Table of Contents:
Specific to Foundation Type
How can the foundation support our grantees and local nonprofits?
Many foundations in Michigan and across the country have been re-examining their practices and activating a variety of strategies to support nonprofit partners and local communities, adapting to meet emerging and evolving needs while maintaining a long-term view on the organization’s mission, vision, values and ability to respond to future crises.
Over the past year, numerous national partners have highlighted how foundations have changed their approaches in response to COVID-19.
Open communication: Central to being an effective partner and resource during the COVID-19 crisis is communication. Foundation leaders are encouraged to reach out to grantees and other nonprofits to invite a conversation about their needs and how the pandemic is impacting their staff, operations and programs, while also encouraging their outreach. For those foundations who engaged in those dialogues at the start of the pandemic, now one year later this may be a key time to revisit the conversation. Foundations should also review their current communications plan and web-based materials to provide up-to-date information about their grantmaking, access to facilities and other deadlines and descriptions that may have modified.
You can also share COVID resources with grantees:
-The Michigan Nonprofit Association created a webpage that includes COVID-19 resources for nonprofit organizations, centered around advocacy, financial, legal, and personnel support.
-The National Council of Nonprofits has a webpage dedicated to meeting nonprofit needs during the COVID-19 crisis, as well as nationally-relevant resources.
-The Association of Fundraising Professionals and Bloomerang have compiled lists of webinars, articles, and other resources specifically dedicated to the challenges that nonprofits face in fundraising during this period.
Flexibility in grantmaking: As nonprofits continue to grapple with the immediate and long-term impacts of the pandemic, foundations are encouraged to explore opportunities to adjust their grantmaking accordingly.
A report from Candid and the Center for Disaster Philanthropy indicated that nearly 800 foundations have signed “A Call To Action: Philanthropy's Commitment During Covid-19” – a national pledge coordinated by the Council on Foundations which includes a commitment to more flexible funding approaches. The pledge encourages foundations to:
-Loosen or eliminate the restrictions on current grants.
-Make new grants as unrestricted as possible.
-Reduce requests of nonprofit partners, including postponing reporting requirements and site visits.
-Contribute to community-based emergency funds and other efforts to address the health and economic impact on those most affected.
-Communicate proactively and regularly about foundation decision making and response.
-Listen to partners, especially communities least heard, and lift up their voices and experiences to inform public discourse and act on their feedback.
-Support grantee partners advocating for public policy changes to fight the pandemic and deliver equitable and just emergency response for all.
-Share learnings from these emergency practices in order to consider adjusting philanthropic practices in the future.
Whatever flexibility looks like for your foundation, be sure grantees are aware of the changes, especially given the many fluctuations nonprofits are seeing in staffing and priorities, any deadlines or submission processes that change should be clearly described within the foundation’s materials or highlighted in web or social media formats. If the foundation is adding a special or emergency fund in response to COVID-19 or economic volatility, make that information clear to grantees with realistic and responsive deadlines and expectations noted. For foundations that are transitioning back to their standard grantmaking strategy or pursuing a hybrid approach, that information (and appropriate deadlines) should also be clearly articulated to potential applicants.
As foundations reflect on the flexibility they offered through the pandemic – from short-form grant applications to evaluation methods that are far less time consuming for grantees – it is critical to consider whether those changes can be made permanent. Before going “back to normal” foundation trustees and staff may want to consider adopting those shifts as their new way of operating.
Connect and collaborate: Work with other funders, nonprofits and community leaders to strategically address needs within the region. Each partner can bring unique strengths and areas of expertise.
In her article, “How to Help the Most Vulnerable Through the Pandemic” author Lauren A. Smith, co-CEO of a nonprofit consulting firm, and a former doctor and public health official, shares, “Foundations can leverage their considerable convening power to help community stakeholders, business leaders and public sector leaders collaborate to ensure a coordinated and comprehensive response. Raise your voice and help raise the voices of your grantees and the communities they serve—our elected officials need to know what is and isn’t working. Use your influence to advocate for sustaining critical public health and community support infrastructure when we are not in crisis.” However, Smith also advises that foundations tap into existing local structures when possible, to avoid creating confusion or stress in an already tense situation.
In working across diverse populations and geographic regions, foundations and their nonprofit partners will face new and emerging needs resulting from social distancing policies and other non-traditional patterns of activity within the community. For example, school closures impact food programs designed for children and other services that can cause a detrimental economic effect on vulnerable populations. By collaborating with local government, school districts, nonprofits and other partners, foundations can direct funding to these important needs within their community. As the intermediate and long-term effects of the pandemic become increasingly obvious, foundations will continue to play an important role in addressing these challenges for nonprofits and the communities they serve.
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What resources are available to help the foundation think through the longer-term impacts of COVID-19 on our nonprofit grantees?
Our colleagues at the Johnson Center for Philanthropy at GVSU are actively generating blogs and reports from their Community Data and Research Lab to help organizations and donors think through the risks and impact of COVID-19 on Michigan’s nonprofit sector.
In a blog post, Jeff Williams, director, Community Data and Research Lab, Johnson Center for Philanthropy, posits several data-informed thoughts about this crisis and its impact on Michigan nonprofits:
-Extreme flexibility is key. Due to the unpredictable nature of this event, its progression and its magnitude, everyone involved will need to remain flexible and communicate accordingly.
-Nonprofits (and foundations) face several financial threats, depending on their revenue model and mission. Specifically, Williams indicates that nonprofits’ revenue may be impacted due to decreases in giving, a decline in service demand and decreased value in investments. The exact impact of the current financial situation varies by organizational size, dependency on investment income and type of services offered.
-A return to normalcy will likely occur in waves. Based on previous disaster philanthropy scenarios, Williams anticipates that nonprofits and foundations will be called upon to respond in several waves of activity. Essential service nonprofits will serve immediate needs. When the virus curve has flattened, education, housing and human services are most likely to begin to resume more standard activity levels. As “normal” life begins to resume, job training, child care, workforce development and related areas of activity will become more essential, followed later by travel and leisure activities at a point when full business activity can also resume.
The Johnson Center for Philanthropy and other partners are actively tracking nonprofit data to better understand how donors and foundations can best respond to emerging nonprofit challenges. CMF will continue to update and post these sources as they become available.
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What impact is the COVID-19 crisis having on nonprofit cash flow? How can foundations help?
