New Data Reveals a More Positive Outlook for Some, but Not All, Nonprofits: Here’s How DAF Donors Can Make an Impact

When we at the Center for Effective Philanthropy (CEP) released a report last June about the state of nonprofits during the COVID-19 pandemic, prospects looked bleak. Nonprofit leaders from our Grantee Voice panel revealed that the pandemic was devastating their organizations as well as the people and communities they serve, with magnified effects for nonprofits providing direct services or serving historically disadvantaged communities.

To find out where nonprofits stand relative to the grim outlook we projected last year, CEP conducted a follow-up survey of our Grantee Voice panel in February 2021 and received 163 responses.

Here is what we learned:

1. Most nonprofit leaders report that the COVID-19 pandemic has had negative impacts on their organizations and has affected their programming, revenue, demand, and costs. Arts and culture organizations have experienced more negative effects from the pandemic, while community and economic development organizations experienced fewer negative effects.

2. Increased financial support from foundations, individual donors, and the government—including Paycheck Protection Program (PPP) funding—helped nonprofits to fare better through 2020 than their leaders had originally anticipated.

3. Many nonprofits report that their foundation funders were flexible, responsive, and communicative in 2020. However, nonprofits led by women and nonprofits serving certain communities (including Asian, Pacific Islander, Middle Eastern, and Native American communities) experienced somewhat less flexibility, responsiveness, and communication than other nonprofits.

Given these findings, how can DAF donors like you best support nonprofits right now?

Generously provide nonprofits with multiyear, unrestricted funding and support beyond money.

Nonprofit leaders say the support of their donors and other funders helped them to survive in 2020. As one leader said, “Donors’ support was appreciated given the conflicting, crucial challenges that impacted so many organizations this year.” Indeed, National Philanthropic Trust’s own data show that DAF grantmaking increased substantially in the first half of 2020 as compared to the same time period in 2019.

But now is not the time to step back. Nonprofits are not out of the woods yet. They need your continued support. One nonprofit leader who is concerned that donors will not continue their increased level of support told us, “We had such a significant number of new donors in 2020, which we feel was due to food insecurity being highlighted in the news. We hope we will retain these new donors in 2021 and beyond.”

Further, two of the top suggestions nonprofit leaders have for how donors can best support them are to provide multiyear commitments and to provide unrestricted gifts. Nonprofit leaders find this type of funding particularly helpful because it gives them the ability to plan for the future, the opportunity to focus on their work, and the capacity to invest in staff.

The other top suggestion nonprofit leaders have for how donors can help them do their best work is to provide support beyond money. They request volunteer time or pro bono services (e.g., assistance with financial, talent, and volunteer management; legal support; general advice, skills, or services) and assistance with fundraising (e.g., providing introductions to other people in your network, hosting fundraising events, helping with internal fundraising events, serving as an ambassador).

Consider how the nonprofits that are in most need of support are connected to the issues you care about.

Arts and culture nonprofits

Arts and culture organizations have been particularly negatively impacted by the COVID-19 pandemic, and although DAF grantmaking increased in the first half of 2020, DAF grantmaking to arts nonprofits decreased—this was the only subsector to see a decrease. Your support would make a big impact for these struggling nonprofits.

Perhaps you care most about the environment, health, education, etc.—not arts and culture. If that’s the case, consider how arts and culture relate to the issues you care most about. Art can spark conversations about climate change. It has health benefits. It improves educational outcomes. No matter what issues you seek to address, there’s an arts and culture nonprofit working toward the same goal.

Nonprofits serving Asian, Pacific Islander, Middle Eastern, and Native American communities

Nonprofits serving Asian, Pacific Islander, Middle Eastern, and Native American communities received little support from foundations in 2020, despite the ways in which these communities have been harmed by the COVID-19 pandemic—and, for Asian communities, the rise in racist violence and hate crimes. You can help close this gap.

To find nonprofits that address the issues you care about and serve these underfunded communities, you can use Guidestar’s search tool and filter the “Subject Area” and “Populations Served” fields.

Build relationships with the leaders of the nonprofits you support by developing your understanding of their organizations and providing transparency about your gifts.

Our previous research has shown that nonprofit leaders value their relationships with donors, but they sometimes find it more difficult to build relationships with donors who give through DAFs. The identifying information you provide to recipient organizations is up to you, but we encourage you to be open and transparent with nonprofits. This builds mutual trust and lays the groundwork for sustainable, long-term relationships.

To build enduring relationships with the leaders of the nonprofits you support, the biggest keys are developing your understanding of the organizations and the contexts in which they work and providing that transparency about how you chose to give to them and the likelihood that you will give to them again in the future. Develop your understanding by drawing from resources these nonprofits have published on their websites, posted on social media, or shared with you in the mail. Ask nonprofit leaders what they most need for their operations and staffing, for their programmatic work, and for their own professional development—and if you have the ability to provide what they need, provide it.

Even if you prefer to remain anonymous, building your understanding of the nonprofits you support and being transparent about your gifts will help you support these organizations more effectively.

Donors like you have played a crucial role in helping nonprofits survive the COVID-19 pandemic. By generously supporting nonprofits—especially those that are in the most need of support—and building relationships with nonprofit leaders, you can continue to shape a strong nonprofit sector, and ultimately make a greater impact on the issues you care about.

Hannah Martin works on the research team at CEP in designing studies, analyzing quantitative and qualitative data, and writing reports. Kate Gehling is a former member of CEP’s research team.

NPT does not provide legal or tax advice. This blog post is for informational purposes only and is not intended to be, and shall not be relied upon as, legal or tax advice. The applicability of information contained here may vary depending on individual circumstances.