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The road ahead for nonprofit fundraisers is paved with uncertainty—with inflation and a potential recession at the forefront. In this series of Group Thinkers episodes, we're sitting down with guests who have a unique perspective on our current landscape and who can share how nonprofits should be preparing in the coming months.
On the first episode of this series, we sit down with Nathan Dietz, Senior Researcher at the Do Good Institute at the University of Maryland, to discuss what we learned from the Great Recession and how nonprofits can apply it for the future. Tune in as we chat about:
- Should nonprofits be worried about inflation and the possibility of a recession? (9:27)
- Key findings from the Great Recession and what it means for nonprofits today (19:34)
- What nonprofits can do now in preparation (32:48)
Meet our guest
Nathan Dietz
Senior Researcher, Do Good Institute
“For organizations that might have been hesitating before moving into the digital world to try to establish their own presence there, this would probably be a good time to start doing it. Before now would have been a better time to start doing it, but better late than never.”
Podcast transcript
Justin McCord: So welcome to this episode of Group Thinkers. I'm your host, Justin McCord. With me, as always, is Ronnie Richard.
Ronnie, our guest today was just sharing that in College Park, Maryland, where he's located, that it's hot outside. And I don't know where it's not hot.
Ronnie Richard: It's hot across the country. I'm just checking my watch. It's 100 here. And it's, I think if I remember right, it's our 10th straight 100-degree day in Texas. So yeah, it's a little toasty.
Justin: So, I was in the car a moment ago, and I regret being in the car just mostly from the walk from parking the car in my garage to the door. Not that it's not far, it's less than 10 feet, but it's still like that little moment was miserable in terms of the heat outside. But we're going to get through it. We're going to get through it. We're going to stay hydrated. And we're going to have a fascinating conversation with our guest today from the Do Good Institute and the University of Maryland.
We've got Nathan Dietz with us. Nathan, how are you?
Nathan Dietz: I'm pretty good, thank you, Justin. Thank you, Ronnie. But I think the first thing I should do is apologize because when I said it was hot out, I meant that it was 90 degrees Fahrenheit. So, you know, it's not, I can't really ... it doesn't really compare to what you've been going through.
Justin: Listen, we appreciate the empathy. You've got greater humidity there in the College Park area.
Nathan: Well, yeah.
Justin: And so, all things being equal, it is, it's hot everywhere. And so, but you're so kind to be so empathetic out of the gate. That's not going to make our questions any easier for you.
Nathan: That’s too bad. Well, anyway, yeah, I'm still looking forward to this, so yeah.
Justin: Yeah, we're, we're thrilled that, that we could have this, this chat today. So, just to kind of frame it for our listeners, you know, Group Thinkers is the podcast from RKD Group where on each and every episode we dig into an aspect of nonprofit marketing and fundraising. And we are joined by someone who has a unique perspective on an angle of something that's happening in the nonprofit marketing landscape.
And, and Nathan, as a guest, it's wonderful to have you. Ronnie and I have just finished a series of conversations on the idea of digital advancement. And so over the last number of months, we've been talking with folks about what that means, how to move ahead digitally, as many times, nonprofits find themselves either behind or trying to advance digitally in their marketing, fundraising.
And so that sort of evolved into just a desire on our part to unpack some things that are happening in the world around us. And in particular, to talk about some current trends from the Giving USA research and the ideas around the recession. And so, there are some uncertainties that are about. This is the first of a series of conversations about uncertainty that we're going to have. So we appreciate you being on what we would say is the first episode of a new season for us, talking about uncertainty and the nonprofit landscape.
And we know that we're not going to leave with certainty, you know, but what we want to do is just dig in and understand the complexities around nonprofit finances and around, from your perspective, the research that you and the team at the Do Good Institute have put in place. Because, as you said, you're quite accustomed to talking about nonprofit finances. And so, we're excited to have you. Thank you so much for making the time. If you would, like, just give us a, you know, talk about your background. Let's start there, and let's start with your current role at the Do Good Institute and what exactly you do there.
