The Nonprofit Hero Factory

Episode 5: How Foundations and Nonprofits Are Evolving Through the Crisis with Tracy Kaufman

In this Episode:

How have funders responded to COVID-19? What should nonprofits do in turn? And how has this pandemic changed the field in the near and long terms?

As the Programs Manager at Candid, Tracy Kaufman has a front-row seat to the challenges that grantmakers and nonprofits are experiencing in response to the coronavirus pandemic. What’s working, what isn’t, and what’s next?

Listen to this Episode

Voiceover
Welcome to the nonprofit Hero Factory, a weekly live video broadcast and pod where we’ll be helping nonprofit leaders and innovators create more Heroes for their cause and effect it was from

Boris Kievsky 0:21
Hi everybody, and welcome to the fifth episode of the nonprofit Hero Factory. I’m so excited to have my guest today is Tracy Kaufman from candid if you’re watching us on video, I’m excited to announce that the audio version of this show the podcast is now available on iTunes, on Stitcher, on Spotify, and basically most of your major platforms and we hope to be on all of them within the next few days. So please, please go seek us out over there. Subscribe, download, listen, and of course share your thoughts. Whether you leave a public review happy, very happy for those or a private one. If you want to send me a note anything is appreciated.

Boris Kievsky 1:00
Any constructive criticism is always welcome because that’s how we grow and develop. So, yeah, go check it out and without any further ado, let me tell you a little bit about our guest today. Tracy Calvin is the program’s manager at candid candid is recently formed or renamed organization from the merger of Foundation Center, and GuideStar. And now at candidate Tracy is their programs manager and the main instructor of all things. Basically grant writing, communicating with funders and she’s also currently working on a lot of their curriculum development. She is a pretty fantastic person in general. She’s a great resource. I’m very excited to have her. And without any further ado, let’s just go ahead and bring her on.

Boris Kievsky 1:45
Hi, Tracy. Good morning.

Tracy Kaufman 1:47
Good morning. Happy to be here.

Boris Kievsky 1:49
Thank you so much for joining us. So I hope that was a an adequate introduction. But please tell us more about your story and your nonprofit superhero. superpower. In other words, how you help nonprofits Get More Heroes for their cause.

Tracy Kaufman 2:05
Alright, I’ll start with a superpower just so that I don’t forget what it is. I would say my superpower would be the power of information. Um, so a lot of this is because my background was originally as a librarian, and anyone who knows any librarians knows we’re all about information and the power behind access to information. I have been working for Candid, formerly known as Foundation Center and GuideStar. I’ve been with the Foundation Center half of candid for almost 13 years now. I started working with them back in 2007, originally in their library. Candid is all about data and research on foundations and nonprofits and how you can use that information to be a little more stronger in the work that you due for your cause, both for foundations to do stronger work in terms of how they can fund things by knowing a little bit more about what’s going on out there in the world of foundation funding, and so that nonprofit organizations can be more well informed about what they can do to work more effectively.

Boris Kievsky 3:20
That is awesome. And you and I have collaborated on things you’ve brought me into Candid to Foundation Center, and I put you onto webinars in the past. And I know you have a lot of tremendous, tremendous valuable knowledge that you can share any given time on a whole range of subjects. So let’s let’s dive in to what you’re seeing right now what’s going on in terms of the grant making and grant receiving space that you’re seeing.

Tracy Kaufman 3:49
Alright, so as we all know, we are in the middle of a pandemic right now. So what has been happening with COVID-19 has been happening Obviously a massive impact not just on health, but also on the economy and on nonprofit organizations they are all dealing with a lot right now. My organization Candid has been tracking a lot of data on what’s been going on in terms of foundation funding at this time. And I’d like to just talk a little bit about what foundation funding means at a time like this right now. So at this moment since mid March, I believe $10.6 billion so far has been committed to funding related to Coronavirus relief. In some cases this has to do with like straight up towards the virus health related issues in many cases. This is talking about the economic crisis related to it and a lot of things really related to basic needs food and shelter. Unemployment, Things like that. But there’s been a tremendous amount of funding going up. And it’s been rising dramatically. The last time I spoke publicly on something like this, I believe we had a little over $4 billion that had been given out that was in early April. Now that we’re in May, we’re at 10.6 billion. And so a lot of that funding that’s floating around out there is corporate, the early rush of funding from foundations for COVID relief was about 75%. Corporate now it’s about two thirds corporate with more of the independent and family foundations beginning to catch up a bit. So when it comes to foundation funding right now, keep in mind under normal circumstances, foundation funding is a pretty modest piece of how nonprofits are supporting themselves.

