Donations to nonprofit organizations, including big names like the American Cancer Society and the American Heart Association, are dropping as Americans give less due to pandemic-fueled job losses and fears of getting laid off.
The challenge is being felt across a wide range of nonprofits, including those related to the arts and education, with half of charities saying in May that they expected donations to fall by at least 20% in the next 12 months, according to a survey by the Charities Aid Foundation of America.
The decrease in contributions is resulting in millions of job losses at nonprofits, and is both hurting the people the organizations serve and putting at risk funding for research into ailments such as cancer.
There are some bright spots, however, with non-traditional fundraising, such as GoFundMes, staying afloat and a rise in contributions for social justice causes.
“People who have lost their jobs in the last few months understandably don’t have the resources to donate to charities like they had in the past,” says, Rick Cohen, chief communications officer for the National Council of Nonprofits. He also notes that although health services have seen an increase in demand and donations, the increase in demand exceeds the increase in contributions.
An overall decrease in donations was exacerbated by the effects of the COVID-19 pandemic, Cohen said.
“When you’re traveling on an airplane, you’re advised to put on your oxygen mask before helping others,” Cohen said. “That’s exactly how people are reacting to donations.”
In the weeks after the pandemic led to lockdowns across the U.S., around 88% of nonprofit organizations experienced a 15% or more revenue decline, with 13% having to suspend most or all operations, according to the COVID-19 Nonprofit Workforce Trends Report.
Layoffs at nonprofits
Due to the crisis, over 1.6 million nonprofit workers have lost their jobs, according to a report from Johns Hopkins University. Over 65% of nonprofits have budgets under $500,000, making most of them under-resourced even before the pandemic, according to the Harvard Business Review.
Donations generally account for more than 14% of the overall revenue of nonprofits. Nonprofits generally earn more than 80% of their revenue through private fees for services and through government grants and contracts, according to the National Council of Nonprofits.
“The pandemic has severely reduced our fundraising revenue and forced us to take significant cost-saving measures,” American Cancer Society (ACS) Community Development Manager, Stephen Cavanaugh, told USA TODAY.
The ACS reduced its overall budget by approximately 30% and made cuts to both non-personnel and personnel expenses. It eliminated over 1,000 staff positions nationwide.
The ACS’s research program is at major risk and facing a 50% cut in funding if trends continue.
The American Heart Association also has been facing hardships caused by the pandemic.
Although the organization’s audited financial statements of the last fiscal year are not available yet, the group is bracing for a drop in revenue.
“Like all nonprofits, the American Heart Association has been impacted and we’ve made significant changes to mitigate the impact,” Suzanne Grant, a representative of the American Heart Association, told USA TODAY.
The organization pivoted to online fundraising and was able to offset some losses by eliminating travel, freezing open jobs, and other cutbacks. Those actions saved the association over $120 million, according to Grant.
Social justice causes
Social justice causes have seen an increase in donations this year through Amazon’s charity-supporting program, AmazonSmile. Charities with a focus on civil rights and social action, propelled by the Black Lives Matter movement, had nearly 70% growth in donations in the last year, according to Amazon.
In July, more than 4,000 nonprofits called for specific aid they say nonprofits need to see in a COVID relief bill. Among the requests, nonprofits asked Congress for an extension of the Paycheck Protection Program and access to low-cost loans to mid-size and large nonprofits to be included in the bill.
In September, 38 national nonprofit CEOs called for Congress to approve a relief package immediately. Some of the organizations included the Girl Scouts of the USA, the American Heart Association and the American Cancer Society.
Lawmakers remain at an impasse over a COVID-19 stimulus package, with hopes for its passage rising and falling almost weekly. Democrats blocked a $300 billion plan supported by Republicans last month. Then House Democrats passed their own $2.2 trillion plan earlier this month, but Senate Republicans are unlikely to act on it. President Trump also briefly pulled out of negotiations last week. Since then, the president reversed course, first calling for stand-alone bills on airline relief and $1,200 stimulus checks, and then offering a $1.8 trillion proposal that Democrats rejected as inadequate.
The latest plan from Democrats includes an expansion of the Paycheck Protection Program to larger nonprofits, and it would also increase the amounts that Americans can deduct for charitable giving.
“There are good items in that bill, but there is still more that is needed,” Cohen said.