PACS Blog/December 7, 2020
Lucy Bernholz wrote a five-part series for The Chronicle of Philanthropy exploring what’s next for foundations and nonprofits.
The Current Economic Crisis Is an Opportunity to Reset Philanthropic Priorities
by Lucy Bernholz, August 31, 2020
The U.S. economy “collapsed” in March and cratered in July, but it was broken well before. I’m not an economist, yet last October even I was able to predict a global recession in 2020. It was clear that our lived economy was fragile, discriminatory, and unreliable — although the adjectives more commonly used were automated, innovative, and entrepreneurial.
During the pandemic, a similar cognitive dissonance has taken hold in the philanthropic world where measures of charitable giving and nonprofit vitality are declining even as people are taking to the streets, delivering aid to neighbors, creating online communities of care, and crowdfunding to keep beloved Main Street shops alive. While we search for ways to reconstruct our shattered economy into something better, we also need to reflect on how best to rebuild the nonprofit world and not simply recreate the “old normal.” To do that, we need to take an honest look at where we’re starting.
First, the hopeful news. The nonprofit world was buoyed (emotionally, at least) when five of the nation’s big foundations announced a commitment to an additional $1.2 billion in grant making. This joint action, which involves a variety of measures including issuing bonds and increasing payout rates, demonstrates that even the largest foundations can act quickly and creatively when they want to. Similarly, the #HalfMyDAF campaign, which encourages people to give at least half the money in their donor-advised funds to nonprofits hit hard by the pandemic, shows a willingness to break the mold. These acts reflect awareness by a handful of organizations and donors that our democracy is, as Crystal Hayling, head of the Libra Foundation put it, “on the precipice” of collapse.
While commendable, such moves are, in reality, short-term fixes largely aimed at saving nonprofit organizations.
Neither effort involves a reconsideration of philanthropic structures, the privileges granted to them by law, or their role in perpetuating the societal systems that birthed them in the first place. Instead, they are positive steps within the confines of the old normal. They also undeniably involve a degree of self-protection for both the foundations and DAF holders fearful of expanded regulatory demands on how they use their money. Ultimately, both approaches are about giving more but not differently or necessarily better.
Nonprofits certainly need help, but before philanthropy rushes to save them, let’s consider what they’re saving. We should remind ourselves that many nonprofit jobs are poorly paid and lack benefits and that the nonprofit world fares little better than corporate America on measures of inclusion or equity. I say this not to kick nonprofits when they’re down but to ask us to think about what we’re collectively invested in repairing.
Wealthy Nonprofits Face Other Challenges
The megafauna of nonprofits — colleges, museums, libraries, performance centers, and hospitals — pose a separate set of challenges.
Many are struggling during a pandemic that has made physical gathering dangerous, forcing them to move quickly to incorporate digital opportunities without making their brick-and-mortar institutions obsolete. How, for example, will higher education justify the expenses associated with residential life when most teaching is occurring online? The universities that figure out how to do it right and survive the pandemic will be models for a new normal in higher education.
Navigating this transition will require wholesale reconsideration of both individual organizations and their collective approach to digital rules and practices regarding issues of privacy and intellectual property.
While the biggest of the big nonprofits are struggling, smaller, community-based networks of care that rarely attracted outside funding are raising what might become unprecedented amounts of money. Bail funds and mutual-aid groups have used the internet and social media, as well as months of media attention, to attract money from new donors in faraway locales who previously knew little or nothing about these groups. Almost every solidarity statement received in email inboxes over the past few months, whether from employers, major retail brands, banks, elected officials, or even local bookstores, has called out a set of Black-led organizations to support. And people are opening up their wallets in response.
Anecdotally, we are also giving to local restaurants, newspapers, artists, musicians, and unions. But unless data-reporting rules change, we have no way to quantify this generosity since much of it takes place on private platforms through services such as GoFundMe, Patreon, Venmo, and PayPal. The same holds for the time, energy, money, and physical safety that people spend putting their bodies on the streets for racial justice. These collective actions remain uncounted, even as they lead to policy change in cities and corporations. As I’ve written about in the Blueprint series, this giving also demonstrates how little donors care about tax incentives when it comes to working for social justice, keeping small businesses alive, and so many other important causes.
Will Americans Give More or Less?
Here’s what I predict for several years to come: We will see declines in measured charitable giving, declines in the number of nonprofits and the size of their budgets, and a reduction in the size of philanthropic foundations.
Here’s what none of that will tell us: Are Americans doing less to care for their neighbors and neighborhoods, to advocate for justice, to make change in their communities? In the summer of 2020 as people take to the streets, participate in local support networks, and volunteer for political campaigns, it certainly doesn’t seem that way. We give in innumerable ways, but because we don’t count them, they don’t count in terms of understanding how much people give or how much time they spend advocating for different policies.
This presents opportunities for rethinking how philanthropy operates. To get started, we should:
Each of these ideas provides an opening for foundations to help community groups and mutual-aid networks flourish without falling back on the old inequitable and unproductive rules of giving. Community foundations such as the Chicago Community Trust are already taking steps in that direction.
Local nonprofits should also look for ways they can support and learn from the care and aid networks in their communities, including strengthening rather than diminishing grassroots leadership. This is a chance to not just save nonprofits; it is an opportunity to turn them into more effective vehicles for change.