Nathan: Well, yeah, let's, we should probably start there. At the Do Good Institute, I'm a senior researcher and an associate research professor, which, like the titles imply, my main job is to do research on philanthropy, civic engagement, giving to charities, volunteering. We do a lot of work there, and I'll explain why in a minute.
But I also teach nonprofit finance to nonprofit professionals, mainly in the area. And that's ... I'll draw on a lot of that as we go along today, talking about the effects of the Great Recession. Before I came to the university, I was with the Urban Institute Center on Nonprofits and Philanthropy, and there is where I worked on some research projects with the National Center for Charitable Statistics, talking about the effects of the Great Recession. The first little research reports that talked about the immediate effects of the Great Recession of the late 2000s on the nonprofit sector.
And following up on that, right before the pandemic, Ruth McCambridge from The Nonprofit Quarterly contacted me. This was a couple of years after I came over to the University full time. She said, would you be interested in doing an article with me for The Nonprofit Quarterly on a 10-year retrospective on the Great Recession and its impact on the sector's finances? Because what her claim was, and I think she was right, everybody thought the sky was going to fall when the Great Recession hit, and the nonprofit sector, there would be a mass extinction episode. Tons of nonprofits would have terminal financial conditions and never recover from that. And, you know, people were terribly worried about it. Ten years after the recession ended and the recovery started, you can almost not even tell that the recession even happened. So she wanted to write about that. And I thought, that's a great idea. So we did some, we did some research, we published the article, and then the pandemic hit.
And it made us all wonder about everything that we were worried about, that people were worried about when it came to the Great Recession, plus many other very scary unknown factors. And no one knew what kind of impact those were going to have on the sector. So between then and now, I've been working on a couple of research projects, but it was really interesting to go back and revisit the work that we did for that article for NPQ because so much time has passed. It seems like we've been through several different worlds since early 2020. And talking about the uncertainty in the sector's finances, I think now is a great time to do it because there's not much less uncertainty than there was in March 2020 when this article came out.
Justin: And that article is what brought us to you. That's actually the prompt...
Nathan: So I understand.
Justin: Yeah, yeah. As Ronnie and I were thinking about and talking with members of the RKD team about, man there is so much uncertainty, and it's become something that is, it's laboring on nonprofit decision makers, you know, pressure from their CFOs, pressure from the board, complexities around the supply chain, just the general uncertainty of health and wellness tied to the pandemic. All of these different stressors have added up.
Now we are in this season where we, maybe more than ever, feel like we don't know what's going to happen next. It's the war-torn mentality of having ran the marathon that we have for the last two plus years and looking at inflation and looking at the potential recession. And I got to tell you, out of the gate, our... I took comfort in much of what that article had to say. We'll be sure to link to the article in the show notes, etc. I did take much comfort in what that article had to say because I do believe that there are learnings from when we walk through similar-ish patterns in the past that we can draw from, but it doesn't look exactly like today. So that's where we're wrestling with these things and why we're glad you're here as an expert on nonprofit finances.
So, so really, I guess the burning question is, should nonprofits be worried about inflation and the possibility of a recession?
Nathan: I think that all nonprofit organizations, just like all people, should be worried about the effects of inflation. You know, given what we've all experienced so far and the possibility that a recession is coming down the pike. I mean, I wish we … like us, I'm not sure that nonprofit organizations individually can do much about certainly not forestalling whatever outcome is going to happen. And I think there's only so much you could do to prepare for it, given where we are right now.
But I think that, I mean, I think that it should be an area of concern because of everything that we've seen so far. The thing about this, though, one of the first things to keep in mind is that the recession, just like it does, just like it hits the wealthy people much differently than it hits people who are not very wealthy and who are already, who've already experienced a lot of economic dislocation. The same is true for organizations in the nonprofit sector. The very wealthiest, largest organizations are going to have a much different experience and probably suffer a lot less harm than smaller nonprofit organizations will.
So that's something to keep in mind as you're reading this article, especially because we're looking at aggregate totals across subsectors and across the entire sector of dollars. And when you do that, then those numbers are going to be dominated by the very largest organizations in the sector. And it does obscure, I think, the fact that many much smaller organizations are suffering a lot more than the big kahunas, whose dollar amounts are really just preeminent in the totals that we're looking at.
