Though many have been buoyed by federal relief and emergency grants, Wisconsin nonprofit organizations are struggling from a drop in private donations needed to sustain their operations during the COVID-19 pandemic.
Of hundreds of nonprofits polled this summer, 73% said they had received an emergency grant since the outset of the pandemic, but many nonprofits continue to report a decline in individual gifts.
“Foundations have been very proactive,” said Bryce Lord, associate director of the Helen Bader Institute for Nonprofit Management at UWM. “...The one piece is individual donors, which are the lion’s share of fundraising. That’s a significant piece that hasn’t recovered at all.”
The Helen Bader Institute has conducted two surveys over the past five months to gauge how nonprofits across the state are faring. Results from the first survey, conducted a month after public health guidelines were put in place to limit the spread of COVID-19, offered a snapshot of the devastating effects of the shutdown on nonprofits.
Ninety-three percent of organizations reported at that time being worried about declining donations and 69% had canceled fundraising events.
Nearly half (47%) said they had made staff reductions, while more than half (51%) were concerned about being able to make rent.
Based on the next survey, conducted in July, some of the industry’s worst fears from the spring have not yet been realized, said Lord.[caption id="attachment_512043" align="alignright" width="300"] Bryce Lord[/caption]
“Overall, there is a sort of stronger sense of stability than back in April,” he said. “Back in April, this was all relatively new. People didn’t know how they would deliver services. How they would manage payroll and what that was going to entail. The indication is the PPP funding really made a big difference in getting a significant number of nonprofits through the summer.”
But some have not made it through the health crisis. Five percent of Wisconsin nonprofits surveyed in July have ceased operations altogether. Another 17% percent have “severely restricted” their operations.
Wisconsin arts and cultural organizations are among the hardest hit by COVID-19, with one-third of the workforce in that sector filing initial unemployment claims in the first five months of the pandemic, according to a recent Wisconsin Policy Forum study.
Meanwhile, continued caps on large gatherings and a reduction in discretionary spending among households due to the economic downturn mean the industry could be one of the last to normalize after the pandemic.
“My biggest concern is for the arts,” Lord said. “Because of the nature of the work they do … they are devastated by this.”
According to the report, 13 organizations supported by the United Performing Arts Fund — a group that includes the Florentine Opera, Milwaukee Ballet, Milwaukee Repertory Theater, Milwaukee Symphony Orchestra and other arts groups in southeastern Wisconsin — reported combined net losses of $2.5 million for the 2019-‘20 season, and expect more than than $2 million in additional losses for the 2020-‘21 season. For the The Rep, the projected losses are even higher; the nonprofit is bracing itself for a $6 million loss this upcoming season due to limited capacities, fewer productions and low ticket sales.
“We did what we could for as long as we can,” said artistic director Mark Clements. “We were having a good year, we got the PPP loan and we maxed that out for as long as possible, but then there came a point where that stopped. … We will need to raise a huge amount of money to stay viable and not have a brain drain from the organization.”
The plight of nonprofit arts organizations is particularly troubling because of the ripple economic impact they have on the entire community, Lord noted. The arts and cultural sector contributed $10.1 billion in added economic value to the state in 2017, according to the Wisconsin Policy Forum report.
“It’s very concerning because arts organizations, potentially more than human services and education (nonprofits), are economic drivers,” he said. “Think of not just ticket sales but the people they bring to hotels, parking lots and gas stations.”
But the nonprofit sector has also demonstrated resiliency over the past six months, Lord said.
Lutheran Social Services of Wisconsin and Upper Michigan faced significant challenges as soon as COVID-19 hit the state. Because of the organization’s size (it has more than 500 FTEs) and other factors, the social services organization wasn’t eligible for federal aid. It initially projected a $750,000 monthly revenue loss and $400,000 monthly operating loss, amounting to an estimated $3.6 million loss at year’s end.[caption id="attachment_512042" align="alignright" width="300"] Héctor Colón[/caption]
In response, the organization “reacted quickly and decisively” by reducing discretionary spending, renegotiating reimbursement rates, finding new sources of revenue and executives taking voluntary pay cuts, said LSS president and chief executive officer Héctor Colón. LSS also furloughed staff because of the reduced workloads.
Now, the organization projects it will meet and possibly exceed its year-end budget.
At a time when nonprofits are having to scale back their services, Colón noted many of those services are needed now more than ever.
“For me, the crises we now face put into focus that instead of shrinking our impact, now is the time for us to adapt, innovate and collaborate,” he said.