Funders across the philanthropic sector have expressed concern about nonprofits’ cash flow throughout the COVID-19 crisis. With increased service demand, shuttered programs and events, and unpredictable revenue, nonprofits are facing financial uncertainty with no precise timeline for returning to “normalcy” in regard to their operations.
In a blog post, Jeff Williams and Tamela Spicer (Johnson Center for Philanthropy at Grand Valley State University) provide insight into the state of Michigan nonprofits’ cash and cash equivalents going into the COVID-19 crisis.
These are just a few of the key takeaways and common themes we read:
The median number of months of cash on hand for Michigan charitable nonprofits is 2 months – 5.5 months including cash and cash equivalents.
The larger the nonprofit by revenue, the less cash (or cash and savings) on hand – sometimes falling to dangerous levels. While smaller nonprofits oftentimes had well over two months of cash on hand, very large nonprofits measured their cash on hand in days or weeks, rather than months.
Even with minimal event or paid admission revenue, arts organizations were more likely to have “rainy day” funds while health and human services nonprofits had relatively low median amounts of cash on hand.
Younger organizations have more months of cash on hand than older organizations. Nonprofits founded before 1975 had only 1.1 months of cash on hand, in comparison to 2.5 months for those founded in 2015 or later.
One third of Michigan’s charitable nonprofits have less than one month of cash on hand, while employing two-thirds of the employees in the sector.
For funders concerned about nonprofit cash flow, this information is timely and important for building future strategy and grantmaking that impacts nonprofits in the near future. Staff from CMF and the Johnson Center suggest the following as potential action steps for funders:
Grantmakers should reach out to grantees to determine their cash needs, including well-established and large organizations.
For foundations concerned about helping to keep the nonprofit sector’s workers employed, they should consider the impact of cash on hand as an indicator of which organizations need assistance.
Consider how grant flexibility toward operational or staff costs can provide a valuable lifeline to nonprofits.
Support capacity building for nonprofits in the near and long terms.
Help convene nonprofits to help address needs, whether that involves meeting the basic needs of community members or the cash flow concerns of keeping nonprofits’ doors open.
The Johnson Center presented a webinar, “In the Time of Coronavirus: What the Data Say About the Risk to Nonprofits – A Conversation for Funders” on April 29, featuring Jeff Williams, director of the Community Data and Research Lab (CDRL) at the Johnson Center for Philanthropy in a conversation with CMF President and CEO Kyle Caldwell. CMF members interested in accessing the event recording are invited to contact CMF.
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How can we help our nonprofit grantees think about building resiliency into their strategy and programming?
It is critical organizations consider not only high-urgency, immediate needs amid the COVID-19 crisis, but also their recovery and longer-term strategy. The term “resiliency” has become synonymous with the long-term stage of COVID-19 and the philanthropic sector’s response to it.
The S.D. Bechtel, Jr., Foundation developed a series of materials centered around the theme of organizational resiliency. With the many shocks and disruptions that have come to define the COVID-19 crisis, these tools address the heightened interest in resiliency as an asset for nonprofits and their funding partners. Based on this research, resilient nonprofits shared seven defining characteristics:
- Purpose Driven: A galvanizing commitment to mission, meaning, and values.
- Clear Eyed: Challenges faced head-on, while maintaining faith in ultimate success.
- Future Oriented: Forward-looking planning practices for navigating an uncertain future.
- Open: Intentional communication with internal and external stakeholders.
- Empowered: Inclusive organizational culture that embraces shared leadership.
- Committed to Self-Renewal: Space created for rest and rejuvenation.
- Connected: Supported by personal relationships, institutional links, and community networks.
Grantmakers should consider how they can help to cultivate these attributes within grantee nonprofits.
As Diana Scearce describes in Resiliency at Work, “At their best, resilient nonprofits respond to disruptions as tipping points, rather than tragedies, finding new opportunities to learn, grow, evolve, and, ultimately, better serve their communities.” Funders can help cultivate resiliency in their grantee nonprofits by following good grantmaking principles, including:
Come to the table: Be a student of nonprofits and their context in order to be able to offer meaningful support in times of disruption.
Stay at the table: Listen intently and remain committed, while offering support, even if this means sitting back to give nonprofits the necessary space and time to navigate periods of disruption.
Stand in the nonprofit’s shoes: Commit to understanding the foundation’s biases and blind spots, which may impact its understanding of nonprofits’ challenges.
Be in open dialogue with nonprofits: Invite authentic conversation and learn together with nonprofit grantees in order to prepare and respond to current and potential disruptions.
Keep nonprofits’ needs at the center: Focus on the unique context and needs of nonprofit organizations, particularly in times of turmoil and disruption. Funding initiatives may need to be reevaluated or set aside in the meantime.
In considering the immense challenges of the COVID-19 crisis, these principles are a good reminder of how funders can come alongside nonprofit grantees to focus on the big picture goals that foundations and nonprofits share to create vibrant and healthy communities.
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What communication guidelines might we consider when connecting with our stakeholders? Do you have examples?
CMF has put together these general suggestions to consider when connecting with your stakeholders (i.e. community members):
- Stay people-centered with a focus on community, health and safety.
- Recognize the equity issues involved in the crisis, including the impact on vulnerable populations.
- Consider the role that all play in community resiliency; this may be a long journey with many phases of crisis to address.
- Acknowledge the nonprofits you work with, with the foundation as a partner and supporter.
- Acknowledge your partners (and name some i.e. United Way, local officials) who are mobilizing to ensure those most in need in the community have access to care, resources, etc.
- Communicate how you’re responding, including how you’re working with grantees and changes you’ve made to your procedures.
- Include action steps of what residents or donors can be doing, and how they can help or contribute.
- Provide links and resources to only the most reliable sources, i.e. CDC, WHO, state’s COVID-19 site.
- Let your stakeholders know how they can learn more about the foundation’s work and/or when you’ll communicate next.
The following are just a few examples of communications that foundations are sharing with stakeholders:
The Skillman Foundation has shared with CMF a blog post with their response to COVID-19.
The William Davidson Foundation has shared with CMF its e-mailed message responding to COVID-19.
The Greenville Area Community Foundation (GACF) is one of many community foundations that has launched a webpage specific to COVID-19. GACF’s site includes a direct link to donation information through the local United Way and an overview of the foundation’s response to this pandemic.
