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Nonprofits hit by societal shutdown, look to unsure future

Businesses big and small are not the only ones suffering through COVID-19’s economic impacts, nonprofits also face constricted funding while demand for services and client needs increase.

Representatives of local organizations discussed the harsh realities of life during COVID closures at a virtual town hall meeting hosted by the Center for Nonprofit Excellence on Wednesday afternoon.

They also wondered what their institutions’ lives will be like after the virulent virus has subsided and society opens up. While there were a few answers, mostly questions remained, framed by a sense of purpose.

“Nonprofits are needed. If we leave nonprofits out of the response equation to the virus, there would be big holes to fill,” said Cristine Nardi, the center’s director. “There are critical and crucial community needs that our nonprofits are needed to respond to.”

Nardi noted that nationally, unemployment increased more than 10 percentage points to 14.7% in April, reflecting the large number of jobs lost as states closed businesses to stem the rampant spread of the SARS-CoV-2 virus that causes COVID-19.

She said it often falls to nonprofits to help provide food, emergency housing, mental health and other assistance to those suddenly facing financial and emotional difficulties. At the same time, donors are giving less and foundations are cutting back, putting nonprofits in the same boat as their business brethren.

Coupled with a reliance on volunteers, many of whom are in at-risk age groups, and an uncertainty as to when things may improve, nonprofits are facing a potential crisis, Nardi said.

“Nonprofits are experiencing destabilization due to COVID,” she said. “The damage is likely enduring and the dangers are uncertain.”

According to surveys, 69% of nonprofits have reported reductions in philanthropic giving. Some 68% have seen reduced earned income, 67% say they face possible long-term financial instability and 25% have had to reduce their workforce.

“The bright side is that 75% say they have operating reserves, which is the hallmark of good fiduciary management,” she said. “But 63% have three months or less of reserves.”

Justin Reid, of the Virginia Humanities, said his organization is funneling federal funds for grants to keep afloat museums, arts and cultural agencies.

“Arts and culture are essential to a community and there are statistics that show arts and culture are critical to a community’s well-being,” he said. “We see agencies turning to virtual programs in hopes that people won’t forget them and will keep donating.”

It was an arts and cultural organization that fired the first warning salvo in the state regarding the seriousness of the COVID-19 pandemic, Reid said.

“I credit our own Festival of the Book with being the canary in the coalmine,” he said. “It really helped wake the entire state up when the festival decided in March to cancel.”

Reid said just as important as helping nonprofits survive is finding ways to change with the changes likely to take place in society. That would also include funding efforts, he said.

“We have to ask ‘how do we rebuild and restructure to be sure we are creating an active cultural and arts community that is not precarious but has support through the local economy.’ That is going to be important,” Reid said.

Michael McKee, of the Blue Ridge Area Food Bank, said local food service agencies the bank serves have lost many volunteers who are in at-risk age groups but that others seem to be stepping up to replace them.

“It’s hyper-localized as nonprofits are finding ways to connect with people to meet local needs,” he said. “But it’s important that government agencies also get involved. Increasing [food stamps] benefits so more people buy their food at the store would be one way to help the increasing need.”

Charlene Green, director of the Piedmont Housing Alliance, said the agency’s main funding source is rent paid by tenants and clients, many of whom receive subsidies or have fixed incomes.

“We have not seen a big reduction in income, yet, but our clients are among those who rely on other nonprofits,” she said. “We are shifting donations in ways that will support our clients.”

While agencies work to survive in the present, they also need to consider the future, Nardi said. That means identifying needs as they arise and convincing patrons and donors to act quickly. Flexibility in how funds may be used is important, she said.

Nonprofit leaders must also ask the larger ‘what-if’ questions, including ‘what if another pandemic strikes,’ in order to prepare.

“It’s no longer an either/or situation, it’s a both/and situation,” she said. “We need to be able to both invest in nonprofits to sustain the future and address emergency needs. We are moving forward into a gray environment where we do not know what to expect.”


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