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New Data Reveals A More Positive Outlook for Some, But Not All, Nonprofits

Date: June 8, 2021

Hannah Martin

Former Manager, Research, CEP

Kate Gehling

Former Senior Analyst, Research, CEP

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When CEP released a report last June about the state of nonprofits during the COVID-19 pandemic, prospects looked bleak. Nonprofit leaders from our Grantee Voice panel revealed that the pandemic was devastating their organizations as well as the people and communities they serve, with magnified effects for nonprofits providing direct services or serving historically disadvantaged communities. The one bright spot in our data was that foundation support was helping nonprofits—organizations that primarily rely on foundation funding reported fewer negative impacts from the pandemic and more stable revenue than those that rely upon earned revenue or individual donors.

A lot has changed since then. In the spring of 2020, the federal government offered the Paycheck Protection Program to financially support organizations, including nonprofits, through the pandemic. Many individuals and organizations grappled, more than they had been, with our country’s historical legacy and present perpetuation of systemic racism. A new president took office amidst numerous threats to our democracy and political process. We developed and have begun disseminating life-saving vaccinations to stem COVID-19’s spread. In parts of the world, businesses and nonprofits are re-opening their doors.

So how have these changes over the last year affected nonprofit organizations? Where do they stand relative to the grim outlook projected one year ago? To find out, CEP conducted a follow-up survey of our Grantee Voice panel in February 2021 and received 163 responses.

Here is what we learned:

  1. Most nonprofit leaders report that the COVID-19 pandemic has had negative impacts on their organizations and has affected their programming, revenue, demand, and costs. Arts and culture organizations have experienced more negative effects from the pandemic, while community and economic development organizations experienced fewer negative effects.
  2. Increased financial support from foundations, individual donors, and the government—including Paycheck Protection Program (PPP) funding—helped nonprofits to fare better through 2020 than their leaders had originally anticipated.
  3. Many nonprofits report that their foundation funders were flexible, responsive, and communicative in 2020. However, nonprofits led by women and nonprofits serving certain communities (including Asian, Pacific Islander, Middle Eastern, and Native American communities) experienced somewhat less flexibility, responsiveness, and communication than other nonprofits.

In some ways, these results are more positive than what we found in our first report. Despite the pandemic creating largely negative impacts on nonprofits, compared to respondents from last May, leaders who responded to our follow-up survey rate the impact of COVID-19 less negatively and fewer report having to reduce programs or services or draw from reserves to sustain their organizations.

Leaders say their organizations were able to stay afloat due to the generous support of government sources, foundations, and individual donors. As one leader from our follow-up survey puts it, “Crisis funding from foundations essentially helped us survive.” And many leaders report that their foundation funders were more flexible, responsive, and communicative with them in 2020.

Unfortunately, these more positive experiences were not universally shared by all nonprofits. Arts and culture organizations have been more negatively impacted by the pandemic than nonprofits working in other program areas. Most leaders whose organizations primarily serve Asian, Pacific Islander, Middle Eastern, or Native American communities report that no foundations provided new funding to support these communities in 2020. (When we surveyed foundation leaders themselves in the summer of 2020, very few said they were making new efforts to support any of these communities.) Leaders whose organizations primarily serve these communities report that fewer of their foundation funders exhibited flexibility, responsiveness, and communication. Similarly, nonprofits led by women experienced less flexibility, responsiveness, and communication from foundations than nonprofits led by men.

It’s easy to see why these differences are concerning. Arts and culture organizations, many of which rely upon earned revenue from in-person performances and exhibits, are struggling to survive. Asian, Pacific Islander, Middle Eastern, and Native American communities received less foundation support despite the myriad of ways in which they were harmed by the public health and economic consequences of the COVID-19 pandemic, including the massive rise in racist violence and hate crimes against members of Asian communities in particular. Gender disparities, which are already well-documented in nonprofit leadership, showed up yet again.

We hope that this report helps to highlight the nuanced experiences of nonprofit organizations over the last year. For many, 2020 was tough, but the generous support of their funders helped them fare better than they originally expected. Sadly, others were largely left out of this essential support. For almost all nonprofit organizations, the ultimate takeaway is clear: they still need increased support from their funders in the near future. As one leaders says, “There is still so much uncertainty about the rest of 2021 and perhaps even into 2022. We need unrestricted funds and flexibility in the timing of their use. The challenges and expenses we anticipate now may change in a matter of weeks or months.”

Download Persevering through Crisis: The State of Nonprofits here.

Kate Gehling is senior analyst, research, at CEP. Hannah Martin is manager, research, at CEP.

Editor’s Note: CEP publishes a range of perspectives. The views expressed here are those of the authors, not necessarily those of CEP.

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