Non-profits and charities are on the frontlines of the COVID-19 crisis, plugging gaps in our social support systems to minimize the disease’s impact on the most vulnerable. As demand for their services increases, these organizations are in ever-greater need for cash to carry on — or amp up — their work. 

Many small organizations were already surviving month to month financially before the pandemic hit, said Sydney Piggott, Director of Programs and Projects at YWCA Canada. Member organizations she works with, which include women’s shelters and childcare centres, “won’t survive something like this unless there is more flexibility in the way that they’re accessing funds,” she told Future of Good.

Hearing these concerns, foundations have been looking for more flexible ways of funding through the COVID-19 crisis — for example, by removing or reducing the conditions attached to grants, providing advanced payments, and pushing administrative tasks like reporting down the road.

What impact will these changes have? Is it possible for foundations to enact them across the board? And as the sector rapidly reorganizes to find new ways of working, will grant-making ever return back to normal? 
 

Easing the burden

Traditionally, when foundations give grants, they attach certain restrictions that say the money must be spent on a predetermined project. But with COVID-19 putting unprecedented pressure on grantees, it has become clear that this process may not work.

As the sector rapidly reorganizes to find new ways of working, will grant-making ever return back to normal? 

“It’s time for us to get out of the way,” said Marcel Lauzière, President and CEO of the Lawson Foundation, in a webinar hosted by Philanthropic Foundations Canada. “We know these organizations, we trust them, we have confidence. They know how best to use those dollars right now,” he said. 

The Lawson Foundation and others are trying to help grantees address urgent issues like paying staff and covering rent. “Essentially, the funds that [organizations are] receiving are entirely unrestricted,” Lauzière said.

But foundations themselves need the funds to make this possible. Although global markets have taken a beating, “the stock market is not our endowment,” explained Kevin McCort, President and CEO of the Vancouver Foundation, in the webinar. The Vancouver Foundation’s capital is spread across various investment types, which has allowed them to somewhat weather the storm and “shift into a proactive stance” in helping grantees, he said.

The Vancouver Foundation has created a community response fund in partnership with Vancity credit union, United Way Lower Mainland, and the City of Vancouver. These will be “flexible operating grants,” McCort said, enabling charities to maintain or expand services to vulnerable populations. The fund has already accumulated more than $3 million.

For grantees, the ability to use foundation money for operations, instead of particular projects, could keep them afloat. Operations are “where the key gaps are going to be,” said Piggott. Under more usual circumstances, though, funding tends to be project-based as “funders don’t like to fund direct service provision,” she said. 

Although project-based funding can allow for clearer accountability and easier measuring of dollars against results, said Piggott, “it pushes a lot of the work away from the actual core mission of organizations, which I think is a huge disservice to the organization and the people that it serves.” In a very top-down structure, grantees are forced to mould their work into what they think the foundation is looking for, she said, rather than being guided by what their communities need. 

Communication 

Along with introducing less restricted funds, there are growing calls for foundations to communicate more effectively – both with grantees and each other. “It’s really important to remind our grantees, if we can, that payments will continue,” Lauzière told the webinar. “That certainty piece is really key for them.”

Last year, a survey by the Lawson Foundation found that grantees wanted to hear more from foundations, which in this time of crisis is likely to increase. “They’ve actually been telling us that they want to connect with us more than we have in the past,” Lauzière explained.

Foundations’ expertise can be valuable support on larger economic and policy issues, said Piggott, when charities are busy putting out fires on the frontline. “It’s useful to have an organization that is not in the weeds of everything,” she said. 

Without clarity on funding, including how flexible it will be and how long it will last through the COVID-19 crisis and its aftermath, it is extremely hard for charities and non-profits to manage their work, said Piggott. “There have been varying degrees of communication and varying degrees of actual detail on what that flexibility looks like,” said Piggott. “For some it seems like it’s changing every day.”

“We’re all hoping for a post-COVID world when a lot of these changes will be made permanent.” 

One change that grantees have applauded is the removal or streamlining – at least for the time being – of the “super onerous” application and reporting processes, said Piggott. “For a lot of smaller organizations I support, it’s a huge barrier to overcome,” she said.

“If you have multiple funding sources, it takes up so much time that you could be using to actually deliver the services,” Piggott explained. Foundations also have various different processes, which adds to the confusion. With major member organizations out there, such as Community Foundations of Canada and Philanthropic Foundations Canada, she wonders why there is no collaboration between foundations to find one single reporting tool. 

A new normal? 

It’s often said that changes like these cannot happen overnight, but when faced with a crisis of COVID-19’s scale, radical innovations may be borne out of necessity.

Undoubtedly, it will be easier for some foundations than others to make rapid changes. The Lawson Foundation, for example, has long been accustomed to more flexible grant-making, said Lauzière. “The foundation has always had a philosophy and approach of flexibility with its grantees,” he said to webinar attendees, “so that makes it relatively easy.” 

With the right leadership, this period of unprecedented crisis could be matched with unprecedented innovation in grantmaking. “As scary as it is, it’s actually a really interesting opportunity to have these conversations,” Piggott said. If the sector moves toward less restricted funding in the longer term, she believes there could be “a better balance between support for an actual institution as well as for the programming and projects that they’ll be implementing “

Less restricted funding could become the new normal, she said. “We’re all hoping for a post-COVID world when a lot of these changes will be made permanent.” 

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