Justin: And when you look at the aggregate, especially if you look at just the philanthropy tied to GDP over time, there isn't much change. That trend line is stable.
Nathan: Well, it's almost scarily stable. I mean, when I first saw it, I didn't, I wasn't really sure how that happened, how it could happen. This since World War II, the percentage of GDP, I think inflation adjusted GDP, that was being donated to charity was always around 2%, almost always, you know, and then it varies somewhat over that time period, but it never varies very much. It's always tightly bound around 2%.
So things have been pretty constant for a very long time, I think. And as far as metrics like that are concerned in the nonprofit sector—and similarly, I think when you look at the trend line that you see in, let's say, the Giving USA report, which, which has done a really effective job of tracking funding into nonprofit organizations from one major source, one of many major sources, individual contributions and industry and institutional contributions—but if you look at the grand total of money coming from those sources to nonprofit organizations, what almost always happens is that there's a good-sized increase, you know, an increase of a couple percentage points and total dollars from all sources before you control for inflation. And then most of the time, there's still a significant increase even after you control for inflation.
2021 was an exception because there was a slight decrease after controlling for inflation. But that was because, that was partly because inflation was so much larger in 2021. You know, it's not a correction that most of us are used to paying a lot of attention to because inflation is generally, you know, wasn't that big of a deal in the previous year. So it doesn't really matter if you control for it or not, really.
The other thing is that there was such a huge increase in 2020, and I think a lot of people were surprised by that. But it looks like that was the response of a lot of people to the pandemic, is to give to charity, maybe give larger amounts than they have been, or maybe give when they hadn't been giving at all. And I think for those who expected a kind of a regression to the mean, maybe a cooling off of that hot activity that we saw in 2020, we didn't really see that. You know, we saw a slight decrease, but only a slight one.
On average, over the last two years, the sector is still up by several billion dollars in terms of contributions from individuals or organizations.
Justin: Yeah, it's so interesting because, you know, you mentioned this idea of the many worlds that we've lived in since 2020. And, you know, I've turned my perspective multiple times on how to think about the last couple of years compared to disaster response. So when there's a disaster and there's a hyper increase of giving over a short period of time, and then the longer you get away from that disaster, the giving just naturally falls off. That disaster is no longer as relevant, et cetera. And so I, early on we anticipated that the pandemic would be somewhat like that, and then we quickly saw that it was sustained. And, you know, regardless of where you fall on pandemic to endemic at this point, etc., there has been consistency in giving. There hasn't been that regression to the mean that many people anticipated, like you said, from 2020 into 2021. At the same time, for many organizations, fundraising has gotten even more complex during that time.
Nathan: Yeah, complex is a very good way to describe it because it hasn't necessarily gotten harder, especially for those organizations that have done a pretty good job of moving over into the digital realm. They were, they had something to fall back on that might have even been their business as usual. But for organizations that are dependent on getting large groups of people together and trying to convince them to give money at fundraising events, you know, some of them have not … they still haven't gotten unstuck and are trying to find a, tried to find a workaround even now. I think probably most of them have, but many of them, I think, reacted to the pandemic saying, all right, well, you know, I guess we can't do what we usually do. So we'll just wait until we can do what we usually do. So that's, I think, part of that. That's part of what we've seen.
I think that when you ... but when you talk about the sustained response to the pandemic, I think what you've seen is that ever since the pandemic started, really, I think we've seen, we haven't seen a big decline. We haven't seen a kind of a cooling off or a lack of willingness to keep on contributing money into the sector. The thing about that, and when you mentioned disaster response, I think I have to mention a report that we published, the Do Good Institute that is, back in, right around the start of the pandemic, because we wanted to take a look back at this history, this trend data on volunteering and other sorts of non-monetary contributions to civil society. For a report that we did for … and we published the results and a report, we took a look back at volunteering and other types of charitable activities right after 9/11 in New York city, right after Hurricane Katrina in the New Orleans area, and right after the Great Recession nationwide. And what we found is that even with giving, where we're measuring giving not by total dollars but by the percentage of people who contribute to charity over $25 or more, we did see a cooling off period. Even in the most heavily affected areas. People were willing to step up and make contributions of time and money right after the disaster happened and for a little bit through the recovery. But after the recovery was sort of up and … up and running, then in a lot of cases, participation rates dropped off to where they were before the pandemic, sometimes even lower. So that was our lesson from coming out of previous historical pandemic-like events, which is that unless people mobilize and prevent something like that from happening, the vast majority of people who are willing to step up are going to do it for a little while and then kind of tail off.
