Donations soar but nonprofits still struggle with pandemic

The American spirit of generosity this holiday season may be no match for the coronavirus.

Despite record amounts of charitable donations this year, the effects of the pandemic are suffocating nonprofits across the country as organizations face soaring costs and demand for help, yet are largely without their own support systems, including volunteers and in-person fundraising events.

December is typically the most important month for nonprofit revenues, as Christmas and end-of-year tax deductions drive a flood of charitable giving. The holiday campaign season that charities big and small rely on is underway in full force amid a resurging pandemic that has infected more than 16 million people and claimed nearly 298,000 lives in the U.S. alone.

The Salvation Army, already down 18% in funding this year, projects its Red Kettle campaign will net half as much as it did in 2019. That’s a $60 million drop for the iconic fundraising drive being crippled by the pandemic in numerous ways.

Thousands of kettle locations were eliminated because the businesses that once hosted them have closed and foot traffic has diminished as much of the public opts to stay at home. Its pool of volunteer bell ringers is smaller, as many older helpers — some who dress up as Santa Claus — are unable to participate because they’re at high-risk for COVID-19. There’s even a national coin shortage, in part because pandemic shopping has turned increasingly digital.

The Salvation Army’s thrift stores as a separate funding stream are also projected to take a $150 million hit this year.

The Christian social services charity expects 6.6 million people — a 155% increase over last year — will seek their help between Thanksgiving and Christmas, for food, toys, and rent assistance as eviction moratoriums expire.

"The numbers in terms of the people who we are serving are simply off the charts and how we’re going to meet the increased need is causing us to be concerned about the giving levels we’re seeing so far," said Kenneth Hodder, the U.S. national commander for the Salvation Army.

But multiple studies and surveys say more people than ever are giving and at greater amounts than usual.

The GivingTuesday Data Commons estimates there was a 23% jump in the number of people who participated in the movement to donate on the Tuesday after Thanksgiving in the U.S.

The organization said 16.8 million people across the country gave a collective $2.47 billion on Dec. 1 — a 25% increase in total dollars compared to Giving Tuesday last year. That’s more than what any single U.S. philanthropic foundation gave in 2019, with the exception of the Bill and Melinda Gates Foundation, said Woodrow Rosenbaum, GivingTuesday’s chief data officer.

Fidelity Charitable said it has distributed 32% more grants and seen a 20% increase in people setting up investment accounts for charitable giving this year. But, the donor-advised fund operator, which generally caters to a wealthier donor base, also said two-thirds of its surveyed donors decreased or stopped volunteering during the pandemic.

There have been efforts to encourage more giving since the coronavirus took hold of modern life in March.

The IRS is urging the public to utilize a special $300 tax deduction that can be claimed next year for cash donations in 2020 to tax-exempted nonprofits. The initiative allows non-itemized filers to get the tax break only for 2020, as part of the Coronavirus Aid, Relief and Economic Security Act passed by Congress last spring.

Big philanthropic players have also stepped up.

The Ford Foundation said it has already surpassed last year’s total giving with $580 million in grants. It’s giving another $400 million through a bond. Ford and four other foundations announced earlier this year they would borrow $1.7 billion through bonds to help keep afloat donations-dependent nonprofits through the crisis.

"Even in the best of times, even the most well-known nonprofits live on the edge financially," said Hilary Pennington, an executive vice president at Ford.

That all might not be enough.

When stay-at-home orders were first issued in March, Adam Porter, the Meals on Wheels director for the nonprofit Sound Generations in Seattle, feared the worst because volunteers typically deliver more than half of the hundreds of thousands of meal kits the organization provides to the elderly.

"I said to myself: ‘Well, game over. We gave it a good shot but we won’t have a program without our volunteers,’" Porter said.

The program has made do with 40 fewer active volunteers this year compared to last, while Sound Generations has raised $200,000, or nearly 10%, more in donations overall. The remaining volunteers, Porter said, have taken on more work to ensure there’s no waitlist for food.

Nationally, Meals on Wheels America said its 5,000 community programs are, on average, serving 77% more meals this year compared to 2019, and nearly all of them are facing financial strain because they’ve also had to buy additional safety equipment and pay drivers to replace volunteers. Though the national organization has given emergency grants worth more than $31 million to local programs since April, increasing donations are simply not bridging the gap in many cases.

The nonprofit tracker Candid also projected in July that 22,000 or 7% of nonprofits in the U.S. may close because of the coronavirus crisis.

Among those struggling the most are arts organizations, which have collectively lost an estimated $14.6 billion in revenue to date this year, according to the Americans for the Arts. The national advocacy group projects 12,000 arts and cultural nonprofits are at risk of being wiped out forever.

But as the world recovers from the isolation of the pandemic, Rosenbaum of GivingTuesday said, arts and social services organizations that draw people together will be among the most integral to rebuilding a sense of community.

"They have a role of community," Rosenbaum said. "And a role of healing."