August 23, 2020; Pittsburgh Post-Gazette and Paul Hastings
Across the US, many nonprofit organizations are struggling under the weight of the pandemic and its impact on economic and financial sustainability.
The Delta Foundation of Pittsburgh, a 24-year-old organization whose signature event was the annual Pittsburgh Pride celebration, which brought together members and supporters of the LGBTQIA+ community for a Downtown festival, announced last month of plans to dissolve. Martin Healey, Delta’s board president, shared with the Pittsburgh Post-Gazette that the postponement of Pittsburgh Pride this year due to the COVID-19 pandemic, and uncertainty about whether the event could be held in 2021, left the nonprofit without a revenue stream and no means to move forward. Consequently, nine members of Delta’s board of directors voted unanimously to wind down its operations; one board member abstained.
For those who are considering dissolution, authorization must first be obtained from the nonprofit’s board of directors. The organization will also need to develop a plan of dissolution, pay off liabilities, distribute assets, coordinate with state authorities, and notify the IRS.
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In June 2020, after 38 years, the Salem-Keizer Education Foundation (SKEF) announced the nonprofit would be dissolving. SKEF supports the education and development of students in Oregon’s Salem-Keizer school district through before- and after-school programs, athletic camps, supply drives, and more. Before COVID-19 closures, which stopped needed program revenue coming to SKEF, the nonprofit had approximately 150 employees, 20 of whom worked full-time. However, with furloughs and layoffs from the virus, that number dwindled to six. Topping that with the ongoing financial difficulties the organization had faced over the past two years, the board and leaders made the agonizing decision.
“We could not weather the coronavirus storm,” says Kelly Carlisle, SKEF’s executive director.
The nonprofit has already started distributing assets and programs/services. For example, their tuition-based enrichment academy and youth sports will be transferred to the Salem Family YMCA.
After exhausting all options, dissolution was the best resolution for SKEF. However, others are seeking out partners with whom they can reorganize service delivery methods. Most nonprofits have other related organizations with which they collaborate, and the relationships at those intersections can be seen as a kind of capital that can be utilized to serve communities better. Don’t get stuck on the idea of a merger or acquisition, though those options may be good. Think more broadly, outside categories, and new forms will emerge.—Deidre Fraser