US Deloitte Monitor Institute

An event or an era? Resources for social sector decision-making in the context of COVID-19 July 2020

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An event or an era? By Gabriel Kasper and Justin Marcoux, with Kerri Folmer, Joanna Burleson, Rhonda Evans, Jennifer Holk, Sarah Brayton, Apoorva Kanneganti, Leah Jordan Haynesworth, and Danielle Jordan DeVera. In cooperation with New Profit, the Center for Effective Philanthropy, the Council on Foundations, Independent Sector, the National Center for Family Philanthropy, and United Philanthropy Forum. With profound thanks to our special advisors Dana O’Donovan, Andrew Blau, and Katherine Fulton, who were invaluable guides as we made sense of this complex and dynamic time, as well as to New Profit’s Shruti Sehra, Kim Jackson-Nielsen, and Yordanos Eyoel for their deep collaboration on this work. We would like to offer our sincere appreciation to Crystal Gonzales (English Learners Success Forum), Kalani Leifer (COOP), Adrian Mims (The Calculus Project), Sheila Sarem (projectBASTA), Kimberly Smith (Digital Promise), Yutaka Tamura (nXu), Jason Terrell (Profound Gentlemen), and Daniel Zaharopol (Art of Problem Solving Initiative, Inc.) of New Profit’s EdCatalyst Cohort. Finally, we would like to express our lasting gratitude to those within Deloitte who have enabled and advanced this work, including Judy Cheng, Debbie Chou, Carl Engle, Chris Ertel, Stacy Janiak, Emily Jansen, Allan Ludgate, Eamonn Kelly, Kelly Langan, Kwasi Mitchell, Tony Siesfeld, Sam Silvers, and Avon Swofford. About Monitor Institute by Deloitte Monitor Institute by Deloitte is a social change consultancy that marries the specialized knowledge and experience of a boutique social impact consulting practice with the breadth and scale of a globally-recognized professional services organization. We work with innovative leaders to surface and spread best practices in public problem solving and to pioneer next practices—breakthrough approaches for addressing social and environmental challenges. Monitor Institute combines a deep grounding in strategy, networks, social innovation, and human systems with the fundamentals of professional advisory services—effective project management, skilled facilitation, and well-timed intervention. As a for-profit/for-benefit hybrid, Monitor Institute by Deloitte pursues social impact while operating as a fully integrated unit of Deloitte LLP. For more information about the Monitor Institute by Deloitte, visit 02

An event or an era? Contents Introduction 04 What we mean by scenario planning 05 What we know so far 06 What is still uncertain 07 How to read (and how not to read) the scenarios 09 What are the critical axes of uncertainty 10 The scenarios 11 What to do with the scenarios 20 Takeaways for the social sector 22 Conclusion 23 Endnotes and additional resources 24 Interviewee acknowledgements 25 03

An event or an era? | Introduction COVID-19 is a crisis unlike any we have faced For most of us, “normal” life feels like a distant memory, even We explicitly chose a 12-18 month time horizon as a way to help as many communities are reopening their doors for business. social sector leaders pressure-test how the immediate budgeting, 1 More than 100,000 Americans have died. Tens of millions are out operational, and strategic decisions they are making right now 2 of work. No one knows what the future will hold—not for the will play out over the course of 2021. It is also worth noting that progression and spread of the virus, not for the economy, not while the potential scenarios presented here are centered on even for the most basic aspects of how our country and the COVID-19 crisis, we have made a point of looking at how communities will function in the weeks and months ahead. they may play out through a racial equity lens. We made this choice intentionally—at a moment of deep social unrest when And the COVID-19 crisis isn’t occurring in isolation. The activism many organizations are reexamining their existing practices and for racial justice taking place across the nation is intersecting systems—because we believe that equity concerns have profound with the health and economic disparities laid bare by the virus. impacts across virtually every other social and The COVID crisis will increasingly serve as a compounding environmental issue. backdrop for many other issues we face, from our politics to our children’s education. To that end, over the next several months, the Monitor Institute by Deloitte will be building on this initial scenario work along Many organizations trying to navigate through this moment may several different fronts. One will focus on identifying potential find themselves alternately paralyzed or swamped by a crushing “cascading aftershocks” that the field may need to prepare for number of choices, without much scaffolding to guide their in the wake of the immediate effects of the pandemic—from the decision-making. This is especially true in the social sector, where potential for a housing and homelessness crisis if government the economic crisis has put organizations on tenuous financial eviction moratoriums aren’t renewed to the health impact of footing even as demand for their assistance is skyrocketing. deferred medical testing (e.g., missed physicals, mammograms, and other diagnostic testing) as people postpone non-urgent care. For nonprofits that have managed to weather the initial storm, continued survival and effectiveness will depend on the ability We will also explore potential “reset opportunities” that might to adapt strategies and operating models to new post-COVID allow funders and nonprofits to make new progress on critical realities, whatever they may look like. And many philanthropic issues—from labor rights to individual-based health insurance to funders, having decided on an initial emergency response, are affordable housing in the wake of the crisis. And perhaps most struggling to figure out what to do next. importantly, we will be designing other tools and workshops to help nonprofits and funders adapt the futures work to their To help social sector leaders in the United States confront these specific issues, places, and organizations, and consider how their challenges, the Monitor Institute by Deloitte—the social impact strategies may (or may not) fit the different possible futures that unit of the global professional services organization Deloitte may emerge in the coming days and months. LLP—launched a national effort with pro bono investment from Deloitte Consulting LLP to apply the tools of scenario planning to help funders and nonprofits get on their front foot in preparing No one knows what the future will for the post-COVID-19 landscape. hold—not for the progression and Over the course of two months starting in late April 2020, the spread of the virus, not for the Monitor Institute by Deloitte began a wide-ranging dialogue with economy, not even for the most a diverse group of more than 75 nonprofit leaders, foundation executives, and social sector experts from around the country basic aspects of how our country and to understand what they were seeing and experiencing and communities will function in the weeks what they anticipate might be coming over the horizon. These conversations informed a “futures-thinking” process aimed at and months ahead. helping funders and operating nonprofits: (1) consider the critical uncertainties of the moment, (2) reckon with the difficult, new “truths” emerging from the pandemic, and (3) explore possible future scenarios that may emerge over the next 12-18 months. 04

An event or an era? | What we mean by scenario planning What we mean by scenario planning Scenario planning is an approach to thinking about the future that is rooted in the recognition that even in the best of times, we can’t accurately anticipate what will come ahead. Instead decision-makers can begin to imagine multiple plausible pictures of the future and rehearse how their organizations might respond. Scenarios are stories about what the future may look like, created through a structured process, that aim to help organizations stretch their thinking, challenge their traditional assumptions, and drive better strategic decision-making. Scenarios aren’t about what will happen; they’re provocative pictures of what could happen, designed to provide a new perspective and context to help guide present-day decisions. This is quite different from the “scenarios” that many social sector organizations are accustomed to discussing, which are typically contingency planning exercises focused on best-, medium-, and worst-case revenue projections. Thinking about these types of resource questions is a critically important activity, but it ignores the fact that the current disruption is far more than just financial, and it is unlikely to provide leaders with a framework for thinking through the complex uncertainties they face in the midst of the rapidly shifting crises. It’s worth noting that even the most optimistic futures painted here present difficult challenges and significant threats. There isn’t one best scenario that you’ll read—most will involve glints of progress combined with varying degrees of negative consequences stemming from the virus, the economy, and widespread inequities. We enter into the work with a humility and understanding that we can’t predict the future. No one can. Who, for example, would have anticipated back in April the extent to which recent events have prompted organizations and leaders across the nation to begin confronting longstanding inequities and systemic racism? And it’s not hard to imagine that the coming months may see additional transformative surprises. As former Time magazine editor Richard Corliss once said, “Nothing ages so quickly as yesterday’s vision of the future.”3 What complicates things is that the COVID-19 crisis is no longer just the “lead story.” It’s 4 now also “the setting” in which other emerging issues and crises will play out. It’s hard to miss that recent protests for racial justice are occurring with the backdrop of masks, social distancing, and racial tensions already heightened by the inequitable impacts of the pandemic. Similarly, the story of the election in November 2020—itself a major uncertainty for the future—will be inseparable from COVID-19. Or this year’s coming hurricane season, where communities will need to manage their response to the storms while at the same time reeling from, and dealing with, the health and economic impacts of COVID-19. Or the potential for international conflict stemming from blame about the spread of the virus. With so many variables and wildcards in play, it’s quite possible that COVID-19 won’t be the most important story of 2020. We at the Monitor Institute by Deloitte also have a deep conviction that even with so much out of our control, there are ways we can influence how the future will unfold. Scenario planning is a tool for helping understand how the world around us may change and what those changes may mean for both what we do and how we do it—but it also helps us to make decisions that can have important implications for how (and which) scenarios may play out over time. 05

