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Countering COVID's long shadow

Nonprofits grapple with trying year

Like many businesses in the metro area, nonprofits were shook to the core when the pandemic took hold in March, but with careful financial scrutiny and a keen eye on planning for the future, trepidation over potentially not being able to serve the community seems to have been put on the backburner. 

Nonprofits have become creative with virtual fundraising, massaged relationships with crucial donors and stakeholders and taken advantage of PPP and other foundational funding. While that has kept agencies afloat, many have sliced and diced budgets for their new fiscal year, and executives and board members alike are keeping a close look at what many believe could be a tumultuous 2021 and 2022. 

Keeping perspective

Michael Coleman took the reins as chief executive officer of one of Birmingham’s longest-serving nonprofits just a couple months before Covid-19 took hold in the region. 

His fresh set of eyes and ideas at the Jimmie Hale Mission helped the faith-based organization alter programming, stay limber, revamp a budget and stay positive. 

The mission remained open with safety procedures in place for current clients but didn’t open again at full capacity until May. While many would think numbers at the homeless shelter would swell with layoffs surging, Coleman said his service numbers have been down. 

“I believe that’s going to change,” he said. “Right now, since the government’s been subsidizing $600 a week on top of the state, that’s offset some financial stress. Well, now that’s down to $300, and then that’s going to go away. And when that does, you’re going to see that stress kick in. And you’re going to see homelessness increase. You’re going to see addiction increase — things that can be masked right now because of the extra finances. So, I really think 2021 is going to be the biggest year. It’s going to have a much more dramatic effect on homes than it is right now. When that government support goes away, you’re going to see a lot of people in crisis.”

And that could extend across the board to all nonprofits, regardless of service realm and location. 

Children’s Aid Society, which provides crisis resolution, parenting classes, adoptive services and more, has not lost any funding for the fiscal year and just stepped into its next fiscal year on Oct. 1. Like Jimmie Hale, it had a temporary pause in services but then brought them all online or in a new format other than in person. 

CEO Gayle Watts said her agency’s two greatest issues are the growing needs of the communities it serves and the unknown impact of its funding streams going into the future due to the economy.

“Families in crisis are in greater crisis and there are more of them, and the unknown economic impact over the next one or two years or more,” are concerns, Watts said. “As we all experienced, we have to be swift and nimble and often do more with fewer resources. We need to care for all our community support workers and make sure they are safe and healthy. This will be a long game.”

Coleman cut a half-million dollars out of Jimmie Hale’s budget this year to remain fiscally responsible. That has helped keep the nonprofit’s operational costs in line with current donations. 

“I’ve only been here for 10 months, but Tony Cooper and the board have done a good job of holding a little bit back for events such as this, so we are not in dire financial straits,” he said. “But I will tell you we’re probably in a better position than some nonprofits. Some nonprofits literally work month to month. We’re not a month-to-month ministry, but I will tell you it doesn’t take, even with nonprofits who are healthy, more than a couple of years of donations being down to really put you in a difficult or precarious spot.”

Coleman credited PPP and sound previous financial accountability for helping his agency not lay off anyone, but he’s not sure how long his $6.2 million budget for the fiscal year that started in July will stretch since donations are down. 

“There are a lot of variables that determine how long that would be, but I feel like we can weather a downturn in donations as long as it’s not too severe for a short time, but if this is going to be the new norm, and if giving doesn’t return to normal levels, next year’s budget would have to reflect that,” he said. 

Children’s Aid Society put a hold on open positions, re-evaluated part-time staffing and staggered work schedules to remain financially viable, so it has not been forced to furlough or lay off employees. 

The Exceptional Foundation in Homewood shifted to have its staff clean more frequently and ensured time is spent on keeping the facility — at less than 40% capacity — safe for its participants, who are considered high risk.

“We are also mindful that the financial status of many of our parents and caregivers may have been adversely affected by Covid-19, and we have been working hard to ensure that we are able to provide safe and affordable programs to all of our participants, regardless of financial means,” said Executive Director Tricia Kirk. “Most of our fundraising efforts have focused on Covid-19-related program adaptions and scholarship funding.” 

The Community Foundation of Greater Birmingham has been monitoring the financial status of nonprofits in the metro area, shifting funding and programs to funnel money into the community and has kept tabs on needs using surveys of not-for-profit leaders. 

“Nonprofits in our community have shown a remarkable capacity to adapt to these incredibly challenging circumstances,” said Gus Heard-Hughes, vice president of programs for the foundation. “I have great respect and admiration for the work they are doing.” 

He crunched numbers from more than 260 survey responses in March and May and is gearing up for another in the winter. 

“Our survey in late May found that nearly 80% of organizations reported having to modify how they provide services – ranging from acquiring proper PPE for necessary in-person activities, to completely reworking programs to fit a virtual environment, to adding or removing entire programs,” he said. “Specifically, 44% reported adding new services to meet community demands; 83% reported moving to a remote work environment; 90% of organizations with budgets greater than $1 million reported working from home, while only 65% of organizations with budgets under $50,000 reported the same.”

He said smaller organizations are suffering more, and because of that, the foundation has altered the direction of funding for the next round of grants. 

