Minnesota nonprofits are in survival mode, shifting galas and fundraising online during COVID-19

Leah Hébert Welles had grand plans for her nonprofit's biggest fundraiser of the year, shuttling donors in limos from a glitzy downtown event center to a restaurant.

But the coronavirus pandemic halted the event, which was supposed to bring in 10% of the organization's revenue. Instead, like a growing number of nonprofits, Open Arms of Minnesota shifted its fundraiser online with a free live cooking class that drew more people but fewer donations than the traditional event.

"We're really being creative," said Hébert Welles, who leads the Minneapolis nonprofit that's delivering more free meals to people with life-threatening illnesses. "We really need foundations and individuals to step up."

Spring ushers in the biggest fundraisers of the year for many nonprofits. But with COVID-19, nonprofits are postponing or canceling galas and fundraisers, moving them online or looking for new ways to drum up cash.

Through Friday, nonprofits across the state are participating in the first Give At Home campaign, coinciding with a national day of giving Tuesday.

Before the pandemic, some nonprofits were already retooling the typical soiree to combat "gala fatigue," looking for new ways to reach donors.

Virtual events so far have met with mixed success, but they could alter how nonprofits fundraise post-pandemic. Though donations are sometimes smaller, the costs are often less. And unlimited livestreams can reach more people.

Still, some of Minnesota's more than 9,000 nonprofits may not survive the crisis. Nationally, half of nonprofits have less than a month of operating reserves, according to a 2018 study by GuideStar. Many nonprofits expect to see a drop in revenue and donations this year similar to the 2008 recession.

Museums and arts organizations reliant on admissions and events are taking a hit. Some are cutting costs by furloughing or laying off staff.

At the state and national level, nonprofits are seeking relief for self-insured nonprofits and backing state and federal legislation to expand the charitable tax deduction to stimulate more giving.

While the crisis is causing nonprofit expenses to soar, it's also boosting philanthropy, with foundations doling out millions of dollars in emergency aid. Some nonprofits are seeing a surge in new donors. Donations on GiveMN's site more than quintupled in April compared to the same month in 2019, similar to what the site usually gets in December.

At the Minneapolis Foundation, grant dollars from donor advised funds rose 46% in April compared to last year, also more akin to holiday giving, said Bill Sternberg, director of business development and a philanthropic adviser. He said major donors are doubling down on giving, but it's unclear if smaller giving will be sustainable all year.

"The real question: Are they just moving their contributions from December to April? We don't know the answer to that," Sternberg said. "The magnitude of need right now is so much greater than what philanthropy can fill."

It may be more difficult for organizations not directly responding to the virus or the economic crisis to make their pitch to donors. A national poll in April found that Americans are changing what they support, giving more to hospitals and health causes while cutting donations to environmental, educational and cultural organizations.

No 'copy and paste' events

Mary Uran braced for a drop in money when she moved the annual luncheon for Girls on the Run Twin Cities, a youth development program, online. To her surprise, the free fundraiser drew more people and $10,000 more — the most in five years.

"It wasn't a copy and paste from in-person [fundraising] to online," said Uran, explaining that the virtual event allowed more donors, kids and coaches to attend and share reactions live, which they couldn't do at a formal luncheon. "It's taught us a lot."

Post-pandemic, nonprofits like hers might do more hybrid events, she said, resuming in-person events while also having a livestream for those who can't attend but want to support the organization.

But other nonprofits are seeing mixed responses with online fundraisers.

For the first time in 24 years, the YWCA Minneapolis replaced its main fundraiser, a luncheon attended by some 1,000 people, with a virtual one last week. The online event included trivia games and fitness classes, and drew $300,000, down 40% from the typical event.

However, new donors accounted for 70% of people who gave to a YWCA emergency fund. The crisis will prompt the nonprofit to use social media and online tools more to tell its story, Chief Development Officer Kari Clark said. Nevertheless, she expects in-person events to resume.

"It's still not the energy of being together, but we're learning a lot," she said. "Nonprofits aren't usually this nimble, but I think there's opportunity here."

At the Minnesota Adult and Teen Challenge, a rehab and recovery center, J.J. Slag, vice president of development, agreed that face-to-face connections and special events remain important. The sound of a 400-person choir at its dinner gala can't be replicated online, Slag said.

"There will be elements all nonprofits adopt during this time and some things we're excited to get back to," he added.

The organization moved its largest fundraising event of the year, which usually brings in nearly $1 million, to a free virtual event Friday that drew 400 more people than the in-person event.

In Minnetonka, Opportunity Partners postponed its May gala for October, hoping crowds will be able to gather by fall. In the meantime, the disability nonprofit netted $60,000 by asking for donations, less than the $400,000 the gala usually brings in but compensating for its increased costs.

Unlike nonprofits that rely most on fundraising, Opportunity Partners gets 60% of its revenue from now-closed day programs for people with disabilities, so it also had to furlough 200 employees and cut pay.

"This is not a sustainable situation forever," said Kate Wilinski, vice president of advancement.

Can donations be sustained?

The Salvation Army in the Twin Cities is trying out new events, like a recent one-mile walk that people did on their own, paying $25 each — enough money to provide a person groceries for a week.

Brian Molohon, executive director of development, said they raised $9,000 — thousands less than he had projected. But he also noted the "feel-good event" cost nearly nothing to organize. The Salvation Army's biggest fundraiser is its red kettle campaign during the winter holidays, and Molohon said he worries today's donations may cannibalize that fund drive.

The nonprofit is spending more money on food shelves, housing for the homeless, and shelter cleaning. It spent $50,000 on 1,000 gallons of hand sanitizer alone.

"It's unprecedented what we're seeing," Molohon said. "We're spending dollars as fast as they're coming in."