The Center for Effective Philanthropy (CEP) has also provided a sample COVID-19 Input Survey that foundations can use with their grantees. This survey instrument is designed to gauge nonprofit challenges, needs and resources during the COVID-19 crisis.
The Communications Network has put together a “COVID-19 Crisis Comms Triage Kit” with sample messaging, recommendations, and resources useful to communications staff across the philanthropic sector.
Looking for additional communication examples? Contact CMF!
Additional communication resources:
The Communications Network is a national community of foundation and nonprofit communications professionals. They have a variety of resources related to crisis and public health communications available on their website, and they are currently offering a new listserv open to anyone, including non-members. You can also connect with Michigan-based in this community peers via the ComNetworkDetroit group on Facebook.
Communications professionals from more than 50 U.S. community foundations discussed best practices for messaging their communities and internal teams about the COVID-19 crisis during a March 12, 2020 call, organized by the Community Foundation Public Awareness Initiative. They have provided a recording of the call as a member resource.
The Michigan Society of Association Executives, of which CMF is a member, has provided a listing of partners who can support communications, public relations and event planning supports. Please contact Bridget McGuiggan, chief strategy officer, CMF, for that resource or other communication-related needs.
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What are some of the ways nonprofits are thinking creatively and reaching out to communities while serving their mission?
Some nonprofits are serving on the front lines in order to meet urgent health and social service needs. Organizations like Gleaners and Kids’ Food Basket are working to bring food to children out of school, expanding upon their existing operations through increased donations and volunteers.
Other nonprofits and institutions are thinking about their missions in new creative ways. While some museums remain closed and venues have had to cancel in-person public performances, many arts institutions have found creative ways to reach audiences virtually. As examples, the Metropolitan Opera launched a “Nightly Met Opera Stream” for free and PBS Kids built upon its strengths in educational programming to offer daily activities and tips for children home from school.
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What are some ways that foundations are assisting individuals?
As part of the philanthropic sector’s response to the COVID-19 pandemic, foundations are actively looking to support individuals directly impacted by the health effects of the pandemic or by social distancing, as well as others suffering from widespread economic effects on nonprofits and businesses.
The Council on Foundations also has a useful webpage dedicated to addressing how foundations can create hardship funds and provide assistance to individuals.
Robin Ferriby, a CMF member and senior counsel at Clark Hill, PLC, has also written an article entitled, “Considerations in Supporting Individuals during COVID-19 Pandemic,” that provides an overview of relevant laws that influence how foundations and employers can assist individuals.
United Way: Many foundations are looking to regional partnerships to ensure that individuals receive the assistance they need. A number of Michigan community foundations are teaming with their local United Way and other regional partners to meet the needs of their community. The United Way has an established system within most regions of the state to directly address basic needs, while foundations are able to support and provide additional capacity to meet widespread need.
Community Action Agencies: A network of 28 community action agencies service all 83 counties within Michigan, providing vulnerable populations with critical services throughout the relief and recovery stages of the COVID-19 pandemic. The DTE Foundation made a $500,000 matching grant to Michigan Community Action agencies, to provide emergency food and housing assistance to individuals across the state.
Other Nonprofits: Foundations are also working with their existing strategic partners to reach vulnerable populations within their communities. Through emergency and urgent need funds, community funds are specifically reaching the organizations that have established connections to the individuals who need assistance.
Employees: The President’s declaration of a national emergency under the Robert T. Stafford Disaster Relief and Emergency Assistance Act for the COVID-19 pandemic triggers the provisions of Internal Revenue Code (“IRC”) Section 139. This section provides guidance to employers for providing “emergency relief payments” to staff without those payments being considered as taxable income to the employee and exempts such payments from being subject to unemployment insurance taxes to the employer.
For example, during this type of extreme need if employers should provide additional medical assistance not already covered or child care through direct employee payments, those would not be taxable to either the employee or employer provided that it meets the eligibility qualifications as outlined. Further, during the Ebola outbreak in 2014, the IRS issued a notice which references Publication 3833, Disaster Relief: Providing Assistance Through Charitable Organizations. This publication provides additional guidance on how charitable organizations, including employer related private foundations, public charities and donor advised funds can make relief payments to individuals or otherwise support these relief efforts. Specifically, the publication offers guidance on establishing disaster relief programs to cover basic necessities for the general public and how private foundations can support employees using foundation assets without being considered self-dealing or requiring additional IRS approval.
Disaster grants for individuals, as well as employee hardship funds, are not designed to duplicate Federal Emergency Management Agency (FEMA) payments or insurance payments to individuals or families. As a result, emergency relief from community foundations, rapid relief funds and other charitable efforts are designed to help cover the remainder of basic needs created by the pandemic. An individual applying for this category of funding may receive assistance with medical expenses, funeral expenses, temporary housin, or travel expenses for family members assisting a victim of a disaster.
The IRS Publication 3833 provides further clarify for employee hardship funds and similar efforts that are designed to benefit employees and their immediate family members. This means that these funds can be used to provide assistance to the employee directly, in the case of the disaster impacting the employee’s spouse or children, or to assist the family in the unfortunate case of the employee’s injury or death.
As described in more detail in this memo drafted for corporate clients by Jennifer Oertel, a CMF member, shareholder with Bodman PLC and CMF’s Impact Investing Expert in Residence, the rules against impermissible private benefit, self-dealing, and recipient charitable class still apply. It is posted for informational purposes only and not intended as legal advice.
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What are some examples of how foundations are assisting local and small businesses?
Foundations are actively using their local connections and partnerships to assist businesses facing financial challenges.
Grants and Loans: Foundations can provide disaster relief payments to for-profit businesses, under certain conditions. These payments can be made if they fulfill a charitable purpose, provide a “reasonable means” of accomplishing that charitable purpose, and any benefit to a private interest is incidental. Grants made to for-profit businesses will require expenditure responsibility.
Robin Ferriby, senior counsel at Clark Hill, PLC, provided guidance around the question of how foundations can provide disaster relief to for-profit businesses in response to the COVID-19 pandemic.
Chambers of Commerce and Economic Partnerships: Foundations can work in collaboration with chambers of commerce, local governments and businesses as active partners in addressing community needs. As part of a network of institutions, foundations can assist in supporting the economic welfare of small businesses and their employees.
