COVID-19: How did it affect the Nonprofit sector?

On December 12th, 2019, a cluster of patients in Wuhan, Hubei Providence, China began to experience shortness of breath and fever. That would be known as the first cases of Coronavirus. It only took a few short weeks for the infectious disease, caused by the SARS-CoV-2 virus, to spread globally. Two and a half years later and the aftermath of the COVID-19 Pandemic continues to shake the nonprofit sector in unspeakable ways.

Millions of civilians are still turning to nonprofits for assistance with necessities including food security and mental health. Unfortunately, for many nonprofits, reserves have dried up, as have PPP loan funds. According to research conducted by Florida Nonprofit Alliance, nonprofits are not recovering quickly financially: 53% had a decrease in unrestricted revenue, and 48% have budgets that shrunk. And although COVID-19 relief funding was vital to 80% of nonprofit organizations making it through the pandemic, those sources are largely no longer available. 49% of nonprofit organizations have spent some or all of their reserve funds, making them more financially fragile than before the pandemic.

More than one-third of U.S. nonprofits are in jeopardy of closing within two years because of the financial harm inflicted by the viral pandemic, according to a study by the philanthropy research group Candid and the Center for Disaster Philanthropy. In their median baseline scenario, they found that 12,042 nonprofits (4%) would close in the absence of a crisis. Across nine “realistic” scenarios, a median of 34,472 nonprofits (11%) will go out of business. In this median case, about 22,000 additional nonprofits (7%) close because of the COVID-19 crisis. In their most dire scenario, we lose 119,517 nonprofits (38%).

We are in a new world now. We have adjusted. We have adapted. We will continue to make major changes to our organizations. NFF’s 2022 State of the Nonprofit Sector Survey reflects how 88% of nonprofits changed the way they work. 51% of those think the changes are permanent. COVID-19 overturned the traditional funding practices in our sector, and for the most part, the changes were both welcome and needed. While we should celebrate nonprofits’ relative strength in the present, we must also be proactive in ensuring these gains are maintained well into the future.

By: Sydney Marks

Coordinated Assistance Network is proud to present The Momentum to Modernize Grant (M2M) M2M is intended to provide technology that produces transformational resources for nonprofit infrastructure, efforts to scale, and implementation support. CAN is granting 75 in-kind grants to organizations for “Black Level” CAN portal licensure. Click here to learn more about M2M.