Justin: Yeah, yeah. And that is certainly the effort of so many organizations, let's say, especially in the last 18 months, is COVID donor retention. That's become a phrase that we're very familiar with and that there are multiple different strategies and tactics that folks are taking.
And Nathan, what we want to do is spend some time today on an area that you're very well versed in, in the Great Recession, and see what we can understand as we look ahead to a potential recession. Understand some things from your research and what you, as an expert on the Great Recession, both from how long it lasted and what that might tell us or not tell us about what to expect, but then also just some key findings. And so, give us a fly by. Like, walk us back to 2008 and in the immediate time following that so that we can kind of wrap our minds around that time frame and what it meant for nonprofits. So that it might help us think about this time frame and what it means for nonprofits.
Nathan: Yeah, well, I can, I can do that. I'm going to start with the broader picture of nonprofit finance and then kind of zero in on individual portions of the subset of the sector to try to see what happened. What you saw, for instance, if you look at the Giving USA results, but again, what you are used to seeing when you look at the major trend in the report, which is total amount given adjusting for inflation, let's say, from all sources put together. What you're used to seeing is a slight increase, sometimes a larger than slight increase, but, you know, occasionally a decrease. But that's not the norm.
What you saw in 2008 and 2009 were two larger-than-average decreases in total dollar amounts controlling for inflation. And that was really extraordinary. Not just because that doesn't usually happen, because decreases, period, don't usually happen in that particular metric, but even during recessionary periods, in the giving you see a time trend that goes back 40 plus years, when there is a recession, you typically don't see a decline in giving to charity by individuals or organizations. The Great Recession was the exception.
So it took us a while, I think. And this is true no matter what kind of, no matter what kind of empirical result you're talking about. It took us a while to see it, mainly because it took us a while to get the data that would tell us what actually was going on in the sector. But that's something that we saw right away. What we did for the NPQ article, Nonprofit Quarterly article, was to take a look at historical data from Form 990 where organizations, I mean, probably most of your audience knows this, on Form 990, on part 8, organizations are reporting the amount of money that they took in for revenues and support from all kinds of different sources. And that's what we did, that's what we tracked when we looked at revenues from all sources and the revenues from major groupings of sources taken from the 990s. Again, there was a delay there. We didn't have that data right away because it takes a while for the IRS to process the 990s and make them available to analysts. But that was actually helpful because when we did the analysis, we not only had the data from the Great Recession period as well as data from before the Great Recession, but we had data for a few years after the Great Recession. So we could take a look at not just which organizations took the biggest tumble during the Great Recession financially, but also which ones rebounded the most, did the best job of getting back to where they were, or even improving their positions since the Great Recession happened.
What we saw ... we saw a couple of things that I think were really noteworthy. One is that if you look at education organizations, especially higher education organizations, which contains some of the largest organizations measured by revenues or assets, whatever you prefer, some of the largest organizations in the nonprofit sector, they saw a big change in their revenue stream. I think they saw a big decline in money that came in from program service revenues. I'm sorry, they saw a big decline in the money that came in from, from other revenue sources, primarily investment income, as opposed to money that comes in from contributions and money that comes in from program service revenues. Those are the three major categories that we focused on when we looked at trend data is money from contributions, money just like Giving USA; money that comes in from program service revenue or commercial activities; the money that comes in from all other sources. Sometimes it's membership dues for higher education institutions, it's primarily investment income. And this was the large colleges and universities with big endowments whose investments took a hit during the Great Recession. That, that was a big change.
But what you see, what you see when you look at the trend and the shape of the revenue stream isn't really matched by a big decline in total dollars taken in by higher education institutions. You saw a decline in investment income, but you saw an accompanying, accompanying increase in program service revenues and contributions that very nearly made up for that big decline.
