Nonprofit Impact Report, Issue 2: Insights for Nonprofits to Weather the COVID Storm

Just a few short weeks ago, the coronavirus was a news story from far away. Now it’s a global pandemic with real and frightening implications for families, schools, and businesses close to home — including nonprofit organizations. In a very short period of time, nearly all nonprofits have been forced to scrutinize their budgets, programs, and business models, and many have had to make painful decisions to cut expenses and even suspend services.

Even so, the needs of the community have not changed. In fact, our community needs nonprofits now more than ever — to meet basic human needs, to educate children, to deliver high-quality healthcare, to experience natural wonders, and to escape into the beautiful worlds of music, dance, and visual art.

The Sterling team is working hard to assess the needs of our current and former clients to learn everything we can about relief available to nonprofits in the just-approved stimulus package and to provide insights and support to Houston’s nonprofit community. We’ve compiled a few pieces of advice below that may be helpful as you navigate these uncharted waters. As always, remember that one size never fits all. You must consider the specific needs of your organization and those you serve.

• There is an unprecedented outpouring from philanthropy to support organizations affected by COVID-19, and the $2.5 billion given as of March 25 is growing by the day. However, the scope of the problem is global, not local — so the giving is spread around the world. Look for support close to home, because the greatest share of giving is local.

Philanthropic funding for recent disasters in billions

Source: Center for Disaster Philanthropy

The Issues Summarized

• Determine what stimulus relief is available to your organization through the new $2 trillion bill that was signed into law on March 27. The Sterling team has scoured the Internet for the best summary of what the legislation means for nonprofits and found it here. If you’re eligible, you can access the CARES Act loan application here. Sterling encourages organizations to work closely with financial and legal professionals on your staff or board to determine what all of this means for your nonprofit.

• Gut-check your business model and expenses. Some of you are already taking a hard look at your budgets and executing contingency plans you never thought you would need. For some, this crisis will require you to take a hard look at your business model. You may need to adjust your operations and staffing plans. This can be a painful exercise, but it may be necessary to ensure long-term survival.

• It’s all about COVID-19 right now. Some nonprofits have asked us if they should continue with their normal appeals schedule. COVID-19 is a veritable herd of elephants in the room, and failing to acknowledge the reality of its impact could send a message to donors that your organization is oblivious to the current health and economic climate. Some organizations will be in a good position to make an appeal right now, but for others, this would not be appropriate. Regardless, any communication to your stakeholders right now should acknowledge the COVID-19 situation and its impact on your organization.

• Focus on general operations and essential services, but don’t cancel campaigns. It is virtually impossible to predict how long this situation will last and what the long-term impact will be on nonprofits. When it comes to fundraising, we recommend a measured approach, rather than throwing the baby out with the bathwater. Although we must always have our eye on the horizon, in most cases, it is much too soon to lower capital campaign goals or significantly shift long-term fundraising strategies. We generally recommend slowing down rather than coming to a full stop on capital campaigns. For annual campaigns, it will be important to adjust revenue expectations based on your current reality — but where it is appropriate, ask your donors to continue their support.

• Donors are figuring out what this means to them. As the stock market seesaws and nonprofits in every subsector scramble to ask for help, many foundations and individuals are considering what they should do. Some are concerned about their portfolios and the impact that an uncertain market will have on their ability to give. Others are gravitating to a small number of organizations they care most about. Still others will keep their focus on their longstanding priorities. No one can evaluate what the philanthropic impact will be yet, so we recommend communicating with your donors, asking for critical help from those who are closest to you, and conveying your path forward so they feel secure about their investment.

• It may be appropriate for organizations with significant cash flow challenges to ask some donors who have made restricted gifts to relax their restrictions so that you can use funds in-hand for operations. This must be weighed carefully in light of your relationships with donors and your immediate and long-term needs. If your organization qualifies for forgivable loans in the new stimulus bill, these could also offer some cash flow relief.

• Don’t rely on mass emails to communicate with top supporters. But take the time to pick up the phone or send a person text or email to those who are closest to you.  It is essential that you send the message to top donors that they are worth your time.

• Keep email communication short and simple. Donors and volunteers are being inundated with messages from every nonprofit, retail outlet, and business out there. Make sure your messages are short, sweet, and to the point. Resist the urge to “preach” and focus your messages on the most relevant information.

• If you can, use this time to plan. For some organizations, every member of the staff team is knee-deep in operational execution and other pandemic-related work. But for others, this is a terrific time to tackle research, analysis, policy revisions, campaign and other fundraising planning, and other important work that often gets pushed aside in favor of more urgent tasks. This cloud will lift at some point, and when it does, you want to make sure that your organization is ready to hit the ground running.

This is one in an occasional series of updates from Sterling on trends and developments in the nonprofit sector. We welcome your comments and observations, and we will continue to monitor the impact of coronavirus, the price of oil, and stock market volatility on the wellbeing of the nonprofit sector.

If you have questions about how COVID-19 is affecting the nonprofit sector, email us at hello@sterlingnonprofits.com, and we will address your question in our next issue — or be in touch to discuss with you personally.