Nonprofits in crisis: virus puts funding at major risk

Volunteers place food into vehicles at a Food Bank event at Dover Downs International Speedway. Delaware State News/Marc Clery

DOVER — When it comes to the 1,000 or so charitable nonprofit organizations housed in Delaware, a vast amount are committed to tending to the needs of the most vulnerable populations, such as seniors, veterans, needy, homeless and people dealing with addiction.

However, with the country facing an economic crisis in the coronavirus pandemic, nonprofits are among the vulnerable.

During a town hall teleconference hosted by the Delaware Alliance for Nonprofit Advancement (DANA) Thursday, Gov. John Carney told hundreds of leaders of nonprofit organizations that difficult times lie ahead when it comes to the future state budget, with a litany of small businesses closed and a record number of people unemployed following the governor’s state of emergency declaration in March.

“It’s going to be a significant hit to the state budget,” Gov. Carney said. “The legislature is out, and we would like for them to come back at least in some way — virtually — to put a budget together by June 30th and we’ll have conversations with them about it. In terms of lost revenue, it could be $500 million or more, up to maybe a billion dollars.”

Gov. Carney added that the state “cannot use federal stimulus money to replace lost revenue or to supplant spending that you would normally have. It’s all for spending that’s done in response to the pandemic itself. So we’ll be in a dire situation in terms of our budget.”

That could have a direct impact on acquiring funding for many of the state’s nonprofit organizations.

“It’ll have a definitely negative impact on grant aid and all aspects of the budget,” the governor said. “The question of whether or not we’ll be able to help nonprofits with their cash-flow challenges will be a challenge for us. We’re going to be in a very different world when we start to open up (the economy) again.”

While there is potential relief for nonprofits in the Coronavirus Aid, Relief, and Economic Security (CARES) Act that was signed into law on March 27, along with other forms of bond and grants-in-aid funding, many of the organizations could find themselves left out in the cold when the widespread virus threat finally passes.

Sheila Bravo, president and CEO of DANA, said she was thankful to Gov. Carney for his transparency.

“I think that he was forthright, especially as it relates to the funding stream that may be available or not available to nonprofits based upon restrictions of the federal stimulus dollars as well as the state of the Delaware budget and what that might look like going forward,” Ms. Bravo said.

She added that DANA’s primary concerns are with those agencies that are providing critical services during the crisis and to make sure they have the resources they need and are reimbursed for their expenses.

“What’s unfortunate is that it’s usually the agencies that are working with the most vulnerable populations themselves that are at risk,” said Ms. Bravo. “They tend to be very small organizations and sometimes they get overlooked. There are so many people out there doing really, really good work and they may not be on the radar of the government and yet, if they weren’t helping a certain community, nobody would be helping them.”

‘Thankful’ for nonprofits

Gov. Carney said he is extremely thankful for the work the nonprofit organizations do.

He said the first things that come to his mind during the coronavirus challenge is their work in reaching out to the homeless population and trying to get them into hotels and motels. He also lauded nonprofits for helping to feed the hungry, especially with schools being closed since March, and those providing outreach to the state’s elderly population — which is the most vulnerable to contracting the virus.

“There’s tremendous work going on up and down the state from the northern end to the Sussex end,” Gov. Carney said.
Lt. Gov. Bethany Hall-Long also tipped her hat to the work the nonprofits are doing.

“I want to say thank you to the four-legged chair,” she said, referring to DANA, the Delaware Community Foundation, United Way and Philanthropy Delaware, which have coordinated the COVID-19 Strategic Response Fund in Delaware, which currently is helping fund nonprofits. “You’ve been historically there for our families over many decades doing the things that need to be done and with the COVID crisis, I’ve watched each of your agencies really step up with new families. This is a new experience. You have always been that safety net.

“I think the final takeaway for me is I think the nonprofits are another tool that our state has to really make sure the individuals aren’t feeling abandoned and aren’t feeling hopeless right now. The nonprofits are there to lift us up.”

However, without adequate funding, that mission could die. And the governor did not paint a rosy picture during Thursday’s teleconference.

