Investor Alert

Nov. 30, 2020, 3:29 p.m. EST

Flood of Cash Into Many Covid-19 Response Funds Has Dwindled

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In the early months of the Covid-19 crisis, funds began to pop up in major cities and small towns across the U.S. aiming to serve individuals, nonprofits, and small businesses directly suffering from the pandemic. 

As these Covid-19 response funds began forming, first in Seattle as cases there were identified, and then elsewhere, a group at the Lilly Family School of Philanthropy at Indiana University focused on community foundations and United Way, began to track them. 

The school’s researchers have since learned that about 1,120 funds were formed to respond to the Covid-19 crisis specifically by community foundations and United Way chapters, raising US$1.25 billion as of early October.

These groups range from a Covid-19 response fund set up by the United Way of the Tanana Valley in Fairbanks, Alaska, to support nonprofit agencies meeting basic human needs resulting from the pandemic’s economic fallout, to the Hawaii Community Foundation, which focused on reducing the spread of the virus. 

While these efforts are impressive and widespread, Laurie Paarlberg , the Charles Stewart Mott Chair on Community Foundations at the Lilly School—who initiated the research—notes the pace of contributions into Covid-19 response funds has slowed dramatically since April and May. 

“Now it’s at a trickle,” Paarlberg says. “We were tracking it every week in the spring and now we’re tracking it monthly.”

Also of concern is that by early October, 80% of the funds raised have already been distributed through grants, leaving little in reserve as communities across the country face mounting numbers of infections. The big question is whether donors will step in again to replenish these funds. 

“The impact on local communities with [infection] rates going up and more closures, is really concerning,” Paarlberg says. “I’m not sure we’ll have another round of fundraising for US$1.25 billion.”

No doubt, GivingTuesday is coming at a good time. The now 9-year-old annual event, conceived as a counterpoint to Black Friday and Cyber Monday, is happening on Dec. 1 this year. Since its inception in 2012, GivingTuesday has expanded globally to include volunteering as well as donations in 65 countries, with US$2 billion raised for nonprofits in 2019.

Jacob Harold , executive vice president at Candid—an organization that tracks funding for nonprofits and foundations—agreed that donations have slowed since the spring, yet people and groups are still responding to existing needs. The nonprofit separately has tracked 979 Covid-19 response funds across the world that in some cases were also formed by public charities or independent foundations.

“GivingTuesday is an opportunity for people to come together and show generosity as we continue to deal with this pandemic,” Harold says. 

On May 5, the organizers of this traditional post-Thanksgiving event created “GivingTuesday Now,” to raise funds specifically to address the pandemic. The idea was “to find ways to strengthen community and bonds between humans,” Asha Curran , GivingTuesday’s CEO, said in an interview at the time. 

Donors responded, giving US$503 million online. 

The Lilly School’s research also revealed that 244 of the U.S. funds initiated in the wake of the pandemic were created from a partnership with either a United Way or a community foundation, which is a break with a common practice.

“A lot of United Ways walk side-by-side in local communities, but they don’t always work together in partnership,” Paarlberg says. “To have organizations sharing fundraising when they [were] sometimes competing with each other, to be sitting on joint grant committees, things like that, is really neat.” 

Since the pandemic began, individuals, corporations, and foundations have granted a total US$16.5 billion globally, according to Candid. The biggest recipients of these dollars are unknown, however, and it remains unclear how much giving lately has been directed to local communities to address Covid-19 versus to national or international groups, for instance. 

The Lilly School is analyzing what prompts donors to give back to their communities (being a subscriber to a local newspaper is one reason, they fund), and they also are trying to better understand where dollars donated to these response efforts are going. One question is whether the purposes of these funds has shifted over time, particularly considering the needs surfaced through the racial justice protests over the summer. 

Some of the funds are focusing on vulnerable and marginalized populations, while others from the outset were focused on inequities and disparities in health care access, Paarlberg says. 

GivingTuesday’s conversations with donation and giving platforms indicate “people have been giving to a wide variety of causes and that giving within donors’ communities has been a strong trend,” says Woodrow Rosenbaum , chief data officer at GivingTuesday. 

This is also reflected in the rise of mutual aid networks in the U.S., Rosenbaum says. These networks include individuals and groups pulling their resources together to serve their communities.

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