Tracy Kaufman 5:54
Like the most recent information was that about 18% of the private support that goes to nonprofits is coming from foundations just 18% compared to almost 70% coming from individual donors. However, at a time like this foundation funding has a little bit more stability to it, relatively speaking, compared to individual donors. I read in the Chronicle of Philanthropy recently that the percentage of Americans giving to charity has dropped to I think an all time low of like 73%. And a lot of this is because people don’t have the money to spare right now, individual people don’t have the money to spare right now.

Boris Kievsky 6:40
they’re worried about their long term financial prospects. And so they’re trying to save and allocate as quickly as possible right now.

Tracy Kaufman 6:46
Exactly. Even if they’re not suffering financially. At this moment, the uncertainty makes them more cautious about what they’re going to do with their money. But foundations don’t have that option to give or not give foundations are required by law to give out at least 5% of their assets per year. That alone leads to a little bit more stability as a funding source for an organization. And at a time like this foundations also often have certain kind of built in shock absorbers that help them to be a little more stable in their giving compared to other sources. I’m not going to say that it’s easy to get foundation funding or that foundation funding will not be affected by this crisis, because it will, and it is. But a lot of foundations do what we call asset averaging, which leads them to give a little bit less than it seems like they should when times are good, but it leads them to give a little bit more during a rainy day. And right now we’re on a rainy day situation

Boris Kievsky 7:50
We are in a rainy year situation.

Tracy Kaufman 7:51
Yes. And so because of this about a roughly a third of foundations do asset averaging, so that they when they’re portioning out there 5% payout rate, instead of making it be just on their most recent fiscal year, they average it out over the past few years. So that if they’ve had some good years in the past, this means sometimes their payout is a little lower during good times. But it means that when times are rough, if it’s averaged out this way, they’re giving a little bit more. So that was well,

Boris Kievsky 8:24
that’s awesome news, of course, for all of us in the nonprofit space. How should How can I guess nonprofits take advantage? So I know that at least initially, the response from foundations and I think you just alluded to this too is, you know, to the to the most urgent of means to the to the nonprofits out there that are handling. Marian Stern was on the show last week, and we were talking about the Maslow’s hierarchy and it was, you know, foundations were focused on nonprofits handling the most critical needs on that hierarchy. But All things are unnecessary, in that hierarchy, their own needs. So our is the funding now, expanding to more types of organizations, or our most foundation still focused on those most integral needs of like food and shelter.

Tracy Kaufman 9:16
I would say a lot of the new funding initiatives that are coming out right now are going to be heavily focused towards basic needs food and shelter. And that is important, especially because social services organizations I think are being hurt. Almost most of all at a time like this. They have the thinnest margins and the smallest operating reserves of all nonprofits. And so it is important. However, if, for instance, you have existing funders that are all already have been given to you. foundation priorities are foundation priorities, those don’t tend to change over time, but when foundations choose, these are the subjects that we want to give towards that is A relatively stable thing. If you’re an arts organization, your arts funder is still an arts funder, for instance. I would say it’s probably more important than ever to focus most heavily on the funders you already have. You can chase down new funders but as they say it’s cheaper to keep them like it go for the the people who know you and like your work the best first and steward them.

Boris Kievsky 10:29
Absolutely right on. So speaking of that, what is working and what’s not working for nonprofits these days with seeking foundational funding?

Tracy Kaufman 10:39
So I think the most effective technique is to double down on what you do best, what are the critical needs that you serve and how you do it effectively. Some of these things are true, not just in a crisis, but at all times, but they become truer than ever right now focusing not just on the fact that your organization is suffering right now, most organizations are suffering right now. But putting a little more emphasis on the urgency of the work you are doing, what is the critical social value that you provide right now? Why is it important that this work gets funded, what they call the case for support, strengthening that case for support and making sure that you can clearly articulate whether it’s to foundations or to individuals or whoever, that this is important work that needs to exist? That question of, why do you exist? Why do you do the work that you do every day being able to communicate that in a crisp, clear, persuasive way is going to take you very, very far.

Boris Kievsky 11:54
So we’ve been talking a bunch on this show and really everyone that I’ve been talking to in general How to refocus your mission and and within your mission, find new ways to achieve it to serve your community. I know that individual donors specifically are responding to it. So if you have been primarily doing fulfilling your mission in one way, and it’s been more per person to person direct contact, and now you’re shifting to programs that are more online based or that are helping people specifically in the situation that we’re all in right now, but it’s something slightly new, something slightly different. Still, though, based on your mission. A lot of individual donors are responding. They appreciate that you are still trying to serve your community that you’re filling these important needs that you are pivoting and involving as needed to keep serving our funders interested in new ways that you’re that you’re doing your work or are they mostly interested in the the long term of programs that you’ve already had in the past.