(Please note that foundations may face restrictions for some economic development grants or those directed to non-501(c)(3) organizations. The Council on Foundations has a useful webpage that describes community foundations’ options for giving to chambers of commerce and other non-501(c)(3) organizations. Consult with tax or legal counsel before making these grants.)
Foundations have found additional ways to support local businesses, such as ordering food from local restaurants and continuing to rely on established partnerships for office space and services.
CDFIs: Partnerships with Community Development Financial Institutions (CDFIs) are also an important means for foundations to support small businesses. Through Program Related Investments (PRIs) and other avenues, foundations can help local and small businesses gain access to loans that ensure they can survive through this period of economic volatility.
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What other resources are available related to support for small businesses?
The Michigan Economic Development Corporation (MEDC) has a number of resources and funding opportunities available for small businesses and Michigan-based organizations. MEDC regularly updates their COVID-19 webpage to include active support programs.
MEDC’s Pure Michigan Business Connect program is expanding its free, online procurement platform by now including donations from suppliers capable of filling health and human service needs across a broad range of product and service categories. The platform will provide direct access to businesses within the state providing supplies including personal protection equipment, food, medical devices, paper products, cleaning equipment and more. The platform is also offering a place for companies with manufacturing capabilities for personal protection equipment to indicate which items (i.e. masks, gowns, ventilators) they are able to produce, along with quantity and timing detail. Service providers seeking access to supplies and suppliers who have items to support COVID-19 response efforts can learn more on the Business Connect website.
CMF was among those who submitted comments to the Federal Reserve urging that nonprofits be included in the Main Street Lending Program to support lending to small and mid-sized businesses in the wake of the COVID-19 pandemic. The program would offer four-year loans to companies employing up to 10,000 workers or with revenues lower than $2.5 billion.
Additional resources on COVID-19 related to business are available from Business Leaders for Michigan, the Small Business Association of Michigan, and the Michigan Chamber of Commerce.
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How can I report suspicious activity during the COVID-19 crisis, such as illegitimate PPE suppliers, charity scams, hoarding and price gouging?
While actively assisting nonprofit grantees with acquiring personal protection equipment (PPE), it is important to be aware of illegitimate suppliers. Other scams and fraud have also been reported during the COVID-19 crisis, including the emergence of requests from fake charities.
The Department of Justice has a webpage dedicated to "detecting, investigating, and prosecuting wrongdoing related to the [COVID-19] crisis." Much of this activity can be included in two categories: “coronavirus fraud” or “hoarding and price gouging.”
As foundations assist organizations in obtaining PPE, the Department of Justice is actively working to prevent hoarding and price gouging of these critical materials. By pursuing the bad actors who are amassing critical supplies, hospitals, medical facilities and other frontline organizations are able to obtain the necessary supplies they require to combat COVID-19.
If your foundation has encountered or become the victim of a scam or attempted fraud involving COVID-19, or have information on hoarding or price gouging of critical supplies, please contact the National Center for Disaster Fraud hotline at 866-720-5721 or email [email protected]. Cyber scam activity can be reported online.
For foundations seeking out PPE for their employees, MEDC has created a portal to connect Michigan employers with PPE producers to ensure safe in-person operations. More information on this initiative is available through a state press release. The MEDC Procurement Platform portal is available here.
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What is a rapid relief or response fund?
In response to COVID-19, many communities are forming rapid relief or response funds. They are oftentimes intended to meet the needs of a specific geographic area or of a field of organizations. According to a report by Candid and the Center for Disaster Philanthropy, community foundations and their rapid relief funds provided 49% of grants made to address the COVID-19 pandemic. Over 860 rapid relief funds were created across the United States in the first half of 2020, with two-thirds of those funds established at community foundations.
According to the Council on Foundations, these funds share the following features:
Provide one-time general operating support grants.
Accept applications and provide grants on a rolling basis.
Include funding for the immediate economic impacts being experienced by so many, such as those who have suddenly lost their jobs or had their hours reduced, those who cannot work because they are caring for children whose schools have closed and those facing new healthcare costs for testing and treatment.
Clearly delineate who is not eligible.
Collaborate with community partners to understand the pandemic impacts in order to deploy funds effectively.
Have easy-to-find information about how individuals, businesses and others can donate to the fund to support their community.
A listing of known relief funds active within the state of Michigan that are either led or supported by CMF members are available in our Resource Central page. If you are aware of a relief and response fund led by or supported by Michigan philanthropy that is not listed, please contact CMF.
What is the value of operational versus programmatic grants in this environment?
Several sources have recommended that foundations prioritize operational grants. Within the current environment, both operational and programmatic grantmaking strategies are exceptionally valuable and both are needed across the nonprofit sector to ensure the survival of as many organizations as possible through a period of economic volatility and community need.
Programmatic grants make up a significant portion of modern-day grantmaking strategies. Nonprofits depend on this funding to implement cutting-edge programs and drive impact for the populations they serve. In times of uncertainty and upheaval, nonprofits will be actively implementing innovative strategies to serve individuals within their communities. They are depending on foundations to continue to provide this type of support at or above their current levels.
Operational grants are somewhat less common within an impact-driven grantmaking strategy. However, nonprofits facing uncertain financial situations (given fluctuations in endowments, fewer people through the door, etc.) greatly benefit from funding that ensures they can keep their doors open and their staff employed. Grants intended to address operations generally allow nonprofits much-needed time and resources until their financial situation and local community are able to stabilize.
In helping to respond to the pandemic in Washington, the Seattle Foundation created a rapid response fund in collaboration with philanthropy, government and business partners to provide operating grants to local nonprofits..
They explain, “One-time operating grants will fund organizations that have deep roots in community and strong experience working with residents without health insurance and/or access to sick days, people with limited English language proficiency, healthcare and gig economy workers, and communities of color, among others. The Fund is designed to complement the work of public health officials and expand local capacity to address all aspects of the outbreak as efficiently as possible.”
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How can a foundation or corporation contribute financial, material or in-kind donations to assist with the state of Michigan’s response to COVID-19?
Financial, material and in-kind donations to aid the fight against COVID-19 at the state level can be directed to the Michigan Community Service Commission at [email protected] or 517-335-4295.
The current most pressing needs include:
-Surgical masks N95-N100
Large corporations or individuals who want to DONATE (in-kind services, manpower etc.) can contact [email protected] (EOG POC).
Businesses who want to SELL protective gear listed above, please email [email protected].
