Budgeting is always, to some degree, an exercise in uncertainty. But the current budgeting environment is unlike any experienced before. As a result of the COVID-19 crisis, many nonprofits have seen deep declines in revenue while the demand for their services has spiked. These and other pandemic-related factors may call for organizations to take a different approach to budgeting. This article discusses rolling budgets and reforecasting. A sidebar reflects on how nonprofits should budget for COVID-19-related expenses, such as sanitation-related services and employee assistance.
The COVID-19 pandemic created an unprecedented need for funding — and grantmakers and donors stepped up. Corporations, foundations, public charities and high-net-worth individuals awarded more than $20 billion to address the social, health and economic effects of COVID-19 globally in 2020.
That’s just one of the findings in a new report from the Center for Disaster Philanthropy and nonprofit information service Candid, “Philanthropy and COVID-19 in 2020: Measuring One Year of Giving.”
Data for the report came from publicly available sources in English, including websites, surveys and funders that report disbursements directly to Candid. The report notes that the data set, while substantial, isn’t comprehensive. Nonetheless, it provides vital information for targeting fundraising efforts.
Corporations contributed 44% of the COVID-related funding last year. Corporate giving totaled $9.4 billion and included both cash donations and in-kind support. Corporate support was stronger in the first half of the year than the second, but the report says that’s not surprising. It points out that corporations often are among the first to respond in the immediate aftermath of a disaster or crisis.
Independent foundations, by contrast, more than doubled their support in the second half of the year compared to the first six months, from $1.7 billion to $4.7 billion. The Bill & Melinda Gates Foundation led the way, awarding more than $1.3 billion, followed by the Rockefeller Foundation with $1.1 billion.
Although donor-advised funds (DAFs) also beefed up their giving in 2020, the report says that the growth can’t necessarily be directly linked to COVID-19 giving. But a survey conducted by the National Philanthropic Trust found that DAF donors responded urgently to the pandemic. According to the “Donor-Advised Fund COVID Grantmaking Survey,” DAF grants to charitable organizations jumped nearly 30% by dollar value in the first six months of 2020, compared with the same months in 2019 — from $6.41 billion to $8.32 billion. The total number of DAF grants during that time grew by 37.4%, from 945,044 grants in the first half of 2019 to about 1.3 million in the first six months of 2020. Organizations in the human services category saw the biggest increase, receiving 78.1% more DAF grants than in the first half of 2019.
Corporations aren’t required to report their grantmaking, so the recipients aren’t always identifiable. Among awards to specified recipients, though, the report says human services organizations received the largest chunk of the funding, at 28%.
Health organizations, which received the most support in the first six months, came in second for the entire year. They received 26% of dollars. Interestingly, less than 2% of dollars ($29 million) but 25% of gifts (863 gifts) were directed to mental health organizations.
Which causes were targeted?
The report asserts that the “twin pandemics” of COVID-19 and systemic racism brought attention to the role philanthropy should play to help achieve policy and systems change. Yet only a relatively small proportion of COVID funding to specified recipients was aimed at such a purpose. Grants focused on equitable access to COVID diagnostics, therapies and vaccines were among the largest awards that fell in this category. Only 1% of the dollars had a specific focus on advocacy and grassroots organizing.
On the other hand, almost a quarter of global funding dollars for specific recipients was designated for communities of color or organizations serving such communities. These dollars largely came from high-net-worth individuals. The percentage dropped to 13% when only institutional philanthropy was considered.
In the United States, 35% of COVID dollars to specific recipients went to black, indigenous and people of color (BIPOC) communities. High-net-worth donors carried the load, designating a higher proportion of their funding (44%) for BIPOC communities. Only 11% of corporate funding to named recipients was designated for such communities.
Eight percent of funding explicitly targeted people with disabilities, including those with psychosocial disabilities. Four percent of COVID dollars was directed at women and girls. Immigrants and refugees received 2% of the funding, and another 2% went to older adults.
How flexible were the awards?
In some highly welcome news for nonprofits, unrestricted or flexible funding skyrocketed as 2020 progressed. In the first six months, only 3% of dollars was unrestricted or flexible; over the entire year, 39% of dollars (and 21% of gifts) was so described. There’s a caveat, though: Much of this is due to “very large, unrestricted grants” made by MacKenzie Scott (the ex-wife of Jeff Bezos, the world’s wealthiest person). Without her grantmaking, only 9% of all dollars awarded to named recipients was flexible.
The report highlights some of the ways funders are making funding more flexible, beyond simply awarding unrestricted contributions. For example, some funders have extended grant timelines or reporting requirements. And grantmakers have converted previously made project grants to unrestricted grants. The report doesn’t capture such actions because its data set primarily consists of new awards.
An ongoing challenge
Nonprofits will hope that funders take to heart one of the report’s primary recommendations: that funders do more to support the most vulnerable and that they address both short- and long-term needs. Organizations also should incorporate the report’s findings as they plot their fundraising strategies.
Donors show their giving preferences in COVID-19-related report
A new report from a biannual survey, on how donors worldwide prefer to give and engage with nonprofits, offers valuable data at a time when every dollar counts. According to the “2020 Global Trends in Giving Report” from Nonprofit Tech for Good, nonprofits probably are missing out if they don’t have a recurring giving program.
Fifty-one percent of the more than 13,000 donors surveyed participate in at least one such sustaining program. In Canada and the United States, 57% of respondents are enrolled in a recurring giving program, up from 46% in 2018. By far, most prefer monthly donations (94%) to weekly (3%), annually (2%) and quarterly (1%).
Although your organization might have a preferred channel for receiving donations, donors’ preferences vary significantly. In the United States and Canada, 63% of donors prefer giving online with a credit or debit card, while 16% want to mail their donations and 10% use PayPal. Only 4% prefer donating cash, but that’s more than the 1% who are fans of “text-to-give.”
Forty percent of U.S. and Canadian donors give through Facebook fundraising tools and 12% through Instagram. Notably, though, the vast majority of these donors (88% and 93%, respectively) say they’re likely to use the tools again.