The COVID-19 crisis has caused deep and widespread strain across sectors and individuals since taking hold in early 2020. Despite this adversity, nonprofits—especially those comprising the modern social safety net—have continued to serve their communities during this tumultuous time (Kulish, 2020). This report seeks to understand (a) the major challenges facing nonprofits in Washington state as a result of the COVID-19 pandemic, (b) the strategies that nonprofits are using to mitigate the effects of the crisis, (c) how nonprofits are experiencing changes in funder relationships as a result of the crisis, (d) the degree to which nonprofits in the state have accessed assistance under the CARES Act, and (e) the most pressing needs nonprofits have as they face the ongoing uncertainty and hardship presented by COVID-19.
Not surprisingly, this report finds that nonprofits face considerable financial difficulty, with many already experiencing steep declines in total revenue and projecting declines over the next year. The average decline in total revenue experienced across nonprofits is approximately 30%. These declines are largely driven by a drop in program service revenue and are particularly challenging as many nonprofits are shifting their modes of service provision and incurring costs as they seek to prevent the spread of the disease. Declines in total revenue are projected to continue over the next year by an average of
16%, including a 4.2% decrease for health and human service organizations and a 25.6% decrease for other nonprofits.
Health and human service nonprofits are also seeing significant changes in service demand—an average increase of 28%—without a requisite increase in funding. At the same time, nonprofits are seeing a significant reduction in the number of people willing and able to volunteer in order to provide needed services. Other nonprofits, such as arts organizations, are seeing a drop off in demand that is jeopardizing their ability to survive.
Despite these challenges, we find that nonprofits are being flexible and creative in their response to the COVID-19 crisis. Many organizations have effectively reimagined what service provision looks like during this challenging and uncertain time, with nearly 64% of nonprofits changing how they provide programs and services. Approximately 58% of nonprofits have altered their short-term organizational goals, and nearly half have changed their programmatic priorities.
These changes come at a cost, and the strain on nonprofits is visible: 62% have had to pause one or more programs, and 14% have had to end one or more programs. Subsequently, many nonprofits have spent down cash reserves and made significant cuts to their number of staff, staff hours, and program capacity in order to stay afloat. Partnerships between nonprofits and local governments have become a common means of maximizing limited resources and tending to communities hardest hit by the crisis.
While some funders are moving to ease the burden on nonprofits through actions such as increasing funding and loosening grant restrictions for grantees, nonprofits reported that changes in funder/grantee relationships have been limited. A majority of nonprofits (for whom the questions were applicable) report that none of their funders have changed how existing funding can be used, reduced reporting requirements, or made new funding unrestricted so that it can be flexibly used to meet needs.
Many nonprofits—56% of our sample—have successfully accessed CARES Act Paycheck Protection Program loans to support their employees. While nearly 30% reported some difficulties in applying, 95% that did apply were approved for their loans. Qualitative evidence suggests that there is still confusion though about whether and how these loans will be forgiven, and while assistance with payroll is helpful, nonprofits note that other costs associated with operating during the pandemic are still challenging.
Finally, we asked nonprofits what types of assistance would be most useful during this time in the hopes of stimulating action on the part of policy-makers, government agencies, institutional funders, and donors. Nonprofits overwhelmingly responded that they require assistance in terms of additional funding—from foundations, government, and individuals. Nonprofits also stated that reduced restrictions on current funding streams, information about the emergent state and local regulations pertaining to COVID-19, and information and data sharing would be useful during this time.