An event or an era? | What we know so far What we know so far Regardless of what happens in the next few weeks and months, earned income, government contracts, and fees for service are the consequences of the COVID-19 crisis will continue to echo likely to be among the hardest hit, and organizations in the arts, through our communities. Even if there were an early vaccine education, and other space that don’t lend themselves to remote or other fast resolution to the health crisis, many long-standing service delivery may be particularly vulnerable as many must businesses and nonprofit organizations will have shuttered for fundamentally re-imagine their program and financial models. 5 good. Unemployment is at record highs and government budgets Impact from the crisis will fall disproportionately on are already under pressure, with a cascading set of implications communities of color and other marginalized populations for education, food access, and other social services that will vary Heightened risk of exposure of frontline workers, worse access widely from place to place. to health care, and disproportionate risk of job and business 9 Creating stories about the future often begins with thinking loss all hit marginalized groups harder. This has exacerbated about critical uncertainties—the key things we don’t know and already existing inequities. And community-based nonprofits led 10 how they might interact to produce very different futures. But by people of color, which typically have less access to capital, at a time when so much is uncertain, we think it may be just as will likely be at greater risk for insolvency. Additionally, other important to focus on what we do have a grasp on—what Deloitte cross-sections of the population will bear an outsized share of 6 futurist Eamonn Kelly calls “Prudent Assumptions.” These are the consequences of the crisis, including the elderly, immigrants, the baseline realities that organizations will need to come to families with children, and low wage workers. Without active terms with—and hold onto—in order to begin moving forward intervention, our communities will emerge from the pandemic in the midst of great uncertainty. We see five essential prudent with highly divergent outcomes and widened inequities. assumptions that social sector leaders will likely need to recognize Differences in outbreak rates and reopening strategies will and face: cause varying levels of crises and need across geographies The pandemic will intersect with and compound other and time ongoing trends We already see different case levels, peaks, and plateaus across The crisis is accelerating many changes (especially digital ones) the country. Policy divergence, combined with variations in that were already underway in how we work and live—from population density and demographics, geography, cultural telehealth and remote work to job automation and the ubiquity of responses, and health infrastructure—not to mention a significant e-commerce. But it is also widening many of the fissures and flaws dose of luck—are creating very different realities on the ground in our systems, including long-standing health and educational in different states and metropolitan areas. This creates wide disparities, as they play out against the backdrop of disruption, deviations in our experience of the pandemic and heightens the fear, and difficult health and economic conditions. In particular, significance of place and localized responses. it is clear that the economic and health disparities in the impacts Reckoning with these new realities—and what they may mean for of the pandemic will be part of a larger conversation on racial the work of the social sector—will be critical to moving forward in inequity—while at the same time racial inequity becomes an the coming weeks and months. inextricable part of the conversation about COVID-19. The need for nonprofit services will dwarf available capacity and resources Even if the pandemic miraculously ended tomorrow, communities will be facing daunting resource gaps in dealing with the economic and health impacts of the last few months. As Anders Holm of the Hempel Foundation observed to us, “You cannot do more 7 with less. You can only do less with less.” Nonprofits will face real limits and have difficult choices to make about whose needs get prioritized, what quality of services they can provide, and whether to focus on immediate need or more systemic causes. A significant number of nonprofits will be forced to consolidate or close their doors Early estimates of contraction in the nonprofit sector range from 8 10 percent to as high as 40 percent. Nonprofits that rely on 06

An event or an era? | What is still uncertain What is still uncertain There is also a great deal that we don’t know about how the crisis will unfold over the next 12-18 months. There are many “critical uncertainties” right now: factors that (1) are volatile in terms of how they play out and (2) have an unusually high impact on how the future may unfold. In scenario planning, we use these critical uncertainties as the building blocks for creating scenarios. Think of them as a continuum of possible outcomes (normally visualized as an axis), and by labeling both ends of the axis, we should be able to imagine both end points being plausible. Through our research we’ve identified at least five critical uncertainties that we believe have the potential to tip the future of the social sector in one direction or another: The length and severity of the pandemic So much remains unknown about the health realities of the novel coronavirus and how COVID-19 will spread and play out across the nation. But uncertainty about the length and severity of the closures. The economic impact of the crisis will also have a outbreak will have a set of cascading implications for everything number of more specific implications for equity and the social from how quickly the economy recovers to the scale of cuts in sector, especially related to the disproportionate distribution of state and local government budgets to who lives and dies from economic impacts in communities of color, the increased scale of the outbreak. Uncertainty about the length and severity of demand for services from nonprofits, and the extent and uneven the pandemic will be driven by a set of interrelated questions, distribution of nonprofit consolidation produced by the downturn. including: the rate and spread of the disease as the economy The government’s response and the strength of the public reopens; the temperature sensitivity and seasonality of the social safety net disease; the timing and effectiveness of potential treatments, As unemployment and other social, health, and economic management protocols, and/or vaccines; and the duration of challenges mount across American communities, the antibodies and/or immunity. In addition, the distribution of health government’s response to COVID-19—and in particular the impacts—and the accessibility of testing and treatments—in strength of the public social safety net and stimulus efforts— marginalized communities are likely to have outsized implications will have massive implications for the social sector and the related to the social sector and racial equity concerns. recovery of individuals, businesses, and organizations that will The length and severity of the economic downturn vary widely from place to place. In many parts of the country, Economic activity in the United States has fallen in the wake it remains unclear whether government safety net programs of the COVID-19 pandemic. Unemployment has risen sharply, will be sufficient to keep individuals from falling through the and there is some fear that the economic decline may rival cracks. And uneven access to stimulus funds will have enormous 11 implications across communities. Uncertainties around the the Great Depression. The economic damage of the virus will likely go beyond temporary decreases in spending and job losses; government response to the crisis will be driven by several key consumer behavior appears to be changing as well, and regardless questions, including: how significantly state and local budgets are of any resurgence of the virus there will likely not be a quick return affected by the crisis; the level of coordination of recovery and to normal as social distancing measures, ongoing anxiety about stimulus efforts across the federal, state, and local levels; and the the virus, and precautionary consumer saving may blunt a hoped- outcomes of the 2020 elections, including state and local races. for burst of pent-up demand. The length and severity of the Other governmental uncertainties, such as possible regulation economic downturn will depend on several key factors, including: and stimulus efforts for funders and nonprofits, the potential the shape of the economic “recovery curve;” the willingness of for decreased civic engagement, and potential disruption of key consumers to spend and businesses to make capital expenditures; government processes like the election and the census will also the degree to which the economy is staked to the trajectory of the have important consequences for the social sector. pandemic; the scale, duration, and distribution of job losses; and the scale of bankruptcies and organizational 07

