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3 Action Steps Nonprofits Should Be Taking Right Now

There are three action steps every nonprofit should be taking in these uncertain times of the COVID-19 crisis. I believe these action steps are critically important for the current and future health of their organization.        

Apply for SBA Assistance 

If your organization was unable to access a forgivable SBA loan under the first round of the Paycheck Protection Program (PPP), there will be another opportunity, as the program is about to be replenished with an additional $320 billion.  To avoid delays in processing, it is very important that all the required information is provided in as complete and accurate manner as possible.  The latest PPP application forms can be found at 

Nonprofits with employees of 500 or less are eligible for these disaster relief loans of up to $10 million.  The loans are based on 2.5 times the average monthly payroll, health and retirement benefits for employees earning less than $100,000 annually for the past 12 months.  Loan forgiveness is available to employers that maintain employment or rehire employees between March 1 and June 30, essentially turning the loan into a grant. The amount forgiven is based on the amounts actually spent on payroll, benefits, rent, utilities, and interest during the 8-week period immediately after the loan is issued. There are some limitations based on the levels of employment during the 8-week period versus employment levels prior to the crisis. 

For those qualifying organizations where the PPP may not make sense based on your evaluation, there is the opportunity to receive up to a $10,000 grant from the SBA Economic Injury Disaster Loans (EIDL) program to assist with temporary loss of revenue.  This program is also expected to have its funding replenished.

Communicate with Your Donors

You may not be thinking it, but your donors are concerned about you.  They are concerned about the health of the staff, the clients and the organization.  Let them know how everyone is, keep them updated on how the organization is responding in this crisis, and how the mission is being served, perhaps in new and unique ways. 

Today we are all looking for connections and for hope.  The more you connect with your donors and share with them short stories of day-to-day urgent needs and the successes that have come due to their support, the more they will respond with generosity. 

My mantra in fundraising has always been about telling stories that directly link your donors to the people being served by the mission, and to leave the organization out of it… because it’s not about you.  Well, these are truly unique times when too many nonprofits are at financial risk, so let’s toss that mantra in the trash for now.  Let’s make it okay to talk about how donors can help ensure the organization survives and is able to continue to serve the mission that donors care about.

While you are at it, alert your donors to changes in the tax law brought about in the CARES Act, which allows for an above the line $300 charitable deduction on cash gifts for taxpayers who use the standard deduction.  For those who itemize deductions, cash gifts are now fully deductible up to 100% of adjusted gross income in 2020.  With the stock market down, using cash versus appreciated securities may make a lot more sense, especially with this temporary increase in the allowed deductibility.

Review Your Endowment

The financial markets have taken a big tumble as our economy has come to a near complete standstill.  While we fully expect the markets to recover, based on past experience, it may take a couple years or more.  At this time, it’s critical to understand how this will impact the organizational budget in 2020 and looking out the next several years.

Based on research done by RegentAtlantic, a well-designed spending policy that utilizes a sustainable percentage of a three to five year average account value will help to smooth out the inevitable ups and downs of financial markets and in turn smooth the cash flow to support the organization.  Over time such a spending policy may even create larger cash flows than would otherwise be the case.  A beneficial and prudent exercise now would be to test multiple recovery scenarios across the next several years of budget projections to gauge the impact on the organization’s financial well-being.  This is one of the action steps for nonprofits that would be immensely helpful for the leadership when setting priorities in spending and fundraising, as well as the board in its fiduciary oversight role.

When markets experience substantial declines, it creates potential opportunities with one of the most important being active rebalancing between asset classes.  For a portfolio with a targeted balance between stocks and bonds there comes a point when this relationship gets far enough out alignment that a disciplined rebalancing strategy will be selling bonds and buying stocks to get back to the desired strategic allocation.  At the same time there will have been sectors of the equity portfolio that have been beaten up more than others and we believe should be brought back to their targets.  We think this provides a disciplined way to buy stocks when they are on sale and may help to accelerate the endowment’s recovery.

During this time of a health and economic crisis, RegentAtlantic is here to assist nonprofits with questions around these action steps: SBA loan programs, to brainstorm on fundraising approaches and to review endowment investment strategies and spending policies.  Please visit our website page Helping You Navigate the COVID-19 Crisis for a vast array of helpful resources including our weekly investment webinar updates and please call if we can be of assistance.  We are here to help you.

Important disclosure information

Please remember that different types of investments involve varying degrees of risk, including the loss of money invested. Past performance may not be indicative of future results. Therefore, it should not be assumed that future performance of any specific investment or investment strategy, including the investments or investment strategies recommended or undertaken by RegentAtlantic Capital, LLC (“RegentAtlantic”) will be profitable.

Please remember to contact RegentAtlantic if there are any changes in your personal or financial situation or investment objectives for the purpose of reviewing our previous recommendations and services, or if you wish to impose, add, or modify any reasonable restrictions to our investment management services. A copy of our current written disclosure statement discussing our advisory services and fees is available for your review upon request.

This article is not a substitute for personalized advice from RegentAtlantic. This article is current only as of the date on which it was sent. The statements and opinions expressed are, however, subject to change without notice based on market and other conditions and may differ from opinions expressed in other businesses and activities of RegentAtlantic. Descriptions of RegentAtlantic’s process and strategies are based on general practice and we may make exceptions in specific cases.

RegentAtlantic does not provide legal or tax advice. Please consult with a legal and or tax professional of your choosing prior to implementing any of the strategies discussed in this article.

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