Perils of a Pandemic: The Biggest Issues Facing the Nonprofit Sector

It’s no secret that the pandemic has significantly disrupted the nonprofit sector. Despite federal relief efforts, such as the Paycheck Protection Program, organizations across the country are still reeling from the economic turmoil caused by COVID-19. According to a study by Candid and the Center for Disease Philanthropy, over a third of nonprofit organizations are at risk of shutting their doors due to pandemic-related harms. As the world gradually reopens, the need for revolution and healing in the nonprofit sector has never been more apparent.

The Biggest Issue: Fundraising

Even in a pre-pandemic world, fundraising was generally difficult for nonprofits. Health restrictions have sidelined in-person fundraising for over a year, preventing organizations from receiving crucial revenue. Predictably, Improving fundraising has urgently become a priority for many organizations. A survey conducted by the Nonprofit Leadership Center showed that organizations’ top challenge throughout the pandemic was securing fundraising. 64.10% of respondents claimed the cancellation of fundraising events was the biggest source of harm. Concerningly, about half of those surveyed did not expect to meet their revenue goals for 2020.

Tight Budgets Create Vulnerability

Alongside fundraising concerns, existing budget issues limited the adaptability of nonprofits during the pandemic. Across the industry, operating with a lean budget is the norm. According to another study conducted by Candid, the majority of nonprofits operate on a budget of less than a million dollars. For every big-name nonprofit that pays their CEOs millions, thousands of organizations exist on less than six figures.

With a limited budget comes inflexible disaster preparation. Concerningly, many of these organizations support populations disproportionately impacted by catastrophes, such as the pandemic. Met with a demand they cannot supply, several organizations have found themselves backed into a corner, forced to do more with less.

Lack of Resources Hurts Targeted Communities

Ultimately, the pandemic limits a nonprofits’ ability to do what it does best: give back. Harm to communities that rely on an organization’s generosity is an inevitable consequence of impacted funding and stricter health protocols.

This is especially apparent for charities specializing in in-person care. Residential recovery programs, such as Gilgal, were inevitably forced to shut their doors to newcomers, due to health risks. Although Gilgal made commendable efforts to conduct services virtually, it could no longer provide the hands-on support its constituents needed.

Rethinking the Nonprofit Industry

The results of the last year have demonstrated that the nonprofit sector is not fully equipped to control a long-term disaster on the scale of a global pandemic. However, the pandemic has also given the industry a chance to show its resilience.

According to The Conversation, some funding partners removed restrictions on grants, trusting their grantees to respond to the crisis with insider expertise. Furthermore, many organizations have benefited from government aid: analysis conducted by the Dorothy A Johnson Center revealed that nonprofits received the highest share of high-dollar loans from the Paycheck Protection Program. The analysis concluded that those loans protected 4.1 million jobs.

Despite these silver linings, it’s evident that solutions of the past cannot be the only options for fundraising. The transition to in-person events, which have historically sustained the industry, is still in its infancy. Alternatively, gaps in fundraising can be filled with passive, simple alternatives. At Higher Rewards, we’ve embraced this challenge with financially driven solutions. To learn more, check out our website.

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