16 March 2020

Coronavirus: Philanthropy and charities


Alana Petraske
Partner | US

Click here to read more insights on how we can weather the coronavirus outbreak with you.

With the Coronavirus crisis now officially a pandemic by World Health Organization standards, there is nowhere that will remain unaffected by it. The role of charities and philanthropy is likely to be key, but not without significant challenges.

The nature of the impact of the virus will vary depending on a charity’s activities and location, but all will be stretched, in some cases, beyond capacity.

Schools and universities are already suspending operations or moving to online course provision, and canceling some or all of the non-essential events, meetings, and trips that would normally supplement classroom teaching. Likewise, museums and libraries in many places globally have closed their doors, and conferences, theatre, and musical performances canceled, all in a bid to minimize the spread of the virus within communities.

Nonprofits that deliver services to society’s more vulnerable members will face additional challenges. They may be called up on to expand their reach and impact at the same time that ‘social distancing’ and mitigation efforts will make even basic operations difficult. The elderly, those with compromised health, and those in financial need, including the homeless, will be at serious risk in any place affected by COVID-19, and these groups may rely substantially on the support and services of shelters, food banks, and free clinics in the best of times. In places with little or no social welfare safety-net, the need these individuals face will be significant, and their reliance on charities will be unprecedented. In addition, quarantine and social distancing measures will certainly push many low-wage, hourly, and ‘gig economy’ workers into poverty.
Nonprofits providing service under pay-by-results funding, usually from governments, may find that expected funding does not materialize if they cannot show the promised results due to service suspension or social distancing consequences.

Front line health care providers may be stretched beyond capacity in ways not seen outside of conflict zones (and those providing healthcare in conflict zones will be stretched even further).

All organizations will be navigating staffing challenges during this crisis, including the duty to ensure the welfare and safety of employees and the challenges of shifting to remote or other working arrangements. It is, unfortunately, possible that charities lacking sufficient reserves may need to close down entirely, and may even become insolvent.

There is a tremendous role for philanthropy to play in these uncertain times, including advocacy, sharing accurate information, and of course, funding – funding preparedness, response, and mitigation. A crisis of this magnitude will encompass not only healthcare, but also all manner of need experienced by the most vulnerable, and it is clear generally that marginalized groups are affected disproportionally in natural disasters and conflict.

Rapid response funds have been created by individual philanthropists, foundations, and community foundations. Some funders are allocating additional funding to their existing grantees, acknowledging that more resources will be needed for front-line charities to weather the crisis and help communities rebuild afterwards.

Funders can make all the difference, even far removed from the front-lines:

  • Loosen up – Nonprofits often struggle to cover their overheads even while restricted project funding may be available. Provided a grant is within its own charitable purposes, a funder should consider making unrestricted grants and providing additional funding to cover overheads associated with any restricted project funding. Funders committed to a cash-plus or venture philanthropy model should also consider whether, despite this preference, they can make a valuable contribution in this crisis with a one-off unrestricted cash grant to the right grantee.
  • Allow grantees to focus – Funders should consider if they can temporarily suspend reporting and monitoring requirements so that grantees can focus all of their time and energy on charitable activities. Reporting is important for many reasons and can have a particularly importance in cross-border grants. However, where compliance with funder reporting requirements or monitoring visits would divert employee time and attention, it’s worth exploring the options for delay.
  • Keep calm and carry on – Funders may become concerned about the performance of the markets, and instinctively want to curtail grant making. Maintaining funding levels despite financial fears is vital wherever possible.
  • Consider ramping up grant-making – While foundations operating a capital restricted endowment may have limited flexibility to increase funding levels, other funders should at least consider this option. While long term impact is important to most funders, an extreme global crisis such as this pandemic may be best addressed with more intervention, earlier.
  • Work quickly now – By all measures, the pandemic is in its earliest stages, with numbers of fresh infections growing nearly everywhere. New infections are falling in a small number of places, and it is extremely likely that low testing levels have obscured the true size of the crisis. It is still possible in many places to fund preparedness, but this will not be the case for long. Funders should act quickly now to make an impact.
  • Work together – Funders should leverage their impact by working in collaboration or by contributing to existing initiatives. If there was ever a time not to reinvent the wheel, this is it.

The pandemic is clearly going to challenge the capacity of individuals and communities. Philanthropy can be a critical element in weathering the crisis, growing resilience, and helping to rebuild.

Click here to read more insights on how we can weather the coronavirus outbreak with you.

Alana Petraske Partner | New York

Category: Article