The Pandemic and Nonprofits

There are few aspects of society that the pandemic is not affecting. Accordingly, COVID-19 is having a substantial effect on the operation and sustenance of nonprofits. A June, 2020 article in the Stanford Social Innovation Review, which summarizes a national survey of 750 members of primarily US based nonprofits, reported that nearly 75% of survey respondents stated their organizations had experienced a drop in revenues, and over 80% had moved all or some of their programs and services to an online format. (See “The Continuing Impact of COVID-19 on the Social Sector”) Eighty percent of surveyed nonprofits are shifting to work from home, many are expecting or already have made reductions in staff, and many are considering mergers with other non-profits. (See also the reported effects on 110 nonprofits in  “The Impact of COVID-19 on Large and Mid-Sized Nonprofits,” June 15, 2020, Independent Sector which reports that 71% of surveyed large and medium sized nonprofits have reduced services.)

In the Nonprofit Quarterly article, “Nonprofits Struggle to Stay Alive amid COVID-19” one nonprofit CEO says “The impact of COVID-19 on the nonprofit community is unprecedented. It has affected the capacity and sustainability of every nonprofit—from education to the environment, affordable housing to mental health services, animal welfare to the arts—no organization will emerge unscathed.” This article goes on to say that in Arizona, “Fundraising and program cancellations as a result of COVID-19 have cost Arizona nonprofits an estimated $53 million in lost revenue (as of June 11). In that same survey, 25 percent of nonprofits indicated that they’ve had to lay off or furlough employees, and 69 percent report a loss of critical program volunteers.”

In a more recent, October, 2020  article “Second Wave of Virus Looms, Some US Nonprofits Running Out of Road”, Ruth McCambridge writes “Nearly every aspect of operations has been shaken. Organizations have had to find new ways to provide their services while staying as close as they can to their stakeholders. Revenues shrank, but expenses did not go away. As communities are reopening and trying—perhaps too quickly—to return to “normal,” we are also learning that no matter how important an organization’s mission might be, things are harder and more expensive in a world with COVID-19 still undefeated.”

It’s vital to keep in mind not only the social role, but the economic importance of the nonprofit sector. The National Council on Nonprofits reports that, “Nonprofits employ 12.3 million people, with payrolls exceeding those of most other U.S. industries, including construction, transportation, and finance. A substantial portion of the nearly $2 trillion nonprofits spend annually is the more than $826 billion they spend on salaries, benefits, and payroll taxes every year. Also, nonprofit staff members pay taxes on their salaries, as well as sales taxes on their purchases and property taxes on what they own.”  (See: “Economic Impact“) The Urban Institute says that “Approximately 1.54 million nonprofits were registered with the Internal Revenue Service (IRS) in 2016, an increase of 4.5 percent from 2006.”  (See “The Nonprofit Sector in Brief” Urban Institute) “ The United States non-profit sector alone would rank as the 17th largest economy in the world.” (See “The Economic Impact of Nonprofit Organizations —Part One” by Andrew Paniello)

While the 2020 COVID-19 pandemic brings multiple challenges, might there be things that nonprofits can do to adapt and sustain themselves? In “Three Things Nonprofits Should Prioritize in the Wake of COVID-19” by Amy Celep, Megan Coolidge & Lori Bartczak, in the April, 30, 2020 Stanford Social Innovation Review, the authors say that nonprofits may choose to revisit their purposes and value in the current environment, in order to rally donors, engage partners, and motivate staff. They also suggest that nonprofits: 1) assess their financial situations, including understanding how they depend on various revenue streams; 2) create various financial scenarios for best, worst, and most likely financial scenarios; and 3) have frank conversations with donors and stakeholder about their plans and intentions so that these nonprofits can get some sense of the reliability of contributed revenue streams. They note that “Many organizations are finding success in asking customers or members to donate pre-paid fees for canceled services and events to help programs and services they care about continue in the future.”

Although there are certainly new opportunities for nonprofits to rethink their operations and to create new approaches to fundraising, it is likely that the nonprofit sector will continue to face rather steep challenges in the months and years ahead. In fact, many of the challenges confronting nonprofits began before the onset of the pandemic. The ameliorative goals of many non-profits had already been challenged by the operation of the “normal” economy, which favored the well-positioned and affluent, and created ever greater needs among ever larger swaths of the American population for the many services that nonprofits have delivered.

For additional resources and ideas that will help nonprofits to continue to serve their communities see “Nonprofits and Corona virus, COVID-19,” National Council of Nonprofits.

“COVID-19’s Impact on Nonprofits’ Revenues, Digitization, and Mergers,” by David La Piana, Stanford Social Innovation Review Jun. 4, 2020

“COVID-19 Has Pushed Nonprofits to the Limits, Especially Those Led by People of Color,”  by Amelia Ahl October 19, 2020

“As Second Wave of Virus Looms, Some US Nonprofits Running out of Road” by Ruth McCambridge, Oct 20, 2020, Nonprofit 

“Nonprofits Struggle to Stay Alive amid COVID-19” by Martin Levine, June 23, 2020,  NonProfit Quarterly

“Three Things Nonprofits Should Prioritize in the Wake of COVID-19” by Amy Celep, Megan Coolidge & Lori Bartczak   Apr. 30, 2020 Stanford Social Innovation Review.

“The Impact of COVID-19 on Large and Mid-Sized Nonprofits,” June 15, 2020, Independent Sector

“Nonprofits and Coronavirus, COVID-19,” National Council of Nonprofits

“Economic Impact,” National Council of Nonprofits.