Arts and culture non-profits hit by stay-at-home order find flexibility from foundations

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By Kari McMahon
Medill Reports

During the spring season, the Garfield Park Conservatory expected around 70,000 visitors to pass through its doors. But on March 17, two days before the first day of spring, the conservatory closed based on public health advice. Visitors stayed home, and revenue was lost.

The free-to-visit conservatory, a botanical oasis located within the concrete of the city on the West Side of Chicago, earns revenue through a combination of memberships, in-person donations at the conservatory entrance, fundraising events and grants. Most of these revenue streams have taken a hit following the implementation of Illinois’ stay-at-home order on March 20 to minimize the spread of the coronavirus.

“The effect has been the shut off of our revenue streams for visitors attending [the conservatory],” said Jennifer Van Valkenburg, CEO and president of Garfield Park Conservatory Alliance, a nonprofit organization that works with the Chicago Parks District to provide events and resources to conservatory visitors.

Last year, during the spring season, the conservatory earned $208,679 in revenue from in-person donations and gift shop purchases, according to documents provided by the conservatory. The closure of the conservatory means losing in-person donations that account for around 10% of overall revenue, Valkenburg said.

The conservatory has been providing members with alternate options such as hosting its semimonthly yoga sessions online and extending memberships by three months in order to retain members during the stay-at-home order, Valkenburg said. However, memberships in April were down around 20% compared to the prior year, the decline is a mix of fewer new members and current members not retaining memberships, Valkenburg said.

Across the country, nonprofits have experienced changes in revenue. Nonprofit Finance Fund, a nonprofit lender and consultant, surveyed 465 nonprofits between March 18 and March 23. The results showed that 75% of nonprofits had seen a reduction in earned revenue, which is the money nonprofits earn for providing goods and services, and 50% of nonprofits had seen a reduction in philanthropic donations.

Despite the general decline in earned revenue, many nonprofits have found increased support from foundations. The Center for Effective Philanthropy, a nonprofit organization that provides data and insight to funders, surveyed 172 nonprofit CEOs in May and found that organizations that were largely funded by foundations were not hurt as much by COVID-19 compared to organizations that depend on other sources of revenue.

“We’ve seen a lot of particularly the largest foundations having really stepped up and have changed either their funding guidelines, [or] have allowed people to use restricted funds for what would’ve gone to certain programs for general operating dollars,” said Dawn Melchiorre, chief operating officer at Forefront, an Illinois’ statewide association representing both grant makers and nonprofits.

In March, Forefront surveyed over 1,300 nonprofits in Illinois about the impact of COVID-19. The survey found that there were concerns from nonprofits about funding going more toward causes and needs related to COVID-19 and less to traditional avenues that receive funding.

Yet, both the American Writers Museum in Chicago and Garfield Park Conservatory have seen flexibility from foundations during the crisis, said Valkenburg and Linda Dunlavy, director of development at the American Writers Museum.

Valkenburg said she had seen great support from foundations, who have been more flexible about what reports need to be filed during the pandemic. She attributed the great support to the organization maintaining strong communication with foundations from the outset.

Jim McDonough, executive director at Alphawood Foundation in Chicago, said part of the flexibility comes from the fact foundations are partners with nonprofits.

“You have to be invited to get into our process and so we’re really careful about that and try to be thoughtful and intentional,” McDonough said. “So that kind of planning and intention has gone into selecting who we fund, and it would be to throw that effort away to just pull our horns and to be inflexible.”

Some of the flexibility also comes from the shared experience of this crisis, which brings a heightening of empathy and understanding compared to when a crisis hits a subset of organizations, Melchiorre said.

Between 2007 and 2008 — at the start of the Great Recession — foundations were more flexible and grants to charities increased 12.5%, according to a 2009 survey of 95 of the nation’s biggest donor-advised funds by the Chronicle of Philanthropy, a magazine that covers the nonprofit sector. Then in 2009 the survey found that grants declined 8% following sharp declines in the stock market.

Many foundations leverage endowments to help ensure funding for future years. Endowments are a combination of assets including stocks, bonds and other investment vehicles, which are set aside to grow over time but can be subject to movements in the stock market.

“Right now, we are going to have, and most foundations will have, more money for 2021, ironically, than we might have had in 2020, because it’s based on all those quarters of strong stock market performance and the number has been set,” said Elizabeth Glassman, CEO and president of the Terra Foundation for American Art. “It will be in 2022/2023, that the lower numbers of performance will factor into the amount of money that a foundation has to give away.”

Fluctuations in the stock market are more likely to have an immediate effect on individual giving, said Laura Woods, communications manager at youth program and social services nonprofit Chicago Lights.

On Monday, the S&P 500 erased its 2020 losses, and the National Bureau of Economic Research confirmed the U.S. moved into a recession in February.

Chicago Lights experienced an “overwhelming response” in online giving following an emergency appeal sent out on March 19 regarding the shutdown of in-person programs, Woods said.

A core component of Chicago Lights services is tutoring. At 80% capacity, the program could have 160 individuals across two floors on one night, but now the program has moved online, said Alex Cornwell, executive program director at Chicago Lights.

Foundations provide restricted grants to support specific programs, like the tutoring program. In the current environment, many nonprofits are asking foundations to convert these grants to unrestricted enabling them to pivot services during the crisis.

Generally, more unrestricted funds would provide nonprofits with the ability to be nimble in times of shock and to support the foundational components of the charity, Cornwell said.

“My hope is that what [foundations] see is all the great work that came out of COVID and that shift to these dollars, and that really the quality of the work and the outcome remained the same and so we can take these lessons and then apply it once we come out of the side of this,” Melchiorre said.

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