Published in Nonprofits
Grand Rapids Art Museum, Grand Rapids. Grand Rapids Art Museum, Grand Rapids. COURTESY PHOTO

Nonprofit leaders cautiously optimistic about 2021, some organizations face tough challenges

BY Sunday, December 20, 2020 05:00pm

Some nonprofits survived the first nine months of the pandemic relatively unscathed while others are hanging on in hopes that a widely distributed vaccine lifts capacity restrictions and renews confidence in gathering indoors.

In such a diverse sector, the 2021 forecast brings a mixed bag of cautious optimism, and the reality that there will be nonprofits that close.

“It’s going to get worse before it’s going to get better,” said Jeff Williams, director of the Community Data and Research Lab at Grand Valley State University’s Dorothy A. Johnson Center for Philanthropy. “It’s a long way between now and Easter. We have four full months of winter before we can start to get outside.”

Williams believes the recovery will begin in 2021 but it will be another year before life returns to some semblance of normalcy. Some nonprofits such as food banks have seen donations and services increase. Others, like theaters and symphonies, chose to cancel seasons, reduce operating costs and “hibernate” before coming out on the other side. Nonprofits that remain open but are operating at reduced capacity are struggling the most.

“The ones kind of caught in the middle — like an after-school program or children’s museum — are kind of open and kind of closed. That’s really difficult,” Williams said.

A few factors will play a role in the sector’s recovery, including the health of the economy, getting the virus under control, and people feeling safe to resume activities. Nonprofits started to fail and disappear 18-24 months after the Great Recession, Williams said, and he predicts a similar trend coming out of the pandemic. 

“Nonprofits will run out of gas in spring to fall of next year,” he said. “Most nonprofits are surviving through 2020. I think we will start to feel the pain of nonprofits exiting in 2021 and 2022.”

Charitable giving as of now is holding steady. Many people make year-end contributions, and nonprofit leaders remain optimistic that the funds will come in.

“We’re expecting it to be down just a little bit,” Williams said. “Broadly speaking, donations tend to follow the economy, and broadly speaking the economy is doing OK.”

Concentrated giving expected

Community foundations play a critical role in distributing money from donor-advised funds and other private philanthropy for nonprofit programs and services. 

Mike Goorhouse, president and CEO of the Community Foundation of the Holland/Zeeland Area, doesn’t foresee charitable giving dropping substantially in 2021 but perhaps becoming more concentrated.

“It likely means that the trend towards getting a higher percentage of charitable dollars from fewer people is going to be exacerbated during 2020-2021,” he said.

Goorhouse sees a few emerging trends heading into the new year, including a deepening commitment to diversity, equity, and inclusion; addressing issues around affordable housing; and more funding for mental health programs.

“Housing did not become more affordable during the pandemic,” Goorhouse said. “In many cases, affordable housing is an even greater challenge now than before.”

Mental health services have been cut for years, making access and affordability a concern prior to the pandemic. The need for services remains high, and research shows it will be even higher in 2021.

Foundations may prioritize more funding for summer school programs to help students who fell behind during virtual learning make academic gains. He foresees an uptick in need this spring from lower income families who will get smaller tax refunds after a lower earned income tax credit after months of unemployment.

Additionally, Goorhouse predicts direct cash assistance programs will continue. The Greater Holland/Zeeland Direct Cash Assistance Program distributed more than $600,000 in 2020. The program provided $500 in emergency unrestricted cash relief to eligible individuals who lost their job or experienced significantly reduced hours of work during the pandemic.

“Oftentimes, when you can’t feed your family or have to decide whether to fix the car to get to work, what you most need is resources,” he said. “It’s a strategy for how we serve alongside those that are financially unstable in our community. I think it’s here to stay.”

In total, the program issued funds to more than 1,000 families in Holland/Zeeland over the last five months. The program was the result of a collaborative effort involving CFHZ, Movement West Michigan, Good Samaritan Ministries and Community Action House.

