The Non-Profit Depression?

Ideas and Issues
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December 14, 2020

Atlanta A boatload of money is being spent in the Georgia election runoff for the two remaining US Senate seats. Estimates range from $350 to $500 million by the candidates’ campaigns and especially independent expenditures. This last round of the 2020 election cycle follows more than $1 billion, maybe $2 billion, spent on the presidential and other contests. President Trump reported to Federal Election Commission raising more than $200 million after the election.

So much money in so many places, but are these donors, large and small, equally motivated in this time of pandemic along with a US and worldwide recession towards philanthropy as they are towards politics? They aren’t necessarily the same people, but often times they may be, especially when we look at the army of small donors that have driven many of these races. With the superrich, there’s always more money where that came from. For the small donor, especially in the worst economic downturn since the Great Depression with huge unemployment, funds are not limitless; it’s a shallow well.

The demands are not just those that develop increased capacity in the progressive forces. The devastation in the restaurant industry and the increased grocery demand, has hammered food banks even as the lines lengthen. Malls customer traffic, devastated and deserted, has the Salvation Army red kettle annual campaign projecting a drop of almost 50% from $120 million to just more than $60 million. Churches are hurting, too. Research by the Center for Church Management at the Villanova University School of Business found in three Catholic dioceses that the average drop in collections was 7 percent after three years of relatively stable collections. The center projects collections through June — the end of the next fiscal year — will decline on average in the dioceses by 24 percent, but by 50% or more in parishes that did not offer on-line services.

Families looking after families, sick and broke, are pinching pennies. Reading the Wall Street Journal, the rich see pressure on tax rates coming their way, hedges being restricted, and too many hands out looking for help, while they are looking for safe havens. The soaring stock market that continues to pile up riches for the one-percent may be the only thing that still allows some cash to trickle down to financially desperate nonprofits.

Other sustainability strategies used by some nonprofits, including ours, that include social enterprises, training, and consulting have all been sidetracked or shelved by shutdowns, travel barriers, and the demise of face-to-face work. Libraries closed in universities and cities across the world means institutional subscriptions for publications have also been curtailed.

The list goes on and on. An economic depression has ripple effects for many small businesses, including in the vital nonprofit sector. It’s a rough 2020 season everywhere you look. Think of your favorite nonprofits, when you get ready to dig deeper this season.