A Mission of Impact
Regions Bank is helping nonprofits, foundations and donors learn the best lessons from a historically challenging year
At this point it is trite to point out how much the pandemic changed everything. But Marcie Braswell recalls something she noticed in the early weeks of lockdowns and virtual meetings, and how it played a small but possibly important role in the work she was engaged in at the time, helping nonprofits weather the storm.
“We could not meet in person, of course, but we were communicating more,” says Braswell, head of Endowments and Foundations at Regions Bank. She and her colleagues were in constant contact with nonprofit clients, their funders and many others as everyone tried to adapt to the sudden upheaval. Most meetings occurred via online video platforms, which meant inviting people into your home, in a manner of speaking, and visiting them in theirs, as everyone turned dining rooms, bedrooms and backyard patios into makeshift offices.
“That is quite leveling. And I think it contributed to the sense that we were all in it together.”
That attitude was vital to getting through a year packed with many challenging, a few encouraging and some still-evolving developments for virtually everyone in nonprofits and foundations. Braswell and others at Regions Bank have invested considerable time and energy in looking ahead, to 2021 and beyond, to help clients not just recover, but rethink and reposition for a more stable future. What follows are some of their expectations for the near- and long-term.
Increased focus on nonprofit sustainability
Organizations with endowments generally fared better in 2020 than those without. No surprise there. But while “get an endowment” may seem like overly simplistic advice — and much easier said than done — the fact is that the pandemic has provided a unique opportunity to move in that direction.
“We have had nonprofits reach out about starting an endowment,” says Braswell. “Some of them have pools of money in different places and they want to know how they can bring those funds together, and often that is through an endowment. We have helped them put policies and procedures in place, and shown them how to approach donors from that perspective. 2020 was eye-opening for donors as well. Donors saw the critical work that nonprofits were doing to meet basic needs in the community. They also witnessed how sources of revenue such as admission fees and ticketed events quickly evaporated for some nonprofits such as museums, zoos, and community theaters. Nonprofits now can engage those donors at a different, more concrete level, to say, ‘We need you to invest in our future and to ensure that steady stream of income for years to come.’”
The 2020 economic roller coaster also provided a rare, perhaps unprecedented backdrop for reassessing long-term investment strategy.
“One of the things that was most unique about 2020 is that you really got to see the full circle from an investment standpoint."
“The first quarter was particularly difficult. In the middle part of the year, we saw some recovery. And then for the most part, nonprofit clients with long-term, growth-oriented portfolios actually ended up positive for the year. So a lot of the conversation now is around that ability to absorb volatility in the short term, and seeing how investment portfolios react in different market conditions and what impact, if any, it has on the other aspects of the organization.”
2020s: A lower return environment
Even with an endowment, organizations will still need a multi-faceted strategy. The fact that 2020 was not as devastating to investment markets as seemed possible in the first and second quarter does not mean that 2010-2019 growth rates are visible on the horizon.
“As we look forward 10 years from this point,” Wright explains, “the expectation is that we will experience a lower return environment across most major asset classes — not only lower than the recent past, but lower than what history would suggest. Organizations may want to change their asset allocation structure, take on a different risk-return dynamic if they do not have the ability to adjust other levers of the organization – like spending or fundraising – to offset the potential for lower investment returns.”
Projecting 10 years ahead is tricky, of course, and it is not yet clear how useful data from the recoveries following the 2008 financial crisis and the late ’90s tech bubble will be to charting a course after a global pandemic. Regions’ assessment is based in part on the level of recovery seen in 2020, which, as Wright explained, was surprisingly rapid in many ways, but remains far from complete.
Growing emphasis on environmental, social and governance (ESG) investing
ESG is a broad and malleable concept, but getting it right requires much more than tweaking a mission statement. Companies and individual donors are becoming more intentional in their giving, and more insistent that recipients are engaging in the kind of work that brings about the change they most want to see.
“There are organizations of funders who are talking to each other to get ideas of how they can best make a meaningful impact,” says Braswell. “There is a lot more collaboration. And companies are hearing from their own employees and clients. There is a heightened sense of awareness around giving, and I think that trend will continue throughout 2021 and beyond.”
Regions Bank spends a lot of time with clients to understand their vision and goals related to ESG, then customizes a strategy around them. There are many variables to consider, and no two organizations will reach the same conclusions or benefit from the same tactics.
“Implementation is often not as simple as it sounds,” Wright cautions. “Historically, ESG was predicated on the idea of eliminating things, or avoiding things that an organization did not want to invest in. Now there is opportunity to promote certain areas with investment dollars. And it can be very specific to an organization as to how they define it, what they are looking to accomplish. We can customize based on the organization’s unique ESG vision and work to build a solution that makes sense.”
Collaboration, coordination and communication
If there was anything positive for nonprofits to come out of the pandemic, it was how quickly and readily longstanding relationships were strengthened, and new alliances were formed. Braswell believes that spirit will continue as all parties see that more, and more varied, engagement is to everyone’s benefit, even as the urgency slowly wanes.
“Almost immediately, we saw clients and groups getting together towards a common goal, whether it be related to food insecurity, homelessness, mental health,” Braswell recalls.
“Funders reached out to their nonprofit partners who were on the ground doing the work and brought them into the conversation to say, ‘What is it that you see? What do you need?’ There was an effort to make sure that barriers were taken down, unnecessary paperwork was eliminated, with the understanding that a lot of nonprofits were suddenly doing more work with fewer resources.”
This was also true among nonprofits not providing relief, but suddenly faced with severe financial shortfalls because of lost earned revenue – like those in the performing arts.
“There was true collaboration,” Braswell continues. “Everyone brought others to the table, and it was beautiful to see. And I think that will continue, as nonprofits keep talking to each other and sharing what they have learned about adapting. I think that ‘we’re all in this together’ attitude will continue.”
This content was paid for and created by Regions Bank. The editorial staff of The Chronicle had no role in its preparation. Find out more about paid content.
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