The coronavirus pandemic is taking a toll on charities — and changing the way donors should think about giving. Here's what to consider now.
The coronavirus pandemic and the resulting financial and business pressures have changed the way that U.S. nonprofits operate their programs and interact with donors. Many nonprofits have seen reduced funding from individual donors and lost value in their endowments, says Beth Renner, managing director – national director of philanthropic services for Wells Fargo Private Bank.
“It will probably take 5 to 10 years for nonprofits to recover,” Renner says. “The pandemic is hitting the mid-sized (regional or local nonprofits) and small nonprofits the hardest. Some organizations may close as a result of the challenging environment for revenue generation and expense management.”
This poses an important question for investors who see charitable giving as a key part of a portfolio: In today’s world, how can you help nonprofits you care about?
Here, Renner offers her perspective on ways you can implement or maintain a philanthropic strategy that continues to support the causes that matter to you the most.
Assess your current philanthropic path
The first step is understanding where you are with your philanthropy. “If you have an intentional giving plan, treat it like a business plan,” Renner says. “You should ask, ‘Does the way I give fit with today’s environment? Are the charitable causes I’m involved with as important to me today as they were before the pandemic?’” Renner also recommends talking to the nonprofits you support to better understand their immediate needs.
One important step that Renner recommends is to look at your giving history to see how it aligns with your personal values. “Here at The Private Bank, we help you take an intentional approach to giving, discussing changes that will help you benefit the causes you really care about.”
One important thing to discuss with your charitable and tax advisors right now is any tax implications involving charitable giving. For example, the Coronavirus Aid, Relief, and Economic Security (CARES) Act waives the adjusted gross income limitation for cash contributions made in 2020. For those managing or considering a foundation, another discussion to have is whether a donor advised fund is a more appealing option for managing your philanthropic vision.
Understand today’s types of funding needs
The coronavirus pandemic has certainly changed the landscape for nonprofits. “The needs of nonprofits typically fall into three categories now: response, recovery, and resilience,” says Renner.
- Response: The organization needs emergency funding to keep afloat or to help it respond to new, growing, or more expensive immediate needs.
- Recovery: The organization needs funding to replace lost revenue it uses to serve its mission and funding to respond to evolving needs.
- Resilience: The organization needs funding to build larger operational reserves that can sustain it for the long-term.
Once you understand the three categories and which one applies to your favorite nonprofits, you can decide how to take action.
New ways to donate beyond dollars
Part of your charitable giving strategy might involve donations of your time as well as financial donations.
Though in-person volunteering may not be possible with some organizations right now, other ways to donate your talent and experience exist. For example, your professional network could help a struggling nonprofit explore ways to navigate this new normal. Perhaps you know a technology expert who can help that nonprofit transform its in-person workshops into online courses.
Consider helping groups responding to the coronavirus
Renner has noticed a growing number of investors considering helping nonprofits that work to serve those disproportionally impacted by the virus and the economic downturn, which includes low-wage earners. Many of these causes have been in the spotlight lately.
Being prepared to offer help may mean keeping your philanthropic portfolio nimble as events continue to unfold.
“Even though we advocate for philanthropy to be strategic, that doesn’t mean it shouldn’t also be flexible,” Renner says. “As society evolves and as donors become more aware and engaged in their communities, philanthropy will also continue to develop, innovate, and expand to meet new challenges and create the greatest impact.”