In January 2020, the COVID-19 pandemic was an abstract concept to most of us. By March, we started experiencing the overwhelming impact caused by COVID-19 in the U.S., affecting every aspect of our lives. Since that time, many social sector organizations have endured challenges for which they had no time to plan and without necessary resources. Some observers predicted that nearly a third of the world’s nonprofits would go out of business within a year.

Despite those difficulties, there are reasons for us to now feel hopeful. The focus is shifting to recovery, thanks to medical advancements, inspired funders, flexible staffs, and understanding boards.

Rebuilding Together

The Center for Effective Philanthropy’s (CEP) recent survey on the state of nonprofits outlines how the potentially catastrophic impact to the sector was curtailed. We benefited from a series of wide-ranging federal relief programs and a strong collaborative effort among funders, foundations, and philanthropists around the world. This remarkable collective effort stemmed a potentially disastrous outcome to organizations who otherwise may have closed their doors. Critical support flowed faster and had fewer restrictions than before. Funders responded more quickly and creatively than we ever could have imagined.

Donor-advised fund (DAF) donors responded in the same way, with great speed and flexibility. Most grants that donors recommended were unrestricted to the recipient charities. Those unrestricted funds allowed organizations to spend where they had the greatest need. Additional compelling statistics:

  • In the U.S., charitable giving increased by almost 7.5 percent in the first six months of 2020, compared to the same period in 2019.
  • DAF donors played a major role: charitable dollars from DAFs increased 30 percent during that time in seven of the eight IRS-defined charitable subsectors.
  • Every charitable subsector, from education to human services to the environment, received a higher number of DAF grants than in 2019.

In my experience, DAF donors are reliable and loyal philanthropists. CEP’s report found that 86 percent of DAF donors either increased or matched their previous grants in 2020. We know from 2008 that DAF donors offer “counter-cyclical” support, meaning that during an economic downturn, donors will recommend the same amount of grants or more when other critical sources of income disappear. Throughout challenging times, we have witnessed how individual donors and institutional funders support causes that need critical capital to operate, or, in terms of the past year, survive.

Read the full article about reflections by Eileen Heisman at the Center for Effective Philanthropy.