An event or an era? | What is still uncertain What is still uncertain The impact of technology on operating models social sector. While we do discuss the election in the scenarios, Social distancing and sheltering-in-place aimed at limiting we decided not to give it a greater degree of primacy for two exposure to the virus has meant that people have not been able key reasons. First, we feel that many of the critical consequences to attend school or work (excluding those deemed essential of the elections related to COVID-19 and the social sector are workers) and have depended on virtual platforms to connect already embedded in the other health, economic, community, with others. Necessity has accelerated digital transformation; and technological uncertainties described here. The election will technology transitions that were once expected to take years affect these uncertainties, but it’s likely that these uncertainties have occurred in weeks. But what remains unclear is the degree will also affect the election. Second, we recognize that the 2020 to which the digitization of work, learning, and other forms of elections have so many different permutations that they defy a interaction will stick, and how much will eventually just return to straightforward analysis. Do different parties control Congress the way it was before the crisis. And while many organizations and the presidency? Would such a situation lead to compromise to have figured out ways to transfer (at least parts of) their normal pass additional stimulus legislation or greater retrenchment? How work online, it is also less clear how technology might enable new close are the elections? Are they contested? What role do state ways of working and new possibilities for service delivery. While governors and mayors play? The 2020 election has a complex the consequences of increased reliance on technology will have series of possible outcomes, and we wanted to avoid over- long-term implications for the nation, its impact on the social simplifying it. We understand that some readers won’t agree with sector will be driven by a number of key uncertainties, including: this decision, but we want to be transparent in our thinking. how tech changes the delivery of social services and shifts the way nonprofits think about scale; what the increasingly ubiquitous use of technology means for data ownership and privacy; and the capacity of social sector organizations to undertake digital transformation. The level of social cooperation across communities Social cooperation—the willingness of people to work together across lines of difference toward common or collective goals— has long been one of the hallmarks of American communities in the face of crisis. Diverse groups of individuals pull together against a common challenge, engage with their communities in new ways, and draw on a collective strength and identity. But the COVID-19 pandemic and other cascading shocks to the system may stretch our sense of social cohesion and cooperation to the breaking point. The durability of social cooperation across American communities will be driven by several key uncertainties, including: the level of trust and confidence in core institutions and government; the predominant cultural narratives (e.g., individual liberty versus collective responsibility) that win out; and the degree of collaboration across sectors and organizations. Social cooperation will also have important consequences specifically for the social sector. For example, whether the country can come together to address systemic racism depends, in part, on the level of cooperation between groups. Another important area is the level of cooperation between funders and nonprofits, and whether sometimes harmful funding practices and power dynamics will fade or persist. It’s worth noting that we have deliberately not included the 2020 election as one of the primary critical uncertainties in this work. It was frequently flagged in our conversations with sector leaders, and there is no question about its importance to the future of the 08

An event or an era? | How to read (and how not to read) the scenarios How to read (and how not to read) the scenarios Scenario planning is quite different from other planning efforts you have likely undertaken in the past. And while scenario planning itself is often focused on stretching people’s thinking with hypothetical stories about the future—the key challenge right now is on helping organizations move from thought to action in the midst of great uncertainty. As you read through the scenarios, DO: As you read the scenarios, DON’T: • Focus on why the scenario might happen, what it would • Just pick the scenario that you like best, or that you think is mean if it did, and how your current strategies and the most likely. The work is meant to help you look across tactics would—or wouldn’t—work in that context. What possible futures and prepare in a structured way to be able assumptions would you need to rethink? What would you to pivot and quickly adapt as circumstances change. need to hold on to? What would you need to let go of? And • Focus too much on the specific details of the scenarios. what would you need to think about in new ways? Instead, try to suspend disbelief for a few minutes and • Consider what it would feel like to live in each scenario. put yourself into the scenario to think about the overall What new threats would there be to your organization’s direction and conditions each future creates. survival? What new opportunities might emerge? What • Dwell on the nuances of the two axes of the matrix. would you need to start doing right now to prepare? What General understanding of the concepts is enough to strategic bets would you want to make? help you understand the contours of the scenarios, and • Think about how you would respond in each scenario, focusing too much on the details of each axis will prevent determine signposts that signal key changes, and prepare you from fully “living in” the scenarios themselves. for how you can pivot as necessary. • Expect to see specific details about the places or issues • Consider whether you have been operating as if one of you care most about. Scenarios are not meant to provide these scenarios is your “expected future.” Do you need to specific answers, and this document was designed to be be hedging against the possibility of another used broadly across the entire social sector. Scenarios are future emerging? a tool for prompting thinking and discussion, so there is real power in doing the work to consider what a world like this would mean for your place, your issues, or your organization. 09

An event or an era? | What are the critical axes of uncertainty What are the critical axes of uncertainty To shape the scenarios, we explored two critical uncertainties that we believe will most significantly shape demands on the social sector over the next 12-18 months: the severity of the crisis—a combination of both health and economic variables (which, although not perfectly intertwined, are likely to be closely correlated)—and the level of social cooperation. What is the continued severity of the crisis? Definition: The level of harm and dislocation experienced by the population as a result of the depth and duration of the health and economic impacts of the pandemic Lower Impact Higher Impact • The virus is brought under relative control • The virus is harder to control and the number of by the development of treatments, testing and infections and deaths soar monitoring, and/or vaccines • The economy is devastated as cities and states are • The economy steadily recovers, and the economic forced to repeatedly shut down and shelter in place. damage of the downturn, while bad, is more limited Unemployment and other economic indicators persist at record levels What is the level of social cooperation? Definition: The relative willingness of society to work together across lines of difference towards common or collective goals Fragmented United Sporadic Enduring Factional Broad-based Variable • Breaches of institutional trust limit our ability to • A unified sense of purpose to address the crisis effectively work toward common goals ultimately prevails • Where coordination is found, it is entirely factional • People and organizations seek out ways to collectively in nature solve cross-sector problems • Attempts at change and reform are gridlocked • The value of collective responsibility is prioritized, and many divisions are overcome 10

An event or an era? | The scenarios An overview of the scenarios 1 Return to “normal” 4 Rising from the ashes • Despite heavy tolls across American communities, an n • The virus is more deadly than we initially thought and early vaccine helps us control the virus more quickly the economy declines sharply. Facing a national crisis than anticipated and the economy bounces back tio of epic proportions, we’re forced to pull together. Given as people breathe a sigh of relief. By the end of 2021, it a the level of death and destruction, people are open feels like a recovery. r to deeper structural changes. Our existing systems e clearly aren’t working. • As in other recoveries, strong top-line growth masks p deeper inequities, but in the rush for a return to o • By the end of 2021, there is a sobering understanding o c normalcy there’s limited appetite to make deeper, that we are at the beginning of a decade-long effort l more structural changes. Efforts to address the a to build a new social compact. The crisis convinces unequal impact of the virus on communities of color ci enough people that the status quo will no longer work. prompt movement on key challenges like structural o s racism, but progress is modest reform, not revolution. • The story here is that through much pain h and suffering, we collectively face the truth that • The good news is that we are getting back to normal. g our systems are creating vastly unequal opportunities The bad news is that we are getting back to normal. Hi and need to be reimagined. Lower impact of crisis Higher impact of crisis n 2 Social fabric unraveled o 3 A nation on the brink i t a • New treatments help us begin to get the virus under r • The crisis worsens dramatically, and no one is coming control, and COVID-19 gradually becomes one more e to save us. As government aid dwindles and giving p “acceptable” risk we take as people return to work and oo collapses, the virus worsens, stifling any economic consumer confidence increases. c progress—with a particularly devastating impact l on communities of color and other marginalized • But the disproportionate impact of the crisis a i populations. on communities of color turns out to be part of a spark c that ignites long-standing powder kegs of inequality. The so • A scarcity narrative wins the day. There’s more economy and virus are relatively under control, but our demand for fewer resources. As municipal governments social fabric is unraveling. w go bankrupt, there are requests and later demands on • By the end of 2021, there is no collective narrative of the Lo philanthropy to fund social services and sustain public, crisis. Everyone holds their own truth and sees others civic institutions. as “villains.” Any cooperation is factional in nature and • By the end of 2021, it’s unclear if things will get better those with opposing views are seen as dangerous. or worse. Fringe views gain traction in the national debate and the “sensible center” all but disappears. 11

