking in Croteau’s email, and a sobering counter to the more optimistic news Moore had shared with me, was this: “We have recently heard from a few funders that they may need to decrease the size of their grants, given the anticipated economic decline.”
But UTEC’s mission remains as crucial as ever — and now with a different angle on individual and community health. “With young people less engaged, and, while we try to loop them into the daily news about COVID warnings, we are concerned that them having more idle time could result in an increase in youth-related violence. We need to prepare how to continue to provide such intervention work without putting our staff in harm’s way,” Croteau explained. “Additionally, those young adults who are incarcerated run the risk of being very socially isolated. Jails are limiting visits, so our streetworkers will not be doing their usual weekly one-on-ones.”
These are the harsh realities for many nonprofits. And the implications for funders are significant. There has been much good advice offered by leaders such as Antony Bugg-Levine of Nonprofit Finance Fund — I don’t want to repeat all that here, though I do want to endorse it!
But where many have suggested funders should maintain funding levels, I want to suggest they go further. I believe funders should be asking themselves fundamental questions about their role and payout levels in this time and consider increasing their support for at least key grantees even as their own assets decline.
As I write in Giving Done Right, and as UTEC’s experience with at least some funders seems to suggest, “givers tend to retrench when nonprofits retrench, essentially forfeiting one of their most powerful potential roles out of worry that they won’t be able to claw their way back to the same endowment or asset levels afterward.” I argue that “endowed foundations especially should be mindful of their potential to be a countercyclical force, providing support for grantees during economic downturns.”
This is my plea to foundations to take the long view. Indeed, if yours is a perpetual foundation, you have literally forever to get back to whatever your endowment was at its peak — which really wasn’t ever the most relevant number anyway! Consider dramatically increasing your payout, as Vu Le and others have argued. “If this pandemic is not the time for transformative action, then when is?,” Le asks. “Please increase your payout rate.”
For individual givers, now is the time — if at all possible — to write checks to the organizations you supported at the end of last year so they know you’ll at least match that giving level again. Then, leave open the option of upping your support later in the year. Those organizations will need all the help they can get.
Phil Buchanan is president of the Center for Effective Philanthropy (CEP) and author of Giving Done Right: Effective Philanthropy and Making Every Dollar Count, published by PublicAffairs last year. Follow him on Twitter at @philxbuchanan. This is the second post in a series.