Tracy Kaufman 13:03
As long as whatever pivot you’re making for your programs make sense for who you are and who you serve and what you do, then I believe funders are going to be very receptive to that. funders are people the same way regular donors are people. And they understand that times are complicated right now. As long as you loop your funders in to what is going on, don’t surprise them with whatever changes are taking place internally at your organization. Talk to them right now, if you haven’t already about changes that you’re making in your program. because things are different. You’re taking this program and reconfiguring it to this new virtual format. In order to still keep serving people and getting such and such positive outcomes. Just talk to them openly and honestly about it. I can’t emphasize enough how important it is just to talk openly and honestly, with your funders, to not surprise them. And also just to make sure that you’re getting them on board with things as they’re happening. And they can either opt in or opt out, but they’re much more likely to opt in to what you’re doing if you’re completely on the level with them at all times and having open human conversations with them.

Boris Kievsky 14:23
Sure, keeping them feeling like a partner in the work that you’re doing.

Tracy Kaufman 14:26
Right? Because they are a partner.

Boris Kievsky 14:28
Absolutely. And a lot of storytelling definitely comes into play in that where it’s how do you tell the story of the community that you’re serving, the way that they’re being impacted right now, and the ways that you’re pivoting, adjusting to serve them? But absolutely, as you said, staying true to your mission and the goals of the programs in the first place, rather than all of a sudden you see a need that’s unrelated and launching something completely new.

Tracy Kaufman 14:56
Yeah, you don’t want to do mission drift at a time like

Tracy Kaufman 14:59
yeah, mission drift, mission creep? Absolutely. So what then we’ve hit the initial crush, if you will, of emotion of response of changes in the way that we all not just our organizations operate. But we all kind of see the world in society right now. Things change really rapidly. Some nonprofits were great at adjusting some took a little longer are still on that path. But now that we see this new reality, if you will, that we’re going to, we’re going to be in for at least the next few months, maybe years, maybe some changes are probably permanent, in there lasting effects. What should nonprofits be looking at now? And thinking about in terms of their sustainability post, pandemic post COVID?

Tracy Kaufman 15:49
I mean, there’s, there’s two main pieces of what nonprofits are going to need to be thinking about, they’ll need to think about what do their programs look like long term now and to what extent do you even know the long term? Every a lot depends on what your subject area is what you do what your programs currently look like some things more easily adapt to these modified new formats than others. But just being careful that for some things, it might not go back to normal. It might if we’re very fortunate, but coming up with maybe a few plans of what the future might look like, so that you can be adaptable, like trying to be proactive, rather than reactive to the situation, which is difficult and it’s going to be difficult for everyone. But having an idea of what does for instance, this time next year look like how much we’ll be back to normal and how much might not be and how can you be ready for either outcome. But then there’s the fundraising question. I think there’s a little more control over what the question of fundraising We’ll look like compared to the question of what your programs might look like. Now, fundraising is hard. And it always has been. And it will continue to be difficult. I don’t want to paint an overly rosy picture of what foundation funding looks like right now. Because it’s, it’s never been easy to get a grant. And it’s not going to be easy to get a grant. And it shouldn’t be. Grants are given to organizations who merit the grant funding the case for support. So there’s the foundation piece, there’s also figuring out what do what does the piece of individual donations look like for your organization? Because the share of donors is shrinking as I was reading that fewer people are giving to charity right now and what’s that going to look like over time? They’re saying that lower income donors have shrunk the most whereas the higher income donors have been affected. The least. Donor Advised fund Meanwhile, this is kind of a bright spot. Giving from Donor Advised funds has gone up something like what is it? 58%? I wrote it down it. Yeah, Donor Advised fund grant making is up 58% between March and April compared to what those numbers were like this time last year. That’s a big deal. And that is a good thing to keep in mind. It’s not incredibly easy to access Donor Advised funds if you haven’t already, but these are basically high income donors. So cultivating them a little bit better with someone who has a dafe. The thing is, this is money that has already been committed to charity. It’s already there. So you may as well ask you may as well cultivate those major donors more than ever. But this all leads back into a major thing of what what nonprofits need to do to become more sustainable over time, which is re examine your funding streams. Make sure they are diversified before The pandemic, there were a lot of organizations that were overly dependent on one or two funding streams, whether it’s individual donors, whether it’s government support, it’s very risky to be overly dependent on government support, making sure that you are looking at ways to diversify as much as possible so that when there’s a crisis, you are more protected, you hedge your bets a bit more. So I think that’s going to be one major, major piece of it.

