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As nonprofits struggle to respond to COVID-19 and the accompanying economic shutdown that has gripped the country, everything that many thought they knew about nonprofit revenue models is being challenged. As it turns out, earned revenue is not the panacea many thought it to be. In fact, the nonprofits with earned revenue spigots that have suddenly been turned off are the ones that find themselves in the most danger at this moment.
What should funders do? The pledge that hundreds of foundations have taken in the last week, organized by the Council on Foundations, is a very good one — and affirms what nonprofits have been asking for more broadly for years (for example in study after study CEP has conducted). The kind of flexibility the pledge urges — releasing organizations from funding restrictions, for example, or from particular projects or deliverables — will be crucial if leaders like Phelps are to keep their organizations afloat.
And many organizations will need something more: an infusion of funds. Announcements of this kind of action are much fewer in number than signatories to the pledge, but my hope is that this is simply because it’s early days. I was pleased to see the Bonfils-Stanton Foundation in Denver, for example, move immediately to provide its grantees — arts and culture organizations in Denver — with unrestricted emergency funding of 10 percent of its most recent grants, with a cap of $6,000.
More funding — and now — is crucial.
Armed with good information, funders will need to increase grantmaking rather than contracting — even as their endowment values plummet — if the hardest-hit nonprofits are to survive the coming weeks and months. Some help from the federal government is possible, and we all need to be supporting organizations like the National Council of Nonprofits, Independent Sector, United Philanthropy Forum, and Council on Foundations that are fighting for nonprofits to get the assistance they need. But increased philanthropic support will also be vital.
Read the full article about supporting nonprofits by Phil Buchanan at The Center for Effective Philanthropy.