Not-for-profit organizations, just like other business entities, had significant changes thrust upon them due to the pandemic, and in response, had to make changes to their programming activities, staffing and budgets, among other things.
There are a number of things these organizations learned, as well as short-term and long-term decisions they had to make. They are navigating through the various government funding programs to ensure they are bringing the necessary funds to their organization so they can support people in need. Additionally, they are working with the people they serve to help them determine funds directly available to them, so they do not risk missing out on any well-needed payments.
- Many nonprofit leaders acknowledged the pandemic had a negative impact on their organization and affected their programming revenue, demand and costs.
- Sector-wide revenues did not plummet as initially feared because of increased financial support from foundations, individual donors and the government, including Paycheck Protection Program funding. This revenue helped nonprofits fare better through 2020 and 2021 than they originally anticipated. Many are now concerned with how they will successfully move forward if additional funding does not continue, and they are forced to make necessary decisions.
- There were unexpected operational realities, including the need to incur significant new costs to cope with the sharply increased demands of many more people than usual seeking assistance, and the need to protect the health of their employees, volunteers and the public by retrofitting their facilities and the investment in personal protective equipment.
- Temporary boosts in giving often failed to keep pace with increased costs, causing organizations to dip into their Board Designated or Unrestricted Endowment Funds.
- In response to shrinking revenues, many nonprofit organizations were forced to cut costs. Often times, this meant program reductions, hiring freezes, salary reductions and furloughs. While fundraising became more important due to a drop-off in revenues, the need to cut expenses made it harder to fundraise. As a result, organizations had to think long and hard and involve their Board members in the conversation, whether to soley focus on cost made sense for them when evaluating different approaches.
- Additionally, many implemented significant changes to their organizations’ goals and activities, including how they serve their constituents in response to COVID-19, as well as their need to increase their focus on diversity, equity and inclusion in the workplace.
- The new child tax credit is an opportunity to help people nonprofits serve, by helping them navigate the process so families get the payments to which they are entitled. For many, it is a game-changer in terms of how organizations can support families.
- Many organizations noted a significant increase in online giving and need to ensure their capability to meet the desires of their donors. Online giving opens the door for engagement with donors throughout the country and beyond. In addition, many noted that crowdfunding is growing in popularity.
- Extra cash from federal stimulus checks enabled more donors to make charitable contributions. These donations were especially popular among donors under age 35, providing new donor connections to the recipient organizations.
- Donors gave high marks to virtual fundraising events, including virtual galas as well as new fundraising events created specifically for a virtual audience.
- Donors with donor-advised funds used them more generously due to COVID-19 and the opportunity to advance racial justice efforts
- Organizational leadership realized that formal documentation of processes and procedures is crucial, especially for roles filled by individuals with long tenure.
- An organization’s ability to work remotely was tested, as well as ensuring that security issues are in place for both financial information and donor data. Leaders learned they need to stay informed on cybersecurity risks and emerging technology. They must recognize and respond to common threats as well as identify practical steps their organization can use to mitigate risks.
- Many considered their current workspace and their future needs, including location, size of space, and need for multiple offices to provide services where their constituents reside.
- Succession planning and strengthening employee retention rose back to the forefront as their workforce reflected on their own personal needs. Can their employees effectively work remotely and still meet the needs of the people they serve as well as their donors and Board members? Many thought long and hard about how this will affect their ability to maintain the organization’s culture, train employees and ability to collaborate successfully as a team.
In the midst of so many crises, people came together through nonprofits – as employees and volunteers – to help as many people as possible. More people turned to nonprofits for help – at the same time the organizational relief funds ran out. Organizations found themselves with the challenge of having fewer resources to operate, plus higher demands for services, which increased costs to meet the higher demands from the people depending on them.
It is impossible to call out every nonprofit who made a difference in the face of these difficult times. However, it is possible to acknowledge that while we may never see or hear about every specific act they do to serve others, we are all grateful and we thank them.
Zinner & Co. has a robust not-for-profit practice that is here to help your exempt organization navigate through its challenges and opportunities.
