With Donations Declining, LA Nonprofits Face Post-Pandemic Challenges

With Donations Declining, LA Nonprofits Face Post-Pandemic Challenges

As Covid-19 tightened its grip on Los Angeles last year, residents dug deep into their pocketbooks to support local nonprofits helping communities in need. 

Private donations streamed into organizations like The People Concern, which serves residents experiencing homelessness and domestic violence. During the pandemic, from March to December 2020, donations to the Arlington Heights-based nonprofit increased by about $4.3 million compared to the same period the previous year. 

Now that L.A. has made it through the worst of the pandemic, however, the influx of support is tapering off. The People Concern has taken in fewer donations so far in 2021, about $4.6 million compared to $5 million at this time last year.

Chief Executive John Maceri said there’s no longer the sense of crisis there was a year ago. 

The nonprofit has “weathered the storm” financially, Maceri said, but he’s finding it almost impossible to predict what donors' giving patterns will look like in the coming years. Private donations make up about 18% of the organization’s revenue and are “very important” to its bottom line, the organization said. 

“People tend to be very generous in a crisis, and that’s wonderful — but that isn’t often sustainable,” he said. “Part of my concern is … what happens when people get to a point where they feel like, ‘Well, it’s over, and now I can focus my attention and my resources somewhere else?’” 

As the pandemic subsides, people are no longer feeling the same urgency or desire to make donations, said Regina Birdsell, president and chief executive of the Southern California Center for Nonprofit Management.

That puts new pressure on the leaders of local organizations, many of which are still adjusting to pandemic-induced shakeups in finances and operations. Now they will have to shift gears once again as they try to make up for a decline in donations and loss of Covid-19 relief funds. 

In February, the center conducted a survey of 235 nonprofits and concluded that, overall, these organizations face “significant” financial uncertainty. 

Of those surveyed, 75% expect revenue to decrease this year, 72% said they’re looking for new sources of revenue, and 56% said they’re aiming to reduce administrative costs. Additionally, 38% reported having less than three months’ worth of financial reserves, and more than half said they saw an increase in community need. 

There’s a lot at stake. The nonprofit sector in California accounted for 7.8% of the state’s workforce as of January 2020, and it employed 1.1 million people, according to Independent Sector, a national membership organization. But nonprofits are far more than an economic engine.

“The scope of the nonprofit sector and the service delivery, I believe, is something that we all take for granted,” Birdsell said. “When you want to go to after-school enrichment, when you want to get help with an addiction, when your family is stressed out, you turn to nonprofits. But we don’t always think about nonprofits being almost on every corner.”

Rescued by PPP

As with The People Concern, financial support to the Westside Food Bank “greatly increased” during the pandemic, allowing the Santa Monica-based organization to at least double its food distribution based on poundage of food, Executive Director Bruce Rankin said. “We were anticipating that at least twice as many people would need food in the long-run,” Rankin said. 

“Essentially, everything doubled — our budget, the amount we spent on food and the amount of food we distributed.

Westside Food Bank closed out the 2019-2020 fiscal year with about $3.2 million in net assets, nearly doubling the $1.7 million it posted in the prior fiscal year, according to its latest audit. The organization ended the 2020-2021 fiscal year with about $4.9 million in revenue, up from about $4 million in 2019-2020. 

The food bank also received $130,000 from the federal government’s Paycheck Protection Program. 

Rankin is hopeful the food bank will be able to continue operating at the same scale, but he’s proposing a budget for the 2021-2022 fiscal year that includes a “sizable deficit.” 

Rankin declined to specify exact figures but said the nonprofit is expecting to take a financial hit because it can’t guarantee the same level of funding from individuals, foundations and the government. 

While the pandemic drove donations to Westside Food Bank, Westlake-based Los Angeles Neighborhood Land Trust, which works to ensure L.A. County residents have equitable access to parks, only broke even, according to Executive Director Tori Kjer. 

At the start of the pandemic, some funds that had already been committed to the organization were redirected toward funding immediate crisis relief, she said. Some of that funding eventually returned, and consistent funders continued to support the nonprofit, she added. 

This activity is reflective of the fact that nonprofits offering services that were deemed essential — such as those that provide housing, food, health testing and domestic violence services — received a lot of funding during the pandemic, Birdsell said, while other organizations, she said, heard “crickets.” 

“We saw so much disparity, where it was dark on one side, and it was extra busy on the other side, and then there was a little bit in the middle where it was just business as usual,” she said. 

In some cases, PPP aid filled the gap. The land trust received about $270,000 through two PPP loans, which were a “lifesaver” for making up some of the redirected funding, Kjer said. 

Pandemic-related aid also supported Inner- City Arts, a nonprofit in downtown that provides arts education to students from underserved communities. The nonprofit was awarded about $1.2 million in PPP money. It also received more than $1.2 million in grants. 

This funding offset a decline in individual giving, according to Inner-City Arts Chief Executive and President Shelby Williams-González. She attributed the loss in individual giving to the nonprofit’s inability to host in-person fundraising events. 

“Now our work, the hard work in coming out of (the pandemic), is reengaging with those individuals and bringing them back into supporting Inner-City Arts because we know that Covid relief was only for this particular time period,”she said.

Ready for change

Despite the hardships wrought by the pandemic, nonprofits found silver linings. 

In the Southern California Center for Nonprofit Management’s survey, 41% of respondents said they’re hiring new staff, and 60% said they’re investing in technology. 

Inner-City Arts is slowly hiring again after reducing the size of its full-time staff and contractor base from 57 before the pandemic to 42 now, Williams-González said. She added that the nonprofit is “on course” to end the 2020-21 fiscal year with a balanced budget. 

At the Los Angeles Neighborhood Land Trust, Kjer is optimistic about the future after riding out a tough year. 

The land trust consolidated some positions at the beginning of the pandemic and cut one position for a program that wouldn’t be operating for at least a year. Combining positions was a difficult decision, Kjer said, but it made sense financially. 

“We have been operating so conservatively for so long,” she said. “We all do administrative work so that we don’t have additional administrative overhead, or very limited. I think those were practices we had started before the pandemic, and I think they helped us survive.” 

If the land trust ends up receiving the grants and meeting the fundraising targets it has earmarked in its budget, this fiscal year “looks great,” Kjer said. 

“We don’t have full funds yet — we’ll be fundraising throughout the year — but we have projects that are underway that we have funding for, and then we have funders that we expect to reach out to and hope that all of that together will find us in a good position at the end of the year,” she said. 

For now, Maceri said The People Concern is focused on fundraising and expanding its donor network to sustain its higher levels of service. 

“I think especially now, with homelessness being front and center, to have people who are engaged in this issue in a positive way is really important,” he said.

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