Pandemic puts 1 in 3 nonprofits in jeopardy
More than onethird of U.S. nonprofits are in jeopardy of closing within two years because of the financial harm inflicted by the viral pandemic, according to a study being released Wednesday by the philanthropy research group Candid and the Center for Disaster Philanthropy.
The study’s findings underscore the perils for nonprofits and charities whose financial needs have escalated over the past year, well in excess of the donations that most have received from individuals and foundations. The researchers analyzed how roughly 300,000 nonprofits would fare under 20 scenarios of varying severity. The worstcase scenario led to the closings of 38% of the nonprofits. Even the scenarios seen as more realistic resulted in closures well into double digit percentages.
Officials of Candid, which includes the philanthropic information resources GuideStar and Foundation, and the Center for Disaster Philanthropy, which analyzes charitable giving during crises, said the most dire scenarios could be avoided if donations were to increase substantially — from the government as well as from private contributors.
“If you are a donor who cares about an organization that is rooted in place and relies on revenue from in-person services, now is the time probably to give more,” said Jacob Harold, Candid’s executive vice president.
Among the most vulnerable nonprofits, the study said, are those involved in arts and entertainment, which depend on ticket sales for most of their revenue, cannot significantly their reduce expenses and don’t typically hold much cash.
Other studies have concluded that smaller arts and culture groups, in particular, are at serious risk. Californians for the Arts, for example, surveyed arts and culture nonprofits in the state and found that about 64% had shrunk their workforces. Roughly 25% of them
had slashed 90% or more of their staffs. And a report last week from New York State Comptroller Thomas P. DiNapoli found that employment in New York City’s arts, entertainment and recreation sector tumbled 66% during 2020.
“It really has been devastating,” said Kristina Newman-Scott, president of BRIC, a Brooklyn arts institution best-known for its community TV channel and Celebrate Brooklyn! concert series.
“We have a lot of empathy for our colleagues and friends in the arts space who, based on their model, see things that are just not going to be the same for them. They will be navigating a very different financial pathway.”
Newman-Scott said BRIC has been helping sustain smaller arts nonprofits and offering artists unrestricted $10,000 grants through its Colene Brown Art Prize.
“We are anxious to get back to in-person events,” she said. “But we want to do it as part of a community. We don’t want to be the only one. We want other organizations that are and have been doing extraordinary work, especially the smaller folks who have it harder because they just don’t have as many resources. We want them to be around us also.”
Harold, the Candid executive, said that while arts and entertainment groups may be at particular risk, nonprofits from all sectors are in danger. According to the study, the District of Columbia was expected to lose the most nonprofits per capita, followed by Vermont and North Dakota.
The most vulnerable nonprofits may try to reduce costs this year by narrowing their focus or by furloughing workers. Some may seek a merger or an acquisition to bolster their financial viability, Harold noted, although doing so would still mean that fewer nonprofits would survive.
“A lot of nonprofit boards were able to say, ‘Oh, this is going to end soon’ and ‘We’re fine for a year,’” Harold said. “But they might not be fine for two years. So if they dragged their feet last year, they may find themselves really having to scramble this year to make the structural changes now.”
The perils that nonprofits face are similar to the economic damage from the pandemic that forced so many restaurants to either close or operate at deep losses over the past year. An estimated 110,000 restaurants — roughly one in six — closed in 2020 and, according to the National Restaurant Association, the pandemic could force 500,000 more to shut down.
President Joe Biden last week ordered the Small Business Administration to prioritize businesses and nonprofits with fewer than 20 employees in the awarding of loans through the Paycheck Protection Program.
“Since the beginning of this pandemic, 400,000 small businesses have closed — 400,000 — and millions more are hanging by a thread,” Biden said. “It’s hurting black, Latino and Asian American communities the hardest.”
During the 2020 campaign, candidate Joe Biden promised to undo President Donald Trump’s border security policies.
He pledged to halt all deportations for 100 days and allow asylum seekers who enter the United States illegally to stay in this country while their cases are considered, rather than wait in Mexico, as Trump required.
It was obvious that Biden’s changes would attract a flood of new illegal immigrants. So during the transition, the presidentelect tried to lower expectations. In late December, Biden told reporters he would not throw out the Trump program immediately, lest the United States “end up with 2 million people on our border.” Instead, Biden said, he would take some time to set up “guardrails” to make sure his new system would work smoothly.
But prospective illegal border crossers still got the message: Come to the United States and you can stay. And now, under President Biden, they are not waiting for the new administration to set up “guardrails” to handle them. They are coming right now.
About 78,000 people tried to cross illegally into the U.S. in January, more than double the number from January 2020. In response, White House spokeswoman Jen Psaki practically begged would-be illegal crossers not to stay away, but to wait a few weeks or months before illegally crossing. “Now is not the time to come, and the vast majority will be turned away,” Psaki said in early February. “Asylum processes at the border will not occur immediately; it will take time to implement.”
But the rush continues, with as many as 4,000 people trying each day to cross the border illegally. Many of them are children, and some of the youngest are not accompanied by an adult. The White House hasn’t figured out what to do with them. “The number of migrant kids is on pace to exceed the all-time record by 45% — and the administration doesn’t have enough beds,” Axios reported recently.
Amid it all, the administration has moved into full denial mode. This week Homeland Security Secretary Alejandro Mayorkas insisted there is no crisis at the border. “The answer is no,” Mayorkas said at a White House briefing. “I think there is a challenge at the border that we are managing, and we have our resources dedicated to managing it.”
A reporter challenged Mayorkas. “Respectfully, sir, though, one of your predecessors, Jeh Johnson [President Obama’s Homeland Security Secretary], said that 1,000 illegal border crossings a day constitutes a crisis, that it overwhelms the system. We’re at between three and four thousand now, according to CBP officials. So how is this not a crisis?”
There’s no crisis at the border, Mayorkas repeated. It’s a “challenge.” “I have explained that quite clearly,” he said. “We are challenged at the border. The men and women of the Department of Homeland Security are meeting that challenge.” The Biden administration, he said, is “building the capacity to ... meet our humanitarian aspirations in execution of the president’s vision.”
In the meantime, Mayorkas, like Psaki before him, asked people currently in Mexico to wait a while before crossing illegally into the United States. “We are not saying, ‘Don’t come,’” Mayorkas said. “We are saying, ‘Don’t come now,’ because we will be able to deliver a safe and orderly process to them as quickly as possible.”
That statement essentially served as the Biden administration’s official welcome announcement to those seeking to enter the United States illegally. Don’t do it just now, the administration said, because we’re still getting everything ready to receive you into this country.
But they’re not waiting. And why should they? Many are being allowed to stay right now. The Washington Examiner’s Anna Giaritelli recently reported that the Border Patrol released 350 migrants onto the streets in Yuma, Arizona, over the last two weeks. From Giaritelli: “Yuma Mayor Douglas Nicholls [said] the city lacks the resources, manpower and money to help the hundreds of people who, because Border Patrol lacks space and transportation, cannot be held or taken to Phoenix, where Immigration and Customs Enforcement would normally detain families. Instead, the federal government is releasing families directly into his community, putting the town of 96,000 residents in a predicament.”
So the crisis is here, whether the Biden administration will admit it or not. And with Mayorkas’ message to potential illegal crossers — please come, just give us a little time to prepare — the flow is sure to increase.