Report: Nonprofits Hit Hard by COVID Economic Disruption; CT Could See More Than 400 Nonprofits End Operations
/A new analysis has found that the nonprofit sector nationwide lost nearly 930,000 jobs since the beginning of the pandemic. And although most organizations have managed to survive a short recession, a longer one could be devastating, the research found. Connecticut could see more than 400 nonprofits close their doors, according to various projections of the economic fallout from the coronavirus.
The report, by the organization Candid, in collaboration with the Center for Disaster Philanthropy (CDP), also found that there has also been a notable effort to support nonprofits by the philanthropic community.
The median U.S. nonprofit has about six months of cash, according to the report, which means that if a nonprofit’s expenses stayed the same but its revenue went down to zero, it could continue its current activities for another six months.
“Even as we see signs that the U.S. may be turning the corner in this pandemic, recovery from this disaster is a long process that will take years,” said Regine A. Webster, vice president at CDP. “This is only the beginning. We need philanthropy to continue stepping up.”
The report, Philanthropy and COVID-19: Measuring one year of giving, examines COVID-19-related philanthropic funding in 2020. Funding designated for specific populations changed in the latter half of the year, the report found, particularly regarding Black, Indigenous, and people of color (BIPOC) communities.
In the first half of 2020, only 5 percent of COVID-19-related funding that specified recipients was designated for BIPOC communities, despite these populations being disproportionately affected by the pandemic. Since then:
23 percent of specified global funding was explicitly designated for communities of color.
35 percent of specified U.S. funding was designated for BIPOC communities.
High-net-worth donors designated the highest proportion of funding for BIPOC communities (44 percent), whereas corporations designated only 11 percent.
Additionally, 8 percent of funding was directed explicitly for people with disabilities, an increase from 1 percent reported in the first report.
The report did not include a breakdown by states of the impact to date, but in a series of scenarios designed to project the number of nonprofits that may be forced to close, depending upon the length and severity of the continuing pandemic, Connecticut could see as many as 430 nonprofit closures (and more in the most dire scenario), ranking 20th in the nation per capita.
“Philanthropic giving is vital and every dollar is appreciated. But only government can support can sustain the broad-reaching nonprofit network that had lost $461 million in buying power over the dozen years before COVID-19 hit,” Gian-Carl Casa, President of the CT Nonprofit Alliance, told CT by the Numbers this week. “In July, one in five community nonprofits believed that they were unlikely to be able to fully fund payroll for the next quarter, and more than one in four worried about being able to fully provide services. It is reasonable to assume those concerns have only increased, as federal funding sources available in June and July have dried up.”
“What’s amazing,” he added, “is that nonprofits have continued to provide services even as doing so damages their long-term financial health. They have done so for years. It is who they are.”
The arts community has been particularly hard-hit by the pandemic across the country. Nearly 37% of workers at arts and entertainment organizations lost jobs, according to the Johns Hopkins Center for Civil Society Studies, the report noted. Education nonprofits lost 15% of their workforce, about 300,000 jobs. The Center estimates that it could take nearly 18 months to return to the pre-COVID-19 level of employment.
Responding to those findings, Kristina Newman-Scott, president of a Brooklyn, NY, arts institution who previously led arts initiatives in Hartford and for the State of Connecticut Office of the Arts, told the Associated Press “It really has been devastating.” She added “We have a lot of empathy for our colleagues and friends I the arts space who based on their model, see things that are just not going to be the same for them. They will be navigating a very different financial pathway.”
The report recommended that philanthropic organizations and donors “Increase your giving and make unrestricted and flexible grants,” stating that “Recovery from this crisis will extend over a number of years, and nonprofits will need the support of funders to respond to changing events and circumstances. This pandemic will have long-term impacts and cannot be solved by pre-2020 contribution amounts.”
The recommendations also included a call for additional operational and administrative support of nonprofit organizations, explicitly targeting funding to communities that are systemically marginalized, and expanding the reach of contributions beyond the organizations that have traditionally been funded.