All other business needs related to PROCUREMENT and or SUPPLIER CAPABILITIES, please direct them to https://pmbc.connect.space/covid19/forms.
Businesses who are asking how they can help with PROVIDING SPACE like warehouse space or hotels for self-quarantining or makeshift hospitals, camp group, etc. can contact [email protected].
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How can the foundation make international grants to address the global impact of COVID-19?
Our partners at the Council on Foundations have created a “Tips and Resources for Responding Globally to COVID-19" webpage that serves as a useful starting place for making international grants. Some of their tips include:
Understand the legal basics of international grantmaking and IRS regulations.
Be patient with nonprofit partners, especially in a crisis situation.
Use an equivalency determination, when possible.
Try to streamline your application and reporting processes.
Use local networks and foundations for support.
Consider using a U.S.-based intermediary organization.
Think long-term through multi-year, operational or infrastructure grants.
Approach global grantmaking with humility.
Foundations looking for additional resources on international grantmaking are invited to contact Ask CMF for customized support.
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Can Donor Advised Funds (DAFs) be used to support the COVID-19 response?
Yes, donor advised funds can be used to support COVID-19 response.
Council on Foundations (COF) notes that in general, DAFs can continue to follow many of the same rules and restrictions that are typically in place and can be used to provide support through domestic public charities. Expenditure responsibility may be required for grants to supporting organizations or non-501(c)(3) organizations. Grants to organizations outside of the U.S. may have additional requirements.
With interest in supporting local businesses at an all-time high, some foundations have asked if DAFs can be used to further this activity. The IRS publication 3833, “Disaster Relief: Providing Assistance through Charitable Organizations,” provides specific detail about the types of charitable purposes that can be directed to businesses, with many similar constraints as found in supporting general economic development purposes. Whether using a DAF or other charitable mechanism to support this activity, please consult with qualified tax or legal counsel to ensure compliance with the IRS’s definition of allowable charitable activity in this area.
Typically, DAFs cannot be used to assist individuals. With the enactment of the Stafford Act, employer-sponsored DAFs have an exception to benefit employees and their families who are victims of a qualified disaster. The Council on Foundations has outlined the requirements of employer disaster relief funds of this type.
Please consult with qualified tax or legal counsel to learn more about the particular circumstances and criteria involved in this form of activity.
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Can foundations make grants to crowdfunding campaigns for COVID-19 relief?
It depends. According to the Council on Foundations, most crowdfunding platforms (including GoFundMe), are not registered as 501(c)(3) public charities. Others, such as GlobalGiving, are distinctly charitable crowdfunding platforms and have their own charitable designation.
On most crowdfunding platforms, foundations can make grants to pages and accounts that are set up by a charitable organization to benefit that organization. The platform is a different method of accepting the grant for the nonprofit.
Crowdfunding campaigns that are set up by an individual or non-charitable entity must be treated as a grant to a non-charity, even if the person setting up the fund intends it to benefit a charity. The foundation would need to obtain proof of the grant’s charitable purpose, such as documentation of the grant funds reaching the charitable organization. Grants made from donor advised funds would need to exercise expenditure responsibility for this situation.
Please note that some online giving tools charge a fee for the service. This fee may be charged to the nonprofit or donor.
The COVID-19 crisis has resulted in a significant increase of “fake charity” scams and similar fraud. Please be cautious in vetting charitable giving and grantmaking opportunities, especially before making an online gift or a grant outside of your regular grantmaking procedures. If your foundation has encountered or become the victim of a scam or attempted fraud involving COVID-19, please contact the National Center for Disaster Fraud hotline at 866-720-5721 or email [email protected]. Cyber scam activity can be reported online.
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How do we create or use a discretionary grant program to make emergency/disaster grants?
As an alternative to a formalized emergency grantmaking policy, some foundations (more frequently private or family foundations) have the option of using a discretionary grant process to enable more rapid, disaster funds to be disbursed. Discretionary grant programs oftentimes provide trustees and/or senior staff members with a pre-designated amount of funding they can grant to organizations of their choice. Sometimes these grants are limited to the foundation’s existing funding goals, while other institutions allow for broader charitable grants to be made. Foundations also vary in whether application or reporting forms are required for these gifts.
Discretionary grant programs can work as an alternative to emergency/disaster grantmaking policies, as they frequently have a less rigorous grantee application and board approval process. In some foundations, these grants can be approved by the CEO or senior staff, which allows for funds to reach nonprofits quickly and efficiently.
If your foundation is interested in exploring discretionary grants as an option, the National Center for Family Philanthropy has a webpage dedicated to discretionary grants, including sample policies and forms.
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How are foundations assisting nonprofits with cash flow issues?
Foundations are actively assisting nonprofits with cash flow issues, especially as many organizations are temporary closed or facing unprecedented demand for services.
Cash Flow Loans: The Ann Arbor Area Community Foundation announced a program for short-term cash flow loans for local nonprofits, up to $50,000 for each organization. Other community foundations throughout the state are also exploring cash flow loans for local nonprofits, including through the use of Program Related Investments (PRIs).
Operating Support Grants: Many foundations throughout the state are looking at ways to prioritize operational support for nonprofits. Realizing that some nonprofit programs are essential to meeting basic needs or ensuring the health and safety of communities, foundations are actively prioritizing their grantmaking to ensure that nonprofits receive critical funding to continue operations and meet demand.
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How can foundations provide assistance to nonprofits, beyond direct grants?
Jennifer Oertel, CMF Impact Investing Expert in Residence, wrote a blog post entitled, “Impact Investing as a Tool for COVID-19 Economic Recovery” outlining a number of examples of foundations assisting nonprofits and local businesses beyond standard grantmaking options, including impact investing, nonprofit loan programs and innovative donation activity.
Impact Investing: Michigan Women Forward (MWF) is both an investee and an investor, raising funds from various investors through loans and in return loaning those funds to small, mainly women-owned businesses. MWF has reached out to each of its investees to proactively offer support and ask what they need, offering support such as no-penalty loan extensions and relief from payments for the next 90 days (to be re-evaluated depending upon length of the stay-at-home mandate). MWF also created an online assistance program to serve its target population virtually. MWF’s supporters have been generous in their contributions to support this outreach.