An event or an era? | The scenarios Scenario 1 1 4 Return to “normal” 2 3 Low Crisis, High Cooperation At a glance A vaccine is developed in late 2020 and begins to be distributed using existing influenza vaccine infrastructure as people rejoice after a year of pain and loss. 2021 is a year for healing—physically, mentally, and economically—as we embark on a sustained, steady recovery. Politicians work together enough to get a deal on additional government stimulus, which allows most families to tread water until hiring ramps back up. Racial justice protests ignite a desire for change, bringing communities together. While modest reforms take hold, many Americans have limited appetite and energy for taking on larger, more structural transformation on the heels of the COVID-19 crisis. Many nonprofit leaders find themselves frustrated that we snap back to the status quo instead of continuing the push for deeper systems change. What you would need to believe • A vaccine or treatment comes in late 2020 or early 2021. It is produced and We tend to overreact to new distributed at scale and succeeds in getting the virus under control. People risks and then we tend to resume activities at something close to pre-crisis levels, aggregate demand “ absorb them and move on. rebounds, and the economy recovers more quickly than is expected. That will ultimately happen • The shared experience of the crisis ultimately results in a desire to create here.”12 change, but the pull of simply returning to the way things were provides a strong counterbalance. Larry Kramer • As trust in institutions increases, people believe change will arise from The William and Flora reforming the system, not breaking it. Hewlett Foundation May 2020 Impact on the social sector & communities Philanthropy Nonprofits Funders face strong pressure from nonprofits to As the crisis lessens over time, the level of continue less restrictive grantmaking processes as community need and funding available begins boards begin to ask, “Was our COVID-19 response to normalize, though not all organizations make effective?” Funders that didn’t immediately adjust it through. Relationships and power dynamics their strategy in response to the crisis may have with funders improve. Nonprofits also improve even more “dry powder” available to push for relationships with government to deliver services reform on the issues they care about. and shape reforms. Equity Racial disparities around the virus and economic recovery linger. For some, the racial justice protests triggered by long standing inequities are a tipping point that lead to an increased focus and drive for change. Others are eager to put the troubles of 2020 behind them and look to better days ahead. 12

An event or an era? | The scenarios Scenario 1 1 4 Return to “normal” 2 3 Low Crisis, High Cooperation A closer look A vaccine and a strong economic recovery Hypothetical signals that Through the fall of 2020, treatments for COVID-19 drastically improve mortality rates and by the end this scenario is emerging of 2020 a safe and effective vaccine gains approval from the FDA. Mass production gets underway These potential headlines are intended and vaccines begin to be distributed using existing influenza vaccine infrastructure. New cases of to be thought-starters, not predictions. COVID-19 start to fall and Americans breathe a collective sigh of relief. Production ramps The first quarter of 2021 brings the strongest U.S. GDP growth on record. Pent-up demand is high as up on new COVID-19 people return to restaurants and hotels and resume their plans for postponed elective procedures vaccine in hospitals. The Federal Reserve undertakes extraordinary efforts to spur the economy during the crisis. By the end of 2021, for the first time in a decade, people are worried about inflation in a Dow hits new highs; serious way. unemployment down Despite the recovery, the inequitable effects of the virus remain in the forefront. Mortality rates for Black, Latinx, and Native Americans are double the rate of White patients because of unequal health, housing, and employment systems that translate to inadequate access to healthcare, a Congress passes new higher likelihood of working in essential frontline jobs, and overcrowded housing. Like the economic interim stimulus recovery after the 2008 financial crisis, gains are unequal and the lowest-paid workers struggle to package get ahead. Back to normal? Limited systemic In the fall of 2020, the social cohesion of the nation wavered but ultimately held together. After racism reforms protests sparked by the unjust killings of a series of Black men and women, some criminal frustrate activists justice reforms take hold in cities across the country and organizations make sincere pledges toward advancing racial equity. Another major issue—the November election—is fraught, but not particularly close. The winning party has a clear mandate. The vaccine announcement brings additional calm toward the end of 2020. Implications for the By 2021, the mood is almost celebratory. In the Spring, New York City holds a ticker-tape parade for social sector healthcare workers. People look forward to a summer of travel, barbeques, and time with families. In this scenario, the relief Despite challenges, Federal and State governments ultimately work together and manage to that comes from a faster- provide enough support to help most families weather the storm. Unemployment insurance than-expected return to is extended, SNAP benefits temporarily increased, and emergency aid to small businesses normalcy undermines the continued. Communities work together as well, beginning to address the trauma and mental health opportunity to address consequences of the crisis. deeper inequities and 2021 is defined by modest reform rather than major revolution. However, by the end of the year, problems. Social sector a sense of complacency begins to set in. Many want to continue to push for deeper structural leaders will need to think reforms but find limited support for drastic changes. Corporations slowly drift back to prioritizing hard about interim solutions. shareholders over deeper community commitments. The good news is that things are back to Nonprofits will need to figure normal; the bad news is that things are back to normal. out how to temporarily adapt What funders and nonprofits face their fundraising, staffing, Although nearly 10% of nonprofits are forced to close their doors or shift to volunteer-led activities programs, and operations to during the crisis, many funders and nonprofits work together relatively well through the crisis by make it through until a new cutting red tape, more rapidly responding to community needs, and increasing unrestricted funding. normal emerges. Funders will Some work to lock in these gains, though other funders retrench, slowly rolling back emergency need to consider how they efforts and defaulting back to old practices after the crisis is perceived to be over. can best support grantees to help them weather the storm, Financial resources for nonprofits return to pre-crisis levels. Funding for leaders of color working while at the same time looking more “proximate” to communities increases somewhat as some funders intentionally redirect for opportunities to leverage resources, but levels still lag White-led organizations. Nonprofits looking to change systems face change before things begin to headwinds as complacency sets in. return to a new status quo. 13

An event or an era? | The scenarios Scenario 2 1 4 Social fabric unraveled 2 3 Low Crisis, Low Cooperation At a glance New treatments and lower mortality rates make the virus an “acceptable risk” for many. The economy recovers as consumer confidence increases. But as the virus is increasingly managed, the divisions stemming from the differential spread of COVID-19 pull communities apart. The disproportionate impact of the crisis on marginalized populations stirs up deep-seated fear, distrust, and fracturing along predictable lines. In particular, racial justice protests become an accelerant that highlights division, entrenchment, and social unrest. What you would need to believe • Improved understanding and better treatments of the virus mean that we can Without social cohesion, flatten the curve and lower the risk of death to “acceptable” levels. the default rallying cry is • People observe the unequal effects of the virus and racial injustice, but avoid “ “protect yourself and the addressing them productively, preferring to demonize and fight the other side. 13 people you care about.” • The social sector will operate in an increasingly polarized context. Alejandro Gibes de Gac • With no shared narrative of the crisis, people will struggle to trust and retrench Springboard Collaborative into their existing belief systems. May 2020 Impact on the social sector & communities Philanthropy Nonprofits As societal divisions and gaps in government Nonprofits, who are still recovering from the programs grow, funders must decide how to pandemic, experience increased pressure and respond. Should they fill the gaps? Which ones? demand as society turns to them to fill gaps as trust Should they more fully check their values and in government erodes. The funder-grantee power commit to an ideological point of view? Should they imbalance grows as many grapple with how to maintain the “sensible center” to ease growing appeal to funders’ changing strategies. tensions? Equity Even under a best case recovery, marginalized communities and proximate organizations serving them suffer disproportionally. With low social cooperation, tensions around racial, ideological, and socioeconomic issues are exacerbated, resulting in deeper divides. 14