“With unemployment spiking like it has, with the federal government pushing off the personal income tax filing date from April 15 to July — and our personal income tax filings piggyback on that — with lost revenue at our casinos, and our business taxes based on our gross receipts will be significantly down,” said Gov. Carney. “The impact on corporate franchise taxes has yet to be measured. So we have lost significant cash flow since the beginning of the pandemic.

“The real impact will be on revenues for next year and next year’s budget. I think we are looking at a situation like in 2009 when we had the significant recession there and a significant drop in revenue.”

Ms. Bravo said nonprofits will have a lot in common with small businesses when it comes to survival.

“A lot depends on when this is over,” she said. “We saw in our recent survey that many nonprofits have less than 10 weeks of unrestricted cash on hand (money they can use for operations and staff). Similar to small businesses in the state, with no program revenue and lost fundraising dollars — they will be hard strapped to emerge from the crisis in the same shape as before.

“Some agencies will find that the services they provide in food, shelter and financial support will increase dramatically, while others may find the fundraising dollars will shrink.”

Gov. Carney said that when it comes time to make the critical decisions regarding which nonprofits are awarded funding down the road, decisions will be handled on a case-by-case basis.

Strategic funding offered up

There is some hope to helping fund nonprofits by way of two vital funds — the Delaware Does More: COVID-19 Rapid Response Fund and the Delaware COVID-19 Strategic Response Fund.

The COVID-19 Strategic Response Fund has awarded $987,000 to 36 nonprofits with three rounds of funding thus far, the most recent coming on Friday.

Some of the nonprofits in Kent and Sussex counties who have received assistance in the first three rounds include the First State Community Action Agency; the Green Beret Project; Milton Community Food Pantry; Nanticoke Senior Center and Dover’s Modern Maturity Center, among others.

“As the pandemic continues, the needs are growing and evolving,” said Stuart Comstock-Gay, DCF president and CEO, who chairs the fund’s decision-making council. “We are calling on the community to help local nonprofit organizations get food, shelter, medical care and other essential services directly to the people who need it most. We also must support our workforce, arts community and other sectors to restore our quality of life post-COVID-19.”

The Longwood Foundation, which previously gave $1 million to the Strategic Response Fund, has pledged an additional $500,000, contingent upon the DCF raising a matching $500,000 from the community.

To date, the COVID-19 Strategic Response Fund has received $2.3 million, with another $1.1 pledged. Among the new contributions last week was $50,000 from M&T Bank, which also contributed $25,000 to the Food Bank of Delaware.

“In times of need it is important for all of us to work together and do what we can to make a positive impact,” said Nick Lambrow, M&T’s regional president for Delaware. “M&T Bank and our subsidiary Wilmington Trust recognize that we are in challenging, unprecedented times. Through our support, we hope to help alleviate the effect the pandemic is having on the region’s most vulnerable neighborhoods.”

In addition to the Strategic Response Fund, the CenDel Foundation has launched a new fund dedicated to assisting Kent County nonprofits as they respond to the crisis. The CenDel COVID-19 Community Response Fund is offering grants to nonprofits in central Delaware that are aiding those struggling.

The CenDel Foundation is accepting donations and the foundation will match community contributions up to a total of $5,000.

“We know there is a critical need for funding across our county during this difficult time,” said Judi Pflaumer, vice president of the foundation’s all-volunteer board of directors. “Our goal is to provide those working on the front lines of the COVID-19 response with as much help as possible. During this crisis, we’re here for the community.”

Nonprofits can apply for grants and the public can donate to the fund by visiting www.cendelfoundation.org. Donations can also be mailed to 101 West Loockerman St., Dover, DE 19904. Questions can be emailed to Tenish@cendelfoundation.org.

To be eligible for funding, organizations must have a 501 (c)(3) status and must provide vital services to Kent County children, seniors or low-income residents regarding food and nutrition, medical care, housing, assistance to pay bills, and educational help for students learning from home.

Grant applications are due by April 30. Recipients will be notified by May 10 and will receive funding as soon as possible. Qualified organizations will be eligible for a grant up to $2,000.

Keeping the mission going

Ms. Bravo said many nonprofits in Delaware have had to reinvent themselves during the pandemic.