Justin: And so it's a change of the mix.
Nathan: Right.
Justin: It's not the overall declining. It's just your change of a mix. Like, many people are seeing a change in the mix of channel source right now. So maybe, as Lindsey Iero shared with us from food banks, you saw a shift of the pie from direct mail to digital. It's similar to what you saw from the Higher Ed. And also in medical space as well?
Nathan: Yeah, also in the medical space, although what you see in the medical space is not nearly as … you can't really tell what's going on trend wise. You can't even really tell if you look at the revenue mix trend and you even, if you focus on the Great Recession period, you can't even tell that there was a Great Recession. Hospitals just sort of cruised through the Great Recession without much impact. In fact, I don't think they actually ... I don't think their revenues actually declined very much at all during the period of the Great Recession, controlling for inflation.
They did for higher education institutions, not by very much, but they did they did decline a little bit, but they actually increased, I think, for hospitals. So but, but the thing about what happened to hospitals and higher education institutions, the so-called eds and meds in the sector, these are the very largest organizations in the public charity space. We're not talking about private foundations, we're talking about public charity, public charities, who spend money on programs primarily as opposed to grant making.
But just the way that the eds and meds survived the Great Recession and recovered from it is just very different from what happened in the rest of the sector. You saw a lot of organizations, a lot of organizations have much more trouble, especially organizations that have less stable sources of income coming their way. Like arts organizations had a little bit harder, a little bit tougher time because their income, their, their money was coming in from contributions and not necessarily contributions from things like patrons of the theater buying tickets, but contributions from institutional supporters or foundations who had a hard time spending money, on making beyond the minimum, during the Great Recession sometimes decided to cut the funding that they gave to arts organizations because their investment income is a lot lower. And so they had less to spend without cutting into the body of money, the corpus that they manage.
And then you had, and then a third category that was really noteworthy. And there were a couple, the smaller categories, the categories with smaller organizations in them, tended to have worse outcomes, kind of like the arts organizations, in some cases even worse. But with Human Services organizations, not universities, not hospitals, but organizations that provide Human Services. That was a group of organizations, first of all, that's the biggest subsector in the nonprofit sector, more organizations in that subsector than in any other. But also, this is a group of organizations that, not exclusively, but primarily, I think, takes in most of their revenue from commercial revenues, government contracts, especially. And during the Great Recession period, they just didn't, their revenues didn't decline at all.
I think, just like hospitals, I think, controlling for inflation, total revenues for Human Services organizations didn't decline during the Great Recession, and there was really nothing to recover from. So just the post-recession trend was actually a little bit less impressive than it was for other subsectors. But that's just because they didn't actually suffer very much as a group during the recession.
Ronnie: So Nathan, as we're kind of … you just described the trends we saw during the Great Recession. The larger organizations kind of remixed where their revenue was coming from. The really small organizations kind of struggled a little bit more along with arts. And then you said the Human Services kind of stayed about even in the middle. As you looked ahead in the next few years, moving on to 2010, 2012, 2014, how did that look in terms of things like market share? And were these organizations able to then grow afterward, or did things kind of stay about stable, or how did that look?
Nathan: You had a lot of organizations like Human Services organizations, the biggest subsector, that had the smallest percentage of organizations that lost a lot of assets during the recession. They had the smallest percentage of organizations that gained a significant amount of their assets back after the recession, and they had the lowest closure rates. So, you compare that to arts organizations, which had, which also for the most part didn't close. They were less likely to close, but they were more likely to lose a lot of assets during the recession and less likely to be big winners. So, even though they didn't go bankrupt typically during the Great Recession, they came out of the Great Recession in worse financial shape than they went, than before the recession started. So, but they were better off than the smaller organizational types that I was talking about earlier.
Justin: Yeah, you know, with those small organizations, I know it's relative, but at least I theorized that many of those, maybe their individual giving was heavily weighted towards a small number of high-wealth donors. And so, when those small number of high-wealth donors, when they have to pull back, then all of a sudden it depletes the funding for the nonprofit as a whole. And so, I can at least see that cycle play out. And it's one of the reasons why we talk about how there is health and diversity amongst your donor pyramid, right? So obviously having a wide base of mass market donors and then a strong base of those middle donors and then up to the major donors. And then, obviously, your kind of legacy giving, corporate giving and foundation giving at the top.