An event or an era? | The scenarios Scenario 2 1 4 Social fabric unraveled 2 3 Low Crisis, Low Cooperation A closer look A manageable virus and a steady economy Hypothetical signals that We catch a few lucky breaks with the virus. A better understanding of COVID-19 helps us discover this scenario is emerging more effective treatments, introduce safety protocols, reduce spread, and lower mortality rates. These potential headlines are intended There isn’t a silver bullet, but steady improvements make COVID-19 an “acceptable” risk as people to be thought-starters, not predictions. inevitably resume more and more activities (albeit altered from the pre-COVID era). The economic recovery follows this steady improvement as well. Spurred by increasing consumer New drug cocktail confidence, economic demand returns over time, though some sectors like restaurants, retail, showing promise and travel & hospitality recover more slowly. Unemployment rates trend downward. However, the economic recovery isn’t as strong as it could be because additional federal stimulus packages remain Black unemployment stalled by partisan divides. remains high as Even under improving economic scenarios, some groups are left behind. Workers making less than overall rates drop $40,000 per year faced the brunt of layoffs in early 2020 and, while companies rehire most of these workers, the pace is painfully slow. Structurally, more jobs become gigs, continuing pre-crisis trends. Trust in government But with double-digit unemployment rates for some populations and little national consensus, plummets, survey says changes to wage and labor rules stall. A social fabric unraveling Protests grow as D.C. Despite the economic recovery, the nation cleaves apart along several major fault lines. Partisanship gridlocks on systemic and filter bubbles mean that we can’t even agree on facts throughout the crisis. Whether you wear racism reforms a facemask or trust health experts is predicted by your political views. Conspiracy theories gain real credibility. Some communities experience widespread polling closures while others take weeks to tally mail-in ballots. Allegations of voter suppression are countered with claims of voter fraud. Survey shows COVID-19 Election results are called into question. A winner is finally declared, though a narrow governing behind climate change, majority combined with bitter gridlock limit additional federal response. racial tensions as top worries Race relations continue to divide the country. Following additional unjust killings of a series of Black men and women, centuries of racial injustice are laid bare for hundreds of millions of Americans to see. Some cities and states make progress in advancing racial equity, but many advocating for racial Implications for the justice underestimate the backlash to the movement that emerges. Entrenched interests fight back, social sector inertia is strong, and the movement is caricatured as anarchists who want to abolish police. COVID-19 turns out to be a spark that ignites long-standing powder kegs. Instead of putting out the As social and political fires, divergent opinions fan the flames. divides become deeper, the passing crisis worsens What funders and nonprofits face existing inequities and Organizations respond quite differently over this time period. Some shift their strategies away from responses are viewed persuading a “sensible center” and more fully commit to their ideological point of view. The use through polarized of 501(c)(4)’s increases dramatically as conservative and progressive funders support likeminded lenses. Many organizations organizations. Others look to meet division with collaboration, creating space where people with will feel pressure to “pick different viewpoints can come together and develop community solutions. a side” as the social sector becomes more politicized. One silver lining is that a relatively stronger economy helps to insulate stretched nonprofit budgets It will be important for and resources aren’t as scarce as some feared. However, community organizations that are led organizations to get clear by people of color face unequal access to capital. Some larger, national organizations see a sharp about their core values and increase in funding for racial equity. understand how to operate and affect change in an even more divided world. 15

An event or an era? | The scenarios Scenario 3 1 4 A nation on the brink 2 3 High Crisis, Low Cooperation At a glance The virus is unrelenting with no cure or effective treatment in sight. The economy craters and it does so in an incredibly unequal manner. Society divides further along existing fault lines and is on the brink of shattering. Governments are gridlocked and additional aid to workers, states, and nonprofits dries up. A slew of municipal bankruptcies ensues and the nonprofit sector faces a major contraction. Protests and counter protests become increasingly common and increasingly violent amidst the chaos. Funders are overwhelmed and act unpredictably. Nonprofits claw for resources in a zero-sum contest. What you would need to believe • There is little hope that the virus will be contained, and without a vaccine or We’re all facing the same effective treatments, people will choose to operate in individualistic ways. storm, but we’re not all in • In times of crisis and without unifying leadership, people will splinter off to “ the same boat. Some of us fragmented groups that reinforce existing narratives. are in duct-taped rafts and • With high scarcity and lack of coordination, nonprofits are forced into a “hunger others are in reinforced games” mentality for resources. cruiser ships and there’s • Things can get really bad, really quickly. really no comparing the vessels.”14 Tulaine Montgomery New Profit May 2020 Impact on the social sector & communities Philanthropy Nonprofits Failing state and local governments look to The sector contracts significantly due to philanthropy for bailouts. Faced with gross retrenchment from donors and a plummeting injustices, public sector demands, and a economy. Nonprofits must decide how to allocate contracting nonprofit sector, funders are in the little they have. Boards and staff are divided uncharted waters. Some retrench, while others and see community need differently based on their spend down entirely. degree of proximity. Trust erodes between funders and nonprofits. Equity The unequal effects of the virus and economic recession are described as atrocities. Anger at this injustice is felt by many, but their cries largely go unanswered as those in power choose to divert resources away to other, more mainstream efforts. 16

An event or an era? | The scenarios Scenario 3 1 4 A nation on the brink 2 3 High Crisis, Low Cooperation A closer look A deadly virus and a collapsed economy Hypothetical signals that The virus continues to spread across the country and we’re unable to halt its spread and flatten the this scenario is emerging curve. Virus cases rise dramatically through the fall of 2020 as a result of episodic compliance with These potential headlines are intended preventative measures, and then peak in the winter. Medical capacity is stretched, and healthcare to be thought-starters, not predictions. workers reach their mental breaking point after seeing months of suffering. The sick overwhelm hospitals in some cities. Worse still, getting infected with the disease only grants short-term Second wave COVID-19 immunity and some people get the virus multiple times over 2020 and 2021. As with the annual flu deaths surpass first season, experts warn us to prepare for a cyclical “COVID-19 season” that potentially claims 100,000- 200,000 lives each year. In terms of treatments, we regularly raise our hopes only to see them dashed by extremely limited advances. The Greater Depression: Stock market and The economy craters as people don’t see a real end in sight. Sporadic shortages of medical unemployment at supplies and other basic necessities become more common as supply chains start to break 1930’s levels down. Economic contraction and unemployment levels spike to levels that approach those of the Great Depression. For the first time in a century, food shortages and hunger overwhelm many Another COVID-19 municipalities. vaccine fails in trial The effects of the virus and economic contraction are gravely unequal. Communities of color and immigrant communities face constant waves of trauma as unequal systems exacerbate already Fiscal stimulus stalls disproportionate outcomes. again amidst D.C. gridlock Pulling apart Against the backdrop of pain and suffering, social cohesion breaks. The crises push democracy to Senator proposes the brink. State governments balkanize over their handling of COVID and several governors attempt “repatriating” to close borders between states to slow the spread of the virus. Election results are challenged endowments amidst polarized debate and have to be decided by the Supreme Court. Internationally, the crisis exacerbates existing skirmishes and large-scale conflict seems closer than at any point in recent memory. Amidst the pain of the virus and the tumult surrounding it, fringe, sometimes dangerous, Implications for the views gain real traction in many communities. social sector How funders and nonprofits respond In this scenario, nonprofits The social sector faces incredible levels of need but a drastic cut in resources. Many organizations and funders will need to don’t make it through the crisis, and those that do need to triage the work they do. begin to consider how they will respond if most other Foundations and their endowments are seen as one of the few remaining sources of funds to civic infrastructure begins to support communities. New regulations are proposed to increase minimum foundation payout fail American communities. rates and start taxing endowments more aggressively. And citing the “Detroit Precedent,” where a As things worsen at an consortium of funders saved an art museum during the city’s bankruptcy, municipal governments alarming pace, organizations seek (and then demand) bailouts from foundations. Funders effectively decide which nonprofit will face the unthinkable and organizations survive and which collapse. Funders are portrayed as out-of-touch villains hoarding need to be prepared to rapidly resources from cities and nonprofits and face heightened regulatory pressures. pivot or pull the “rip cord” on Plan B. It will be important There’s massive contraction of nonprofits. Hundred-year-old institutions fail. Those that survive for funders and nonprofits struggle to stay on their feet. Nonprofits still respond to community need and work toward systems to be clear about the signals change as best as they can, but struggle mightily. that indicate a need for fundamental shift mission or operations; and for nonprofits, that includes when to merge or dissolve. 17

