(Bloomberg) -- As the stock market plunged on Thursday by the most in more than three decades, Kathleen Purdy was ordering more groceries for Hillside Food Outreach, a pantry that delivers to the elderly, disabled and needy in the suburbs north of New York City.
She was buying more supplies, especially frozen fruit and vegetables, because Westchester County, the site of one of the U.S.’s largest confirmed coronavirus outbreaks, asked Purdy’s organization to be ready to bring food to residents who were quarantined in their homes.
“We don’t want anybody to be hungry,” said Purdy, the organization’s founder and executive director. She was also recruiting volunteers who wouldn’t mind dropping off supplies for people afflicted with the virus -– with new procedures: No personal contact or even door-knocking allowed. “I am amazed at the number of volunteers who stepped up to do the deliveries.”
The coronavirus outbreak puts nonprofits in a bind. The needs of charities are set to soar and the financial situations of many wealthy families and foundations that help fund them have deteriorated.
“We can see charitable contributions starting to slow down,” said Tom Gabriel, chief executive officer of United Way of Westchester and Putnam. “We know fundraising events are being canceled. At the same time there’s been an increase in demand for services.”
Children’s Museum
Some very rich people are trying to fill the gap.
Ten minutes into a board meeting Thursday for the Children’s Museum of Manhattan, Laurie Tisch, who’s been involved with the institution for almost four decades, said she’d give $100,000 if the board matched her. The colorful and educational museum is closing on Saturday, with no date set for a re-opening.
Part of the family who runs Loews Corp., Tisch wanted to start a fund to help the museum and its employees navigate the shutdown, to do things like pay wages for workers who’ll lose hours and extend online resources for families cooped up at home. The museum, on New York’s Upper West Side, serves families of many income levels, including a program that brings moms incarcerated at Rikers Island, the city’s main jail complex, to the museum to spend time with their kids. That program also has been suspended.
Lauren Tuck, wife of former National Football League player Justin Tuck, and 28 other board members more than matched Tisch’s donation by the end of the day.
Tisch said the experience of making gifts after 9/11 and Hurricane Sandy served as her guide.
“A lot of institutions are going to have to scramble,” Tisch said. “We’re all losing money, but the people who have money still have money and they can do something.”
The world’s 500 richest people have lost almost $1 trillion since the beginning of the year, including $331 billion on Thursday, the biggest one-day drop in the eight-year history of the Bloomberg Billionaires Index.
Some of them are writing big checks to fight the outbreak. Bill and Melinda Gates’s foundation said last month it would commit as much as $100 million to the battle against the 2019 novel coronavirus. Half that money will go toward the Covid-19 Therapeutics Accelerator, a $125 million initiative announced Tuesday that’s also funded by $50 million from the U.K.’s Wellcome Trust and $25 million from Mastercard Inc.
Alibaba co-founder Jack Ma on Friday announced a donation of 500,000 testing kits and 1 million masks to the U.S.
In Washington state, another area hit hard by the virus, the Seattle Foundation on Monday launched a Covid-19 response fund with more than $2.5 million from corporate and foundation donors including Alaska Airlines Inc., Amazon.com Inc., Microsoft Corp. and the Starbucks Foundation. On Thursday, the fund had surpassed $9 million, fueled by a $3 million gift from Microsoft billionaire Steve Ballmer and his wife Connie.
‘Natural Inclination’
As global markets crater, nonprofits worry that such generosity could become increasingly rare. Wealthy donors may be more preoccupied with their own balance sheets than the financial health of their favorite charities. Foundations, which are required by law to give away 5% of assets a year, could end up slashing their donations as the value of their investment holdings tumble.
“People are seeing their investment portfolios decline and the natural inclination would be to pull back,”said Alison Powell of the Bridgespan Group, who advises wealthy individuals about philanthropy. “Our advice would be: Double down.”
Meanwhile, organizers are being forced to cancel fundraisers and galas that take months to plan and often generate a substantial portion of a nonprofit’s annual budget. One way donors can help organizations is letting them keep contributions made for galas that are canceled, Powell said.
In New York on Thursday, the Frick Collection’s Young Fellows Ball was nixed hours before it was scheduled to take place. Other prominent events called off include one for the Whitney Museum on April 7, where Laurie Tisch was to be honored, and the Save Venice Ball on April 17, which has been postponed until Oct. 29.
Unique Strains
One concern, borne out by previous crises like hurricanes, is that charities directly responding to coronavirus may get big checks, while other nonprofits are neglected or ignored.
During a crisis, “the entire community is focused on one particular issue,” Gabriel said. “The needs in the community explode and at the same time charitable giving drops precipitously for anything that does not involve that issue.”
Another worry for charities is that a pandemic will put unique strains on the nonprofit sector. Homeless shelters and programs for the elderly and disabled could be especially hard hit, for example. Social services are often provided by low-paid, poorly insured and hourly workers who are vulnerable to the outbreak themselves. Volunteers -- who are often eager to help after natural disasters -- may be harder to come by during an outbreak, Gabriel said.
Donors should “ask the local experts what they need,” Bridgespan’s Powell said, whether “that’s calling a hospital, calling a local community foundation, calling bedrock local institutions. Don’t fly solo.”
The Muncie, Indiana-based Ball Brothers Foundation, with about $200 million in assets funded by the family that made the famous Mason jars, is doing just that. It’s preparing “rapid grants” for extras like medical supplies, cleaning services or child care. “We are keeping an eye on what we view as a very fluid situation,” said foundation Vice President Jenna Wachtmann.
Privileged Position
Rich donors should remember that charities are on the front lines of the coronavirus, facing realities and risks that their funders don’t, said Henry Berman, chief executive officer of Exponent Philanthropy, an association of wealthy families and foundations with small staffs.
“We as funders need to remember we’re in a position of privilege to give away money,” Berman said. Even as markets have dropped, these “paper losses” just bring portfolios back to where they were a year or two ago, he said.
“Let’s keep some perspective here,” Berman said. “There’s still a lot of money available there for philanthropic purposes.”
--With assistance from Sophie Alexander.
To contact the reporters on this story:
Ben Steverman in New York at [email protected];
Amanda Gordon in New York at [email protected]
To contact the editors responsible for this story:
Pierre Paulden at [email protected]
Steven Crabill, Peter Eichenbaum