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Published in Nonprofits

Nonprofits focus on donor relations as COVID surges create distance

BY Sunday, January 02, 2022 06:47pm

Nonprofit leaders and researchers say maintaining donor relationships is perhaps the biggest ongoing challenge for organizations as the COVID-19 pandemic continues surging and creating distance between funders.

Salvatore Alaimo, associate professor of nonprofit management at Grand Valley State University, says maintaining this “social capital” is typically most effective while meeting in person. While technology has allowed organizations to meet and connect with donors remotely, it’s seldom an adequate substitute.

Left to right: Salvatore Alaimo, Kelley Kuhn, Diana Sieger Courtesy Photos

Nonprofits’ social capital has “taken a hit because social capital is based on trust, reciprocity, networking and relationship-working,” Alaimo said. “I’m not saying we can’t do those things with existing platforms available, I just think it’s not as effective. You miss out on things like body language, dynamics of group discussion, and individual back-and-forth. That will be important to recapture.”

The challenge may be particularly evident for the Grand Rapids Community Foundation, which is planning a series of events in 2022 to mark the organization’s 100-year anniversary.

“While we are going to celebrate, we’ve got a Plan A, B and Z with regard to how we’re going to do that,” GRCF President Diana Sieger told MiBiz. “While we’re commemorating a century of responding to changing needs in our community, it’s also a great place to turn the page to a new way of looking at how we can make an impact.”

Moreover, nonprofits were largely hopeful that 2021 would bring a return to normalcy after a 2020 filled with shutdowns and in-person meeting restrictions.

“One of the things I think is important is: There’s still the telephone, and the fact that people really would like to not be forgotten,” Sieger said. “I think that’s the message: Always try to keep some connection with your donors and all of your partners whether it’s in person or not. It doesn’t mean you’re a pest, you’re just remembering people who are really important to your organization or business. I’d say this past year we’ve learned how to move in various directions, and we really need to pay attention to each individual, donor or partner.”

Connecting with donors by relaying nonprofits’ roles in communities is also a top priority for Kelley Kuhn, who started Jan. 1 as president and CEO of the Michigan Nonprofit Association

As well, Kuhn said ensuring nonprofits play a role in helping to distribute or receive federal COVID-19 relief funds is another priority. 

“With relief dollars coming into the state, we want to ensure nonprofits are hopefully considered in the same way small businesses are being considered,” Kuhn said.

Giving trends

The virtual shift caused by the pandemic has come amid some fundamental changes in donor trends.

Prior to the pandemic, Alaimo said giving trends indicate that the “overall donor pool is shrinking and becoming top heavy” as major gifts are generally becoming larger while the overall donor participation rate drops. Additionally, those aggregate figures don’t account for inflation or the growing number of nonprofits competing for donations, Alaimo said.

“Though aggregate amounts increase, it just means it’s heavier at the top,” he said. “That seems to be continuing. We’re still waiting for the fallout of how much COVID and the switch to remote has impacted giving.”

Kuhn called 2020 and 2021 a “bit of a mixed bag” for philanthropic giving.

“Some nonprofits indicated they’ve had some of the best fundraising in history, and others have indicated it’s been a struggle,” Kuhn said. “Some are thriving and others still need those volunteer hours as well as monetary donations with supplies. The supply chain issues we’re seeing all over the country are impacting nonprofits and their ability to get supplies they need.”

Sieger said 2021 was a “remarkable fund development year” for the Grand Rapids Community Foundation, which brought in nearly $16.2 million in planned or legacy gifts. The foundation also oversaw the launch of 27 new funds in 2021, which include some “donor advised funds” in which donors such as families or businesses have a say in how money is distributed in the community.

“While our donor giving and retention was steady and pretty impressive, our impact with regard to our grants was equally if not more impressive,” Sieger said, noting that GRCF awarded nearly $19 million in grants to nonprofits and scholarships, a 40-percent increase over the previous fiscal year.

Donor advised funds, in many cases overseen by community foundations, remained in focus in 2021 amid new research from GVSU and an ongoing policy debate over regulating the way funds are distributed.

GVSU issued a first-of-its-kind report last year that analyzed four years of distributions from donor-advised funds (DAFs) in Michigan. While fund supporters say they act as a vehicle to democratize philanthropy and can increase in value over time, critics contend they’re used by donors to gain tax benefits without being required to distribute money to causes.

The GVSU study analyzed 2,600 DAFs held at Michigan community foundations, finding that roughly two-thirds of the funds distributed money to charities in any given year.

“If you’re worried about huge DAFs sitting on the sidelines and parking money, our study of at least Michigan DAFs showed it’s not true,” Jeff Williams, director of GVSU’s Dorothy A. Johnson Center for Philanthropy, told MiBiz earlier this year.

While not all of GRCF’s 27 new funds this year were donor advised, Sieger maintains: “We’re not holding on to the money.”

“Donor advised funds have had what I’d say are some glory days and we’ve had some real questions from people with regard to whether we are holding back,” Sieger said, adding that the funds initially grew rapidly in the 1990s. “I’d say the trends in donor advised funds is that they’ll continue to be strong.”

Racial equity, other trends

Meanwhile, contributions to racial justice and an ongoing focus on diversity, equity and inclusion will continue to be a top priority in 2022 for GRCF and other charities.

“If anything, there’s been centuries where the disparities have been evident for Black, Latino and Asian communities. We really do need to continue to emphasize (racial equity), and that’s not going to diminish any with this foundation,” Sieger said. “Having convened area foundations for years, that message is definitely being sent by most philanthropic organizations.”

In addition to racial equity, Alaimo said giving trends to COVID-19 and climate change or natural disaster relief may also continue.

“In the last year and a half or so, there was a big focus on philanthropy toward climate change and natural disasters, COVID relief and racial justice,” he said. “Those big three were front and center. COVID hasn’t gone away. Racial justice is certainly not going away. And climate experts tell us extreme weather will continue, so disaster philanthropy is in the mix.”

As GRCF approaches its centennial coming off its 98th and 99th years with a public health crisis and social justice movement, Sieger remains optimistic about sustained giving that will spread out to nonprofits in the region.

“From day one, we’ve been meeting to certainly respond to the emergency of March 2020,” Sieger said. “The foundations and the Heart of West Michigan United Way have been banding together to collaborate on a variety of things. If anything, it’s strengthened us working together. We’re much stronger than we were previously. If there’s a silver lining: We’re much more aligned in our values and our direction.” 

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