Special Interests

Giving during a crisis: How to make a difference

Many people are responding to the pandemic by donating to charity. Here’s how to help your contributions have an impact.


 

Around the world, there’s been an outpouring of generosity as people rush to help alleviate others’ suffering in this pandemic.

By May, individual donors had committed more than $10.2 billion to coronavirus-related relief efforts globally.1 This amount is greater than the combined total donated to help victims of the September 11 attacks, Ebola outbreak in West Africa, Hurricane Harvey in 2017, and the financial crisis in 2008–2009.

We’re seeing this response reflected in the Charitable Giving Fund (CGF), the donor-advised fund managed by J.P. Morgan and National Philanthropic Trust, a public charity.2 In April alone, donors directed gifts totaling more than $77 million from their Charitable Giving Fund accounts. That’s a 63% increase in the number—and a 48% increase in the value—of the grants made from CGF accounts in April 2019. 

Still, nonprofits are struggling to maintain their cash reserves and deliver services. Many organizations are experiencing severe disruptions in their programs, workforce and volunteerism. Lockdowns have also prevented charities from hosting fundraising events.

Indeed, a vast majority of charities recently surveyed by the Better Business Bureau’s Give.org anticipate that the 2020 revenue they receive and services they can provide will be lower than expected. The problem is so acute that 60% of nonprofit leaders in the United States surveyed at the end of March by the Nonprofit Finance Fund said that destabilizing conditions threaten their long-term stability.3

Nonprofits also fear that, while giving tends to spike in the midst of disasters, donations may wane as a new economic reality sets in.

What can you do to help ensure the survival and effectiveness of organizations devoted to the causes that are important to you? We recommend that you be aware of what’s happening in the non-profit sector and remain flexible in your giving, even as you take some steps to make sure your gifts are put to good use.

 

Current trends

As part of the response to the COVID-19 pandemic, we are seeing more local and direct giving. In many countries, that often means contributions to community foundations, which are both well positioned to respond to local needs and are connected to local nonprofits and resources.

One interesting change is that many people and nonprofits have been providing direct cash assistance (rather than services) to individuals who are in need of immediate financial support. The idea that philanthropists might make direct cash gifts has gained traction over the last decade. However, the recent explosion of direct giving may make this approach more of a norm.   

Some donors are being similarly flexible with their contributions to organizations. To help nonprofits survive short-term revenue losses, some donors have been providing general operating support, offering unrestricted gifts and waiving some of their usual reporting requirements.

By May, donors had also started to shift some of their focus from immediate- to longer-term support for individuals. Clearly, the pandemic’s economic fallout is going to affect individuals and communities for years to come.

Donors have also begun trying to reimagine our economy, hoping to find solutions so that select segments of our society won’t again be exposed to the ravages of a virus, including freelancers, hourly and domestic workers, food and healthcare systems, as well as arts and cultural institutions. Philanthropy can provide the risk capital needed to pilot and prove solutions.

 

Range of needs to address

 

Choose your recipients wisely

If you want to give now, ask yourself what is most important to you when making a giving decision and whether you need the organization itself to supply the answers. Here are five key due diligence questions you may want to keep in mind:

  1. How aligned are you with the organization? Is the organization’s mission and vision similar to your philanthropic goals and objectives?

  2. Does the organization have a track record of success? What has it accomplished? Is there evidence that it is more than (or as effective as) other organizations working in a similar issue area? Is it recognized as a leader? Is it providing a service/filling a gap that others are not? How does the organization assess needs on the ground?

  3. What is its quality and reputation? What relationship does the organization have with other nonprofits? Is it collaborative? Does the organization have a positive reputation? What is the quality of its leadership, board and staff?

  4. What is the financial health of the organization? Look at the nonprofit’s website and annual report. Is the organization transparent about its financial information, and does it have a broad base of funding support?  

  5. Is it clear how your donation can help this organization? Has there been clear communication with the nonprofit about what your donation is meant to cover and how the organization will share the impact with you? Depending on the size of your donation, you may want to memorialize it with a grant agreement.

 

 

1. “Funding for coronavirus (COVID-19)”, Candid.
2. A donor-advised fund account essentially is a gift donors make to a public charity (with the Charitable Giving Fund, that charity is National Philanthropic Trust). The amount is then invested so that it might grow (with the Charitable Giving Fund, J.P. Morgan manages the investments). Donors then have the right to advise the charity on when and who will be the recipients of amounts they allot from their fund accounts. Typically, so long as the recipient is qualified to receive charitable gifts, the charity managing the fund will make the grant as the donor advises.
3. COVID-19 Survey Results, Nonprofit Finance Fund, March 2020.

 

 

 

 

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