Your research also indicated that there are those that increased their revenue post reception, after the Great Recession, and that kind of thrived somewhat during it even. So, talk a little bit about that, that resiliency.
Nathan: Yeah, I can I'll talk some about resiliency, but I'll also talk about organizations that just didn't really suffer during the Great Recession. Like, I think the two major categories of organizations that didn't even see a decline in the total assets that they controlled are hospitals and Human Services organizations. Hospitals, because they were just so big, you know, they didn't have, they didn't have money coming in that was really jeopardized by the Great Recession like program service revenues. But I think people, I think people don't realize this, especially if you look at something like Giving USA. But Human Services organizations are kind of smaller versions of that business model. You don't see that in Giving USA because you don't have commercial revenues measured with Giving USA, you have giving from people and from institutions. So, and thus, you're missing a big chunk of money that comes in from other sources into the sector. So those, I think, are the biggest differences.
When you look at revenues, then you do see, you actually see a couple of other organizations, organization types like health organizations, not including hospitals, actually saw an increase in their revenues, controlling for inflation. And you saw a couple of organizational types that really didn't, really suffer very much, like actually a couple of the smaller ones, like international organizations and membership benefit organizations, they didn't, even though they're very contribution heavy in their revenue streams, they actually didn't have ... they didn't suffer very much during the Great Recession.
So it's funny. I think it's not the case, in other words, that during a great recession, if your income stream is very heavily weighted toward contributions from individuals or from institutions, that the subsector tended to suffer. But I think that that's one big, that's likely to be one big difference between that recessionary period and the one that we might be heading into, is that I think this is where inflation really matters a lot more.
I've heard people talk about this, especially when it comes to monthly givers. You know, that's been the trend in the sector, especially in the fundraising world, is to try to convince people to give on a monthly basis, just set it up so that the money comes automatically out of your account. I think that donors are coming back to fundraisers now and saying, this is going to kill me, but I just I need to cut way down on the amount that I'm giving on a monthly basis or I need to, I need to cancel the monthly payments because things just cost too much. And that's something that, you know, I think that the value in that, the huge benefit to fund, to the fundraising world of monthly giving is that, you know, you can get people set up so that they don't have to go after them every, you know, on a regular basis to try to get them, to convince them, to give more.
Now, I think that's work that fundraisers are going to have to do because of inflation. Once things kind of stabilize a little bit, they're going to have to go back to those people and say, OK, now we really need you. So can you, is it possible for you to restart, get us back to where we were?
Ronnie: So then, if we're looking at these lessons that we learned from the Great Recession, and you were just kind of talking about this, applying them going forward into the possibility of the next recession. What sort of things, what sort of things can we lean on that you could tell nonprofits, hey, start getting your ducks in a row now for looking at these things? Certainly, resiliency and diversity of revenue. Is there anything else that they should be doing now in preparation?
Nathan: Yeah, this is a great question. And this actually, this took me back not to the things that I've done research on, but the things that we talk about when I teach my class. Because people do want to know about how to ensure the ongoing financial health of the nonprofit organizations, especially if they work for one or if they run one. Got a lot of entrepreneurs in my classes.
I think that the thing that nonprofit organizations have come, I think there are differences of opinion about what things are most important for nonprofits, but I think that what's most important for nonprofits is what's most important for for-profit organizations, according to people like Warren Buffett. And that's positive cash flow. Organizations can grow, and nonprofits know this, you can grow your asset base without actually taking in cash. If you take in receivables just … and take in assets that are just valued on paper like capital assets, those are the types of things where it makes the balance sheet look good for your organization. But when, when push comes to shove and you really need money to pay for things, and you're not ... because you don't have very many other options but to pay for things with money, then positive cash flow is just, there's no substitute for it. There's nothing, nothing that's as good as having positive cash flow. From program operations, I mean, you can always get cash from borrowing, which is not a long-term strategy. And you can get money, you can get money from selling your long-term assets. But that's not a long-term strategy either. You need to have profitable program, operations that bring in positive cash flow.