“Since the crisis began, the Community Foundation has awarded 150 grants focused on Covid response, totaling over $2.3 million,” Heard-Hughes said. “We have completed two full phases of Covid grantmaking and are planning a Phase 3 for the final quarter of 2020. The severity of the crisis has led the foundation to fully shift its 2020 competitive grantmaking to Covid response. Our response has been guided by our survey results, the applications we have been receiving, our regular community conversations, and other outreach to our community partners. Based on our findings, we adjusted our Phase 2 funding parameters to give priority to smaller organizations under $100,000 annual revenue and organizations led by people of color.”

Government funding

Nonprofits are in two different boats right now — one boat receives government funding regularly via donations or for contracts and the other boat is swimming solo with donations and fundraising as the sole sources of income. Each boat is facing challenges due to Covid-19. 

Children’s Aid Society is concerned even during normal times that government contracts could dry up, so its development team builds a diverse funding base. However, Watts said there are many variables impacting its funding stream. 

“While much of our programming includes significant support from state and federal grants and contracts, we simply don’t know what the impact of the pandemic may have on government funding, even if it is contracted,” Watts said. “For CAS, funding loss equates to elimination or reduction in services.”

Jimmie Hale doesn’t take in any government funding, but Coleman admits it is a double-edged sword at times. 

“We’re very blessed we have a strong donor base,” Coleman said. “It would be helpful when things are running tight to have that regular support coming in from the city or the county. But then when they aren’t able to come through like now because of their deficits, it doesn’t affect us, which is a blessing.”

Kelleigh Gamble, chief executive officer of Neighborhood Housing Services of Birmingham Inc., said his nonprofit’s strong relationship with funders, including the city, enabled it to not only stay afloat, but also see a slight uptick in donations. Having a mission in line with a major city focus area enabled it to keep servicing the community. 

Gamble pivoted to move its HUD-approved homebuyer education, foreclosure prevention and financial counseling services online, and a quick infusion of cash from major Birmingham companies supported purchasing PPE and offered assistance in the rental program for those with Covid-related hardships. It continued efforts to work with local contractors to make repairs on single-family owner-occupied homes through the city’s rehabilitation program as well. 

“If we did have a loss in funding, our ability to update major systems on homes with deferred maintenance would have an adverse and far-reaching impact. Redeveloping neighborhoods and their residents are faced with health challenges, food deserts and the potential of displacement due to gentrifying neighborhoods,” Gamble said. “Our ability to service these clients allows the families we serve to age in place and hopefully begin the transfer of their most valuable asset — their home — to the next generation. NHS Birmingham would also have to potentially reduce an already thin staff and further reduce the number of families that we contracted with the city to provide services for if that funding were to go away.”

Despite the positive outlook, Gamble does recognize 2021 and 2022 could be extremely difficult for nonprofits, including his. 

“As unemployment either stagnates or rises, due to small businesses not being able to keep pace with expenses, and furloughs continue, families will get further and further behind on rent/mortgage payments, utility bills and the cost of feeding their families,” he said. “If government assistance stops or continues to delay as we’re seeing with HEROES Act, the tertiary impact will be felt primarily by working-class families. Nonprofits and the faith-based community will be at the tip of the spear and among the first calls that are made for those economically impacted by Covid-19.”

End-of-year donations 

Nonprofits typically rely on end-of-year donations that are made as holiday gifts, for tax rebates and other fall and winter fundraising events, but that may have a new look and feel this year. 

“Organizations of all sizes are facing funding and revenue challenges in the face of the Covid-19 crisis, with 87% reporting lost revenue due to canceled fundraisers, canceled programming and fee-for-service activity, and/or substantial decreases in individual donations,” Heard-Hughes said. “Nearly 60% of agencies estimated revenue losses between 10% and 50% for 2020. Notably, 10% of organizations expect revenue losses greater than 50% by the end of 2020.”

Coleman said he believes budgeting conservatively is crucial right now. 

“We cut our revenue projections,” he said. “We made them more conservative because there’s just this unknown going forth, and we don’t know, but we will probably see a greater impact as we get into the last quarter of the calendar year where usually you raise 50% to 60% of your income for the year. So, we really don’t have a true picture until after Christmas.”

For now, Jimmie Hale is planning a dinner gala in April and held a run in October to bring some funds in for the nonprofit that traditionally hasn’t held fundraising events. 

Watts is targeting grant proposal submissions, individual donor solicitation and planning for a 16% cut in funds from United Way. 

Camille Spratling, executive director of the Railroad Park Foundation, is using the end of year to beef up attention for the park’s 10th anniversary. Visits to the park skyrocketed as people clamored to be outdoors and exercise safely during the pandemic. Since March, the park has seen more than 257,000 visitors, an increase of anywhere from 100 to 500 weekly. But visits don’t translate into funding.

“Due to Covid, Railroad Park Foundation — the nonprofit that partners with the city of Birmingham to manage Railroad Park — anticipates a 50% total loss of income from canceled client events, inability to host on-site signature programs and across-the-board city funding cuts to nonprofits,” Spratling said. “Railroad Park Foundation signature programs and client events from March forward have been canceled. Additionally, the city of Birmingham has implemented funding cuts across the board to nonprofits like ours in order to address the budget shortfall. We have also incurred additional costs from adapting daily operations, implementing Covid safety measures and adjusting programming to virtual formats.”

With all of these factors, Gamble said it is important for residents and businesses to step up and donate in the fourth quarter. 

“This final quarter of the year for those who are looking to give philanthropically will not only be critical for nonprofit agencies to operate, but the resources we are trusted with will be the difference in whether families can recover or not,” he said.  

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