‘An epic moment but not in a good way’: How COVID is causing pain at five of the nation’s largest nonprofits

Breast cancer nonprofit Susan G. Komen took extreme measures to survive the pandemic: laying off over 20 percent of its staff, cutting pay across the board, giving up its Dallas office and consolidating its nearly 60 entities into a single charity.

“We’ve made more major decisions in the past 120 days than the previous 15 years,” said CEO Paula Schneider, whose agency brings in $90 million in annual revenue. “But we will be here at the other end.”

Charities across the U.S. say they are being squeezed by competing realities of COVID-19 a dramatic drop in donations that’s forcing many to lay off or furlough large portions of their staff at a time when lifesaving services, such as free meals or support for immunocompromised populations like cancer patients, are most needed.

Billions in government aid have poured into keeping small businesses afloat, relegating nonprofits to an afterthought, said National Council of Nonprofits CEO Tim Delaney.

The Dallas-based American Heart Association got left out of both CARES Act relief loan programs because of its size and because it receives a large amount of its revenue through donations. Others who secured a relief loan to keep their staff on payroll ended up laying off workers when the funds ran out.

The nonprofit sector is the third-largest workforce of any U.S. industry, employing 100,000 more workers than the nation’s manufacturers, according to the 2020 Nonprofit Employment Report from Johns Hopkins University.

“Policymakers ignore us and don’t include us at the policy table,” Delaney said. “So we’re constantly grabbing our own chairs and pulling them up.”

Texas is particularly vulnerable to strain on nonprofits, which account for 1 in 8 jobs in the state, according to a recent statewide survey from United Ways of Texas and OneStar Foundation. The state is home to some of the nation’s largest nonprofits, including Komen, the heart association and Irving-based Mothers Against Drunk Driving.

Sixty-two percent of Texas nonprofits are in higher demand now, yet 70 percent of their budgets are being squeezed by the economic strain of the virus, according to the study. More than 80 percent have called off or plan to cancel revenue-generating events.

Now, some may shutter their doors for good.

“Everyone sees the handwriting on the wall,” Delaney said. “They know difficult decisions need to be made. But imagine spending the last five, 10, 15 years of your life advancing a mission and then you’re asked to shut it down. That’s where a lot of them are.”

That’s mostly true for smaller nonprofits, which make up the majority of the nearly 107,000 nonprofits in Texas. Ninety-two percent of nonprofits operate on revenue of less than $1 million a year, according to the National Council of Nonprofits.

With unemployment at record levels, many previous donors are waiting to see how the virus progresses and if they can provide for their families before donating. Others are giving money specifically to COVID-related causes, especially food banks.

“It’s been traumatic to nonprofits,” Delaney said. “They’re being stretched beyond any sense of reality.”

Susan G. Komen

Because of the drastic measures taken early, Schneider hopes Komen will end its fiscal year in March at about the same level as last year. Its most recent annual report listed revenue of $190.8 million in 2018.

Komen’s $2 million to $5 million loan from the government’s COVID-relief Paycheck Protection Program helped but was used up within 24 weeks, a requirement for it to become a grant.

Breast cancer kills more than 40,000 people a year in the U.S., and Schneider fears an impending spike if people skip doctor’s appointments to quarantine. “It’s inevitable,” she said.

The hardest pivot has been replacing 100 different fundraising walks with a virtual equivalent, an increasingly common trend for nonprofits, she said. It’s a big task to try to re-create the energy, camaraderie and excitement of an in-person event.

“This is the biggest hurdle any charity will ever go through,” Schneider said. “It will be studied in history books for the next many, many decades. We are living through an epic moment but not in a good way.”

An encouraging sign is that 90 percent of registrants for its annual three-day, 60-mile walk signed up for the rescheduled event happening in four rounds in late 2021, including Nov. 5-7 in Dallas-Fort Worth.

A pain point that isn’t measurable with data is the mental toll on women finding out they have cancer while in isolation, Schneider said. And it’s not just a cancer diagnosis; it’s a diagnosis for being immunocompromised amid a pandemic. “Our helpline is ringing off the hook,” she said.

Schneider said patients often count on clinical trials to save their lives and those have stopped. “Imagine knowing that’s your last shot and you may not get it,” she said.

