Business & Lobbying

Charities scramble to plug revenue holes during pandemic

With the coronavirus recession straining household budgets, charities are feeling the pinch as Americans conserve cash.

Charity organizations have lost billions in revenue during the pandemic, making the sector one of many to seek support from Congress at a time when negotiations over another COVID-19 relief package show little sign of a breakthrough.

Traditional methods of fundraising for charities — concerts, festivals and galas — have all been canceled or significantly scaled back due to public health concerns. Nonprofits and charitable organizations are now looking ahead to the holiday giving season in hopes of donations to make up for shortfalls over much of the year.

And they’re pressing Washington to enact legislation that would make it easier for households to give by providing enhanced tax benefits.

The YMCA is among the charitable organizations that have been hard hit, with nationwide revenue plummeting around $1.5 billion since March as facilities were closed for several months during coronavirus-related shutdowns.

The Salvation Army said it’s too early to know exactly how much revenue has been lost, but the organization noted that all of its thrift stores were closed during the height of the pandemic. Last year, those stores accounted for $600 million in revenue overall. 

Kenneth G. Hodder, national commander of The Salvation Army in the United States, said the organization is now gearing up for its holiday season fundraising efforts.

“Volunteers are essential to our efforts during the holidays — Red Kettles, the Angel Tree program, and food distribution — so we are working hard to train and protect those individuals so that we can continue to provide for the most vulnerable Americans. Without those volunteers, our commitment to meeting needs could be compromised,” Hodder said.

Overall, 83 percent of charity organizations reported a decline in revenues during the pandemic, including a decline in earned revenue from events or other activities, and a reduction in individual giving and grants received, according to a recent survey by Independent Sector, which lobbies in Washington for about 500 nonprofits, foundations and corporate giving programs. 

Fifty-three percent of the 110 organizations surveyed reported a decrease in individual giving and nonprofits also have reported a decline in volunteers for nonprofits due to fear of contracting the coronavirus.

Nonprofits are also struggling to hold on to their employees. Sixty-seven percent said they have furloughed employees since the start of COVID-19 and 51 percent said they have laid off employees, according to the Independent Sector survey. 

Similar to the YMCA, the YWCA said its local associations are seeing revenue declines because of the closure of fee-for-service programs and canceled fundraisers that are coming amid increased demand for services that touch on domestic violence, housing, child care and employment.

“They have been forced to make difficult decisions like furloughing and even laying off staff members. Many YWCAs are now looking to recoup their losses through virtual fundraisers,” Alejandra Y. Castillo, chief executive of YWCA USA, told The Hill.

Another major charity, United Way, said it experienced a giving pattern similar to what happens after a natural disaster — there was a surge in donations at the beginning of the pandemic and now it has dropped off dramatically.

“What we are anticipating is for the remainder of this year, our donations will be significantly down. The very people who have been most economically harmed by COVID-19, those are United Way’s donors. We have this really huge base of middle-class donors … who are making $250, $500 donations a year,” said Steve Taylor, senior vice president and counsel for public policy United Way.

Advocates for the nonprofit sector are calling on Congress to provide more incentives for Americans to give to charity. They’re asking for a higher above-the-line universal tax deduction for gifts to charity and changes to the small business loan program in a future coronavirus relief package.

“It’s a very grave situation for nonprofits who are and always have been, and we pray always will be, at the front line of providing relief to communities in crises like we’re facing in 2020. The reality is that they are being hit right, left and center,” said Jeff Moore, chief strategy officer at Independent Sector.

The group is looking to build on the help nonprofits received from the Coronavirus Aid, Relief, and Economic Security Act, which allows for a tax break of up to $300 given to charity in addition to the standard deduction, which is $12,400 for individuals and $24,800 for married couples. 

Independent Sector is asking that the $300 cap be increased to roughly $4,000 for individuals and $8,000 for married couples.

Sens. Chris Coons (D-Del.) and James Lankford (R-Okla.) have proposed a bill that would make available, for tax years 2019 and 2020, an above-the-line deduction for charitable giving that is up to one-third of the standard deduction, which is roughly $4,000 and $8,000.

But stalled negotiations in Congress over the next coronavirus relief package are a dismal sign for the nonprofit sector.

“Our nonprofits are needed more than ever as they work to help families in need of healthcare, housing, food, and other basic needs — particularly those who have fallen through the cracks of federal relief,” Coons told The Hill. “As we invest more federal dollars in economic recovery, why not direct a portion of that investment to expanding the tax incentive for charitable giving to all Americans this year?”

The Paycheck Protection Program (PPP) is also another focus for nonprofits. 

Small nonprofits with less than 500 employees were eligible for PPP loans, and about 40.1 million nonprofit jobs were protected by the program as of late June. 

But PPP was a “total miss for the larger nonprofits,” Moore said.

“A key piece of our advocacy right now…is for the improvements for the PPP program to include eligibility for forgivable loans for medium and large size nonprofits,” Moore said.

A bipartisan group of 28 senators called on congressional leadership in May to expand PPP so that it includes more nonprofits. They asked that the current 500-employee cap for small businesses be modified for nonprofits.

“We are demanding Congress continue and expand emergency funding programs like the Paycheck Protection Program, provide low-cost loans to the smaller and mid-sized nonprofits that weren’t eligible for COVID-19 financial support, and strengthen charitable giving incentives,” Castillo at YWCA said. 

Hodder at Salvation Army added, “We hope the federal government will continue to invest in programs that support those who are most vulnerable as the nation’s economy regains its strength.”

Tags CARES Act charitable donations charitable organizations charities Chris Coons James Lankford nonprofits Pandemic Paycheck Protection Program ppp Salvation Army Tax deductions United Way volunteers YMCA YWCA

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