New Study Finds Nonprofits Fared Better Than Feared During Crisis Thanks to Stepped Up Giving and Federal Funding

Study also uncovers troubling disparities in experience of executive directors by gender and by the race/ethnicity of the communities their organizations serve

Media contact: Grace Nicolette – Vice President, Programming and External Relations: 617-674-0763

FOR IMMEDIATE RELEASE

Cambridge, MA — Nonprofits faced enormous challenges during the crises of 2020 but generally emerged stronger than they feared they would, according to results of a new survey from the Center for Effective Philanthropy (CEP).

Released today, Persevering through Crisis: The State of Nonprofits, draws on the experiences of members of CEP’s Grantee Voicepanel, which is carefully assembled to be representative of nonprofits that receive at least one grant from foundations giving $5 million or more annually. The report’s key findings:

  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 somewhat less flexibility, responsiveness, and communication than other nonprofits.

“Nonprofits faced massive challenges in 2020, no doubt,” said CEP Research Manager Hannah Martin, lead author of the report. “But, thanks to the response of institutional and individual donors and, very significantly, the federal government, they did better than they feared they would when we surveyed them in May 2020. This matters greatly because nonprofits did, and are still doing, vital work to help those hit hardest by the pandemic and related challenges.”

The report details how many nonprofits experienced a shift in foundation practices during this time – saying their foundation funders provided more flexible grants, communicated about future funding, allowed the goals of existing grants to shift, and lifted up the voices of the people and communities nonprofits serve. However, nonprofits led by women and nonprofits serving certain communities of color experienced these changes from their foundation funders to a lesser degree.

Leaders whose organizations primarily serve Asian communities, for example, report fewer foundations providing new unrestricted support to their organizations. And nonprofits led by women—the majority of organizations in the study—were less likely than those led by men to report experiencing increased flexibility, responsiveness, and communication from their foundation funders.

“These differences in experiences are troubling and suggest that foundations should re-examine their practices to ensure that bias, whether conscious or unconscious, is not impacting how they interact with those they fund,” said Martin.

Although the report looks back at how nonprofits have managed through perhaps uniquely challenging times, it raises many questions for the future. “From this research, many questions follow,” said CEP Vice President-Research, Ellie Buteau, PhD. “Will individual donors and foundations continue to flex their levels of support in future crises? Will foundations make some of the changes in how they work with nonprofits more permanent? And will they take a hard look at the differences in experiences among nonprofit executive directors that our research revealed?”

CEP is also tracking the way foundations are, or aren’t, changing as a result of the experience of 2020 in a separate, ongoing research study. Results from that effort will be released later in 2021.

About the Center for Effective Philanthropy

The Center for Effective Philanthropy (CEP) is a nonprofit organization with a mission to provide data and create insight so philanthropic funders can better define, assess, and improve their effectiveness and impact. CEP received initial funding in 2001 and has offices in Cambridge, Massachusetts and San Francisco, California. For more information on CEP’s work, including its research, publications, programming, and assessments and advisory services, visit cep.org.

The Center for Effective Philanthropy – Improving funder performance through data and insight.

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