Make-A-Wish

You won’t see a heartwarming video of a cancer-fighting child being surprised with a Make-A-Wish-sponsored trip to Disney World anytime soon. Before the pandemic, more than 54 percent of the wishes the nonprofit granted were Disney-related, and 80 percent involved travel.

But now travel is restricted and cancer patients shouldn’t be risking trips to an amusement park. Even Disney CEO Bob Chapek who’s on the Make-A-Wish board said he understands, according to Make-A-Wish North Texas CEO Scott Landry.

“We will fulfill about 250 wishes this year,” Landry said. “That’s half of what we normally do because our kids can’t travel right now.”

The national office agreed that the biggest challenge has been finding creative ways to grant wishes safely during a pandemic. Some examples from the past few months include a princess playhouse, a gaming computer and an electronic shopping spree. But many children chose to delay their wishes.

Make-A-Wish, which reported $364.3 million in revenue across its national and local offices last year, knows it will be busier than ever when it’s safe to travel. So the organization is trying to save up money and prep for the influx while also dealing with an anticipated 30 percent drop in revenue nationwide and about a 9 percent reduction in staff. The national organization and its chapters received a total of $10 million to $27 million in PPP loans but the money had to be used up in 24 weeks.

In July, the North Texas chapter reduced its workforce of about 40 by eight positions and left four job openings unfilled. It also canceled 60 fundraising events this year.

American Heart Association

The American Heart Association has been a stalwart in the industry, fighting heart disease and stroke the No. 1 killer worldwide for over 100 years.

But even the heart association has been swept up in COVID’s economic tornado and had to lay off 400 employees, or about 13 percent of its workforce, according to its chief administrative officer, Larry Cannon. It also eliminated 200 vacant positions.

It now has 2,800 employees, with about 815 working in North Texas, at either its Dallas headquarters or elsewhere in the region.

The video conference to announce the layoffs was emotional, with CEO Nancy Brown shedding tears at one point, Cannon said.

“For our CEO, who has been here for 30 years and worked with these people for such a long time, it was incredibly emotional for her,” he said. “It was very important for her to be the one to communicate to staff about the changes.”

Executives took a 15 percent pay cut from April to June. Other staffers took a day off without pay.

Cannon said layoffs were a last resort after having already implemented a dramatic cost-savings plan that reduced operational costs by $100 million between March and July. The association’s 2019 revenue topped $887 million.

It’s impossible to predict the decline in donations this year, Cannon said, but he noted that the industry is expecting a 40 percent to 50 percent drop. The heart association and other large nonprofits want Congress to help by extending aid to nonprofits of all sizes and broadening tax-deductible giving incentives for all charities.

“Nonprofits aren’t structured in a way to support a debt load and make payments,” Cannon said. “We want to use our funds to fund research and science.”

Like other charities, the heart association said its services are more essential than ever, considering the 120 million people in the U.S. with heart conditions are at a higher risk for severe complications from the virus. It’s funding more than $2.5 million in research on the connection between the virus and the heart.

The association’s top revenue source is events and its biggest fundraiser, Heart Balls, which brought in $85 million in 2018, will now take place virtually, with people at home in ball gowns or their pajamas watching virtual programs of survivor stories, cooking demos and live auctions.

“It’s definitely a crisis,” Cannon said. “A lot of not-for-profits tend to operate at break-even or below break-even. This is a completely different world and we have to figure out how to adapt and try things and shutter things that don’t work.”

Mothers Against Drunk Driving

On the morning of June 11 86 days after MADD employees began working from home CEO Adam Vanek sent an email to staff that said direct mail and individual support were down and corporate sponsorships had all but disappeared.

“MADD’s time and more importantly, money, has finally run out,” Vanek told his staff in the email obtained by The Dallas Morning News. “Today, MADD is forced to furlough some of its team members.”

Vanek, who took the reins in February 2019, told The News that he furloughed about 18 percent of his staff but has since rehired about 10 percent back. A PPP loan of $2 million to $5 million helped it delay the furloughs.

MADD executives took a 10 percent pay cut while directors took a 5 percent cut. The organization also suspended its 403(b) retirement savings match and deferred its office lease payments for at least three months.

