Yesterday, NPQ published a feature by Senior Editor Steve Dubb that points out that in terms of policy, this particular moment contains both extraordinary danger and possibility, and our actions right now can help define our country’s future ethos. That piece addressed macro-scale issues like economics, health, and childcare. Today, we want to address the needs of entities in the sector, because just as a policy window has opened on those issues, so has one issues specifically related to nonprofit and philanthropic resources, organizations, and functions.
The COVID-19 pandemic may indeed define the future of the nonprofit sector as it runs its course. The virus has already transformed the philanthropic and business landscape where nonprofits work, choking off funding streams and straining budgets under the need to both expand and redesign services. It’s important that the responses of local and national government should be informed by community, and that is where your advocacy commitments come in.
The National Council of Nonprofits reminds us that nonprofits “feed, heal, shelter, educate, nurture, and inspire people of every age, gender, race, and socioeconomic status, from coast to coast, border to border.” But those roles could be supported, curtailed, or eliminated in any number of ways in the next year, and you should give attention to the issue of rebuilding after the crisis. Will that rebuild reflect a step forward, or back? Is it more inclusive, or less? What does building into the future require of us? Nonprofits of all types bring perspective to these questions, and that affects the design of our futures and the access to capital those futures require.
Speaking to KFGO in Fargo, North Dakota, Jonathan Reckford, chief executive of Habitat for Humanity International, recognized the uniqueness of this moment. “We’ve been through all kinds of natural and manmade disasters throughout the world,” says Reckfotd, “but we’ve never had our operations all hit at the same time.” The unique vulnerability of the nonprofit sector was described by John MacIntosh, managing partner of SeaChange Capital Partners, in a recent CNN op-ed: “Unfortunately, nonprofits that fail cannot be so easily replaced or restarted. Few have the type of hard, tangible assets that can survive a gap in service. There is no all-powerful profit-motive to fuel a reconstruction. Philanthropy is not good at providing front-loaded, restart capital at scale.” This vulnerability must now be used to fuel advocacy that places equity and justice at the center—even over organizational survival. Still, the organizations through which we do our work are also important in this big mix, and those considerations are being addressed today in various legislative proposals.
A falling stock market, a soaring unemployment rate, and worries that many businesses would fail prompted the federal government to pass four emergency bills that allocated $3 trillion to provide an economic safety net. But specific requests to designate allocated funds for the nonprofit sector went mostly unheeded. Some nonprofits were able to obtain PPP small business loans to protect their staff, but many more missed out, unable to get in line before the rounds of funding were used up, and now must rely on the generosity of supporters or draw down whatever reserves they have.
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Two Democratic US senators, Minnesota’s Amy Klobuchar and Hawaii’s Brian Schatz, are working on legislation to fill that gap, having recognized the pressure on nonprofits. Klobuchar told Thomson Reuters, as reported by KFGO, “We need to help charitable nonprofits keep their doors open, scale their invaluable services and provide opportunities for unemployed men and women.” The bill they’re developing will give “the Treasury Department authority to distribute block grants to more than 1,000 state and local governments, which would in turn dispatch those grants to nonprofits with more than 500 employees. The grants would cover wages of up to $50,000 for each nonprofit employee and also help unemployed people match up with nonprofits in need of more workers.”
Nonprofit advocates and others are urging congressional leaders to go even further to boost the ability of the philanthropic sector to fill financial gaps. Writing in The Hill, an assemblage of prominent health nonprofit CEOs offer an op-ed that proposes Congress should treat nonprofits like other critical parts of the economy. “Congress,” they write, “should broaden tax-deductible giving incentives for all charities by enacting a more robust universal charitable deduction and incentives to encourage more giving by seniors, including the bipartisan Legacy IRA Act.”
Additionally, some are suggesting that Congress should mandate higher payout rates among foundations and donor advised funds. We will be discussing this elsewhere.
There may be debate about what specific policy steps are most important, but it is clear government must be part of any coming solution. Tim Delaney, president and CEO of the National Council of Nonprofits recognized the need for continued advocacy in a recent press release. “Access to emergency loans will help keep the doors of many nonprofits open, so they can continue serving their communities. The inclusion of a universal, non-itemizer deduction that every American taxpayer can use is a step in the right direction.”
But we also need more voices, better organized. NPQ has repeatedly made the point that sitting out this advocacy moment stands as dereliction of fiduciary duty. Boards should make it their business to understand and mobilize on the issues at play, both locally and nationally. We recommend, as always, joining your local state association and getting active today.