Philanthropy is failing the individuals and families who need it most during the COVID-19 pandemic.
The far-reaching impact of the COVID-19 pandemic is visible in every community. It’s in your backyard, not some faraway place. It has directly affected the lives of everyone in one way or another, with no exceptions.
Since COVID swept around the globe early this year, societies worldwide have been in crisis. COVID triggered an economic freefall that has left millions jobless and struggling to make ends meet. As the pandemic rages on, many individuals and families are vulnerable, uprooted, and in need of ongoing support.
Meanwhile, in the United States, the private sector is shedding jobs. The public sector isn’t nimble or equipped enough to provide for basic needs and services. Beyond the limited stimulus packages and loans, businesses large and small are left floundering and wondering what the future will hold. People who rely upon these businesses are finding their livelihoods in jeopardy.
As we round out summer and head into fall, Bloomberg predicts we’ll face a second wave of job losses. This time, the losses will be among more white-collar workers. The hits just keep coming. A one-time government stimulus provides little relief to people who are facing long-term unemployment and financial hardship.
In this context, the nonprofit sector has stepped-up to support vulnerable people in communities across the US — and the world. And yet, right at the moment when we need nonprofits the most, when they are doing the most, these nonprofits are struggling, too.
Nonprofits fill the gap…but for how long?
In communities across the United States, there are nonprofit non-governmental organizations (NGOs) doing heroic work on the ground. These organizations are providing essential services to people who would suffer otherwise. The problem is, most of these community-centric nonprofits operate on razor-thin budgets.
Many nonprofits have been feeling the impact of COVID on their budgets since the pandemic was declared. Nearly one-third of nonprofits have already had to downsize or suspend operations. Unfortunately, many more are threatened.
A report from the Center for Effective Philanthropy (CEP), “Funder Support During the COVID-19 Pandemic”, revealed several areas of major impact to nonprofits, particularly those that serve communities that have been historically disadvantaged.
These include:
- A decrease in funding to nonprofits in general, but specifically, to direct service nonprofits in underserved communities.
- An increased reliance on foundation funding for some nonprofits, rather than individual donor gifts or earned revenue.
- Decreased communication between donors and nonprofits regarding future plans for funding.
At the same time, these nonprofits report that demand for assistance has spiked by 55% on average, and by 61% for direct-service organizations that support disadvantaged communities.
The CEP report revealed that 46% of nonprofits reported that COVID has had a significant negative impact on their operations, with 38% reporting a moderate impact. Fifty-four percent of direct service nonprofits reported a significant negative impact, with 34% reporting moderate.
Of the nonprofits CEP surveyed:
- 90% have had to postpone or cancel events for fundraising.
- 81% have reduced services or programs.
- 80% have had to begin operating on their reserve funds to stay afloat.
- 62% have cut hours, pay, or benefits for their staff.
- 49% have furloughed or laid off staff.
- 39% have had to begin relying on credit.
What’s more, regular donors — especially prominent ones — aren’t communicating with the nonprofits they usually give to. CEP says this is straining nonprofits’ ability to project very far into the future.
It’s uncertain how much longer nonprofits can withstand the economic pressure, much less continue providing support at scale. In part, that’s because there’s a lack of cohesive data infrastructure for the nonprofit sector. If economic woes become more widespread than they already are, resources will be spread even thinner.
Perhaps the most disheartening fact is that many of these nonprofits indicate they’re most likely to lean on federal and state government entities for support in their time of need, too. That puts them firmly in the same camp as the very people they’re working to help.
In other words, nonprofits are threatened just when we need them most.
Charitable donations have increased in 2020
Regardless of the challenges we’re facing, people on the grassroots level say they’re planning to boost their charitable donations in 2020. And, overall, donations have increased. At the end of 2019, Americans spent more than $450 billion in charitable donations, and that amount was already expected to increase in 2020, even before COVID-19 hit the scene.
Individuals and organizations across the U.S. have boosted their charitable giving since COVID. But, much of those donations go to larger, well-known nonprofits, rather than grassroots organizations that are closer to the people who need help. This encourages a cycle of delayed distribution as the money makes its way down from the top.
Prominent philanthropists like Peter Buffett of the NoVo Foundation were pushing back against the status quo even before COVID. Philanthropy, Buffett says, promotes a “perpetual poverty machine”. Rather than leaning on a top-down trickle effect for giving, NoVo instead partners with grassroots organizations to affect real change.
Despite everything that’s happening in the world, the U.S. is still an economic superpower. There are still millions of people willing to give to those in need. We have a huge opportunity in front of us, and an urgent need to help.
What we can do to fix philanthropy right now
Our neighbors need our help now — not weeks or months from today, while we wait for our charitable donations to make their way through organizational roadblocks and red tape. So what are some clear, actionable ways we can fix philanthropy right now?
- Create a trusted financial supply chain for grassroots nonprofits
- Build a data infrastructure so that we can understand the most urgent needs
- Secure reliable finances so they can focus on delivering their services-not on raising funds
- Transform the practice of altruism into a mainstream behavior — and beyond that, into a movement
- Go beyond divisive partisanship and organizational politics, and just take action
In addition, the CEP report lays out three powerful suggestions for what donors can do right now:
- Give more money, more often, if you’re able to
- Provide funding that’s unrestricted, such as through an app like DANDI
- Communicate with the organizations you give to regularly so they’ll know how you plan to give in the coming months
Now, more than ever, is the time to harness the power of the collective good: people giving directly to the people who need it most, right now. It’s time to empower grassroots organizations, rather than waiting for our donations to route through government or multiple entities before they get to the people in need.
If you’re looking for ways to put your donations to work faster than ever before, check out DANDI, an app designed to help you make an immediate impact in your community. DANDI is a community of altruists dedicated to supporting the causes and organizations they believe in. You can find out more and get the app here.
Do you lead an NGO? DANDI for Nonprofits provides registered 501c3 NGOs a reliable, weekly disbursement of funding, up to $50,000 of unrestricted funds per year: Click here to learn more
Originally published at https://dandi.io on September 3, 2020.
