Study Details How Pandemic Has Pummeled Nonprofits

October 9, 2020 — The coronavirus pandemic has led to the loss of nearly one million nonprofit jobs nationally and is expected to lead to the permanent closing of seven percent of all nonprofit organizations, according to a report released yesterday.

More than 80% of nonprofits surveyed for the report estimated that 2020 revenues will be lower than originally expected. In addition, early evidence suggests that small nonprofits may be hardest hit by COVID-19 and that the pandemic may disproportionately affect organizations led by people of color.

“To say that 2020 has been challenging is nowhere close enough to the truth. It has been a cruel and brutal year that has touched our sector, the organizations we help lead, and our communities in unforgiving ways,” said Dan Cardinelli, president and CEO of Independent Sector, which issued its first Health of the U.S. Nonprofit Sector report.

Nonprofits make up 5.5% of gross domestic product and employ 10% of the private workforce nationally, and 17% of the Massachusetts workforce, according to Independent Sector.

Among large and mid-sized nonprofits that reported a decline in revenue in 2020, the largest number reported declines in earned revenue (83%), followed by individual giving (53%) and philanthropic grants (33%), according to Independent Sector.

“’Earned income appears to have taken the biggest hit during COVID-19, placing greater emphasis on other revenue streams, such as charitable giving, to fill budget gaps,” the report noted.

While individual giving to nonprofits increased by 7.5% in the second quarter of 2020, compared to the same time in 2019, “it remains unclear if the recent spike in giving will be enough to supplement the net drop in overall revenue.”

From March through August of this year 976,616 nonprofit jobs were lost due to the coronavirus pandemic, with part-timers hit the hardest, the report said. In addition, younger nonprofit employees tended to be affected worse than others.

Nonprofits reported a significant decline in their volunteer base, the report found, as follows:

  • Individuals report volunteerism rates have declined 12 percentage points compared to the same time last year.
  • 53% of nonprofits surveyed reported heavy cancellations by volunteers in May 2020.
  • 45% of nonprofits surveyed are adapting to the COVID-19 environment by offering more virtual volunteer opportunities.
  • 77% of nonprofits said the crisis may help them find more efficient ways to work online.
  • 57% said they may find new or expanded ways to fundraise.
  • 56% said they find more efficient ways to pursue their mission

According to Civic Life Today, a report released last month by the Points of Light Foundation, while 36% of adults surveyed nationally said they had participated in volunteer activities last year, 73% said volunteering will be more important to them going forward.

The Independent Sector study also found that potential silver linings flowing from the coronavirus pandemic:

In addition, the report noted that “preliminary research also suggests that nonprofit action during the crisis could increase public trust in nonprofits, awareness of systemic inequity, and the short-term rate of nonprofit advocacy.”