So for organizations that might have been kind of hesitating before, let's say, moving into the digital world to try to establish their own presence there, I would say this would probably be a good time to start doing it. Before now would have been probably a better time to start doing it, but better late than never, because they can probably do something like business as usual, going back to some of that as the worst of the pandemic starts to recede. They can start getting used to these new models of fundraising and engaging with donors. So that'll help, you know, I think just they'll help organizations get through periods where maybe they didn't have much of any cash flow because they weren't going out and soliciting funds.
But I think organizations, organizations can probably … it's probably a good idea to ... I'm actually going to double back on this. I've been thinking a lot about what they should do if they do get a lot of money. I think that borrowing money is probably not … probably not the best idea, especially if interest rates are going to continue to go up. I mean, that's something that nonprofit organizations sometimes have a hard time doing anyway, is borrowing money because they just don't have the access to capital markets. I hope that changes because nonprofit organizations can pay attention to, hopefully, get a little bit more of a break during a period like this than maybe they typically do. Even if they do find lenders who are willing to lend to them, they're probably not going to find very favorable interest rates.
The other thing that nonprofit organizations can think about is the fact that a lot of the recovery legislation that's been passed by Congress is scheduled to flow money down to state and local governments. And when that happens, I don't think it's happened for the most part yet, but when that does happen, that is money that nonprofit, they usually goes straight to nonprofit organizations. You know, the state and local governments don't spend it running their own programs or providing their own services. They hire nonprofit organizations to do that. So maybe organizations that don't typically do that type of work should check the request for funding proposals that are published in government sources, because there might be ways for them to take in more money, money from additional sources that maybe they don't tap into ordinarily.
Justin: That's such an interesting, and it's, it's somewhat out of our purview, Nathan, as outsourced fundraising professionals, that we don't necessarily consider. And so, I appreciate you bringing that perspective.
And, and just to touch on the idea that you said about just having a healthy cash flow. Now, I interpret that as continuing to invest in growth. And so, that's coming from diversified sources and diversified approaches. And that even though this world is increasingly more complex, it is worth the complex for the stability of diversified revenue sources, even amongst your individual giving, you know, pipe and section of your donor pyramid. Because, you know, as you said, it's in times of increased, let's say increased stress, global stress—whether or not that's economic uncertainty or macro health uncertainty or even in the wake of a disaster—it's those times when nonprofits are many times needed the most.
And so the thing that we regularly say to our clients and we want our listening audience to hear is, it's not a time to pull back. You have a need. You need to ask. Don't stop asking; make your asks even more authentic and find diverse ways to make your ask. As you said, you know, that resiliency and pivoting and considering new sources, even if it is through government oriented contracts, etc., and additional grants that are going to be out there during this time.
Nathan: Yeah, I think that's right. I think that I was really heartened when I saw the new nonprofit finance fund report because they talked about the fact that something, almost, I think almost half of organizations … let me make sure I get this right … I think it's over a third of nonprofit organizations said that 50% or more of the funding that they've been receiving during the pandemic has been unrestricted, like unrestricted, period. So that's fantastic. I think that … and there are a lot of stories that accompany that from people who say, you know, that's actually been our experience, where foundation funders have been putting a lot fewer strings on the money that they give us because they know everybody's struggling. And so, that's fantastic. You know, that's the type of thing where, that's something that you hope continues because the recovery is not going to be instantaneous, and organizations are still going to be, still going to be struggling.
When it comes to the idea of investing in growth, though, that's where I'm just going back to my experience in class. When I say investing in growth, when I tell my students about that, what I mean is taking money that you have in investing in capital assets like buildings or upgrades of equipment and things like that. And I think now is probably not a great time to do that if you have to borrow, even though it's the type of thing that traditionally will help your organization grow by increasing its capacity. I think what organizations can do is just prepare for growth, you know, look around, keep their eyes open and be attuned and attentive to opportunities to tap into revenue sources that maybe they hadn't considered in the past.
