Despite an uptick in individual contributions aided by the surging stock market, Connecticut nonprofit leaders say huge losses in fee-for-service revenue during the coronavirus pandemic have led to reductions in staffing, loss of access for needy residents and — in some cases — programs shutting down entirely.
In many cases, Connecticut community nonprofits are “still struggling to get through this crisis,” said Gian-Carl Casa, president and CEO of The Allliance, an organization representing hundreds of nonprofits.
“Donations are valuable and so appreciated by the people who receive them, but they just simply can’t be expected to do the job that the state and federal government needs to do in order to provide the services that folks need.”
As COVID-19 cases, hospitalizations and deaths surged in March and April, patients stayed away from in-person medical appointments. Organizations across the health and human services sector spent millions of unbudgeted dollars on personal protective equipment, cleaning services, overtime and hazard pay for workers and technology needed to pivot to telehealth.
Nonprofit theaters, arts organizations and music venues suspended operations entirely, furloughing or laying off workers. Grocery stores — which typically provide 75% of the supplies found in food banks — struggled to keep their own shelves stocked, forcing hunger-based organizations to purchase food for carloads of residents lined up at pickup points.
In addition, many nonprofits don’t qualify for federal Payroll Protection Program loans. Typically, strict rules prohibit money designated for one sector to be used for overall needs — meeting payroll, for example — while the ability to host large galas and in-person fundraisers has vanished due to the coronavirus.
And with winter approaching — as more activity moves indoors, potentially resulting in another outbreak and shutdown — things could get worse.
According to an Alliance survey, 65% of community nonprofits have delivered services in a moderately or severely reduced capacity; 46% suffered a “moderate or a major loss” of fee-for-service revenue; and 5% have suspended services entirely.
Steep declines in revenue
In many cases, individual contributions comprise only a tiny portion of a nonprofit’s budget.
Heather Gates, president and CEO of Community Health Resources, a large behavioral health provider with 900 employees, said her organization relies on foundation grants, fundraising events and broad annual appeals to corporations. That’s on top of state and federal funding, fee-for-service income and individual donations.
“[Contributions are] up slightly, but not in a significant enough way to defer the costs of all the additional cleaning and PPE supplies we’ve had to purchase or staff overtime and hazard pay,” Gates said. “We’re so appreciative of the gifts we receive, but they’re not up so much that it would make an appreciable difference.”
With the onset of the coronavirus pandemic, CHR saw a 60% drop in the volume of people coming into its outpatient clinics over a two-week period. Overall, fee-for-service revenue in March through June decreased by $750,000.
In two weeks, CHR went from all in-person care to 95% of all services being conducted through telehealth services, a move aided by legislative action extending such programs.
But the damage was done. CHR furloughed 50 staff members to reduce costs. “That meant less access,” Gates said. “My worry is you add that financial stress to an already financially marginal human service system and you run the risk of program closing.”
Gates said nonprofits in the health and human service sector have not received grant increases from the state of Connecticut. Funding has been scattershot; CHR got some help from the federal government and the state Department of Children and Families for some of its residential services.
But CHR was too large to qualify for a PPP loan. Medicare funding from the Department of Social Services was late in arriving, and very restrictive.
“We actually think this year is going to be the more challenging year because we know we’re not through the pandemic,” Gates said. “My big worry is the demand for PPE will again kick up significantly and what challenges we’ll run into with that and the expense of securing those.”
Food banks see demand surge
This past week, Foodshare’s emergency food distribution at Rentschler Field in East Hartford reached a grim milestone: 5 million pounds of food, spread across 150,000 cars, since the start of the pandemic. Every day, roughly 2,000 more vehicles drive up.
Jason Jakubowski, president and CEO of Foodshare, said his organization’s revenue from contributions has never been higher. “For a nonprofit like us, who by our very definition is at the center of this economic crisis, it is definitely a two-sided coin,” Jakubowski said. “You’re receiving a lot of donations, but we are also spending a significant amount.”
Foodshare employs 55 full-time staff members and relies on roughly 6,500 volunteers a year. Since the beginning of the pandemic, the volunteer base has withered, forcing Jakubowski to hire more temporary staff.
Even with the state’s donation of the facility, operations at Rentschler Field cost Foodshare $50,000 a week, which goes toward refrigerated trailers, tents, flaggers and portable toilets.
The biggest expense is purchased food. During the entire previous fiscal year, Foodshare spent about $350,000; in the first four months of the coronavirus, that number jumped well above $1 million.
As they struggled to keep their own shelves stocked, Big Y, Stop and Shop, Shop Rite and other supermarket partners made monetary donations, Jakubowski said. Meat donations are starting to tick up again, but Foodshare still has to supplement its offerings with purchased food.
“It’s a huge financial burden that food banks … have definitely not foreseen, budgeted or planned on,” Jakubowski said.
Beginning this month, Foodshare will reduce its distribution schedule at Rentschler Field to three days a week. “I can’t emphasize enough that is not a permanent part of our distribution,” Jakubowski said. “We’ve got to help people find their ways over to our typical pantries and into our mobile sites in the different communities.”
Summer sees contributions taper off
In April, a group of Connecticut philanthropists raised $10 million to form 4-CT, a nonprofit organization designed to coordinate coronavirus-related fundraising efforts across the state, specifically to combat housing, health care and financial insecurity.
That number has since grown to $20 million. The organization has an extensive list of funded projects on its website — including a Homeless Shelter Diversion grant that provides one month of swing rent, part of a security deposit or a moving fee to prevent individuals from entering the shelter system.
Fundraising falls into two categories: contributions from individuals, corporations and foundations, and “monies that philanthropists have made working together with us,” said Ted Yang, 4-CT co-founder and CEO. “We came out of the gate very strong, and we raised a lot of money from large donors and corporate foundations right off the bat,” said Yang.
4-CT doesn’t take a percentage of the money it collects and also tries to offset credit card fees and other administrative expenses. Individual donors make up a small part of what the organization has raised, Yang said.
Contributions tapered off in the summer months, as parts of the economy reopened. There may have been a slight bump when the $600 federal unemployment supplement expired at the end of July.
Melanie Tavares, director of the Nonprofit Support Program at the Hartford Foundation for Public Giving, said philanthropy as a whole is starting to reconsider some of the typical restrictions placed on funding.
As many organizations dip into reserve funds to meet payroll, Tavares said, some donors have allowed nonprofits to use funds for general operating support. “When we put constraints on an organization, what is it that we could actually loosen in order to make it easier for an organization to make those types of pivots?” Tavares said.
If you have an ongoing existing relationship with a donor, Tavares added, you’re likely to be in better shape than if you’re out there looking for new donors. It’s also sector-specific; individuals may be more willing to give to housing, food and health care charities than, say, arts organizations.
“Overall, I think most nonprofits that we’re in contact with are still really concerned about the ability to be able to make up for fundraising shortfalls that happened during the height of the pandemic,” Tavares said. “The foundation world is equally challenged by trying to ensure that we can keep donors engaged in the things that are a priority for the organizations that we’re also trying to support. It’s an interesting conundrum.”
Michael Hamad can be reached at mhamad@courant.com.