U.S. nonprofits scramble for loans as need jumps, funds disappear

WASHINGTON (Reuters) - Domestic violence incidents are surging during coronavirus lockdowns, just as the largest U.S. network providing emergency housing for abused women and their children is running short of money.

Women prepare meals to hand out to children at the nonprofit YWCA, as the global outbreak of the coronavirus disease (COVID-19) continues, in San Fernando, near Los Angeles, California, U.S., April 28, 2020. REUTERS/Lucy Nicholson

Some of the YWCA’s locations are also providing around-the-clock daycare for the children of nurses and doctors who are treating patients infected with the new coronavirus. It is one of thousands of U.S. nonprofits being squeezed as fundraisers are canceled, big donors dry up, and revenue from shops, classes and pool admissions vanishes.

The U.S. Small Business Administration’s initial $350 billion Paycheck Protection Program (PPP) provided loans to help small businesses and nonprofits keep paying their workers. With 12.3 million workers, nonprofits are the country’s third largest workforce sector, behind retail and manufacturing.

But the program came under fire after small companies and nonprofits were squeezed out by bigger, publicly-traded ones, with many nonprofits calling the application process “a logistical nightmare,” said the YWCA’s CEO, Alejandra Castillo.

Nonprofit executives told Reuters they have faced numerous bureaucratic obstacles to get the funding, including requests for federal forms they are not required to file, inaccessible bankers, and a general lack of transparency during the process.

Many are hoping they fare better in the second round of loans, which made $310 billion available, beginning Monday.

“We are really first line responders,” said Sharon Shelton, vice president of the YWCA Greater Los Angeles, which has around 200 employees at seven sites.

Since virus-related lockdowns started, the Los Angeles YWCA says it has been feeding seniors and nearly 400 children each week, while expanding job training and other services during a pandemic that has caused millions to file for unemployment.

The group has also seen increased demand for services at its three rape crisis centers. Under lockdown, women “may be safe from the virus, but not safer across the board,” Shelton said.

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Founded in the decade before the U.S. Civil War, the YWCA is a federation of 204 independent associations with some 11,000 employees that serve 2.3 million women and children each year.

Now amid the current coronavirus outbreak, nonprofit charitable groups that serve vulnerable communities like the YWCA are reeling from falling corporate and private donations, and declining revenues from programs forced to shut, said Rick Cohen, chief operating officer of the National Council of Nonprofits.

Charities hoped the key spring fundraising season could offset a 2.6% drop in contributions of under $1,000 seen in 2018 due to changes in the 2017 tax law, he said. Instead, fundraising balls and auctions have been canceled.

Sheena Wright, president and CEO of United Way of New York, said that even before the pandemic, 40% of nonprofits in the city of New York had no working capital and the other 60% had only a month or two.

The YWCA said 29 of its local associations got PPP funding in the first round, and 32 others had their applications approved but had not received any money. Sixty-five more have applications pending with banks.

The Hudson Guild, a 125-year old community group on Manhattan’s West side, hopes to secure a loan in the second round after losing out the first time, said its executive director Ken Jockers.

But the “highly bureaucratic” application process should have earmarked certain funds for nonprofits, instead of forcing them to compete against small businesses, he said.

“It feels like the running of the bulls,” he said, referring to a chaotic annual event in Pamplona, Spain. “We’re doing really important social services, but it feels bad to be competing against a group of waiters and waitresses who may also be artists. I don’t want to get funded at their expense.”

The Hudson Guild is “fundraising like crazy” to keep paying its 200 staff who provide remote lessons to children that would normally be in day care, carry out therapy sessions for clients by teleconference, and provide food for seniors.

Donors have been hammered by stock market drops, he said. “People have been generous, but money is tight everywhere. If we don’t get the loans, all options are on the table,” including cutting staff and services.

In New York, Jacquelyn Kilmer, chief executive officer of Harlem United, has already had to lay off 15 of her staff of 325, after revenues dropped when the group had to close one of its two health centers and an adult day center for people with HIV. She may have to lay off another 25 to 30 people if the shutdowns continue and more funding doesn’t come through.

“The longer it continues, the worse it’s going to get,” she said. The group, which serves 10,000 people a year, won one PPP loan worth $2.2 million by going through a smaller community lender. But a separate application for a different arm of the group got mired in red tape at a big bank.

“If we don’t get more money, we’ll have to start shutting down programs that help the most marginalized people,” she said. “If we have to shut down, who will be there for them?”

Reporting by Andrea Shalal; Additional reporting by Jonnelle Marte; Editing by Heather Timmons and Aurora Ellis