Justin: I think it's very well said. You know, the past is prologue. And so, you know, there are things that we can learn and certainly take away from many of our most recent experiences. Even not, even going back as far as the Great Recession, you know, a modern nonprofit decision maker should be adept at pivoting at this point. We've been pivoting, you know, like Karl Malone down on the block, since March 2020. That is a deep cut of an NBA throwback for our listener audience.
So, but anyway, you know, and Nathan, I think you hit on some very important aspects of the reality of the resiliency of both nonprofits and of donors, the reality of the overall ebbs and flows of giving and how, in some cases, it may change in terms of the slices of the pie and the size of the slices, and other cases, it may change more or less favorably, depending on the size of the organization and the stability that you have. And some of that is tied to your overall cash flow and how you’re financially structured today. And so, I think there are a lot of great lessons in there.
As we wrap up, if folks want to get in touch with you, learn more about the institute, learn more about the research that you and the team are conducting, where's the best, where's the best place to find you?
Nathan: Well, I'm, the best place to find me, I can, I think you mentioned a place where we can put URLs, so we can do that. My email address is ndietz@umb.edu. That's just N as in Nathan Dietz at UMB dot edu. But I'll send you, I'll send you a link to the Do Good Institute's web page. And there's a research section where people can find out more about the work I do. But really, it's also a great way to find out more about the Institute itself because the work of the institute, the Do Good Institute, is to teach our students—there are many, many, many students here at the College Park campus—how to look for and capitalize on opportunities to do good. The idea of the do good, the name Do Good Institute comes from the Do Good challenge, which is a competition among social entrepreneurs, students, social entrepreneur teams who compete for a little pot of venture capital at the end of every school year. And that's been such a popular event that we changed the name of the center to the Do Good Institute after the Do Good challenge. So, the research that we've been talking about is just kind of background information for the work that we do as our main line of business. We teach students how to get out there and make the most of their passion for doing good by capitalizing on opportunities to do that. And the research just gives them a better idea of what to expect when they start doing it themselves.
Justin: I absolutely love it, Nathan, and yeah, please send us over that link. We'll make sure that that's also included in all of our notes about the show, and we'll encourage folks to go there. And again, just want to say thank you for your time and you sharing some of these lessons and snapshots of what we've seen in the past. And we know that you and the team are staying on top of current trends. And so, we're going to be looking for more great information from you and other researchers at the Institute in the days to come.
Nathan: Thank you, Ronnie. Thank you, Justin. I won't say, it wasn't exactly fun to talk about a recession, then a pandemic, but I enjoyed this. I think it's important to just understand what we can about where we are.
Justin: I completely agree. And, you know, I'd be lying if I told you that you weren't the first person to say that they didn't have fun with us. So that's OK.
Nathan: No, I didn't mean it that way.
Justin: Yeah hey, if you like this episode of Group Thinkers, be sure to give us a review on wherever you're listening to the podcast, or if you're listening with your eyes on YouTube, which some people do as well, be sure to give us a review on this episode. You can always subscribe. Check out all of our previous episodes, and we are so thankful for our listening audience and those that tune in. Ronnie what have I missed?
Ronnie: I think you covered it all. I mean, it was great to hear this because, you know, it's often said that history is our greatest teacher. So, hearing what has happened before and applying that to the road ahead, it sounds like, sure, there's a lot of uncertainty out there, but most organizations are going to be OK.
Justin: Yeah, yeah. It takes staying on top of it. You got to be able to navigate. You've got to be able to Indiana Jones your way through life. And so, that's how we're going to handle it. So thanks, everybody, for tuning in to this episode. Be sure to be on the lookout as we go through the next couple of episodes talking about various aspects of uncertainty. We look forward to those conversations. All right. We'll, we'll see you next time. See you down the road.
Group Thinkers is a production of RKD Group. For more information, visit rkdgroup.com/podcast. Special thanks to our production team, including the talented Ryan Mellinger for his work on mixing every episode. Also, a shout out to the content team that helps pull together research and guests, puts the marketing efforts behind Group Thinkers, Suzanne, Ronnie and others for their work on this and every episode of Group Thinkers.
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