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Philanthropy industry under threat

Copyright © 2020 Albuquerque Journal

Peer Support worker Johnny Armijo and Associate Director Evan Voth at the Albuquerque Center for Hope and Recovery. The nonprofit has seen decreased levels of funding since the onset of the coronavirus pandemic.

At the Albuquerque Center for Hope and Recovery, coffee isn’t just a staple kitchen item.

It’s a tool that allows people to connect and recenter themselves for the day.

In pre-COVID times, clients of the behavioral health support center would sit in sessions with a freshly poured cup or even just drop in to pour a cup of coffee and relax in one of the communal areas.

“Coffee just has that way of helping someone a little bit and feel welcome,” Associate Director Evan Voth said. “There’s power in coffee, don’t ever doubt the power of coffee.”

Marian Tanau is executive director of the New Mexico Philharmonic.

But with dwindling funds, Voth said purchases like coffee and even crucial cleaning supplies and hand sanitizer are sometimes coming out of his own pocket.

Voth said a decrease in incoming donations combined with fewer available general operating grants has fueled this situation and now he and other staff members are having to find ways to stretch the center’s funds.

The nonprofit isn’t alone in needing to tighten purse strings. Industry leaders say many other New Mexican nonprofits are in similar or worse situations and there are fears that this problem will only get worse in the upcoming years.

Kelli Cooper, vice president of the Albuquerque Community Foundation, said she fears the pandemic and its associated economic downturn could push many nonprofits to the brink of viability.

Cooper said she fears the economic pressures could lead to the collapse of a “significant” percentage of New Mexico’s nonprofit sector – a sector that includes organizations devoted to health, entertainment, education, land preservation and more.

“The nonprofit sector really is in so many different areas,” said Joanna Colangelo, the foundation’s vice president of community impact. “If we start to see the nonprofit sector falter, that’s going to have a huge ripple effect.”

Arts fallout

Cooper said this spring, when the virus officially became a pandemic, funding requests to the Albuquerque Community Foundation suggested arts-related nonprofits were feeling the pain first, though they wouldn’t be the last.

“It started with the arts organizations that instantly had to cancel their performances, their annual fundraising,” Cooper said.

The New Mexico Philharmonic, for example, is facing canceled concerts and disappearing grants in its current season.

“Depending on how many concerts we are able to organize again, I anticipate we will lose substantial income from ticket sales, from grants, from sponsorships and other revenue we might have during a normal season,” said Marian Tanau, the philharmonic’s executive director.

Half the organization’s budget comes from ticket sales – which evaporated with the in-person performance bans – while the other half comes from sponsorships, grants and other sources of revenue.

Tanau said staff members scrambled to find ways to bring in alternative sources of funding like asking patrons to donate season tickets and starting a weekly online show. The organization also sought a federal Paycheck Protection Program loan. While Tanau says he remains optimistic about the future success of the program, he notes that the lack of income is already felt.

“We employ … about 100 people and all of them saw a significant decrease in their income once the Paycheck Protection Program loan ran out,” Tanau said.

Not only are employees taking home less money, but they are doing more work since the organization decided to produce regular online content.

Tanau said that the Philharmonic will continue to find innovative ways to bring music into people’s homes while also continuing to apply to a wide array of grants.

‘Hard choices’

While the arts saw ticket sales out the door almost overnight, human services nonprofits have also seen major funding declines. Voth of the Albuquerque Center for Hope & Recovery said the he’s watched traditional sources of revenue and funds slowly dry up over the past six months, while plans for fundraisers – including their annual Hero Run – have moved online.

Some plans the center had, like replacing a 10-year-old communal computer that clients use to apply for jobs and government benefits, had to be placed on hold.

“It’s making those hard choices,” Voth said. “What’s more important? Making sure our members have what they need to overcome their barriers or have something else?”

