Pandemic and Economic Woes Decimated Many Nonprofits' 2020 Fundraising Returns

With Pre-COVID fundraisers, like this Race for the cure event in Portland, Or, out of the question this year, many nonprofits have had to slash their annual budgets. Rigucci/shutterstock

Slammed with exploding demand for services in a severe economic recession fueled by the still-raging coronavirus, many American charities ended 2020 with another devastating blow: a drastic drop in fundraising returns.

At the American Cancer Society, officials said they expected a minimum decline of at least $200 million in its budget of more than $700 million in 2020. Much of that money comes from Relay for Life, a series of fundraising events nationwide. To cope, the charity reduced its budget by 30%, laid off 1,000 employees nationwide and cut the pay of remaining staff by 10 to 20%. Before announcing his retirement, Chief Executive Gary Reedy reduced his own salary by 25%.

Since those steps were taken, the organization made an even higher number of additional layoffs as it moved to close some of its offices and consolidate other local units around the country.

Similarly, Susan G. Komen for the Cure, a 38-year-old breast cancer charity named for the founder’s deceased sister, closed all of its regional offices last year. Komen also announced that it would no longer hold its nationwide signature fundraising event, formerly called Race for the Cure, which had been renamed after multiple setbacks resulted in decreased contributions.

While brighter days are likely on the way as more Americans get vaccinated this year, there are still many tough months ahead. The American Cancer Society’s support for research toward new treatments and cures for deadly cancers, for example, is likely to be slashed by 50% this year, officials have said.

Many nonprofits are also facing a huge spike in need. In Pittsburgh, the Salvation Army’s Western Pennsylvania Division said last month that it expected to serve many more families—a 155% increase in its client base—with year-end emergency aid including food, help with utility bills, shelter and other services. In November, another Pittsburgh charity, Humane Animal Rescue, reported it had distributed some 23,000 pounds of free pet food, a 325% increase from the same period in 2019.

On Christmas Eve, the United Way said it expected 20 million calls this year, double the usual number, to its 211 hotline, which directs people to local organizations offering emergency aid for expenses like rent and utility bills.

A September report by Johns Hopkins University noted some economic improvement among charitable organizations since the start of the pandemic, but it found that nonprofits, which employ an estimated 12.5 million people, laid off nearly 1 million workers in the seven months from August through February last year. Arts and entertainment groups had the biggest cuts. Some 38% of workers in that sub-sector have lost their jobs. The report also found that less than 6% of jobs for people providing day care have returned, limiting parents’ ability to get back to work as schools remain closed.

Although some nonprofit jobs have been restored, particularly among organizations serving on the front lines of the pandemic, there are cases where even those organizations remain hard pressed. As Memphis fundraising expert Robert Sharpe points out in a new white paper released this month, a food bank in a popular vacation destination with a decimated tourism industry is likely struggling.

In his paper about the effects of the pandemic on philanthropy and fundraising, Sharpe identified five factors that determine how an organization’s ability to raise money fares in the health crisis: the nature of the charity’s mission, its geographic location, methods it uses to raise money, its ability to secure bequests and other planned gifts, and the skill of its leadership team.    

Some organizations seeking donations were not as badly hit as others last year. Opera Memphis, which had to cancel its regular season, saw a decline in contributions in 2020, ending its fiscal year on June 30 with $712,000 in contributions, down from $766,000 in 2019. But the organization quickly offered alternative performances, relying on relationships it had built up in years past by holding an annual month-long opera festival that included free performances in the community. Opera Memphis last year started using a flatbed trailer to deliver outdoor performances that paying patrons could request in neighborhoods around Memphis. The opera has provided more than 60 of the performances to date, with more expected in 2021.    

The American Heart Association saw a huge decline in revenue from its special events last year. Like the American Cancer Society, the heart association laid off hundreds of staff members, including many who work on such events. But the association’s losses were offset, at least to some degree, by an increase in bequests and other planned gifts and the charity’s efforts over the past five years to promote major gifts of $10,000 and up. Such donors, for example, quickly contributed $2.5 million to an emergency research fund that has enabled scientists to explore cardiovascular effects related to COVID-19.

Still, major gifts declined in the American Heart Association’s most recent fiscal year, which ended June 30, to $44 million, down from $55.6 million in fiscal 2019.

Some charities, such as those promoting racial equality, did report a rise in donations last year. Community foundations were also among nonprofits that saw an increase in giving last year, as affluent individuals and families added money to their donor-advised funds to meet pandemic-related needs. But all too often, such increases pale in comparison to the dire economic straits faced by people in their communities. At the Westchester Community Foundation in New York, donors contributed $10.3 million in cash last year, up from the $4 million to $5 million the foundation raises in a typical year. “But the need has exploded,” said Laura Rossi, the foundation’s executive director.

“The name of the game is uncertainty and basic services,” Rossi said. “It is scary what people are going through. Nine months into this, there is no end in sight.” She also said that a local “digital divide” is cause for concern. “We have folks in Yonkers who don’t have Wi-Fi, and they cannot work from home or do telehealth appointments. We’ve also been hearing about one laptop in the family and multiple people need to use it to keep up at work or school. There is a real lack of devices, and there are still dead zones.”

But, she said, “technology is essential to access for care and other services.”