Givers and the government stepped up to support nonprofits

Nonprofits in the U.S. emerged from the crisis of the COVID-19 pandemic better than feared, thanks to what we now know was record charitable giving as well as the lifeline provided by the federal government through the Payment Protection Program (PPP). The American public and policymakers alike should take the lessons of 2020 to heart and continue to support the vast and diverse array of nonprofits in the U.S. that strengthen our communities and change lives for the better. 

Giving surged to $471 billion in 2020, according to Giving USA 2021: The Annual Report on Philanthropy for the Year 2020, released last week. This record giving, along with federal funding, helped stave off what could have been a catastrophic situation for the country’s nonprofits. 

In a May 2020 survey of a panel of nonprofits, the Center for Effective Philanthropy, the organization I lead, found that the leaders of those organizations were bracing for the worst. More than 81 percent expected they’d have to reduce programs and services, and 80 percent thought they’d need to tap reserves.

Just under a year later, when we surveyed our panel again, we found that 58 and 38 percent, respectively, ultimately had to take these steps. Still sizable proportions, but better than feared.

Don’t get me wrong — the crisis of 2020 was brutal for nonprofits. Human services organizations faced unprecedented demand for their services — we all saw the lines of cars at food pantries on the evening news, for example. Performing arts organizations saw revenues from ticket sales evaporate and, indeed, our research shows that arts and culture organizations suffered more than others.

But, thanks to stepped up giving by foundations and individuals and a massive infusion of resources from the forgivable PPP loans, most nonprofits were able to persevere through the crisis. The lessons learned along the way matter. 

First, nonprofits are vital frontline responders — every day and in times of crisis. Nonprofits and their staff stepped up to mitigate the worst effects of the pandemic — playing roles government and business couldn’t or wouldn’t.

“We’re going to go to work because we think of ourselves as first responders,” Cathy Moore, executive director of Epiphany Community Health Outreach Services (ECHOS) in Houston,  which seeks to support what Moore calls “poverty-stricken, vulnerable families,” told me back in March of 2020. Nonprofits across the country responded to the challenges of 2020 with incredible creativity, flexibility and resilience. 

Second, philanthropy matters — we should celebrate it. The pandemic began during a period of increasing skepticism about the role of philanthropy in American society, with some critics deriding giving as “a wingman of injustice” (surely true in some instances but not generally). But it was increased giving that helped nonprofits through the toughest times.

A majority of nonprofits we surveyed reported experiencing an increase in foundation giving — and the Giving USA numbers confirm a 17 percent overall uptick. Intermediaries, including the country’s 800 community foundations, also played a crucial role in matching regular Americans who wanted to do what they could to help with community-based organizations.

The individual giving story is more complicated, with only modest growth, so it’s crucial that we work to continue to cultivate the American ethos of charitable giving. 

Third, policymakers need to recognize the crucial role of nonprofits. It took heroic and tireless efforts by organizations advocating for nonprofits to ensure they were eligible for the PPP. And it mattered immensely. More than 90 percent of those nonprofits we surveyed in February of this year said their organizations applied for a loan through the PPP, and 99 percent of those received funding. As of February 2021, about two-thirds had already applied for forgiveness on their PPP loan, and of those who had received a decision, almost all had the full amount of their loan forgiven.

It’s hard to know what would have happened without the PPP, but it’s fair to speculate that many crucial nonprofits would not have survived.

Fourth, it’s often small, unsung nonprofits that are doing the vital work with the populations that most need our support — and we need to trust them to do the work they know how to do. For nonprofits, smallness is often an asset, because it means the organization has its roots in — and is trusted by — the community it serves. As we saw the dramatically disproportionate toll of the pandemic and economic downturn on certain populations, it was community-based nonprofits that were best positioned to respond. 

We can all reflect on the amazing work of nonprofits that helped us, or our loved ones — from the health clinics to the food pantries to the conservation nonprofits whose trails we walked to the arts organizations whose performances we streamed online — during a brutal time. As the pandemic recedes and our society wades into a new post-pandemic normal, I am hopeful that it will do so with a newfound appreciation for the crucial role of American nonprofits and the giving that supports them.

Phil Buchanan is president of the Center for Effective Philanthropy and author of “Giving Done Right: Effective Philanthropy and Making Every Dollar Count.”