By Steve Carter, CPA, Principal
Recently, I have begun thinking more about the evolution of the COVID-19 pandemic upon our nonprofit clients. As government assistance is beginning to subside, and life somewhat slowly returning to measured normalcy, what does this mean to those nonprofits who have experienced the generosity of large and small benefactors helping meet society’s demands to feed, house, and provide other critical human and social services to the many impacted by the pandemic?
Will donors scale back their giving, or narrow their channels to new or existing programs, or entirely shift their focus to alternative charitable missions, those not targeted to COVID relief?
How will nonprofits react and adjust? What is going to be required of Development teams to pivot and maximize opportunities for giving and funding?
I did a little research to see what information might be out there concerning all of these questions. I have outlined below not only what I found currently being talked about, but what we are seeing within our own client base. I hope you enjoy, and find it thought-provoking!
Dynamics in Giving
- Concentration of wealth – mega-donors have increased. How does one target and speak to this group? DAFs (Donor-advised funds) have exploded their coffers – these entities seem to be a black box and very difficult to open! How can Development tap into these resources?
- Donors are now turning their attention to matters that speak to inclusion, diversity, and equity. Does your nonprofit address these areas? How can you better position your organization so that donors see these goals targeted?
- Impact investment funds are increasing. We are seeing this occur with one of our major nonprofit clients. Outside investors, looking to not only make a philanthropic impact but also receive a return on their investment, are seeking such funding opportunities. Private foundations are also finding such funds attractive. Business objectives coupled with philanthropic motivations are blending, and creating new vehicles structured to address both. This requires unique talent to not only run the programs, but manage and operate the funds!
Social Justice Funding and Structure of Gifts
- Studies are showing that large donors are seeking organizations whose mission and programs address people of color, those who are marginalized, victimized and oppressed, refugees and immigrants, and women. Organizations can be, and are, put under pressure by certain large benefactors to gear their efforts into one of these areas, yet not having the infrastructure in place to effectively address these needs. Those organizations already established to serve people in these categories will have a definite funding advantage.
- Unrestricted funding. An interesting phenomena occurring in this area of social justice programs is that donors are actually loosening their gifts’ restrictions, allowing the recipient organization more latitude to identify social justice needs which it can effectively and efficiently serve.
Globalization
- Donors are looking for opportunities to make an impact in other parts of the world. How is your organization set-up to do this? Is it part of your mission? Should it be? Would you fragment your efforts and cause you to be less effective?
- Global reach. We have many nonprofit clients based right here in Silicon Valley which have an incredible global reach. Their initial mission was focused globally, yet with initial funding by donor dollars based right in our backyard.
- Social impact funds are another avenue for globalization (see above). These funds can be centered upon climate change, water, farming assistance, housing, education, medical services, and refugees.
These are just a few areas that current philanthropic trends are moving toward. The keys for our nonprofit clients and other organizations, we believe, are knowing your donor base, looking at creative ways to reach and resonate with existing and new donors, and examining your programs which are designed to address the current needs and future horizon of the many in need.
If you would like to discuss these topics or other issues affecting your organization, please reach out to our Nonprofit Group here at Abbott, Stringham & Lynch.