Boris Kievsky 19:27
That is very similar to an investment strategy, right that if you’re an investor, you want to have a diverse portfolio because, you know, if you’re all in the stock market, the stock market went down pretty sharply over the last few months, right. And most of your wealth could have been wiped out. Similarly, from the other perspective, right, as a nonprofit, you want to have multiple revenue or and funding streams so that if one goes south, temporarily or long term, you can still keep going along with with some But the others in supplement in different ways, right?

Tracy Kaufman 20:02
Yep. And I mean, nonprofits tend to be have been very vulnerable. During crises like this financially speaking, even in the best of times, nonprofits have very slim margins and not that much money saved up in reserves for a rainy day. And then when something like this happens, and you lose a critical funding stream, that is when disaster strikes. So it’s going to be more important than ever to think through finances and operations more carefully than ever to be protected. But at the same time, it keeps getting out there and hustling to make the case for the importance of your work. Because you exist for a reason. The work you do is important and essential for a reason and just learning how to put that into clear jargon free wording that will get people excited, whether it’s a foundation, whether it’s a corporation, whether it’s an individual, getting people excited about oh my money We’ll make results, people’s lives will be better with this money and learning how to tell that story as vividly as you can. doing that, along with that risk averse financial planning, I think will be incredibly important. And then there’s going to be one other thing, which is learning how to collaborate with your fellow organizations more than ever. It’s been a lot of lip service, about the importance of collaboration over the years. And I think at a time like now collaboration is going to be more important than ever when it comes to being able to sustain yourselves. Sometimes it might be a more informal collaboration. Maybe people share office space, at some point, assuming we all get back to physical offices at some point in the future. Or it might be something as major as a merger, some organizations will find that they’ll be able to thrive better if the merge and starting to think about that a little bit more carefully. consolidating resources so that you’re not replicating the same services as another organization. And I think that will help people thrive considerably.

Boris Kievsky 22:09
Finding efficiencies and synergies, right. In terms of office space, I’ve been thinking a lot about that. And I think the CO working model is probably going to shift and nonprofits can take advantage of it to where, you know, everybody doesn’t have to be in the office all the time. And so multiple teams can essentially share the same space on different days or different hours, whatever it might be. So that you have a home base, if you need to go in and have a conference, have an all hands on deck meeting, hands on meeting, whatever that term is. And the other days, you’re all working from home and you’re fine with with zoom or other remote methodologies. So I did want to note come back to Donor Advised funds for a second. Are they very different than say regulatory foundation do they also have to donate a certain percentage or distribute a certain percentage of their funding in any given year?

Tracy Kaufman 23:07
No. So Donor Advised funds are kind of a little bit like an individual donor and a little bit like a foundation. This is a donor advised fund is when a person or a family or what have you, takes a chunk of their wealth. It could be in some places, it’s as small as like $5,000. In other cases, it might be a million dollars. It they vary, and they’re invested in a donor advised Fund, which means this money it is technically committed to go to charity at some point, but it is invested the money grows over time. And whenever the person wants to take a piece of this money and give it away to an organization, they’re able to do that. But there’s not a ton of regulation on Donor Advised funds, while foundations are required to give out at least 5% of their assets each year. Donor Advised fund can go a whole year and give away nothing. So there’s been a lot of controversy about this over time. However, it is a very good sign that right now Donor Advised fund giving is up. Because a lot of money is going there. A lot of the people who used to set up a family foundation or instead using their money for a donor advised fund because it’s much easier to operate than operating a foundation. It’s a lot of work to run a Family Foundation, but it’s very simple and straightforward to run a donor advised fund.

Boris Kievsky 24:34
Do you guys track that at Candid as well and GuideStar and Foundation Center sides of it.

Tracy Kaufman 24:39
We try to collect what information is available on them but there is a lot of secrecy around Donor Advised funds. A lot of the giving is anonymous and that’s what people often like about using a donor advised fund is well they like being anonymous. They like not having every nonprofit in town knocking on their doors at all times. I find it most helpful to think of a donor advised fund the same way as an individual donor, because in some ways they are. It’s, it’s like the Wizard of Oz, or behind the curtain of all that money in that structure. There’s just a person with a lot of money. So you might cultivate a donor advised fund holder, the same way that you would cultivate a high net worth donor. So getting to know people in spheres of wealth and influence, I mean, it. We’re all trying to cultivate that for our donor basis. I in some ways, I guess, that a lot of people who have a lot of wealth, it turns out even if you did not know it originally, that they do, they’re giving through a donor advised fund. So I would say talk to them the same way you would talk to an individual high net worth learner that is going to be the most successful way to do it.

