Financial Strains Grow on Small Nonprofits

The Million Dollar Bike Ride has been a reliable fundraiser for rare disease research, having collected a total of $10.3 million in its first six years. But when riders mount their bikes for this year’s event, they may not travel far.

The event was expected to bring more than 750 riders to the University of Pennsylvania campus on June 13 for rides through the greater Philadelphia area, but because of the COVID-19 pandemic, the fundraiser, which is organized by the Orphan Disease Center at Penn Medicine, this year is going virtual to honor social distancing recommendations.

Riders are encouraged to either take to the road on their own where they are or use a stationary bike in the comfort of their homes. They won’t get the jerseys, water bottles, and other schwag of past years. Sponsorships dollars, which are expected to be down, will be directed toward research only. And organizers expect to see fewer participants this year.

“We’re very cognizant of the fact that we are putting on an event for the rare disease community, which is already an immuno-compromised population, and we didn’t want to put anyone at risk in general, but even further with this community that has a lot of complications and obstacles to consider when gathering in a large group like this,” said Samantha Charleston, director of programs and community engagement at the Perelman School of Medicine at the University of Pennsylvania, of the decision to go virtual. “It’s not an easy trip for a lot of people to make.”

The move to a virtual event reflects an effort to prevent the COVID-19 pandemic from derailing the fundraiser, but for many nonprofits, the virus is having a crippling effect on their ability to raise money. A sudden spike in unemployment, growing concerns about a deep recession, and the inability to hold events that represent cornerstones of the financing strategies for many organizations are choking off funding for many small nonprofits as both individual donors and corporate sponsors have grown cautious about spending.

Some rare disease advocates are devising fundraisers to fit the times. As sheltering in place has led to a wave of home haircuts, one rare disease group is hoping to turn the trend into a funding source. The Home Cuts for a Cure campaign seeks to raise money for research into the rare neurological condition SLC6A1. The campaign asks people to donate $25 and post a video or before-and-after photos of a home haircut, along with a challenge to three friends to do the same.

But despite efforts to turn to online fundraising, for many organizations the pandemic is turning from a health crisis to an economic one.

“It’s a very difficult time for fundraising,” said Steve Zimmerman, founder and principal of Spectrum Nonprofit Services, a consulting firm that provides strategic planning for nonprofits. “A lot of organizations are seeing multiple revenue streams dry up at once from individuals as events people had planned for the spring are cancelled. Some are even getting notices from foundations that were going to give them resources that those foundations are rethinking their priorities.”

Zimmerman said there have been some bright spots as some foundations have lifted restrictions on grants and some nonprofits have been able to increase donations by making appeals based on how their work is needed now more than ever with the pandemic.

While some organizations have tried to move toward taking their events online, Zimmerman said organizations are unable to equal what they have been able to do with live events, particularly as its been difficult to monetize sponsorships.

The bigger question, he said, is when will events return? Though some organizations thought they could just push their events to the fall, that now appears to be optimistic as it may be spring or summer of 2021 before events return.

Given the growing financial strain some nonprofits are feeling, at what point do they need to think about changing the way they are doing things in order to survive?

“I hate to say it, but I think that point is today,” said Zimmerman, who said nonprofits will need to adjust to their new realities. “They are going to have to reimagine what their organization is going to look like in three months. What is our revenue going to be and how do we build an organization of that size as opposed to where we were back in January.”