The following post was written by The Nonprofit Institute and was originally published here.
Nonprofit organizations working on the front lines to meet critical needs across the San Diego region are facing unprecedented disruptions of their efforts due to the unfolding COVID-19 crisis.
According to survey findings released by The Nonprofit Institute at the University of San Diego, many local charities are experiencing increased demands for food, shelter and other basic necessities, yet nonprofits have been hindered or completely cut off from responding due to issues of cash flow, managing volunteers, and technological barriers.
How Nonprofits are Being Affected by COVID-19
Nonprofit leaders at 428 organizations reported they face immediate, critical challenges.
- More than three quarters (80%) of respondents reported a reduction of normal services or programs related to school closures, stay at home orders, and social distancing.
- Twenty percent of respondents reported they were unable to offer any programs at this time.
- If conditions do not improve, more than half report they are “very unlikely” or “somewhat unlikely” to be able to provide ongoing services eight weeks from now.
- In an effort to continue offering services, many nonprofits are considering moving programs to online formats. However, technology access and moving programs online present challenges for nonprofits staff and their clients.
Key Challenges Identified by Nonprofit Leaders
Among a list of growing concerns, nonprofit leaders rated the following as the most urgent challenges facing their organizations:
- Decline in donations
- Loss of fee for service revenue
- Having to lay off employees
- Delayed grant processing for program and/or general operating support
- Government grant contracts that cannot be reimbursed
A nonprofit leader who operates homeless services across San Diego County shared, “All of our most pressing concerns are exacerbated by the likely decline of philanthropic dollars in light of economic and stock market losses. We are racing toward immediate solutions and also understand that the damaging impact of COVID-19 will stay with our organization and community long-term.”
Impacts of COVID-19 on Nonprofit Finances
The study also documented the immediate and short-term impacts of COVID-19 on nonprofit finances. As Figure 1 shows, just over half of leaders reported they are “very likely” to make payroll in the next four weeks and that percentage declines to 35% eight weeks from now. Fourteen percent of nonprofit leaders said they are “very unlikely” to make payroll in the next four weeks. That percent increases to 24% in the next eight weeks.
Previous research conducted by The Nonprofit Institute has documented that the majority of nonprofits operate on very lean reserves of two months or less. In this latest study, even fiscally strong nonprofits reported that they have already lost revenue streams due to cancellation of programs and events.
As a nonprofit executive of an environmental education organization explained, “We typically keep reserves for 3 months. Depending on the length of time the pandemic lasts, all our reserves could be depleted and we may need to lay off staff.” As a result of lean operating margins coupled with declining revenue, some organizations reported struggling to retain staff members and have already either furloughed, laid off, or terminated part-time employees due to lack of resources.
Safety Concerns of Working at a Nonprofit
The study also found that essential service nonprofits such as those providing food, shelter, and health care remain open to serve the community, yet are challenged with securing supplies to maintain the health and safety of staff members, volunteers, and clients including cleaning supplies, personal protective equipment such as gloves and face masks, and paper goods (toilet paper, paper towels, etc.). In addition, nonprofits are facing workforce challenges as volunteers and employees are forced to stay home as a result of health concerns or childcare responsibilities.
“Nonprofit organizations are our community safety net, touching millions of lives every day,” said Dr. Emily Young, The Nonprofit Institute’s Executive Director. “Yet, the unfolding public health and economic crisis is taking a major toll on the capacity of these organizations to help others. They need immediate economic assistance from government, philanthropy, and the community at large. We encourage everyone to do their part in donating to the organizations they hold dear.”
The Nonprofit Institute Survey and Other COVID-19 Resources
Working in partnership with the Fieldstone Leadership Network San Diego, Local Initiatives Support Corporation, San Diego Workforce Partnership, and San Diego Grantmakers, The Nonprofit Institute issued the Nonprofit Leader COVID-19 Response Survey. Within hours, hundreds of responses had been recorded.
The Nonprofit Institute plans to issue a special report and other data regarding San Diego County’s nonprofit response to the COVID-19 pandemic. Additional findings and resources will be updated regularly and made available on The Nonprofit Institute’s website - www.sandiego.edu/nonprofit.
We are dedicated to supporting and empowering nonprofit leaders. Learn more about our work in our comprehensive guide: How to Grow Your Nonprofit Career—A Guide to USD’s Master’s in Nonprofit Leadership and Management.