Associate director Evan Voth said he has had to occasionally purchase supplies for the ACHR out of his own pocket since the pandemic began. (Jim Thompson/Albuquerque Journal)

For nearly 20 years the organization has provided peer support programs for those dealing with mental health and addiction issues.

Voth said the organization hasn’t seen an increase in its services since many of the services are now online and many of the center’s clients do not have access to technology for online meetings. But operational expenses have continued to rise, mainly due to inflation.

Under normal years the organization is able to predict and adjust for known increased expenses but this year the organization is having to contend with decreased funds and an inability to predict where and when revenue will come.

Voth said general operating grants – as opposed to grants given for a specific program or purpose – have been particularly helpful this year. In the absence of traditional programming, general operating funds can help the organization make necessary purchases without having to abide by strict guidelines. But the center is having to make tough choices on how money is spent.

“It’s been enough so that we really have to ask ourselves what’s a need and (what’s a) want,” Voth said.

Shift in funding

The Albuquerque Center for Hope & Recovery has begun to look for funds with fewer strings attached.

Cooper and Colangelo of the Albuquerque Community Foundation said they’ve seen a major shift in local nonprofits looking for less-encumbered funds.

“This is all nowadays about operating funds – just to stay open,” Cooper said.

Colangelo said corporate donors she’s spoken to in recent months have been “100% amenable” to the shift – in part because corporations themselves are existing in a drastically altered landscape.

“Because COVID is such a universal issue, everybody is feeling the unpredictability,” Colangelo said.

Frank Lopez, executive director of the New Mexico Association of Grantmakers, said many foundations across the state are also turning away from program-specific funding to general operating funding, a change he calls “really significant.”

“General operating grants are huge,” Lopez said. “It gives the organization the flexibility to use the money how they need it and given the pandemic that we have now, organizations need that flexibility.”

Lopez said some foundations have even reached out to nonprofits to let them know that program specific grants can be now used as general operating grants and he is seeing more foundations catering to the needs of nonprofits.

Looking ahead

Cooper and Colangelo said they really don’t know the full extent of the straits New Mexico nonprofits are in, aside from the anecdotal examples they see.

“There’s been kind of a silence out there in the nonprofit community,” Cooper said. “… We don’t know if it’s a silence because they’re gone, or they can’t keep up because they’re so busy.”

Kelli Cooper, vice president of the Albuquerque Community Foundation, pictured in 2017. (Jim Thompson/Albuquerque Journal)

For those groups that have been in touch, Colangelo said they mostly seem to be surviving the same way many businesses are – with reduced staff, shortened hours, bare-bones programming.

That might be in part because many nonprofits are still operating on grants they received last year, possibly running on a 12-month cycle.

“I think the harder year might be next year,” Colangelo said.

Lopez said aside from funding problems, many nonprofits are also having to adapt to the pandemic by shifting from face-to-face programming to something digital when possible. But a switch to virtual programming can mean vulnerable or low-income populations, especially those without reliable internet access, get left out and are unable to access nonprofit services.

Voth said that he saw a 70% to 75% drop in attendance when the Albuquerque Center for Hope & Recovery switched to online programming since many of the center’s clients did not have access to the necessary technology.

Colangelo and Lopez both said they suspect the unprecedented challenges facing the philanthropic industry may lead to a spate of nonprofit mergers in months and years to come.

For example, the New Mexico Association of Grantmakers recently merged with the Center for Nonprofit Excellence and the New Mexico Impact Investing Collaborative.

Those kind of partnerships could be beneficial if they keep programs running, Colangelo said.

“For us the bottom line is that we don’t want to see the good services go away,” Colangelo said.

That will be especially crucial as the next several years play out, as the pandemic forces learning gaps and spurs increased levels of domestic violence, addiction, child abuse, depression, anxiety and suicide, Colangelo said.

“I think if you look at the big picture in terms of what philanthropy is going to be facing … there’s much longer-term effects of COVID,” she said.

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