Direct service nonprofits, those serving disadvantaged hit hard

Direct service nonprofits, those serving disadvantaged hit hard

Nonprofits that provide direct services and serve historically disadvantaged communities have been especially hard hit by COVID-19, a report from the Center for Effective Philanthropy finds.

Based on a survey of a hundred and seventy-two nonprofits that had received at least one grant from a foundation giving $5 million or more annually, the report, Funder support during the COVID-19 pandemic (18 pages, PDF), found that while 84 percent of all respondents said the pandemic was having a significant (46 percent) or moderately (38 percent) negative impact on their organization, direct service nonprofits were more likely than non-direct service organizations to report a significant impact (54 percent vs. 29 percent). Large majorities of all respondents said they have had to cancel or postpone a fundraising event (90 percent), scale back on programs or services (81 percent), draw on their reserves (80 percent), or cut staff hours, wages, or benefits (62 percent), even as 55 percent were seeing increased demand for their programs and/or services, with nonprofits  primarily serving historically disadvantaged communities and populations more likely to report increased demand (61 percent vs. 35 percent). 

The report also found that nonprofits largely funded by foundation grants were less likely than those relying on earned revenue or individual donations to report significant negative impacts (26 percent vs. 53 percent) from the pandemic, with only 30 percent of those respondents reporting a drop in grant income, while 31 percent reported an increase in such income. At the same time, 43 percent of respondents saw a decline in gifts from "major donors" giving at least $7,500 a year, while 14 percent reported an increase, and 51 percent saw a drop from other donors, while 18 percent reported an increase.

According to the report, nearly three-quarters of all respondents said foundation funders had been "very helpful" (31 percent) or "somewhat helpful" (40 percent) during the public health emergency, although nonprofits led by CEOs who identify as a person of color were more likely than other organizations to say their foundation funders had been "very helpful" (52 percent vs. 29 percent), while 31 percent of all respondents said at least half their funders had discussed with them how the pandemic was affecting the people and communities they served and 15 percent had discussed with a funder how COVID-19 will affect future support. Some respondents also reported that their funders had extended a deadline for a current grant (23 percent), allowed them to shift the way a current grant is used (20 percent), waived or adjusted a grant reporting deadline (18 percent), or proactively converted restricted grant funds to unrestricted funding (13 percent). 

"It's more important than ever that foundation funders and individual donors support nonprofits in ways that best position them to make an impact," wrote Kate Gehling, a CEP research analyst and co-author of the report, in a blog post. "But nonprofits, especially those serving the most disadvantaged and vulnerable in our society, are facing stark realities right now. Funders must push themselves to better support these organizations in order to tackle the most important problems of our time."

(Photo credit: Center for Effective Philanthropy)

"Funder support during the COVID-19 pandemic." Center for Effective Philanthropy report 06/09/2020. "New realities, new data: Nonprofits in crisis and what donors need to know." Center for Effective Philanthropy blog post 06/09/2020.