Colorado nonprofit coffers run dry during surge of demand sparked by coronavirus shutdown

by Jennifer Oldham

The presence of COVID-19 virus in the Gunnison Valley has caused the nonprofit Crested Butte Nordic Center to face budget shortfalls. There was no spring break revenue and the center's largest fundraising event, The Grand Traverse ski race was canceled. (Photo by Karsten Winegeart, Unsplash)

The article was originally published in The Colorado Sun ⸱ April 12, 2020

Relief agencies are struggling to meet demand while other organizations furlough workers and rethink critical fundraising events. The Denver Dumb Friends League’s Furry Scurry hopes to lure 10,000 people to a virtual dog walk on May 2.

Operators fielded seven times more calls than normal to a Colorado 2-1-1 hotline seeking food, rent, utility and child care assistance in the days after Colorado Gov. Jared Polis ordered nonessential businesses to close and residents to stay home to slow the spread of the coronavirus.

With 127,393 Coloradans filing initial unemployment claims over a three-week period ending April 4 — 16 times more than during the Great Recession’s peak in 2010 — the safety net that many nonprofits provide for the state’s most vulnerable is fraying. Nonprofits are straining to keep up with unprecedented requests for help, even as physical distancing rules forced them to cancel fundraisers that comprise a large share of their already tight budgets.

“In the past two weeks, the demand on 2-1-1 services has increased beyond anything we’ve ever seen,” said Christine Benero, chief executive of Mile High United Way, which operates the hotline with other organizations and support from the state. “On an average day, we typically take 300 calls. We hit 2,100 on April 1.”

Middle-class workers and former nonprofit donors are now among the newly unemployed, or further isolated, by stay-at-home rules and business closures. Many are suddenly unable to provide for their families’ basic needs, particularly as the first of the month approached. The Salvation Army’s Intermountain Division received 219 referrals for rent assistance on March 31, twice as many as the day before, Rachael Fowler, public relations and special events director, said in an email.

Colorado’s 23,147-strong nonprofit sector employs 330,000 — more than its agriculture, mining and information industries combined — and contributes $40 billion to the state’s economy annually, directly and indirectly, illustrating its far-reaching ripple effects.

The one-two punch of the economic and social impacts of the worsening pandemic in Colorado is echoed nationwide, with 6.6 million people filing initial unemployment claims in the week ending April 4—the second highest level of seasonally adjusted jobless claims in history. (The record breaker occurred the week ending March 28, with 6.8 million filing.) Some are furloughed nonprofit employees.

“We are hearing so many nonprofits talking about having to lay people off or close their doors entirely,” said Rick Cohen, chief operating officer for the National Council of Nonprofits.

“If a pizza place down the street closes down, it’s horrible for that business and the people who work there, but I can find another pizza place,” he added. “If a nonprofit that provides shelter to survivors of domestic violence closes down, their clients can’t just go down the street.”

At least some relief for nonprofits is available in the $2 trillion CARES Act President Trump signed March 27, including emergency loans for payroll and operating costs and a charitable-giving tax incentive that applies to cash contributions made in 2020.

In addition, states from Washington to New York are partnering with foundations and corporations to raise money for emergency grants for struggling charities. The Colorado COVID Relief Fund has gathered nearly $10 million from more than 5,000 individuals, companies and foundations, including $1 million from The Colorado Trust, since it launched March 20.

The relief fund’s grant committee will issue the first round of $25,000 grants by April 16 to organizations serving a community need resulting from the coronavirus crisis. Subsequent rounds extend through the end of May.

“The needs of the community at the moment are outweighing these funds, so we are asking folks to please continue giving,” said Benero, of the United Way which is administering the relief fund in coordination with Polis’ office.

With many individual contributors (who, in 2019, accounted for about 85% of charitable giving in Colorado) reeling from job losses and stock market declines, nonprofits are bracing for the long-term economic fallout of the public health crisis. Most are without rainy-day funds and live on razor-thin budgets with reserves for several months, at best.

“Fear and uncertainty about how some Colorado nonprofits will survive the next several months came through loud and clear in the 738 survey responses we received,” wrote Joanne Kelley, chief executive of Philanthropy Colorado, a membership organization for philanthropies in the state, in a March 26 report. (The Colorado Trust is a member of Philanthropy Colorado.)

“Survey respondents reported that Covid-19 is having an overwhelming impact on their current programs, services and operations, with the impact expected to increase further as the crisis continues,” the survey found.