“I hope that foundations like CFHZ will make permanent some of our ‘altered practices’ that we used to make decisions and award grants during the height of the pandemic,” Goorhouse said. “Nothing like a crisis to help you experience a different, and possibly better, way of doing your work.”

Lingering concerns, focus on equity

Diana Sieger, president of the Grand Rapids Community Foundation, said “there are a lot of things we don’t know,” and it’s hard to predict how 2021 will go.

“When I look around and think about going into 2021, I would say the crisis around basic needs will continue,” she said. “If the pandemic lessens, we still will have very strong concerns about the health needs in our community and the economic crisis.”

As an early pandemic response, GRCF repurposed many grants that were made prior to the shutdown and loosened the restrictions around funding for organizations that serve communities of color. Several pandemic-relief funds, including the GRCF’s La Lucha Fund and the Kent County Relief Fund, also distributed direct cash assistance to families and grants to businesses in 2020. 

Sieger sees the foundation’s commitment to addressing racial inequities growing stronger in 2021, as well as its collaboration with other agencies and organizations. 

“It’s of no surprise that the COVID-19 pandemic has really illuminated so much of the deeply historical and racial issues in our community,” Sieger said. “In our grantmaking, we want to make sure that our community is a place where everyone can access opportunity and experience a sense of belonging and prosperity.”

The foundation’s team also meets with holders of donor-advised funds to help them understand the most critical needs. 

“If individuals have resources and have the money to give, now is the time more than ever,” she said. “This is not the time to say, ‘Well, maybe next year.’”

Arts organizations adjust

Meanwhile, arts-focused nonprofits were largely forced to close their doors for several months in 2020, gradually reopening with occupancy limits and new safety regulations. Arts leaders responded by moving programs and concerts to a virtual format, and say they will continue to be nimble and flexible until a vaccine is widely available.

“We just have to consider 2020 was really bad, and 2021 will also be full of challenges, but we have nine months under our belt of being responsive and being sensible about safety,” said Dana Friis-Hansen, director and CEO of Grand Rapids Art Museum.

The museum didn’t reopen until August and adjusted hours to its three busiest days — two of which are free after a donation from Meijer Inc. GRAM also made various cost-cutting measures and reduced its budget by 19 percent for fiscal year 2021.

“We want to be responsible with our funds,” Friis-Hansen said. “We don’t know how long this is going to last, so we’re being quite conservative in our spending.”

The reduced hours will continue in 2021, as will safety precautions including temperature checks for all staff, volunteers and visitors; face covering requirements; reduced capacity, plexiglass barriers and social distancing; increased cleaning and sanitization efforts; and an online ticketing system.

Many exhibits and programs have a virtual offering for patrons who are still hesitant to visit or who live in another state. In some ways, it has helped expand GRAM’s audience.

While attendance is down to roughly 30 percent of what it was a year ago, and GRAM has lost substantial earned revenue from admission fees, gift shop sales and facility rentals, Friis-Hansen said people are supportive and ready for a sense of normalcy.

Many theaters and performing arts organizations had to cancel or scale back seasons, but West Michigan Symphony kept the music alive and moved concerts online. The live performances are recorded at the Frauenthal Theater, and subscribers and paid ticket holders receive an access code to watch for a limited time.

“Our attitude from the start is we had too much momentum going; we weren’t going to let this stop us,” said Symphony President and CEO Andy Buelow.

The symphony will continue with the virtual format until it is safe to gather indoors for live concerts — something Buelow hopes resumes later this spring or by fall. But the virtual replays may be here to stay, too.

“We’re looking at this at an opportunity to operate in some new ways going forward,” Buelow said, noting he received an email from a patron in Arizona who watched “Home for the Holidays” online because they go south for the winter.

Earned revenue from ticket sales has dropped, but individual giving and sponsorships “is as strong as ever,” Buelow said. The symphony scaled back its orchestra ensembles and reduced other expenses.

“We weathered 2019-20 just fine, but 2020-21 is going to be harder because we have spent the entire year in a pandemic,” he said. “The longer this drags on, the more challenging it becomes.” 

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