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SC nonprofits, vulnerable to downturns, face financial challenges from coronavirus crisis

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Volunteer Amber Dufour and Alicia Duffany with the Lowcountry Food Bank distribute food earlier this month at Revive Church in North Charleston. Grace Beahm Alford/Staff

About 120 people typically come to the Lowcountry Food Bank's emergency pantry in a month. Last week alone, more than 400 came through the door. 

As unemployment spikes, so has demand for food assistance. In just a few weeks, the food bank spent more than $500,000 on food and transportation, according to a notice sent out last week by Pat Walker, its president. 

And with the supply chain strained, it's been challenging to even get access to some items, like meat. 

"As soon as it’s coming in, it’s going out the door," said Brenda Shaw, chief development officer for the organization. 

With the heightened demand comes more overtime pay for warehouse workers and truck drivers and other rising administrative costs. Donations are needed more now than ever before.  

That's been true for other nonprofits, too, even those that aren't on the front lines of the economic and health crisis, as cash reserves run low and traditional forms of revenue drop or disappear. 

At the Children's Museum of the Lowcountry in downtown Charleston, visitors generate about 85 percent of the operating dollars. With the museum closed since March 16, executive director Nichole Myles said that loss of revenue has been a "significant financial challenge."

Now, the museum is juggling raising money to cover operating costs with an ongoing capital campaign for a major renovation and new exhibit project.

Financial challenges

Often short on staff, tight on cash and dependent on donations and grants, not-for-profit organizations are particularly vulnerable during economic downturns, and this one is no different. 

The sector employs about 90,000 workers in South Carolina, according to Together SC, a statewide organization for nonprofits. Charleston County alone is home to more than 450 nonprofits. 

Together SC, along with the S.C. Community Loan Fund, recently conducted a survey assessing the potential financial impacts of COVID-19 on the sector.

What they found confirmed what Together SC president Madeleine McGee had heard from groups across the state: They're hurting, and they'll need funds soon to stay afloat. 

More than half of the 190 nonprofits that responded said that they can operate for no more than three more months without additional revenue coming in the door. Another 29 percent said they could last no more than six months. Just 11 percent could survive past the 10-month mark. 

It's fairly common for nonprofits to have about 90 days worth of cash in reserves, said McGee. If they retain more than that, it could hurt their chances of qualifying for grants, she said.

"A foundation could say they don't need their money if they have all of that in reserve," McGee said. 

Now, many of those groups are facing a ticking clock as reserves run low and incoming cash slows. 

Fundraising continues

Despite the need for funds, some organizations are still hesitant about fundraising right now, McGee said. On a call with nonprofit heads last week, she estimated about half of them were wary about contacting donors. 

At a time that many people are hurting financially, there's fear that asking for money could be seen as insensitive. 

But failing to seek funds now would be a big mistake, one that could potentially shutter some organizations, said Tim Winkler, a consultant and CEO of the locally based Winkler Group. 

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"You cannot afford to stop fundraising right now," Winkler said.

Winkler said he's worked with nonprofits for about 30 years and learned that lesson during the Great Recession. 

While the current situation is unprecedented, Winkler said he's feeling optimistic about the outlook for nonprofits, mainly because he's already spotting a key difference between 2008 and now: Donors are rising to the occasion. 

"They're actually stepping up more readily in some cases than the nonprofits right now," Winkler said. 

According to a survey released this month by the Better Business Bureau's Wise Giving Alliance on the impact of COVID-19 on charities, more than 83 percent of those polled — which included people who donate to a wide variety of charitable organizations, not just those that provide essential services — said they planned to give the same amount or more this year.  

It's possible, Winkler said, that some donors learned from 2008 and don't want to see that happen again.

"There’s more of a sense of optimism, at least from the donors, that we are going to get through this," Winkler said.  

Donors have been stepping up to support the Lowcountry Food Bank, Shaw said, including some who have never donated before. A couple of people have even turned over their entire $1,200 coronavirus checks from the federal government, she said. 

Myles of the Children's Museum said her organization has continued to raise money during the closure and is offering new ways for donors to contribute. Staff members have been posting daily videos on the museum's Facebook page. Each art demonstration, science activity or story time video has an option to make a donation. 

The museum's core donors have come through, too, offering up enough emergency funds to cover a couple of payrolls, Myles said.

Still, many organizations can't be sustained on donations alone and are seeking out loan options.

Capital needs

Nearly three-quarters of the nonprofits that responded to Together SC's survey said they're in need of capital as a result of COVID-19. 

About half of them said loans of $100,000 or less would meet their needs. 

Nonprofits, along with for-profit small businesses, were included in the $350 billion Paycheck Protection Program loan plan in Congress's coronavirus stimulus package. The program offers forgivable loans to keep employees on the payroll.

While it's exciting nonprofits were included in the legislation, it's been difficult for groups to actually take advantage, said Tammie Hoy-Hawkins, president at CommunityWorks, a Greenville-based community development organization.

"Most nonprofits have a banking relationship but may not have a lending relationship," Hoy-Hawkins said. 

Since many banks were only prepared to serve current customers, that's left nonprofits on the outside looking in. 

And now, with the initial $350 million pool already dried up, it's unclear if nonprofits that weren't successful in securing the rescue money will get another opportunity.

"I think the message to D.C. is that we need additional funding for that program," said McGee of Together SC. "The money has to get here by June or it’s too late for 54 percent of our (South Carolina) nonprofits."

Myles said she is "extremely grateful" the Children's Museum was able to get into the federal lending pool. It expects the funds to arrive soon, which means it'll be able to go from being in the first stage of a furlough back to having the full staff working. 

She's optimistic about reopening and still plans to see the renovations and exhibit creations through as planned. 

"It’s not that it’s not hard. It’s really hard," Myles said. "But I think there’s reason to be hopeful."

Reach Emily Williams at 843-607-0894. Follow her on Twitter @emilye_williams.

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