Earlier this month, the Center for Effective Philanthropy (CEP) released Funder Support During the COVID-19 Pandemic, a report based on survey responses from 172 nonprofit CEOs that are part of CEP’s Grantee Voice panel, a nationally representative sample of leaders of nonprofits that receive foundation funding.
To no one’s surprise, one of the study’s key findings was that COVID-19 has had devastating impacts on nonprofits, and done even greater harm to organizations that provide direct services and serve historically disadvantaged communities, such as Black, Native American, and other people and communities of color; people with disabilities; LGBTQ people; and immigrants. Sixty-one percent of nonprofits that primarily serve historically disadvantaged communities and populations have seen increased demand for services.
At the same time, those organizations have faced not just uncertainty over revenue, but also challenges in engaging with the people they serve and providing programs and services while adhering to social distancing. And, while it had not yet occurred at the time of the CEP survey, the May 25 murder of George Floyd at the hands of Minneapolis police and the ensuing protests that swept the United States (and the world) in support of the Black Lives Matter movement have added clarity and urgency for many organizations and the people and communities they serve.
For organizations of all types, the stresses have been high, particularly around revenue. Ninety percent of organizations responding to the CEP survey have had to or expect to cancel or postpone fundraising events; 81 percent have had to or expect to reduce programs; and 62 percent have had to or expect to cut staff hours, wages, or benefits. Nearly half have had to or expect to lay off or furlough staff — all at a time when most communities are asking for more, not less, from direct-service organizations.
Challenges for Arts Groups
Over the course of a few days in mid-May, my colleague Kathy Freshley and I interviewed leaders of 28 arts and culture organizations on behalf of the Morris & Gwendolyn Cafritz Foundation, the largest private funder of arts and culture organizations in the Washington, D.C. region. The nonprofits we interviewed, all Cafritz grantees, had annual budgets of less than $10 million and included theaters; dance companies; presenting organizations; vocal and instrumental performing groups; and education organizations that teach visual arts, poetry, theater, and music to people of all ages. We also reviewed their balance sheets to better understand their potential financial vulnerability.
While the groups we interviewed are far from a representative sample of all arts organizations, our conversations — augmented by information gathered from more than 20 additional meetings conducted by Cafritz Foundation program staff as part of their most recent grant round — provided a snapshot of the impact COVID-19 is having on arts and culture organizations in the D.C. region and around the country.
What we learned was sobering, to say the least, and echoes the findings in CEP’s report. Slightly more than a third of the organizations we spoke with had laid off all or part of their staff, and a handful had implemented salary reductions ranging from 20 to 50 percent. More than three-quarters had secured loans through the federal Payroll Protection Program, which mitigated staff layoffs.
Only eight of the 27 organizations whose balance sheets we reviewed (one group was part of a much larger institution) had more than three months of operating reserves. Nine groups had one month or less, and seven had no reserves at all.
Across the board, leaders were grappling with challenges related to online content and program delivery. For some, the challenge has been to demonstrate relevance and maintain visibility while their organizations are essentially shut down. Others are working to translate existing programs into online formats, while also dealing with contractual and intellectual property barriers and production limitations that affect the quality and range of online offerings. Almost all are struggling with how to earn revenue from online content.
Uncertainty about the duration of social distancing is creating complex challenges for nearly all arts organizations, and most are engaging in contingency planning for multiple financial and programming scenarios.
A Time for Innovation
When we began our interviews, we expected to find organizations in crisis, perhaps even struggling for their very existence.
But while the challenges are significant and should not be understated, our interviews revealed a group of organizations that are resolute in continuing their missions and finding opportunity in this difficult moment. Arts and culture leaders are approaching the challenges before them with resilience and creativity. As one leader commented, “We’re lucky to employ artists and creatives. We’re used to making a lot out of a little and innovating, because that’s what art is.”
Many organizations recognize that websites, social media platforms, and digital engagement strategies that may have been adequate before the pandemic are insufficient to meet the demands of streaming online content. They are embracing the opportunity for innovation, with many seeing the forced shift to online programming as an opportunity to reach wider audiences, democratize access, and provide the human connection so many people are craving right now.
Organizations that are willing to innovate have an opportunity to recommit to their missions and address issues of equity and access in ways that are long overdue. Online programming and digital engagement are not simply a short-term and pale substitute for traditional performances and experiences. Aging donors, people with disabilities, and people and communities that are geographically isolated and/or economically marginalized will have a greater opportunity to engage with online content — and may even have a better experience.
From our short conversations with dozens of arts leaders, the promise of these new approaches was already evident. We heard from organizations that were able to re-engage former patrons and participants who had moved out of the area, that were newly reaching audiences around the world, or that were working for the first time to address inequities, such as lack of in-home internet access, that had always created barriers for participants.
A Role for Philanthropy
When we asked about philanthropic support, what we heard mirrored the findings from nearly every survey ever conducted about what nonprofits really need from funders: arts and culture organizations need unrestricted general operating support. And they would appreciate multi-year commitments, where possible, as they grasp for points of certainty in a chaotic environment.
We also heard about urgent capacity-building needs around technology and the production and delivery of online content, with some organizations in such precarious financial straits that making those investments will be difficult without additional philanthropic support. We also heard some concern that if grantmaking budgets go down as a result of economic conditions, arts organizations may be seen by funders as a lower priority than direct-service organizations working to address immediate needs such as food insecurity or emergency financial assistance.
In communities all across the country, funders like the Cafritz Foundation have invested deeply in building a robust arts and culture sector that makes a measurable economic impact, along with an immeasurable contribution to our sense of well-being and quality of life. Beyond well-known cultural institutions that are household names, the arts and culture sector includes thousands of community-based groups that serve people of all ages, identities, and income levels.
Amid all the other urgent challenges philanthropy is being called on to address in the wake of COVID-19 and nationwide protests in support of Black Lives Matter, it also needs to protect and preserve its investment in the arts.
At their best, arts and culture organizations help us experience joy, connect with one another, celebrate our shared humanity, and reckon with difficult truths. The arts can create spaces for grieving — and for healing. Our communities will need all of that as we weather COVID-19 and work together toward a more equitable future.
Rick Moyers is an independent consultant to philanthropy and the communications director for Fund for Shared Insight. Follow him on Twitter @Rick_Moyers.