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Pandemic Will Create Pressure on Charities

4/7/2020
The COVID-19 situation is a scary one for many of Ohio’s citizens. The precautionary measures that have been taken to slow the spread of the disease are unique and have an impact on all parts of our lives. There is no doubt that there will be a profound effect on members of Ohio’s charitable community. The need for their services may outpace the capacity they have to respond.
 
Health Restrictions and COVID-19 Relief Policies: Charitable leaders must be aware of ongoing changes and announcements about virus-related matters through the Ohio Attorney General’s coronavirus resource and guidance website and the state’s website on the crisis. These sites compile the latest announcements regarding COVID-19, including restrictions and required safety measures that would apply to charities and businesses.
 
There have been various new provisions adopted to provide relief for employers, which could also include nonprofits. Charitable employees who have experienced layoffs, lack sick leave benefits, or faced other cuts are eligible for new support such as a shortened process for applying for unemployment benefits.
 
The Small Business Administration is also offering loans to nonprofit organizations. As this is a developing situation, other changes may also be announced to help alleviate the financial pressures created from the coronavirus, so it will be important to monitor the latest news.
 
Communications: Whenever there are unusual situations, ensuring there are solid lines of communication can be helpful. Leaders may want to consider providing clear and supportive communications about what is happening within your organization to staff, volunteers and donors. It also creates an opportunity to share any special needs that may arise because of the COVID-19 situation, including fundraising needs. If your organization didn’t have a crisis communication plan before, this situation illustrates the importance of having one.
 
Avoiding Meetings and Gatherings: It might be helpful to note that Ohio’s Nonprofit Corporation Act permits nonprofits to hold board meetings by teleconference unless an organization’s bylaws forbid it. There are many products on the market, including free software, that facilitate such meetings. These may be handy tools to consider during this period of uncertainty.
 
Because online meetings feel much different than in-person meetings, leaders might want to spend time familiarizing themselves with the operational details of how your particular technology platform or conference call system might work. It is sometimes difficult to distinguish who is talking, so speakers should identify themselves when talking, which greatly assists in completing minutes of the meeting. Roll call votes should be taken so that minutes can properly designate results of votes on various motions. Because some people are often hesitant to talk and interrupt someone else, it can be helpful at times to call on people to ensure all views have been expressed, or to be certain to pause long enough before votes to allow plenty of time for everyone to get their questions answered.
 
Organizations with specific questions about teleconference meetings can contact CharitableLaw@OhioAttorneyGeneral.gov for additional information.
 
Monitoring Finances: Board members may also want to be engaged in examining the financial strength of the organization and considering various scenarios that could arise during this period of uncertainty. Cash flow could be challenging when expenses continue to mount but programs that would have generated revenue are canceled. It is critically important to ensure that financial controls remain in place to protect your assets. Inattention can end up being very costly. Ensure that checks coming through the mail are safely processed and deposited routinely and that other assets are properly secured.
 
Fundraising Issues: Unfortunately, many charities have had to cancel major fundraisers and events that generate revenue for their organizations. That has forced charities to take a creative approach with their donors. Some arts organizations, for instance, are asking ticketholders to consider forgoing refunds and turning the costs of their event tickets into contributions. Others have restructured fundraising events so they can be done by teleconference or other methods. Some organizations have made specific appeals for support in light of the difficulties created by the pandemic. To explore new fundraising options that have been used by charities, consider an internet search to find articles and webinars on fundraising considerations during the pandemic.
 
Reserve Funds and Endowments: Many organizations have reserve funds they may be able to tap during difficult times. Other groups may be able to increase the amount of funds drawn from endowments. Some groups may want to talk to counsel about what specific restrictions apply to using endowed funds. There are provisions that can be used to seek permission to deviate from donor restrictions in certain situations. Those legal requirements involve the Ohio Attorney General’s Charitable Law Section and probate courts. Counsel may be able to advise whether an organization is eligible to seek permission to alter restrictions on funds.
 
These are uncertain times. But these times can often reveal the generosity of our citizens. The charitable sector has always played a critical role in keeping our communities knitted together. That may be more valuable now than ever before.