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September 24, 2020
Nonprofits that Provide Direct Services Harder Hit by Pandemic

June 16, 2020 — While the coronavirus pandemic has had devastating effects on nonprofits, the negative impacts have been magnified for nonprofits that provide direct services and serve historically disadvantaged communities, according to a newly completed survey.

In addition, nonprofits that rely on foundation funding are experiencing fewer negative impacts and more stable funding than those relying more so on earned revenue or gifts from individual donors, according to The Center for Effective Philanthropy (CEP), a Cambridge nonprofit that develops research on grant makers' performance.

Most leaders say that the COVID-19 crisis is having a moderate or significant negative impact on their organization, according to CEP:

  • 46% of survey respondents said the crisis has had a significant negative impact on their operations, while 38% described the impact as moderate.
  • 54% of respondents from organizations that provide direct services said the crisis has had a significant negative impact on their operations, compared to 29% of those providing non-direct services.

The findings were based on input from 172 nonprofit CEOs from nonprofit, grant-seeking organizations that receive at least one grant from foundations giving $5 million or more annually.

Revenue from staffed foundation grants has been more stable than revenue from other sources, CEP found:

  • 39% of survey respondents said grants from staffed foundations has not changed since the crisis began, while 31% said such grants increased, and 30% saw a drop in those grants.
  • 43% said gifts from major individual donors, people who give $7,500 or more a year, declined, while 42% said gift giving at this level has remained stable.
  • 51% said gifts from individual donors who give less than $7,500 or more a year, declined, while 31% said gift giving at this level has remained stable.
  • 77% said they have experienced a drop in earned revenue.

Fifty-two percent of the CEOs who identify as people of color said staffed foundation funders have been very helpful during the crisis, compared to 29% of CEOs who do not identify as people of color, CEP found.

While staffed foundation funders and major donors have been helpful during the pandemic, major donors are significantly less likely to have talked with nonprofits led by women about how they will support them in the future: 72% of nonprofits led by men, compared to 40% of those led by women, said some major donors have talked about future support.

Although 90% of survey respondents said they have canceled or postponed fundraising events during the coronavirus pandemic, 49% said they had to lay off or furlough employees. At the same time, more than half—55%—reported an increase in demand for their programs and services.

Going forward, CEP noted, "nonprofits most need their staffed foundation funders to provide unrestricted funding, provide more funding, and reach out to them to provide transparency about how the pandemic will impact future support."

Nonprofit CEOs said they needed major donors to provide more funding and provide transparency about how the pandemic will impact future support, and non-monetary support, especially fundraising assistance.

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