An event or an era? | The scenarios Rising from the ashes Scenario 4 1 4 2 3 At a glance High Crisis, High Cooperation The pandemic devastates American communities. Hundreds of thousands of lives are lost and the numbers are growing. The nation mourns and the collective trauma cements the COVID-19 crisis in our national psyche. But history is replete with examples of people coming together in the face of extreme adversity—and that’s what happens in communities across the country. Not everyone is along for the ride, but a strong majority of the American population begins to agree that the system isn’t working and there is enough cohesion to start to imagine and begin the long road towards a more just and equitable future. What you would need to believe • The virus is hard to control, and treatments don’t really help. The timeline for a We get a modern era New vaccine is a 3-5 year process, not a 1-2 year effort. Deal. The movements for • The economy struggles over this time period, much like the decade-long Great “ racial, economic and social Depression. justice win. But the price is 15 • Americans find strength through adversity. The severity of the crisis brings out high.” our shared humanity and we collectively find space for listening, healing, and action to fix broken systems. Pia Infante • The social sector can work through financial resource constraints as funders The Whitman Institute May 2020 spend more and nonprofits develop new, leaner models that empower communities. Impact on the social sector & communities Philanthropy Nonprofits Philanthropy is looked to as a key funder of In a world of financial scarcity, nonprofits develop policy and systems-level change. The needs and new approaches and innovations that support opportunities are enormous, but a stagnant communities in creating structural change. economy adds pressure to focus financial Organizations adopt lean operating models and resources on the spaces where they can make the empower community members to direct resources, most significant systemic difference. make decisions, and shape strategy. Equity Black, Native American, and Latinx communities, as well as immigrants, frontline workers, and others have a growing voice as the disproportionate impacts from the virus shine a clear light on inequity in our systems. As the country comes together, there is a real opportunity to center these voices in designing what comes next. 18

An event or an era? | The scenarios Scenario 4 1 4 Rising from the ashes 2 3 High Crisis, High Cooperation A closer look A severe virus and stagnant economy Hypothetical signals that We never really get the virus under control. It spikes during the fall and winter of 2020. Most this scenario is emerging treatments are ineffective and vaccine progress stalls. The healthcare system is pushed to the brink, with emergency hospitals popping up in a dozen states. The number of lives lost steadily climb and These potential headlines are intended then even surpass 405,000—the number of Americans who died in World War II. No one escapes the to be thought-starters, not predictions. impacts of the virus—especially in communities of color. There isn’t really an end in sight. Another vaccine fails The economy sputters along but doesn’t collapse. Great Depression-levels of infrastructure building, in trials work programs, social safety net spending, and transfers to state governments prevent the worst of the worst. Nevertheless, unemployment jumps as there is only so much demand that the Fed revises economic government can create. outlook downward— Truth, reconciliation, and coming together again The destruction from the virus causes the country to come together and face hard truths. Even though everyone faces loss, racial inequities are so blatant that most Americans can no longer National Affirmative overlook them. That creates a space for truth-telling that Black, Latinx, Native American, and other Action bill gains steam communities of color face disproportionate hardships because of inequitable systems like access to health care, employment, housing, and justice. The nation then moves towards healing and action. While progress is slow and sporadic at the beginning, it becomes steady by the end of 2021. People COVID-19 deaths realize that these systems aren’t just failing communities of color; they’re failing everyone. surpass WWII totals With higher levels of trust and cohesion, people work together on real structural reforms. Healthcare, climate change, affordable housing, policing, and a revived labor movement are all on the table. More than 500 foundations Some call for a new social compact that rethinks the way governments, corporations, and civil society sign new “Debt Pledge” to interact. Nonprofits and funders work hard to make sure voices of underserved communities are increase giving included in conversations about new systems. The election is historic as a large number of states use mail-in voting. The results are challenged Implications for the through the winter of 2020, but are ultimately accepted. Throughout 2021, Americans reevaluate the social sector role of the government with real energy for increased federal spending by the end of the year. What foundations and nonprofits face Out of the throes of The social sector faces some tough choices about what to prioritize. We never really escape relief devastation, the nation mode, as communities struggle with meeting basic needs and there is enormous pressure to provide emerges with a growing cash, food, and housing to out-of-work families. At the same time, organizations work to balance recognition of the need to this urgent need with the perceived once-in-a-generation chance to make progress on key structural fundamentally change our reforms. Nonprofits implore funders and donors to fund at greater levels to ensure that the sector existing systems. Nonprofits can provide direct relief while also working to change entrenched systems. and funders need to find a way to balance efforts to Funders and nonprofits re-imagine their own practices by moving resources and decision-making meet urgent, basic needs more into the hands of grantees and the communities most-affected by the crisis. with opportunities to think big about how to catalyze Some funders also have an opportunity to re-shape the narrative and intellectual agenda during this systemic change. Social sector time of crisis. Efforts to “re-imagine” capitalism, neoliberalism, and international relations abound, leaders will also have a critical though the level of coordination between funders on these questions remains an open question. role in working to make sure that constituent voices are There’s also an opportunity to re-think the sector’s role with government in a positive way and a heard in the midst of larger renewed openness to use government funding to scale promising social programs. change processes. 19

An event or an era? | What to do with the scenarios What to do with the scenarios This document is intended to serve as a launching pad for planning and action, providing initial tools and ideas to help funders and operating nonprofits with the difficult task of preparing for the future during a time when so much is uncertain. But its greatest value will come from how the resources can be adapted to fit the specific nuances and context of your organization. We recommend four different activities to help apply our findings in your work: 01 02 Make the scenarios your own Find your anchors Our general scenarios can help push your thinking, but it may be For however long we are dealing with effects of COVID-19 crisis, even more valuable to tailor the uncertainties and scenarios to fit having clarity about your core beliefs, values, and principles your organization and the people, places, and issues you can help ground the many decisions your organization will need care about. to make over the coming months. Adapt the four scenarios Name your underlying values. • You don’t need to re-invent the wheel, but it may be helpful • Identify the core values that define your work, so that you to tweak the four scenarios to make them more relevant for know what to hold firm on if you need to quickly respond to your organization, issue area, geography, or constituencies. changing conditions. Talk through your hidden assumptions and For example, a K-12 education organization might add more discuss what you see as the role of the social sector, and of your detail regarding the economic impact on local taxes used to organization, in these crises. fund education programs while also looking at the level of social cooperation between parents and teachers. Keep the spirit Identify what you can influence and your role in the of each scenario, but add important details for your work. ecosystem Customize the axes • While much is outside our control, scenarios aren’t fixed. You can identify actions you can take now and with others to • For the “Length and Severity of the Crisis” axis, add important promote better outcomes. Where can your efforts most make a details for your organization. What does the virus look like in difference towards a more desired future? your community? What economic factors are most relevant for you and your constituencies? How are your state or local policies Consider your boundaries addressing the health and economic impacts of the crisis? • Talk about what decisions, if they turn out to be incorrect in • For the “Level of Social Cooperation” axis, consider what kinds hindsight, you could live with. If you spend more now to respond of cooperation would be most important to your organization. to urgent needs, are you comfortable that your organization National, political cooperation? Within your community? may have less resources in the future? If abbreviated due Between funders and nonprofits in your field? Discuss what high diligence processes lead to more failures, would that be a or low levels of cooperation would look like in these areas. problem? You won’t get every decision right, and it helps to talk explicitly about what tradeoffs you can accept. Create entirely different scenarios • We don’t recommend undertaking this lightly, but your organization may choose to create two new axes and four new scenarios based on the uncertainties that are most critical for you. Monitor Institute by Deloitte’s book, What If? The Art of Scenario Thinking for Nonprofits, can be a valuable resource if creating new scenarios feels appropriate for you. 20

