Friday, April 2, 2021

With Arizona Gives Day on the horizon, nonprofits pivot and rebound after a tough year

Posted By on Fri, Apr 2, 2021 at 6:46 AM

click to enlarge With Arizona Gives Day on the horizon, nonprofits pivot and rebound after a tough year
Black Salmon/Bigstock

Assistance League of Tucson, a volunteer organization whose mission is “Volunteers working in the Tucson community to help those in need,” faced some grim moments at the outset of the pandemic last year.

The nonprofit saw a dramatic drop in the number of volunteers who are vital to the organization’s operations.

But the organization reacted quickly to the changing conditions brought about by the pandemic.

“We're coming up on our 61st anniversary of helping people, those in need here in Tucson,” said Kim Sterling, Assistance League of Tucson president. “You look ahead and you go, did we do well during the pandemic? Are we going to survive another 60 years and still be here to help out?”

At the start of the pandemic, Sterling said they closed down their thrift shop, which provides about 60 percent of their revenue, with donations and grants providing the rest.

As soon as they closed they began to look at their expenses. In 1959, their founders built up a reserve fund totaling one year’s operating expenses, which they didn’t want to dip into since they could not see the end of the pandemic and worried about the possibility of another disaster, Sterling said.

“We did three things, but we had one goal in mind, keep serving those most in need in the Tucson community,” said Sterling. “So we pivoted our program, we cut costs, and we created new revenue streams.”

Sterling said all five of their programs continued with $190,000 in cuts with the proviso that if revenue increased, funding would return to the programs. They looked to maintain the number of people they served, but reduce the amount provided. Their Starting Over Supplies program required a shift in the way the program operated.

Through the program, the organization works with social workers to provide basic housekeeping supplies and other provisions tailored to individuals who may be experiencing homelessness for the first time or coming out of foster care, said Sterling. So when social service agencies shut down and they could not deliver a kit because they were no longer meeting in person, Sterling said they panicked.

“First we panicked, and then we flung into action, and we started reaching out to different agencies and organizations and finding those that are meeting face to face with clients who needed help because we figured the need had probably increased,” said Sterling.

She said now they are back to providing about 100 kits per month and increasing. They are looking at a loss of about $110,000 for this fiscal year, said Sterling, but as an organization with an $800,000 annual budget, they typically return about 70% to the community and expect this year’s percentage to only drop to 65%.

Assistance League of Tucson is just one of the many Arizona nonprofits that were hit hard due to the pandemic, according to a survey conducted by the Alliance of Arizona Nonprofits, a statewide resource and advocate for the nonprofit community.

They surveyed 412 nonprofit organizations in Arizona, with 43 percent representing Health and Human Service organizations, and found on average nonprofits lost between a quarter to half of their revenue, with a total revenue loss of about $91 million within the past year.

Of the 231 nonprofit organizations from Southern Arizona that participated in the survey, about 7 out of every 10 saw a decrease in revenue, totaling over $35.6 million loss. The average nonprofit lost between 11 to 25 percent of their revenue.

Arts and culture organizations suffered the most with a loss of nearly $800,000 and health and human services second with an average loss of nearly $600,000.

Along with a loss of revenue, nonprofits experienced a dramatic increase in the cost of doing business, with more than $15.3 million of additional expenses, most of which went to PPE, supplies, and technology.

Alliance of Arizona Nonprofits Senior Vice President and Director of Development Jennifer Purcell said the findings are staggering and that the total revenue loss is likely higher, since not every nonprofit participated in the survey.

While Purcell believes you cannot plan for every crisis, she thinks board members and organizations can have risk or crisis management plans in place.

“There can be a tendency of boards, who believe that every penny earned needs to be spent on programming and that can get organizations into a very difficult time when there are downtimes in the economy, or downtimes in giving, and so board members can help their organization to prepare and figuring out how to have some savings and reserves,” said Purcell.

Due to the pandemic, almost three-quarters of nonprofits who participated in the survey had to close their physical locations in some way. One in five nonprofits furloughed or laid off staff, totaling 564 people. Almost half of nonprofits are holding off on hiring.

More than half of Southern Arizona nonprofits saw a 78 decrease in volunteers, losing almost 55,000 total volunteers. Nine out of 10 volunteers were lost due to COVID-19 concerns, about 70 percent were lost because programs were paused or canceled.

Further, nonprofits experienced a decrease in individual donations, corporate giving, support from foundations and grants.

In March 2020, the Community Foundation of Southern Arizona (CSFA), with the help of donors, created two funds–COVID-19 Community Support Fund and the COVID-19 Nonprofit Event Relief Fund–and donated about $3.6 million to local nonprofits. This includes $233,000 in nonprofit event relief grants to 41 nonprofit partners, $300,000 to help minority and women business owners and nonprofit organizations access PPP loans, and $25,000 to provide pivot grants for local artists and arts organizations.

“With that being said, $3.6 million out of a loss of $91 million, that's just a drop in the bucket,” said CFSA Interim President and CEO Mark Montoya. “We've given 3% of what has been lost in the nonprofit community so it's a tough time for nonprofits.”

He said CFSA saw an increase in grant requests last year.

About half of nonprofits saw a decrease in year-end giving, which was down on average between 11% to 25%. Southern Arizona nonprofits fared better with 29 percent seeing a decrease in year-end giving.

Purcell said this is a really significant time of year for nonprofits and for this reason emphasizes Arizona Gives Day on April 6.

