Since the coronavirus pandemic swept the world leading to nearly half a million deaths and rattling global economies, nonprofit organizations are struggling to meet their funding goals and distribute their services. Between plummeting consumer spending, imperiled corporate earnings, and the uncertain status of government grants, the nonprofits of today face a challenging future.
How will successful nonprofits evolve during the pandemic, and how will the nonprofit world adapt to the economic conditions that are likely to remain after the pandemic recedes?
Fewer donations, fewer services, and a few winners
After the pandemic, nonprofits will probably be less active than before, on average. Given that economic recovery from the pandemic may take several years, purse strings are likely to remain tight among the public as well as among prospective corporate donors and government grant officers. Put differently, philanthropy spending will contract in the short term and likely in the medium term as well. This means that nonprofits will have less money to spend on services, and it may also mean that nonprofits will need to cut services or lay off staff to remain solvent.
Smaller nonprofits will be hit harder than larger nonprofits because their services tend to be more locally oriented, and they may lack name recognition outside of their area. This effect will be exacerbated by nonprofit watchdogs like Charity Navigator that caution potential donors about funding new efforts by unknown nonprofits during times of crisis because of the risk of scams and inefficiency.
Charities that were rapidly expanding before the pandemic may not be able to keep growing if the pandemic causes a shift in the social values or the spending habits of the public. While donors face extremely high economic uncertainty, nonprofits may not feel like they can ask them for funding. In this vein, it's hard to see how rapidly growing nonprofits like the Packard's Museum dedicated to the display of antique motor vehicles could continue to grow more than 35% per year when consumers are cash-strapped. Other nonprofits may grow even faster if their services mesh with what consumers view as virtuous or necessary. For example, the Center for Disaster Philanthropy has grown more than 90.7% in the last three years, and the pandemic has caused its growth to accelerate.
Crisis strategy can predict which nonprofits will flourish post-pandemic
SeaChange, a nonprofit services company, said in its crisis response guide for nonprofit decision-makers that there are three potential courses of action for nonprofits during the pandemic: hibernation, response, and a hybrid of the prior two. Whereas hibernating nonprofits go into resource-conservation mode until the pandemic has receded and normal donation flow resumes, nonprofits categorized as responders see increased donations and may also face increasing demand for services. In contrast, hybrid charities may have some of their fundraising or demand for services disrupted by the pandemic, but they still aim to sustainably distribute services, though at a reduced level.
These three strategies will shape the post-pandemic landscape for nonprofits. Overall, the nonprofit world will look distinctly lopsided after the pandemic. Responder nonprofits offering healthcare services may come out of the pandemic stronger than they went in, but hybrids offering economic services may face a slow recovery to pre-pandemic revenues and service-distribution capabilities. Hibernating nonprofits in the education or environmental sectors may not return at all.
The nonprofits of the future will need their donors to chip in just as much and just as frequently as the nonprofits of today. But, as a potential donor, you should target your contribution to the nonprofit where it will do the most good. For many people, that means donating to a nonprofit actively involved in the pandemic response. Others may be interested in contributing to racial justice causes or nonprofits involved in alleviating people's immediate needs like food banks or housing services. The nonprofits you choose to support is up to you, but remember that your donations to self-professed hibernators may not be enough to help them resume services anytime soon.