Survey shows a third of nonprofits could close within a year due to COVID‐19

• Published date: 01 August 2020
• DOI: http://doi.org/10.1002/nba.30817
• Date: 01 August 2020

NONPROFIT BUSINESS ADVISOR AUGUST 2020

6© 2020 Wiley Periodicals LLC • All rights reserved

DOI: 10.1002/nba

Nonprot Research

Survey shows a third of nonprots could close

within a year due to COVID-19

A global survey of nonprot organizations con-

ducted by the Charities Aid Foundation of America

nds that one in three organizations is at risk of clos-

ing down within the next 12 months due to revenue

losses linked to the coronavirus pandemic.

Nearly another third are unable to determine how

long they can persevere under the current conditions.

The CAF America survey found that some 16% of

surveyed organizations did not receive any funding

in the last month, with many struggling to balance

an increased demand for their services, while seeing a

signicant decrease in the size of the grants provided

by long-term donors.

That’s despite additional leniency and exibility

that many funders are allowing for their existing

grantees—close to half of the respondents were al-

lowed grant extensions on current projects and over

39% were able to redirect allocated funds to other

projects in more critical need of funding.

The survey shows that the pandemic is spurring

innovation and adaptability among the world’s chari-

ties. Almost two-thirds of the organizations surveyed

found new ways to engage with donors, whether by

focusing on smaller, targeted online fundraising cam-

paigns or by developing new, more interactive online

campaigns that made it easier for donors to engage

during pandemic-related lockdowns.

Many organizations have had some success at

accessing emergency aid and subsidies from their

local or national governments, the report said. Still,

over 70% of the survey respondents are struggling

to cover salaries, 32% need additional funding for

technology and more than 20% cannot pay ofce rent

and utilities, the survey found. And about a quarter

of responding organizations—1 in 4 organizations—

indicated they faced additional expenses in the near

(See SURVEY on page 8)

Direct service providers hit hardest by pandemic

New research published by the Center for Effec-

tive Philanthropy shows that while nonprots of

all types are seeing an impact from the coronavirus

pandemic, charities that provide direct services and

serve historically disadvantaged populations are

getting hit the worst.

The study, based on a May survey of CEOs from

nonprot, grant-seeking organizations, also shows

that:

Nonprots that rely on foundation funding are

experiencing fewer negative impacts and more stable

funding than those relying more on earned revenue

or gifts from individual donors.

Although staffed foundation funders and major

donors have been helpful during the pandemic, ma-

jor donors are signicantly less likely to have talked

with nonprots that are led by women about how

they will support them in the future.

According to the CEP, the survey also highlights

what nonprots have found to be most helpful from

institutional foundations and donors, as well as

what they need most from both groups now. Per the

survey, funders can do more to support nonprots,

especially those that provide direct services and serve

historically disadvantaged communities, by:

• providing more funding, if possible;

• providing unrestricted funding; and reaching

out to provide transparency about how the pandemic

will impact future support.

At a time when many charities are facing simulta-

neous increases in demand for services and decreases

in revenue, it’s increasingly critical for foundation

leaders and donors to identify the nonprot organ-

izations aligned with their goals that are facing the

biggest challenges, and support them, according to

CEP President Phil Buchanan.

“This new data can help guide funders as they

determine how they can have the most positive im-

pact during the current crisis, especially in helping

organizations serving the most marginalized and

vulnerable in our society—the very people who are

being disproportionately negatively impacted by the

COVID-19 crisis,” Buchanan said.

For more information, visit https://cep.org. ■

Correction added on July 22, 2020, after rst print

and online publication: Charities Aid Foundation has

been corrected to be CAF America throughout.