“We're really encouraging people, who have the ability to give and donate, to give what they can to assist their nonprofit organizations,” said Purcell.

However, not all organizations saw a drop in giving. The 35-year-old Tucson nonprofit Youth on their Own (YOTO), a dropout prevention program that supports youth experiencing homelessness in Pima County, saw an increase in donations, along with an increase in need for their services—and new hurdles in delivering them.

“We serve youth experiencing homelessness, so that's a really vulnerable, high-need population, and we see the impacts of COVID for them. And then on the other end we see folks who are retired or are continuing to work and COVID hasn't been financially challenging for them because they're saving money on vacations or going out to eat,” said YOTO CEO Elizabeth Slater. “They want to be able to make a difference but they can't volunteer in person right now. There's all these reasons why making donations is the best way for them to make an impact.”

She also said their name recognition and loyal donor base put them in a unique position. They had projected a 15 percent decrease, but instead saw an increase in donations. Slater clarified some of the increase was due to one-time donations from the CFSA or United Way, but most were from individuals “just giving more.”

YOTO still had its own set of challenges because of COVID-19. To participate in YOTO, not only do they have to be youth experiencing homelessness but also a student enrolled in school. With the pandemic leading some kids to drop out of remote schooling programs, YOTO had half the number of applications.

“We don't think there are half as many homeless youth,” said Slater. “We know that they're just having these barriers to getting services from us, like where are they getting food and clothing and hygiene supplies, all the stuff that we would typically provide to them.”

Because of the challenge of connecting to homeless youth, Slater said, YOTO created a fund of $135,000, which they donated to organizations that would, in turn, serve the youth who had barriers reaching them, like I Am You 360 and the Sunnyside Foundation.

She said they have always had partnerships with hundreds of organizations, schools, and nonprofits, but this was different. Historically, Slater finds that there is a mentality among nonprofits, where they feel like they have to compete for scarce resources and for their board of directors it was a big shift in perspective.

“It's not very typical for nonprofits to do that, but when you think about ‘How do we achieve our mission,’ which is to make sure that youth experiencing homelessness get all these supports that we provide,” said Slater. “It was a way of acknowledging that, of course, we don't do it on our own and sometimes we can't even do it at all without other organizations stepping in.”

Purcell also noted this finding and hopes organizations can continue this trend to work together.

“We're stronger together and with different ideas and different strengths,” said Purcell. “I think that the nonprofit sector has come together to figure out how they can work together a little bit more, and we certainly all hope that that trend continues.”

In order to adapt to the pandemic, 44 percent of organizations were able to create virtual opportunities for volunteer participation. Purcell thinks organizations will continue to provide innovative ways in which to engage people in their service and support.

Watershed Management Group (WMG), a nonprofit working to educate communities about sustainable living and the environment, provided virtual classes for programs like Bring Your Own Basin, teaching people how to create their own water basin.

By providing virtual programming, WMG Executive Director Lisa Shipek said they were able often to see double, if not triple the participation during the first three to six months of the pandemic.

“We're able to reach a lot more people and people. Normally, most of our services are in Tucson so people outside of Tucson were able to benefit from the virtual programming. So we'll definitely keep some of that going,” said Shipek.

Moreso the Alliance of Arizona Nonprofits found less than 1 percent of organizations closed permanently.

“The fact that only 1 percent of nonprofits polled stopped providing services completely just shows the resiliency of the nonprofit sector and the fact that they were able to continue services and find alternative ways to provide those services in a relatively short time period is incredible and amazing, and it speaks volumes to the dedication that the nonprofit sector has to their missions and to our communities,” said Purcell.

As an arts and culture nonprofit, promoting youth education in arts and music and building a community network of artists in Tucson, Groundworks Tucson could have ended before it even started.

In 2019 Groundworks Tucson became a nonprofit and in January 2020 signed a lease on a building ready to serve their mission, then canceled all of their grand opening plans for March and April because of the pandemic, said Founder and Executive Director Logan Greene.

Greene said they had a budget of about $75,000 and planned for that money to come from their programming, through tuition from classes, tickets for concerts, and art sales and expects they lost about 100 percent of it, because they were not fully operational in 2020. This also left them in a difficult position, where they did not qualify for grants, even those tailored for music venues like themselves, because they did not have an official concert in 2020.

“Of all the contents we've done because we've just done a couple of fundraisers, so we didn't end up qualifying for so many different grants that we applied for,” said Greene. “We were just lucky enough to get to the couple that we did, and that helped us get through the end of last year.”

Groundworks learned to offer virtual concerts and art gallery viewings, like Creation in Isolation debuting on April 10, which will be partly in-person with viewing available by appointment and also virtual. Unfortunately, the fully virtual initiatives were not as financially successful as in-person events.

As a brand new nonprofit, Greene said they got involved with the National Independent Venue Association (NIVA), the grassroots organization that lobbied for the Save Our Stages Act, now the Shuttered Venues Operators Grant Program, as part of the COVID-19 Relief Bill passed in Dec. 2020, which allocates $15 billion in federal relief funds to save independent venues and promoters. Through Niva, they talked to other nonprofit music and arts organizations and learned from them. The Pima County Arts Foundation also helped connect them to upcoming grants and funding opportunities, said Greene.

“It's been really good considering we didn't know anybody from these organizations, a year and a half or two years ago,” said Green. “Then through the pandemic, everybody has been sharing resources and helping each other out and that's been really uplifting and positive.”