The Midland Area Community Foundation (MACF) is raising donations to support its “COVID-19 Impact Investing Project Fund.” The fund offers 0% loans to small businesses in Midland County that are in jeopardy due to the pandemic to provide them immediate short-term assistance. Through the loan fund, coupled with a COVID-19 Response Fund (providing donations), MACF has pledged $1 million in COVID-19 relief, including $250,000 in matching funds. In addition, it has convened a coalition of philanthropy, government, educational and business partners to provide a collective response to COVID-19 in Midland County.
Nonprofit Loan Programs: The Ann Arbor Area Community Foundation (AAACF) launched a short-term cash flow loan program that is providing short-term (up to 180 days) cash flow loans of $5,000 - $50,000 to charities based in, or primarily serving, Washtenaw County. The loans will be made on a rolling basis from a revolving fund of $500,000. This impact investing initiative complements the community foundation’s grantmaking to support COVID-19 response, relief and recovery efforts. AAACF reports it has funded over $1 million in grants and $245,000 in loans to local nonprofits, as of the end of April.
Innovative Donation Activity: Mission Investors Exchange is actively tracking innovative approaches nationally, such as corporations using their purchasing power to secure bulk personal protection equipment (PPE) to donate to state procurement officials and factories retooling to produce needed PPE, with states and donors aiding efforts by chipping in for shipping costs or raw supplies. Companies are also providing technical assistance to organizations seeking and applying for assistance (including navigating the CARES Act benefits and determining which loan options to pursue), and many funds have launched to provide loans and grants to small businesses and charities. MIE maintains an ongoing list of community sourced ideas to meet the COVID-19 crisis with impact investing.
The Dorothy A. Johnson Center for Philanthropy at Grand Valley State University invites CMF members and partners to highlight innovations happening in the philanthropic sector as a response to COVID-19 and the economic crisis, including their own organization’s work and innovations seen from other nonprofits and funders. The information provided via this online form will be shared back with the field.
CMF members seeking ideas or technical assistance with impact investing are invited to reach out to Expert in Residence Jennifer Oertel.
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How can funders support efforts connected to food access for children and vulnerable populations?
CMF’s March 23, 2020, issue of Weekly Download highlighted the challenge of ensuring food access and distribution systems to reach the state’s children and vulnerable populations. The staff of the Office of Foundation Liaison recommended several ways that philanthropy can support efforts around food access:
-Stay informed and coordinate with your local/regional partners: Michigan philanthropists and nonprofits know their food banks and schools. In this early phase of the crisis, there is more happening on the local level that funders can immediately engage in as state and federal responses materialize. Advocate for coordination across siloes, establish collaborative tables to identify needs and responses and share your activities with CMF as we work more broadly to shape informed policy, identify roles for philanthropy and share effective responses with your funder colleagues.
-Consider direct financial support: The Food Bank Council of Michigan shares, “The network of Feeding America Food Banks are on the front lines of COVID-19 and are distributing record amounts of emergency foods to all those affected by the pandemic. These food bankers and their teams are courageous, tireless and dedicated to meeting the need for as long as the crisis lasts.” The Consumers Energy Foundation, a CMF member, made a $250,000 donation to the Food Bank Council of Michigan. “With schools and businesses closed and many grocery store shelves left bare, local nonprofits are playing a critical role in helping those in need,” Brandon Hofmeister, Consumers Energy Foundation president, said in a news release.
-Be creative, be flexible and innovative: These unprecedented times call for philanthropy to leverage its intellectual capital, flexible funding and thinking, and networks to meet needs in new ways. In addition to needs specific to food distribution, these routes represent an infrastructure to reach Michiganders and could be used to make other goods and services available.
-Maintain the long view: The crisis is magnifying many of the systemic deficiencies on which philanthropy has been focused for years. Michigan’s Asset Limited, Income Constrained, Employed (ALICE) population is falling into a safety net that is already filled with our most vulnerable populations. Loosened state and federal policies during an emergency such as COVID-19 represent what philanthropy and its partners advocated for prior to the crisis. Eligibility for services has increased, reimbursement rates for programs have increased, training and credentialing has been streamlined, etc. How can we emerge from this crisis in a strong position to actualize systemic and policy improvements?
The Office of Foundation Liaison is working closely with the governor’s office and stakeholders to monitor, coordinate and share information on needs and gaps in food distribution during this crisis. If you have information to share about challenges your foundation or community, or effective work you and colleagues are implementing, please message Stephen Arellano with the OFL.
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What resources are available for funders looking to support efforts connected to early childhood and childcare?
The Early Childhood Funders Collaborative (ECFC) has built-out a page of resources specifically for funders whose grantmaking includes early childhood needs. ECFC advises, “Philanthropy should consider how to target investments to have the most impact, augmenting and supplementing other public and private responses without reducing the responsibility and obligation of the public sector.” They have identified a preliminary list of emerging needs, curated a growing list of sample materials from funders nationally and identified tools specific to advocacy.
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What resources are available to find out more about the philanthropic sector’s response to COVID-19?
Candid and the Center for Disaster Philanthropy (CDP) are tracking the sector’s response. According to Candid and the Center for Disaster Philanthropy’s report, “Philanthropy and COVID-19 in the First Half of 2020” over $11.9 billion has been directed to COVID-related efforts in the first six months of 2020. Candid's disaster funding map tracks giving to disasters, including giving to COVID-19.
The Council on Foundations is asking foundations to share their responses to COVID-19 through a pair of forms on its website. Data from the surveys will be shared in aggregate as resources to gain a better sense of what’s happening in the field. The COF resource hub includes updates, announcements and other tools, as well.
The Center for Disease Philanthropy’s COVID-19-dedicated webpage includes information on impact, critical needs and how to help.
The Chronicle on Philanthropy has made their COVID-19 coverage free of charge.
The Community Foundation Public Awareness Initiative has launched a webpage to track the responses of community foundations nationwide.
National Center for Family Philanthropy (NCFP) and Giving Compass are working together to track the responses of family foundations nationwide.
Foundant Technologies has launched an interactive dashboard and map representing its clients’ COVID-19 funding.
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How can the foundation change existing grant agreements to allow for unrestricted use of funds or for other purposes, as a result of COVID-19?
Even with COVID-19 impacting foundations and nonprofit operations, the foundation can follow existing internal policies or procedures that influence how grant agreements are amended. If these policies do not provide for a rapid response approach to amendments, internal discussion with foundation leadership should take place to determine appropriate measures for addressing changes to existing grants and potential temporary changes to internal procedures.
