Change happened rapidly over the first six months of 2020. Many non-profit leaders are wondering how they can possibly prepare for what might come next. We believe the first step is to review what has happened, think strategically about the best way forward, and write it down in an actionable plan.

Every organization is different, but we think there are three main areas to evaluate in crafting an effective plan. Each of these areas have their own challenges, but they also share several common themes.

Investments

The first half of 2020 was tumultuous for investors. We witnessed the sharpest stock market selloff in a century, and then the strongest 50-day move in history, all against a dismal economic backdrop caused by the COVID-19 pandemic. Helping the market higher were staggeringly large stimulus measures by the government as they attempt to prioritize economic growth. While these measures have helped, they have also resulted in a return to ultra-low interest rates, which ultimately hurts endowments, foundations, and savers alike.

Over the near-term, the direction of the stock market will hinge on how the pandemic unfolds – something that is very difficult to predict. As we see it, even if the US gets the contagion under control, there will still be economic pain. Even if a vaccine is developed and approved later this year, it will take months to produce and distribute enough of it to immunize the entire population.

In the meantime, over one-quarter of the entire US labor force has filed for unemployment. It will take time for business activity to ramp back up and for people to get back to work. The huge rally in stocks over the past few months means the stock market is far from cheap, and low interest rates have made it more difficult to generate income from a traditional bond portfolio.

In our view, flexibility will remain key going forward. Investors should have a process for identifying areas of the market that are attractive and avoiding those with significant risk. In our multi-asset class portfolios today, we continue to find opportunities in both growth-oriented businesses (e.g., cloud computing, gaming, etc.), while also keeping a close eye on cyclical business as well (e.g., construction). Cyclical businesses are those whose prospects tend to do well when the broader economy does well.

On the bond side, some non-traditional sectors are worth consideration, and it makes sense to stay flexible to take advantage of fast-moving interest rate fluctuations. To summarize our market outlook today, high valuations are keeping us from materially adding risk, and as a result, we remain somewhat neutrally positioned between stocks and bonds.

Legislation

The two biggest pieces of legislation in the first half of the year were the SECURE Act and CARES Act, both of which affected non-profits in a multitude of ways. These are both large and complicated laws that include, among other things, provisions for economic relief from the COVID-19 shutdown, charitable giving deductions for donors, and changes to retirement policy and IRAs.

If you haven’t done so already, familiarize yourself with these provisions and how they might affect your organization and donors. Additionally, keep a lookout for more legislation to come. Some in President Trump’s administration have said they expect legislators to pass a new bill for COVID-19 related economic aid by the end of July. This could include extended unemployment benefits, as well as a more targeted program of forgivable loans for businesses and non-profits.

Fundraising and Operations

Today’s crisis is different than past recessions, and the pandemic has hit revenues for certain non-profits especially hard. Museums and galleries can no longer rely on patrons visiting their exhibitions. Hospitals and nursing homes face rising costs and falling revenue from elective services. Schools rely on students who may or may not be able to return in the fall. All of this has thrown many traditional revenue models out the window.

The good news is that, at least preliminarily, donor and grant support remain resilient. CANDID, a joint effort of Foundation Center and GuideStar, reported in mid-May that global COVID-19 relief support from individuals, corporations, and foundations has exceeded $10 billion. This surpasses the total amount of support following other crisis’ like 9/11 and Hurricane Harvey.

CANDID also reports that while overall charitable giving was down 6% year-over-year in the first quarter, small donations under $250 increased 5.8%, potentially boding well for the second half of the year as donors get more of a handle on their financial situation. People are finding creative ways to lend support as well. Many are pitching in as volunteers, sometimes remotely. Others are redirecting their stimulus checks to their preferred charitable causes, or providing gifts in-kind, such as restaurants providing free meals or tailors making and donating cloth masks.

Best practices for fundraising today have evolved with the crisis, but the fundamentals of good stewardship remain. It’s crucial to communicate often and thank donors for their support. It’s important to show them how your organization is aiding in the fight. Healthcare, education, and social services—essentially all non-profit sectors—have a huge role to play in relief and recovery efforts. Think about what your organization can do to help. Your donors will appreciate prioritizing resources to where they can be put to the best use.

In some cases, donors may be feeling overburdened with financial difficulties or just trying to support too many causes. If that is a concern, consider this as a good time for relationship building. Just calling to check in or thanking them for past support can build the goodwill you will need down the line when you have a bigger ask.

Finally, its important to be transparent. If your organization is facing challenges, let donors know what you are going through but do so in a way that encourages support. There are only so many “emergency” asks you can make, so if you need to pull out all the stops, make sure it’s essential.

Perhaps the biggest takeaway is that its important to be adaptable. No one knows for sure how long this pandemic may last or how severe the economic downturn may be. But if you plan to stay flexible and quickly pivot based on new information, it can go a long way toward making sure you remain on track to reach your long-term goals.

The information in this paper is not intended as legal or tax advice. Consult with an attorney or a tax or financial advisor regarding your specific legal, tax, estate planning, or financial situation.