“I do want to extend a really sincere thank you to Delaware nonprofits and their frontline workers who have been working tirelessly and serve their clients and to rise up to a tremendous increase,” Ms. Bravo said. “I also want to say how impressed I am with the nonprofits that had to very quickly close their offices and relocate their staff into their homes so that they can survive and continue to provide those services such as counseling services, education, and many of the arts organizations have inspired our spirits remotely.

“I want to thank the philanthropy community. They have collectively redirected their resources to help fund COVID-19 issues and many of them also gave permission to unrestrict donations so that nonprofits could deploy those resources where they were needed the most.”

The Food Bank of Delaware has been one of the most visible nonprofits throughout the crisis. It has provided food at several mass drive-thrus and have more events planned. The first is scheduled for Monday at 11 a.m. at the Christiana Mall parking lot, another Wednesday at 11 a.m. at Dover International Speedway and another Friday at noon at Sussex Central High School in Georgetown. (Participants are asked to bring proof of identification and Delaware residency. Pre-registration has been set up for each pantry to help speed the check-in process.)

Kim Turner, communications director with the Food Bank of Delaware, said they have been extremely busy trying to help those who are struggling.

“Over the past month we have distributed close to 2 million pounds (of food),” Ms. Turner said. “Last year we distributed 8.6 million pounds. Demands for services have nearly doubled. We are thankful that our community is stepping up in a big way to provide donations of time, money and food.”

She said that even the Food Bank’s staff is not immune to the difficulty in dealing with COVID-19.

“Not only are we dealing with the economic fallout of COVID-19, but we are also dealing with the public health aspect along with all other essential businesses,” she said.

“Traditionally, our volunteer shifts include 30-plus individuals. With COVID-19, we have had to decrease the number of people who can volunteer for a shift, set up multiple tasks in different parts of our warehouse to adhere to gatherings of less than 10 people and set up our assembly lines to adhere to social distancing practices.

“As an organization, we are so proud of the work of our staff, volunteers and supporters. It’s a taxing time for all, especially with so many unknowns about the virus, but Delawareans have stepped up in a big way to make sure our neighbors in need do not go without healthy meals.”

Unprecedented challenges

While all the nonprofits continue to step up to help the less fortunate, the challenges remain very real.

A survey of 245 nonprofit organizations statewide conducted by DANA reported that they estimate a loss of reported revenue at more than $21 million as of March 20. The lost revenue was related to canceled programs and lost fundraising. Survey participants also indicated crisis-related expenses of more than $3 million, with 55 percent of those fearful they will not be reimbursed for the expenses or able to regain the lost revenue.

“Based on the sample size relative to the total number of nonprofits operating in Delaware, we are estimating a loss for just (those) few weeks of over $100 million,” Ms. Bravo said.

Additionally, 65 percent of the respondents said they would lay off employees.

“Nonprofits in Delaware generate over $6.4 billion in revenue annually and employ more than 45,000 employees,” said Ms. Bravo. “For community-based nonprofits, 49 percent of revenue is earned through programs and services, many of which have now been compromised by the pandemic. They [nonprofits] cannot keep their workforce when there is no funding coming in.”

Many nonprofits do not already have the technology or resources for a remote staff. Agencies such as La Esperanza in Georgetown have had to purchase additional phones and video conferencing services in order to continue outreach services to its immigrant community. Arts and cultural organizations, considered nonessential by the state, have had to shutter their stages and close their doors. These organizations are working to determine how much revenue they have lost.

As for now, the Delaware Does More: COVID-19 Rapid Response Fund at United Way at UWDE.org/COVID19 and the Delaware COVID-19 Strategic Response Fund at the DCF at delcf.org/coronavirus are serving as the catalysts to help nonprofits.

“Nonprofits affect the lives of every Delawarean every day. We need them to be able to not only support our needs today, but in the future as well,” Ms. Bravo said.


Helpful Coronavirus links

Delaware Division of Health Coronavirus Page
CDC: About the Coronavirus Disease 2019
CDC: What to do if You Are Sick
Johns Hopkins Coronavirus Resource Center
AP News Coronavirus Coverage
Reopening Delaware: Resources for Businesses
Delaware Phase 2 guidance

Have a question, tip, or resources about the coronavirus pandemic? Submit it to our newsroom and we’ll do what we can to provide answers.