An event or an era? | What to do with the scenarios What to do with the scenarios 03 04 Test your current strategy against each scenario and Develop a plan for 12 to 18 months, in explore how your organization might adapt 6 month increments Ask the tough questions about your mission, strategies, and Planning in these conditions is not about having a full operational operations in each different scenario. In addition, use the plan for each scenario, but about having sufficient flexibility and scenarios as an opportunity to explore topics that you might not choices as conditions change. normally consider. Create a roadmap that enables you to adapt quickly Imagine that your organization is living in each scenario • Set a direction, identify strategic elements at high risk under • Take a deep breath and really try to feel what it would be like changing scenarios, prioritize opportunities to explore, and to live in each of the four scenarios. Do your best to meditate determine criteria for shifting course. and clear your head. Try to experience the emotions of living in each scenario—fear, anger, joy, surprise, etc. This sounds Be intentional about equity cheesy, but it really helps. • The COVID-19 crisis is contributing to disparate health, • Also think about how one of your constituents (for nonprofits) economic, and racial outcomes. At the same time, a movement or grantees (for funders) would experience the scenario. for greater racial justice is gaining traction and social sector leaders are being called upon—and calling for others—to Understand how your strategy and operations would fare in respond and change their practices. As you develop your plans, each scenario apply a clear equity lens both to your external work and to your • Unpack the key assumptions about your programming and/ values, statements, strategies, and internal processes. or grantmaking strategies. What would still work in different Develop processes to monitor signals futures? What would need to shift? What might you need to abandon entirely? • Once you have a plan, consider what signals you can track to • Evaluate your operations in each scenario. What would understand which scenario we’re moving toward and how you each scenario mean for your fundraising? Staffing? Digital might make adjustments to your plans as new information infrastructure? appears. The processes don’t need to be fancy. It could be as simple as keeping a bulletin board where people can post Explore less incremental actions relevant articles for future discussion and then periodically assessing the implications of the signals you’ve collected— Don’t ignore more significant changes that you might make in especially signs that suggest we may be heading towards one some of the scenarios. For example: scenario or another. • Under what conditions would you reframe your mission or stake out a bold moonshot initiative? • When would you consider taking a strong, values-driven, ideological stance? What would that look like for your organization? • What new or unlikely partnerships might you consider? • For funders, what would it take for you to double or triple your payout rate, or even consider spending down? For nonprofits, consider what emergency financing you could access, or even how you might explore mergers or dissolution in the worst case. 21

An event or an era? | Takeaways for the social sector Takeaways for the social sector As you reflect on what the scenarios mean for your organization, also consider the macro- level impacts on the broader social sector. Here are a handful of the most critical takeaways that emerged from our interviews: Multiple, compounding crises are resulting in devastating blows to American communities (especially communities of color)—but also a potential opening to drive forward fundamental change As Mario Morino of Morino Ventures LLC noted, “We’re now dealing with three crises at the same time: a health crisis, an economic 16 crisis, and a social justice crisis.” These challenges are intersecting and compounding one another. COVID-19 is increasingly not 17 only a “lead story” but also the “background setting” in which other crises are playing out. This dynamic is also true for the push for racial justice following the killing of George Floyd and other Black men and women. As organizations (across sectors, issues, and geographies) go about their other critical work, they are doing so while grappling with systemic racism in both their external actions and their internal practices and cultures. The interrelated crises are exacerbating many existing fissures in American systems, and the visibility of the disproportionate impacts on communities of color will increase pressure not just to manage the consequences of the crises on these populations, but to address the deeper root causes behind many systemic inequities. Nonprofits and funders will live in the same context, but experience it in very different ways There is a prevailing ethos in the social sector that funders and nonprofits are working together to face the same crisis. But the pandemic will leave far greater and more lasting financial and operational distress for nonprofits. While some funders are experiencing setbacks, most are relatively well positioned to manage through the crisis given existing endowments and possible inflows of resources from living donors. This has the potential to significantly exacerbate already imbalanced power dynamics between funders and grantees at a time when public critics are already questioning growing economic inequality. As our Monitor Institute colleague Allan Ludgate explained to us, “All in all, philanthropy may be the safest haven in the American economy right 18 now. I think the contrast between that and the day-to-day reality for grantees will be weird at best and dystopian at worst.“ The role of the social sector will be significantly determined by how federal, state, and local governments are able to respond to the crisis Limits on stimulus spending and budget cuts may drastically impair the ability of state and local governments to provide health, education, and other social services. If government agencies are forced to retrench, it will leave enormous pockets of need that nonprofits and funders will be asked to fill—even though they do not have anything close to sufficient resources to cover the gap. This shifting dynamic between government and the social sector—not to mention the efforts of the private sector in recovery efforts—opens up the potential for a significant reconsideration of the roles and relationships between the sectors in the coming years. How private funders respond to a potentially significant nonprofit contraction will matter If earned revenue, individual donations, and government contracts to nonprofits dry up, institutional funders will often be the last backstop for many nonprofits and infrastructure organizations. Some funders are adopting a “no regrets” mentality, taking unprecedented measures to increase spending to keep nonprofits afloat over the next 1-2 years (such as the innovative social bonds issued by the Ford Foundation and several other major funders to allow themselves to significantly increase their payout rates over the next two years. Others are thinking about how to redirect funds from their focused strategies toward immediate relief for basic needs in the communities where they operate. And still others posit that philanthropy doesn’t have the resources to meet all of the needs that will emerge from the crisis, and that with new opportunities for change emerging in the crisis and additional crises (such as climate change on the horizon, they need to “keep powder dry.” Each funder will need to find the right balance across these very different—and often competing—types of community needs. Many organizations will be torn between investing in high-risk, high-reward opportunities for systems change and a desire for a return to normalcy Periods of major systemic change in the United States have often been preceded by significant disruption, unrest, and economic upheaval. In the midst of current crises, some organizations may find an unprecedented window of opportunity to change entrenched systems, while others will yearn for a return to “normal” where their existing resource and delivery models allow them to deliver important and successful programs. 22

An event or an era? | Conclusion: Nudging the future your way Conclusion: Nudging the future your way It is common for organizations to operate with an “expected version” of the future that no one really stops to question. But in this moment of hyper-uncertainty, our conversations with social sector leaders suggest that organizations are preparing for wildly divergent expected futures. Some are planning for a relatively quick recovery and stabilization of their work. Others are preparing for an extended Great Depression level of dislocation. It remains unclear whether the COVID crisis is simply a devasting but passing event, or the start of fundamentally different era. We don’t know which of these realities (or others) might unfold. But there are a wide range of possibilities in play, and we know that it’s never a good bet to bank on a single, expected future. We created this guide to help social sector organizations begin to think and talk about the future in a structured and productive way that embraces the many possible scenarios that may unfold. We have found that the most resilient organizations are those that have a broader array of choices and alternatives as the future twists and turns—and our hope is that the work here can help funders and nonprofits figure out how to plan and move forward amidst the uncertainty. As we mentioned earlier, this document is only meant to be a starting point. The true benefits will come from adapting the work to your specific issues, places, and organizations, and working through the strategies that will help you push forward toward your goals in and across the different possible futures that may emerge. The Monitor Institute by Deloitte and Deloitte LLP are committed to helping social sector organizations in this challenging work. Because even as many of the scenarios we portray here don’t feel especially positive, we remain hopeful. The social sector has a real opportunity to meet the moment by stepping forward with bold action and leadership in a national time of crisis. Funders and nonprofits may not be able to control the future, but it’s critical that we all keep working to do what we can to influence its trajectory. As author Rebecca Solnit emphasized in an April piece in The Guardian: [H]ope is not optimism that everything will be fine regardless. Hope offers us clarity that, amid the uncertainty ahead, there will be conflicts worth joining and the possibility of winning some of them. And one of the things most dangerous to this hope is the lapse into believing that everything was fine before disaster struck, and that all we need to do is return to things as they were. Ordinary life before the pandemic was already a catastrophe of desperation and exclusion for too many human beings, an environmental and climate catastrophe, an obscenity of inequality. It is too soon to know what will emerge from this emergency, but not too soon to start looking for 19 chances to help decide it. It is, I believe, what many of us are preparing to do. Or more pointedly, as Antony Bugg-Levine, the CEO of the Nonprofit Finance Fund, explained to us, “I have no idea what’s going to happen, 20 but I know what I’m going to fight for.” We hope our work here can help. 23

