The Impact of COVID-19 on the Nonprofit Sector
Nonprofit organizations are facing historic challenges during the COVID-19 pandemic. Some nonprofits are well-positioned to help those impacted by the virus. Organizations with missions that do not directly relate to COVID-19 relief, however, confront hardship as they work to secure financial support while continuing to serve their communities.
According to a survey of 466 nonprofits by the Stanford Social Innovation Review (SSIR), 26 percent of social service organizations reported revenue increases, helped by a timely government response under the CARES Act, and donors who sought to give locally. But a much bigger number, roughly 73 percent, reported a drop in revenue in March 2020—a significant blow to the sector.
Many donors are gravitating to nonprofits that provide COVID-19 relief or that support first responders, medical providers, and high-risk populations in their communities. Nonprofits that do not directly support these efforts are finding themselves with a smaller slice of a shrinking pie even as donors confront the specter of a recession. Fidelity Charitable commissioned a survey of 1,842 adults who have donated at least $1,000 to charity. Some 54 percent of the respondents plan to maintain their giving levels while 25 percent said they would increase their giving.
Among the respondents who expect to decrease their philanthropy, the economy was cited. Although they desire to support struggling individuals in their communities, these donors do not know what their income or investments will be for the rest of the year. Fidelity Charitable survey respondents said they were more worried about the economic consequences of COVID- 19 (25 percent) than the health consequences (17 percent); 54 percent were equally worried about both.
Another challenge for the nonprofit sector is how organizations choose to fundraise going forward. With large gatherings canceled, many organizations must reschedule or re-imagine their primary fundraising activities. Others are losing revenue sources, such as thrift store sales, or seeing the cancellation of revenue-generating programs. Their ability to accept donated items is also changing. Many nonprofits cannot accept unpackaged food or clothing if they are unable to store them for a few days to decrease the risk of exposure to the coronavirus.
The loss of donations from individual donors, loss of revenue from canceled fundraising events, and loss of grants because of unmet expectations is top of mind, and the fiscal future of many nonprofit organizations is precarious. Organizations are looking for flexibility with the rules around restricted giving and grants. They are seeking to allocate funds to the area of greatest need in their budget if they are unable to meet program expectations set before COVID-19. Beyond that, a simplified grant process to secure emergency funding could provide relief for struggling nonprofits.
The number of volunteers has also dropped dramatically due to quarantine mandates and the need to practice social distancing. This is especially detrimental to the many nonprofits who rely on volunteers to deliver their services. Some nonprofits are replacing volunteers with staff to limit volunteers’ risk of exposure to COVID-19.
Nonprofits that address human services, housing, homelessness, and health are in greater jeopardy and may struggle to fully recover from the pandemic. Their diminished presence in the community could undo years of work gaining the trust and engagement of their clients. At the same time, organizations serving disadvantaged populations predict the pandemic will expand inequities in their service areas. Many worry their clients are at a higher risk from COVID-19 and that additional cuts in government budgets will worsen the life outcomes of the most vulnerable populations.
The majority of nonprofits have digitized some or all of their programs and services. Unfortunately, many had to scramble to shift to online services and digital fundraising efforts without the time and resources needed. With in-person fundraising events canceled, organizations are adapting to online donations through email campaigns and social media solicitations, requiring their donor base to navigate technology platforms in order to continue to support the cause.
Nonprofit leaders need to communicate with their donors much more frequently and with greater transparency to inform them of changes to programming, how they can provide financial support, what programs they should give to, and how the organizations will continue to meet their missions in a world that is changing daily.
Nonprofit organizations are also adjusting internally to the “new normal.” Eighty-two percent of respondents in the SSIR survey reported that their staff was working from home; leaders had a growing concern about staff morale and health. Nonprofit workers are worried about the clients and communities they serve and how their reduced presence may cause stress among those who rely on their programs, including medical providers and children in unstable living conditions. Compounding these concerns are fiscal difficulties and apprehension about the possibility that staff paychecks may shrink or even disappear.
As staff members work remotely and care for clients virtually, many nonprofit offices have become more engaged in advocacy to keep their organizations visible. The types of services provided have changed, as well, to include at-home supports such as grocery deliveries and educational material designed to accommodate families’ access (or lack of access) to technology.
The impact of Covid-19 is touching nonprofits in far-reaching ways. Still, the key to success for any nonprofit operation is flexibility. With the economic, public health, and political landscapes changing daily, every nonprofit has the opportunity to adapt. Now is the time to hone the organization’s digital footprint to ensure clients can access services and donors can give online. Now is the time to re-imagine how events and activities can remain accessible. Now is the time to tighten shoestring budgets and redirect resources to meet the most critical mission-driven needs. And now is also the time to evaluate volunteer programs for success and efficiency while supporting staff with training and professional development opportunities.
Sources
“COVID-19 and Philanthropy: How Donor Behaviors Are Shifting Amid Pandemic.” Fidelity Charitable, 2020, www.fidelitycharitable.org/insights/how-covid-19-is-shifting-donor- giving.html.
La Piana, David. “COVID-19’s Impact on Nonprofits’ Revenues, Digitization, and Mergers (SSIR).” Stanford Social Innovation Review: Informing and Inspiring Leaders of Social Change, 4 June 2020, ssir.org/articles/entry/covid_19s_impact_on_nonprofits_revenues_digitization_and_mergers.
Taylor, Yesim Sayin. “How COVID-19 Is Affecting Nonprofits in the D.C. Area.” D.C. Policy Center, 7 May 2020, www.dcpolicycenter.org/publications/nonprofits-coronavirus-impact/.