Vanek said the nonprofit is seeing about a 30 percent drop in donations at the same time that drunken-driving crashes have spiked during the pandemic. In May, for example, the Texas Department of Transportation recorded a 27 percent year-over-year increase in fatal accidents.

Reasons for the spike include a dramatic rise in alcohol sales as people look for ways to cope with isolation and depression, as well as people being more likely to drive themselves due to fear of catching the virus in an Uber or Lyft.

In a video message to employees, Vanek said food banks and other COVID-relief nonprofits were getting most of the donations.

“What we’re seeing is that food banks and other COVID-related support organizations such as United Way have been basically sucking up all of the oxygen of the charitable field and therefore getting a lot of the funds,” he said. “And that’s just been a challenge for us all.”

Founded in 1980 by a California mother whose daughter was killed by a drunk driver, MADD is celebrating its 40th anniversary this year and has been as successful as any nonprofit could hope, helping to cut drunken-driving deaths by more than 50 percent in that period.

As deaths declined, the organization’s funding fell from its heyday in the early ’90s as donors looked for new causes to back. In 1990, it had about $50 million in revenue, while in 2018, it had $33.7 million. The total number of Google searches for MADD dropped about 70 percent from November 2005 to August 2020.

Vanek, who previously served as general counsel for MADD and, more recently, for Susan G. Komen, said that while drunken-driving deaths have dropped from 25,000 in 1980 to about 10,000 last year, they’ve remained at that level for about a decade. He joined in 2019 to move that needle further down and help put MADD back at the top of Google searches.

“People think because it’s down to 10,000, that’s an acceptable level, which we find appalling,” Vanek said. “People think it’s cured, but it’s not. That’s 10,000 families ruined every year.”

United Way

United Way, which focuses on education, income and health care, is one of the nonprofits on the front lines of the pandemic, offering food to those who found themselves suddenly unemployed, rental assistance to those facing eviction and making sure seniors could safely work at home.

Its helpline received a 300 percent to 400 percent increase in call volume, leading it to keep on all of its staff at the national level and hire additional staff, said United Way Worldwide president Suzanne McCormick.

“It’s as if Hurricane Katrina hit every city around the U.S.,” she said.

Because United Way is seen as the go-to nonprofit for helping people with basic needs during a disaster, it was able to raise close to $1 billion worldwide in funds restricted to help with COVID-19 needs. Several million went to hire new call specialists. The organization, which raises $4.8 billion worldwide each year, also received a total of $54 million to $132 million in PPP loans.

“The challenge now is how to sustain because in disasters there is an outpouring initially and then it lags but the needs don’t,” she said.

While the national staff hasn’t been affected by layoffs, some of its 1,100 local chapters haven’t been as fortunate.

Donations are down for United Way of Tarrant County, including an anticipated 40 percent drop in this year’s workplace fundraising campaign, said CEO Leah King.

“If people aren’t earning paychecks, they can’t make those pledges,” she said.

Even with a COVID relief loan of $1 million to $2 million, King said her organization cut senior leaders’ pay and furloughed such positions as the front desk operator, which seemed obsolete in the remote working world. Without additional COVID relief, King fears an interruption in services or elimination of programs.

“These are the gut-wrenching decisions leaders across the area are having to make,” she said.

United Way of Metropolitan Dallas didn’t want to say if it’s expecting a decline in donations this year but noted that it cut $1 million from its operating budget, mostly by not filling open staff positions, according to CEO Jennifer Sampson, who is now fully recovered after battling COVID-19 in early June.

The social services agency raised $12 million in eight weeks from the end of March to May for immediate and ongoing pandemic-response work, such as food support, emergency PPE gear, health care, job re-skilling, housing security and support for students and families. Corporations and philanthropic foundations were major contributors.

“Through this work, we have benefited more than 1.4 million North Texans,” said Susan Hoff, the agency’s chief strategy and impact officer.

The organization, which listed 86 employees on its COVID relief loan application, had revenue of $64.8 million in 2018 and said it hasn’t laid off any of its staff since March. However, 12 open positions are on hold.

“Our plan is to ferociously fundraise our way out of this hole,” Sampson said.