An event or an era? | Endnotes and additional resources Endnotes and additional resources Endnotes 1. United States Coronavirus (COVID-19) Death Toll Surpasses 100,000, Centers for Disease Control and Prevention, 28 May 2020 2. Economic Situation Summary, U.S. Bureau of Labor Statistics, 2 July 2020 3. Richard Corliss, Time Magazine, 10 February 1997, Volume 149, Issue 6 4. Venkatesh Rao, From Story to Setting, Breaking Smart, May 2020 5. Unemployment rate rises to record high 14.7 percent in April 2020, U.S. Bureau of Labor Statistics, 13 May 2020 6. Eamonn Kelley, Deloitte Interview, Deloitte Consulting LLP, May 2020 7. Anders Holm, Deloitte Interview, Hempel Foundation, April 2020 8. Deloitte Interviews, April - May 2020 9. Neeta Kantamneni, The impact of the COVID-19 pandemic on marginalized populations in the United States: A research agenda, National Center for Biotechnology Information (NCBI), 8 May 2020 10. Cheryl Dorsey, Jeff Bradach, and Peter Kim, Racial Equity and Philanthropy: Disparities in Funding for Leaders of Color Leave Impact on Echoing Green and The Bridgespan Group, May 2020 the Table, 11. Paul Hannon, Unemployment Expected to Reach Highest Level Since Great Depression, Wall Street Journal, 7 July 2020 12. Larry Kramer, Deloitte Interview, The William and Flora Hewlett Foundation, May 2020 13. Alejandro Gibes de Gac, Deloitte Interview, Springboard Collaborative, May 2020 14. Tulaine Montgomery, Deloitte Interview, New Profit, May 2020 15. Pia Infante, Deloitte Interview, The Whitman Institute, May 2020 16. Mario Morino, Morino Ventures LLC, Deloitte Interivew, June 2020 17. Venkatesh Rao, From Story to Setting, Breaking Smart, May 2020 18. Allan Ludgate, Deloitte Interview, Monitor Institute by Deloitte, June 2020 19. Rebecca Solnit, ‘The impossible has already happened’: what coronavirus can teach us about hope, The Guardian, April 2020 20. Antony Bugg-Levine, Deloitte Interview, Nonprofit Finance Fund, May 2020 Further COVID-19 Scenario Planning Resources The World Remade by COVID-19: Recover: Planning scenarios for resilient leaders Salesforce and Deloitte | April 2020 Written for global business leaders, Deloitte and Salesforce worked with some of the world’s best-known scenario thinkers to consider the societal and business impact of the pandemic. Online A team of Deloitte leaders adapted the scenarios to look specifically at higher education as well. Scenarios for the COVID-19 Future Arik Ben-Zvi and Dr. Steve Weber | A short-term scenario planning process that envisions where America might be by the State May 2020 of the Union address in January 2021. Online COVID-19 and the New Future for Nonprofits and Foundations Trista Harris | April 2020 An accessible workbook for social sector organizations looking to develop their own visioning and scenario planning process. Online Making Sense of Uncertainty: Nonprofit Scenario Planning in the COVID-19 Pandemic Lindsey Waldron, Robert Searle, A guide by the Bridgespan Group to help nonprofits catalog the key risks facing their Alexandra Jaskula-Ranga | May 2020 organization and develop scenarios around those risks. Online 24

An event or an era? | Interviewee acknowledgements Interviewee acknowledgements We’d like to acknowledge and thank the numerous individuals who provided their time and perspective to help shape this document. Layla Avila (Education Leaders of Color) Mario Morino (Morino Ventures LLC) Karen Baker (California Governor’s Office of Emergency Services) Steven Olikara (Millennial Action Project) Lucy Bernholz (Digital Civil Society Lab, Stanford University Center on Katherine Ollenburger (Community Change) Philanthropy and Civil Society) Veronica Palmer (RISE Colorado) Jed Bernstein (YMCA of the USA) Susan Patrick (Aurora Institute) Jim Bildner (Draper Richards Kaplan Foundation) Evan Paul (Salesforce) Desmond Blackburn (New Teacher Center) Meredith Blair Pearlman (The David and Lucile Packard Foundation) Dana Borrelli-Murray (Highlander Institute) Lance Potter (The Potter Group) Erin Brouillette (Highlander Institute) Steven Preston (Goodwill Industries International) Phil Buchanan (Center for Effective Philanthropy) Beth Rabbitt (The Learning Accelerator) Antony Bugg-Levine (Nonprofit Finance Fund) David Rabinowitz (Deloitte Consulting LLP) Jim Canales (Barr Foundation) Matt Ranen (Matt Ranen) Dan Cardinali (Independent Sector) Dr. Mobeen Rathore (University of Florida College of Medicine) Emily Cherniack (New Politics) Connie Razza (Social and Economic Justice Leaders Project) Julia Coffman (Center for Evaluation Innovation) Michelle Rhone-Collins (LIFT, Inc.) Melissa Connelly (One Goal Graduation) John Rice (Management Leadership for Tomorrow) Aaron Dorfman (National Committee for Responsive Philanthropy) Andrea Sáenz (The Chicago Community Trust) Carl Engle (Monitor Group, Deloitte Consulting LLP) Sheila Sarem (projectBASTA) Yordanos Eyoel (New Profit) Diana Scearce (Diana Scearce Consulting) Katie Fahey ( Dr. Donald Schwarz (Robert Wood Johnson Foundation) Natalie Foster (Economic Security Project) Shruti Sehra (New Profit) Andrew Frishman (Big Picture Learning) Steve Seleznow (Arizona Community Foundation) Alejandro Gibes de Gac (Springboard Collaborative) Hiewet Senghor (Black Teacher Collaborative) Dr. Helene Gayle (The Chicago Community Trust) Kashif Shaikh (Pillars Fund) Jesús Gerena (Family Independence Initiative) Jessamyn Shams-Lau (Peery Foundation) Bob Giannino (uAspire) Shalinee Sharma (Zearn) Crystal Gonzales (English Learners Success Forum) Kimberly Smith (Digital Promise) Matt Hammer (Innovate Public Schools) Deborah Smolover (America Forward, New Profit) Trista Harris (FutureGood) Candace Stanciel (New Profit) Dr. Rebekah Heckmann (Yale School of Medicine) Kim Syman (New Profit) David Henderson (Family Independence Initiative) Yutaka Tamura (nXu) Jenee Henry Wood (Transcend Education) Jason Terrell (Profound Gentlemen) Don Howard (The James Irvine Foundation) Dorian Warren (Community Change) Pia Infante (The Whitman Institute) Dr. Steven Weber (School of Information, University of California, Ira Kalish (Deloitte Touche Tohmatsu Ltd.) Berkeley) Vanessa Kirsch (New Profit) Michael Weil (YMCA of the USA) Larry Kramer (The William and Flora Hewlett Foundation) Michelle Weise (Strada Education Network) AiLun Ku (The Opportunity Network) Daniel Zaharopol (Art of the Problem Solving Initiative, Inc.) Mike Kubzansky (Omidyar Network) Kalani Leifer (COOP) Alison Malmon (Active Minds, Inc.) Maya Martin Cadogan (Parents Amplifying Voices in Education) Steve McCormick (Draper Richards Kaplan Foundation) Chirag Mehta (Community Change) Adrian Mims (The Calculus Project) Tulaine Montgomery (New Profit) 25

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