Boris Kievsky 25:50
Cool. So you guys can only collect as much information as you can collect because it’s not all publicly available. It’s not like they don’t need to file 990s or any kind of documentation? Really that’s public? And for the stuff that you guys do track, is there a tool you think nonprofits should be looking at especially right now or in general? What to look at?

Tracy Kaufman 26:13
There’s a lot. If you’re interested in COVID specific information, we do have a pop up site that our data and research staffers have been working on. Funding for Coronavirus pop up site is tracking how much funding is going on out there and who are the top funders where’s the money going? We’ve been tracking tons of information doing a lot of write ups and analysis on what that funding looks like right now. That would be a great resource. And just for general information. If you’re looking for foundation funding, you can always use the Foundation Directory Online, which is our database of over 150,000 different grant making foundations. That will be a very helpful resource for researching foundations if you’re looking to research and nonprofits and the type of work that a nonprofit organization is doing GuideStar will be a terrific resource for doing that. And if you’re just looking for kind of tools for how to strengthen your organization overall, I would suggest grantspace. org. This is where we put a lot of our training classes, our webinars, you can access our online Librarian service there. Whenever you have a question about anything, ask our online librarians and they’re very knowledgeable and helpful. So those are probably be the major resources.

Boris Kievsky 27:31
Those are all great, and we’re gonna make sure to link to all of those in the show notes for this episode. If someone does reach out to a librarian, is there a chance they’re going to hit you? Are you still doing any librarian services?

Tracy Kaufman 27:43
I used to be one of the online librarians but we’ve got a whole team all over the country of people who are doing it right now.

Boris Kievsky 27:51
So what should people do if they want to follow you connect with you further and learn more about the stuff that you’re doing over at Candide? Well, if you want to follow me personally

Tracy Kaufman 28:00
You can find me on LinkedIn. I’m happy to connect and answer any questions you have. You can also find me through a lot of the trainings that take place over on grant space. So definitely follow grant space. If you get on their newsletter list, you’ll be able to keep up with what are the new classes, webinars, what have you that are that are coming up in the future. And my team and I are always happy to be of service. They’re

Boris Kievsky 28:23
Awesome. Thank you so much, Tracy, you’re always so so generous with all the knowledge information that you have. So much of it stored up in your in your head over all these years that you’ve accumulated. I really appreciate it. I’m sure that people will be following up with you on LinkedIn and checking out grant space and all the other great resources that you mentioned, any parting words that you’d like to share with the audience before we sign off,

Tracy Kaufman 28:49
stay strong and remember to talk to your funders call them up today.

Boris Kievsky 28:54
Awesome. Thank you so much, Tracy. And thank you, everybody for joining us today for episode five of the nonprofit You’re a factory. Do check us out on YouTube, on Facebook on all of the major podcast streaming platforms. Let us know what you think. Share your thoughts. Subscribe, download, I don’t know, do anything that you’d like to do with it with a podcast these days. Talk to y’all very soon, I’m sure Bye bye.

Concepts and Takeaways:

  • Foundations are increasing their giving through this pandemic
  • The best story to tell funders now is how you can apply/are applying your mission and programs to the current crisis and beyond
  • Consider your funders your partners, and keep them in the loop as much as possible
  • Learn how to communicate the urgency of your organization’s work at this time
  • Donor Advised Funds are also increasing how much they’re giving right now
  • Collaborate and consolidate as much as makes sense to keep your services going out to the people who need them

Action Steps: What Now?

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About this week’s guest

Tracy Kaufman

Tracy Kaufman

Programs Manager

Tracy Kaufman is the Programs Manager at Candid. Tracy is responsible for building out Candid’s public and education programming, including stakeholder and networking events for New York City’s social sector at both professional and community-based levels. She is a Lead Instructor for Candid’s three-day Proposal Writing Boot Camp and teaches a popular workshop on Outcomes and Measurement. As one of Candid’s training experts, webinar instructors, and a frequent public speaker, she has spoken at conferences, most notably the United Nations, and has represented Candid on numerous panel discussions. Previously, Tracy held positions with the Association of American Publishers and New York Public Library. Tracy earned her Bachelors of Arts from John Hopkins University.