To understand immediate nonprofit needs, Kelley’s organization launched a platform that allows foundations to share information about grants they are making, to try to coordinate and direct resources where they will do the most good.

For now, organizations on the front lines are trying to survive the next few weeks. Nonprofits in rural and urban areas alike are working overtime to change how they operate to comply with distancing regulations, many with fewer volunteers.

Like their urban counterparts, food providers in rural parts of the state cannot find much needed foodstuffs and hygiene products for the surge in families who are requesting them due to panic-buying of toilet paper, pasta and other items.

“A lot of pantries in our network are totally reliant on what the food bank network can provide them,” said Lyndsey Williams, director of the food bank network for La Puente, an Alamosa-based nonprofit with various service arms and programs. La Puente works with 15 pantries across the Massachusetts-sized San Luis Valley; three closed in March alone, leaving Williams to figure out how to get food to isolated residents.

“We are in this real squeeze with the supply chain where there is no clear avenue to getting goods,” said Williams, who is now providing premade boxes to pantry goers because they cannot shop inside due to distancing requirements. “We are out of canned vegetables and we haven’t had rice for over a week.”

Williams worked with a nonprofit in Durango to track down enough hard-to-find nonperishable goods that each organization could order a semi-truck’s worth for their clients. Even as she gets creative on the fly, La Puente is losing tens of thousands of dollars a month from the loss of other programs: public health orders designating essential versus non-essential businesses forced it to close its three thrift stores and coffee shop—social enterprises that reap $100,000 a year.

“The expenses of running those four businesses is $50,000 a month with overhead and staff,” said Lance Cheslock, executive director of La Puente. “I have zero income now, with all of them closed, but I still have all the expenses.”

Mounting expenses due to social distancing guidelines forced some nonprofit organizations, particularly those who rely on fees for in-person services, to furlough employees. Swallow Hill, Denver’s storied 41-year-old music education and performance nonprofit, laid off its teachers, all hourly workers and a third of its administrative staff. Those who remained took “a deep reduction in pay,” wrote Paul Lhevine, the nonprofit’s chief executive, in a March 25 message on its website.

“Our decisions have hit our teachers the hardest and have been the most heartbreaking for us,” Lhevine wrote. “Our business model is such that, while we are no longer able to pay our teachers during this time that they aren’t working at Swallow Hill, we will be in a position to begin to pay them as soon as they return to work.”

Similarly, the Denver Center for the Performing Arts (DCPA) announced on April 2 the financial toll wrought by the cancellation of five shows, 523 educational classes and school programs, 19 rental events and two fundraisers, including the nonprofit’s signature gala, forcing DCPA to reduce staffing.

“To help offset millions of dollars in deficit caused by these cancellations, we also have made the painful decision to reduce our staffing costs by more than 50% through layoffs, unpaid leave, reduced hours and salary cuts,” wrote Janice Sinden, DCPA president and chief executive, in an email to subscribers that included a request for donations.

Physical distancing requirements also compelled the American Red Cross chapter for the Colorado and Wyoming region to provide shelter and other help to fire victims, among its core services, over the phone. The nonprofit is redesigning this program while also fielding more requests for its equipment and disaster-response-and-planning expertise.

“A lot of this is like building a plane while flying,” said Gino Greco, the chapter’s chief executive.

“It’s probably going to cost us 10 to 20% more than it would normally when there is a natural disaster,” he added. “When we make a plea for support, people are telling us ‘we are waiting to see what happens’—donors who are eager to help in disaster-related times aren’t there right now.”

For nonprofits that rely on donor support, trainings and fundraising events to generate most of their income, the cancellation of such programs, many of which have sunk costs, emerged as the top factor negatively affecting their financial prospects, Philanthropy Colorado’s Kelley wrote in the organization’s recent summary of survey results.

The 738 respondents estimated revenue losses from such cancellations to range from $15,000 to $400,000—the size of some organization’s entire annual budgets, according to the report.

“Nonprofits are looking to reschedule these events, but that is very uncertain, and in the meantime, they have payroll and other costs to handle,” said Renny Fagan, president and chief executive of the Colorado Nonprofit Association, citing cancellations by Firefly Autism, the Latin American Educational Foundation and the Kempe Foundation, among many.

The Dumb Friends League, the Mile High City’s 110-year-old premier pet rescue and adoption service, will hold its signature annual fundraiser, the Furry Scurry, virtually on May 2. Participants can register online to run, hike, jog or even do the treadmill, with their pets to raise money for the event, which typically brings in $800,000, said Maia Brusseau, the organization’s public relations manager.