Generally, grant agreements can be changed via an amendment document signed by both the foundation (grantor) and the nonprofit/recipient (grantee). This amendment may be formatted as a letter or relatively short document, which should be saved along with a full copy of the original grant agreement. It is important to maintain written documentation that records the mutual agreement of both the foundation and the grantee in regards to any changes being made to the original grant agreement. In some cases, amended grant agreements may be able to be signed electronically or via email, although this activity varies by state.
The COVID-19 situation may result in changes to grant agreements, in such areas as:
-Changes of grants from restricted to unrestricted use of funds.
-Extending the time period in which grant dollars can be used.
-Influencing the goals or scope of work being carried out by the nonprofits with the grant dollars.
-Use of grant dollars for general operational, rather than programmatic, purposes.
In making changes to existing grant agreements, please ensure that all legal restrictions on the use of grant dollars are still maintained. For example, private foundations still face restrictions on the ways in which they can provide grants to individuals or for certain advocacy/lobbying purposes.
The Council on Foundation has provided a sample agreement intended to convert project grants to general operating support.
Please consult qualified tax or legal counsel for clarification on grantmaking procedures outside of standard activities.
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How can our foundation think through the complex issues of spending policies, payout rates and grantmaking strategy to the COVID-19 outbreak and related economic volatility?
The complexity of the COVID-19 pandemic and related global economic volatility has led some foundations to reconsider their existing grantmaking strategies and grant budgets. With communities and nonprofit grantees facing numerous challenges related to the COVID-19 situation, grantmakers are being called upon to provide short-, medium- and long-term funding, sometimes in ways that fall outside of their standard grantmaking strategies and procedures.
Exponent Philanthropy noted in a blog post that small-staffed foundations nationally are considering ways to provide extra or advanced funding to nonprofits. While funders are required to follow a 5% minimum distribution requirement, many funders indicated that they were considering making grants beyond that level in this time of crisis.
The National Center for Family Philanthropy encourages foundations to think about their long-term strategy and approach to the COVID-19 situation. They point to creative solutions being suggested by family foundations nationally, including building budgets for contingency grants, revisiting the question of perpetuity, examining current spending policies and taking a long view of the foundation’s assets. Research from the IU Lilly Family School of Family simulated the impact of differing payout rates which showed that foundations in these models could sustain themselves, even while providing additional grants during recession periods.
Examining spending policies is a particularly important step, according to Dimple Abichandani of the General Service Foundation. In her article for the Stanford Social Innovation Review, Abichandani indicated that the General Service Foundation adapted its previously traditional spending policy to account for external factors that influenced their mission and values. This approach allowed for a “balancing test” that enabled the foundation to respond to current needs and opportunities. In addition to elements of a traditional spending policy (investment returns, operating expenses and perpetuity considerations), the General Service Foundation also began to account for growth goals, meeting current needs, organization mission and grants/programmatic needs. This approach may provide some foundations with a means to reevaluate their spending policy to account for the complex challenges presented by COVID-19.
In a blog post by Candid Vice President for Knowledge Services Larry McGill, “Foundations and the Great Recession: Context for Our Current Crisis” McGill reflects that in considering how we respond to the current pandemic and economic crisis, we are “not starting from square one” given some similarities to the financial impact of the Great Recession. He points to the efforts of foundations at the time in minimizing the impact on nonprofits by holding their giving steady or increasing payout rates to meet needs. Additionally, the Great Recession provides foundations with a modern-day template to meet the needs of vulnerable populations, use asset averaging to ensure steady giving and encourage community foundations and other grantmakers to play a significant role in nonprofit survival and recovery from periods of economic volatility.
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Can the foundation make changes to existing endowment funds or its spending policies as a result of the COVID-19 crisis?
Robin Ferriby, senior counsel at Clark Hill, PLC, provided guidance around the question of using endowment funds to respond to the COVID-19 pandemic. These questions may be of particular concern for community foundations.
Organizations that hold endowment funds should have documentation that outlines existing spending directions and charitable purpose restrictions that could apply to these funds, likely contained within gift instrument or fund agreements. Ideally, these documents should also outline under which conditions such restrictions may be modified or removed.
Federal and Michigan regulations do provide flexibility for the modification or removal of restrictions on these funds.
-The Michigan Uniform Prudent Management of Institutional Funds Act (UPMIFA) provides a process for a short-term increase on spending rates for endowment funds, assuming that the long-term purpose of the endowment in maintained.
-Community foundations may use variance power to modify or remove endowment and charitable purpose restrictions, if the conditions exist to trigger that power.
-Nonprofits and foundations may be able to modify or remove restrictions using processes outlined within UPMIFA. However, some processes may not be practical in the current environment, as access to Michigan courts and the Office of the Attorney general may be limited by emergency actions related to the COVID-19 pandemic.
Jennifer Oertel, a CMF member, shareholder with Bodman PLC and CMF’s Impact Investing Expert in Residence, has also provided further clarification for member questions regarding changes to fund agreements.
-The foundation may ask a donor directly to modify a fund’s purpose, as long as the fund originated from a single donor.
-Generally, the Council on Foundations and other legal opinions have indicated that the lessening of fund restrictions is fine, but the addition of more restrictions on a fund indicates too much donor control.
-If the foundation is considering allowing a donor to amend the purposes of their fund, foundation staff should consider the impact of that decision on other funds. While it may seem okay to amend one or two funds, the foundation should consider how other donors may want to make changes, causing a ripple effect through the foundation’s funds and potentially depleting its ability to address other community needs. Ideally, the foundation should develop a comprehensive internal plan to address how it handles donor requests to amend fund agreements.
-Variance power is based on the original purpose being “unnecessary, incapable of fulfillment, or impractical.” In some cases, it may also be based on the idea of the original fund’s purpose as being “inconsistent with the charitable needs of the community or area served.” While the COVID-19 pandemic may present an urgent need, it does not necessarily meet the criteria required for variance power.
-Consider using existing field of interest funds with broad community-based purposes to help address the impacts of COVID-19 within your region. Repurposing funds that are not related to addressing health or community needs may be more challenging to use for COVID-19 needs.
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Specific to Foundation Type
What resources are available for family foundations to think through their approach to COVID-19?
CMF is partnering with the National Center for Family Philanthropy (NCFP) to help address the unique challenges of families responding to COVID-19. We understand the unique nature of this situation, as it threatens the safety of family and friends, our communities, grantees and the operations of foundations themselves.
