The road ahead for nonprofits, foundations and endowments

By Shelley Fisher, regional executive, east region and Brent Wright, head of institutional consulting

Many nonprofits and foundations –including charitable and philanthropic organizations–have been hit particularly hard by the pandemic. While economic problems have caused demand for their services to increase, these same issues have created funding and operational issues for the organizations themselves.

Many organizations across the United States recorded a similar increase in demand for their services, particularly those that directly serve people in need. The pandemic has caused many organizations to change the way they operate, deliver programs, and raise money.  For the financial institutions that serve these vital community lifelines, as well as the organizations themselves, important lessons have been learned.

SHIFTING FOCUS

In 2020, operating budgets for nonprofits were significantly impacted due to unknowns in planned and future giving, in addition to a shortage of in-person volunteers who often serve as the frontline of an organization’s programming. This added to the ongoing strain on staff who were already struggling to do more with fewer resources.

The erosion of institutional assets and subsequent resource crunch forced many organizations to shift their priorities in 2020, abandoning long-term plans for shorter-term measures designed to shore up their immediate needs. Organizations of all types had to scramble to rethink long established conventions for achieving revenue goals.

Event-driven fundraising, for instance, is critical to the bottom line but with many people working remotely to respect social distancing measures, there has been a marked effect on donations. Galas, which are prominent in the nonprofit world and essential to fundraising, were canceled, postponed, or shifted to virtual. Unfortunately, virtual events did not deliver the same turnout, despite valiant efforts across the board.

As expected, nonprofits were unsure about what to expect from the 2020 giving season. Many nonprofit organizations receive 40 to 60 percent or more of their annual donations during the last quarter of the year and it is impossible to predict what donations will look like by end of 2021.

As we look ahead, nonprofits remain somewhat unsure of how to resume business as usual post-pandemic. Will they be able to have in-person fundraisers at any point? Will donors continue to give, or will donor fatigue set in? How should they budget for a potential decrease in fundraising dollars?

Based on our experiences with our own charitable arm, the Regions Foundation, and the donations of time by our associates, we engage with the fine nonprofits that serve Florida and its residents. We look to understand our community partners, continuously adapt our services to address current events, and provide innovative ideas that will positively impact the community.

Through this ongoing work, Regions has been able to work with 1,935 nonprofit accounts totaling more than $3.5 billion in assets. We have adapted our business model to reflect the current state of the industry – considering our customers are going through this state of uncertainty with us. In determining the appropriate asset allocation structure, the team at Regions can work in tandem with an organization to combine expected levels of risk with the necessary investment returns.

If this trying year has taught us anything, it is that there is no one size fits all approach to planning for the future. The institutional world continues to provide for those in need throughout the pandemic and there are financially savvy ways to give back while being smart with your money. If you are interested in discussing what investment management or asset allocation options are best for you, please contact your local Regions Bank branch.

The importance of reaching out, and having a conversation about financial needs, could be the difference of thriving versus just surviving. Uncertainty might be on the horizon but with the right support system, nonprofits can rest a little easier knowing they’re not in this alone.

Shelley Fisher

Shelley Fisher serves as a Regional Executive for Regions Institutional Services, leading the East Region. She leads a team of Strategists and Relationship Consultants to create investment-based solutions that align with a client’s goals. Shelley has more than 30 years of experience in the industry, spanning endowments and foundations, investment management, and retirement services.

Brent Wright

Brent Wright currently leads the Institutional Consulting team within Regions Asset Management which develops and implements investment solutions for Regions’ institutional client base across the nation. He has a diverse investment background including investment policy development, asset allocation design and implementation, investment manager research, and portfolio analytics.

 

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