The tightening of the belt — it was a prospect that loomed large for philanthropic organizations last year into this year, when cash-strapped businesses and individuals were looking for their own government gifts.
But the Garden State’s philanthropic donations and foundation spending didn’t come up short during the pandemic.
That was evident when, earlier this year, one of the state’s largest foundations, the Community Foundation of New Jersey, reported that it had a record year of giving in 2020, with grants totaling $87.5 million.
The organization, which stewards $650 million in charitable assets, makes grants to a variety of nonprofits. Hans Dekker, the organization’s president, said nonprofits — particularly those serving on the front lines of the pandemic’s impact or those running shut down arts programs — needed the funds.
But, between government stimulus programs and the enhanced willingness of Jerseyans to contribute to charitable causes during the pandemic, Dekker may not want to say philanthropic entities have done well … but they haven’t suffered from any dreaded belt-tightening, either.
“Let’s just say, there’s more resources than we expected to go around,” he said.
In just one example of spurred-on donation activity: New Jersey’s first lady, Tammy Murphy, and other state leaders worked with the Community Foundation of New Jersey to create the New Jersey Pandemic Relief Fund, which raised more than $60 million from thousands of donors.
Dekker doesn’t see anything on the horizon that’s set to slow the donation flow. Potential tax changes don’t have foundations fretting, given that any increase in capital gains rates could have more people signing on to gift appreciated securities, which already make up about half of gifts to Dekker’s organization.
Linda M. Czipo, CEO and president of the Center for Non-Profits, a statewide network of charitable nonprofits, said it is true that philanthropic groups relied on in-person events, such as fundraisers, to advance their mission in the past.
“But, one thing that’s clear is that nonprofits stepped up in a big way,” she said. “And, while the pandemic did create challenges with respect to short-term sustainability, nonprofits are known for pivoting. And that’s certainly what they did.”
Nonprofit organizations turned to virtual options when possible to bridge the gap that the pandemic formed between rising demand for charitable services and the resources available for those services.
They also turned to the same government relief programs available to businesses, with certain nonprofits being eligible for Paycheck Protection Program loans under the federal CARES Act immediately — and more becoming eligible after later modifications to the loan program.
The corporate and individual donors that form the financial backbone of these organizations, despite whatever economic anxieties they might’ve been expected to have, didn’t often retract their support.
“While some had to tighten gift-giving, in some cases, donors did their best to sustain or expand it,” Czipo said. “For gifts already given, we saw some encouraging things in the early days of the pandemic. Donors said: ‘Hey, you know that sponsored event you had to cancel? You can use those dollars from the event sponsorship however you need to.’”
However, Czipo would be remiss not to mention: Nonprofits were better positioned to weather 2020’s storm if they were in strong shape financially before it.
And there’s no way to downplay the impact of any shakeup on organizations that aimed their philanthropy on already underserved communities.
“Those serving communities of color were hit especially hard, because there was a disparity in resources available for those organizations before the pandemic,” she said. “And that’s something that really makes what nonprofits have experienced a mixed bag.”
Shaking up the status quo
It’s easy to talk about how, in crisis, philanthropic initiatives shine.
Here’s some testaments to that: Donated personal protective equipment supplies and the food and housing made available to those whose financial lives were thrown into chaos. Climate catastrophes and the swift philanthropic response to them make that list as well.
But Birju Pandya wants to broach a more difficult conversation: How is the investment path of philanthropic dollars sometimes part of the problem to begin with?
“When it comes to the big private foundations, they have to, as a rule, give away at least 5% of their assets every year with grants and charitable gifts,” Pandya said. “But those grants and charities might be solving problems that 100% of that money created — like an oil company foundation’s work to support environmental initiatives.”
At the very least, Pandya, who is linked to Mount Laurel-based real estate company Nessel Development and its renewable energy sister company Nessel Energy, argues it’s worth examining what gets neglected when it comes to philanthropy.
“If you look at where most philanthropy goes these days, regardless of whether it’s big players or everyday giving, it’s going one of three well-established, traditional categories: educational institutions, arts and museums, and religious institutions,” he said. “If you think of socially minded causes or environmentally minded causes, those are niche in comparison.”
Pandya advocates for an “integrated capital” approach. It’s a business model that commingles traditional philanthropic activity and investing, pushing funds and nonfinancial resources to local groups and entrepreneurs that are working to solve social and environmental problems.
The basic idea of this more recent concept is that the money is made — and then possibly reinvested — directly in the organization that’s taking on local problems. Under more traditional philanthropic forms, money might be made on investments in companies whose mission is completely at odds with where that money is later donated.
“Getting our dollars to go farther requires understanding that the way we interact with the world is fundamentally degenerative, and we need to create something regenerative,” he said. “To do that, we have to coordinate, innovate and better integrate (philanthropic efforts).”