NCFP released, “Leadership in Difficult Times: Guidance for Donors and Giving Families – Responding to the Emerging COVID-19 and Economic Crisis”. This insightful publication focuses on the importance of caring for the health and wellbeing of: ourselves, our family, our team, our grantees and our communities.
NCFP also reminds us to prepare for the immediate needs of these stakeholders, as well as preparing for the long-term impact of these challenges. Family philanthropy is being called upon to be flexible and stretch itself to grow in this period of uncertainty and change.
We encourage family foundations to regularly check CMF’s event listing for relevant webinars from CMF and our partners, including programming offered by NCFP.
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What can corporate giving programs do in the face of the COVID-19 outbreak?
Corporate foundations and giving programs vary greatly in their structure.
The Council on Foundations released a Legal FAQ that points to the challenges of corporate foundations violating self-dealing rules under certain conditions. A corporate foundation’s program should not be intended to generate business, and it should not be intended to result in an economic benefit for either the company or another disqualified person. Please consult with your legal counsel to ensure that the philanthropic activity associated with a COVID-19 response is allowable within the parameters of IRS guidance.
Employee Assistance Programs: Some corporations have an Employee Assistance Program. These programs are typically managed or paid for by the corporation itself, rather than through the foundation. If your organization has such a program, oftentimes managed by an external firm or via the HR department, please contact that group for more information about how that may apply to the COVID-19 outbreak.
Employee assistance (or hardship) programs can be used to benefit the employee and their immediate family, with the company’s policy for employee hardship funds clearly defining which people constitute “family members” for the purposes of these initiatives. An employee can be applicable to receive assistance through these programs in the case that they or their family members are negatively impacted by a disaster or financially catastrophic situation, such as a fire, accident or unforeseen event. Families are also eligible to apply for these funds in the case of the eligible employee’s injury, death or involvement in a disaster situation.
Companies with an employee assistance program should have a clearly defined policy and application for employees to submit requests to access these funds. The policy should outline under what conditions employees are eligible to access these funds, such as minimum number of years of employment. Additionally, the policy should outline appropriate uses for these funds, including maximum amounts and the frequency with which an employee can reapply and receive funds from this program.
Corporations may have additional means to support individual employees, such as by providing additional sick leave or extended telecommuting options. See response to "What are some ways that foundations are assisting individuals?" for other ways foundations are helping individuals during this time.
In-Kind Support: During several webinars, Dr. Judy Monroe (CEO of the CDC Foundation) indicated the important role of in-kind donations to provide medical equipment to states facing the COVID-19 outbreak. The CDC Foundation is designed to direct donations to state health departments, as well as national research priorities for COVID-19. Similarly, in-kind donations may be valuable to local nonprofits and institutions serving communities and vulnerable populations.
Volunteer Support: With social distancing in place across Michigan, volunteer opportunities are somewhat limited. However, healthy individuals may play an important role in ensuring that nonprofits are able to serve children and seniors who need assistance in obtaining food and other services.
The Michigan Community Service Commission has created a COVID-19 webpage dedicated to learning more about how to assist with the COVID-19 response across the state. Potential volunteers can sign up for volunteer opportunities through Volunteer Michigan’s web portal.
Serve as a Community Partner: Rapid response funds have launched across the state. Many include businesses among the many institutions funding grants to assist localized COVID-19 response efforts. Corporations have the opportunity to serve as a natural partner to their local communities, including through emerging funding partnerships and rapid response funds.
Leverage Corporation’s Unique Strengths: Companies have unique expertise, assets, and relationships that can be used to maximize impact in addressing the needs of key stakeholders, including local community members, customers, and employees. Solutions to key challenges may come from unexpected places, whether among leadership, employees, or external stakeholders. Some companies are repurposing their existing infrastructure to meet needs, such as repurposing manufacturing, supplying hotel rooms to medical personnel, or providing kitchen facilities for food preparation and distribution.
Manufacture PPEs: Corporations with manufacturing specialties are working to produce much-needed personal protection equipment (PPEs). As part of Michigan’s Arsenal of Health, the Michigan Economic Development Corporation (MEDC) offered $1 million in grants to small Michigan manufacturers to produce critical health and human services supplies.
The Association of Corporate Citizenship Professionals (ACCP), CECP, Council on Foundations and Points of Light released a joint letter calling for the world’s leading corporations to choose the “courageous opportunity in this crisis,” by valuing their business needs alongside societal needs. They call for corporations to bring their resources, innovation and expertise to provide for the “immediate and long-term relief and to rapidly scale solutions.”
A CECP Pulse Survey from March 12, 2020 indicated that 36.1% of respondent companies used both a disaster relief strategy and additional response mechanisms in response to COVID-19, including such options as matching gifts, skills-based volunteerism, local grantmaking, new partnerships and supporting communities needs specific to the crisis (food, children’s needs, PPEs, etc.). Only 11.1% of respondents indicated at that early point in the crisis that their team had not taken action.
FSG released an insightful article, “COVID-19: Companies, Let’s Get Practical,” that outlines a number of ways that companies are using their strengths to meet the needs of their employees, communities, and key stakeholder groups. With a focus on meeting the needs of stakeholder groups, companies are able to identify critical needs and areas that they are uniquely qualified to assist with COVID response.
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Have a question?
These FAQ's are designed to address grantmakers' questions related to their role in preparedness, response, mitigation and recovery from the COVID-19 pandemic and related period of economic volatility. Included in the Q&A responses below are samples, tools, articles, reports and other resources. Our team is also working closely in partnership with the Michigan Nonprofit Association (MNA) and Michigan Association of United Ways (MAUW) to remain connected around the needs of nonprofits and how funders can help.
We will continue to update this webpage with new Q&A items. If you have a question not shown here, we invite you to reach out via Ask CMF, a technical assistance service available to all CMF members. Questions may also be directed to CMF staff members by visiting our team page.
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Disclaimer: The Council of Michigan Foundations is sharing the following sample documents, resources, tools and other materials as a member resource. Please note that these files are provided for educational purposes only, as a reference in developing your own materials. As such, be sure to consult your professional, legal and financial advisors in the development of resources, strategies and policies specific to your foundation’s needs. Further, this is a rapidly changing situation, and as such, be sure to refer to official sources for the latest news and information.
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