Last month we launched a survey of nonprofit staff leaders to assess the impacts of the pandemic, just past its first anniversary. Big thanks to those who participated! Also, a shout-out to Nonprofit Association of Oregon and The Impact Foundry for partnership in publicizing the survey. With 158 responses from a wide range of nonprofits, we learned some interesting things.
Before I discuss the results, let’s go back in time to early spring of 2020. We were in new territory as lockdowns began, workflows were disrupted, fundraising events were canceled and the economy plunged into a recession with an unknown bottom. Nonprofit leaders were deeply concerned and we all heard prophesies of dire consequences for the sector. Where are we a year later?
The survey reveals several themes – some in direct contrast to early expectations.
Nonprofits and Their Leaders are Resilient.
Any predictions that the nonprofit world was not up to the task of responding to this crisis are largely confounded by the data. Nonprofit leaders adapted quickly to situations most had never experienced.
At a high level, the sector has done well. Managers developed protocols to protect clients and supervise remote staff. By and large, staffs have remained productive and boards have continued their work unabated. Organizations stepped up their communications and many report improved reputations as a result of these responses. A surprising share of nonprofits have performed better financially—not just relative to expectations, but even compared to pre-pandemic performance. Many leaders see bright times ahead.
Let’s unpack this data to help fill out the story.
Photo by Jeff Ochoa via Unsplash.
Despite Major Disruptions, Many Organizations are Going Strong.
The pandemic imposed many negative effects on nonprofits, most notably on the number of clients or participants in programs and the ability to meet client needs. Respondents reported that, overall, program outcomes have been adversely affected and that maintaining health and safety of clients has been challenging.
It’s been rough on staff members too, with negative impacts on staff workload and morale. Recruitment of personnel has been challenging, as has maintaining staff cohesion and managing volunteers. Many respondents reported office closures (59%), program site closures (41%) and event cancellations (84%).
Despite all this, respondents reported that, on average, quality of work has remained strong, staff retention has held ground and communication within organizations has generally been as effective as it was pre-pandemic. While 27% of respondents reported staff layoffs, 73% have maintained or increased staffing levels. Seventy-two percent launched new online events, 56% initiated new methods of fundraising and 59% have changed the ways they engage with staff members. This is what resilience looks like.
Far from a mass extinction event, COVID-19 has promoted evolution.
There’s a Financial Divide in the Sector.
One of the most fascinating findings of the survey is that there are two distributions based on the impact of the pandemic on nonprofits’ current financial health. Relatively few respondents (17%) reported no change; many (39%) reported a somewhat or strong negative effect, while a slightly greater number (44%) reported a somewhat or strong positive change.
That’s right, the results show that close to half of organizations represented here are doing better financially a year into the pandemic and recession. Why is this?
We looked at these groups separately and found that the “financial positives” have, on average, been somewhat more successful in fundraising, both relative to the “financial negatives” group and their own pre-pandemic results. As a group, they’ve seen improvement in individual giving and, most notably, in foundation grants. The “financial positives” also report improved donor relationships, another distinction with the “financial negatives.”
Something else is different about the “financial positives”: they are relatively larger. Whereas 36% of “financial negatives” have operating budgets over $1 million, that figure is 58% for “financial positives.” Forty-one percent of “financial negatives” have budgets under $500,000, compared to just 19% of “financial positives.”
This dataset raises important questions and hypotheses. Were the “financial positives” better positioned to thrive in a crisis due to stronger infrastructure, deeper funding bases and/or more capacity to develop relationships? Do funders consider these organizations to be more effective or prepared to respond to changing circumstances? Does an organization’s scale of operation affect these capacities or funder perceptions, or both?
Another, perhaps unsurprising, distinction between the two groups is that “financial negatives” saw much lower predictability of future financial health than “financial positives.”
While the survey didn’t delve into underlying causes, it’s clear that government assistance programs and rising stock markets and had some effect on stabilizing, and even improving many nonprofits’ finances. Will there be aftershocks if and when these conditions change? We don’t know, but it appears likely that the “financial positives” will be better positioned to meet such challenges.
Nonprofit Leaders are Stressed Out.
A large majority of survey respondents (88%) reported somewhat or much higher personal stress levels as a result of the pandemic, with no significant difference between “financial positives” and “financial negatives.” The most frequently cited causes include disruption of operations (68%), disruption of staff (59%), concerns about the health of staff members and clients (59%) and concern about financial performance (50%). The cumulative effects of multiple disruptions was cited by 69% of respondents, painting a picture of steadily increasing burdens on a few people’s shoulders.
We asked about the types of organizational and personal supports that would help leaders over the next year. Most frequently cited forms of organizational development assistance include fundraising support or strategy (54%), board fundraising training (51%), strategic or business planning (48%), staff wellness programming (44%), board development or team-building (42%) and organizational culture development (41%).
On the personal side, 43% of respondents indicated that a peer support system or group could help mitigate stress and 41% cited executive or life coaching. In their comments, a number of respondents suggested that while more leave time could help in principle, using that leave time would ultimately be counterproductive and likely add to stress.
Nonetheless, Leaders are Optimistic about the Future.
Despite the pressures, survey respondents indicated striking optimism for the future. Eighty-five percent felt somewhat or very optimistic about their organization’s health over the next year. This included 94% of “financial positives” and 73% of “financial negatives.”
In all, 40% were more optimistic about their organization’s future health than they were before the pandemic, including 63% of “financial positives” but just 23% of “financial negatives.” This suggests that the experience of adaptation may in itself have strengthened organizations, though financial performance clearly plays a role for many.
We plan to discuss these results further and issue a summary of results, in partnership with NAO, in the near future. Those of us tasked with supporting nonprofit organizations and their leaders have plenty to chew on. Stay tuned, as this discussion unfolds.
In the meantime, keep the good karma flowing!
* Note that a data summary will be announced in this blog as soon as it is complete.