Giving & Tax Guide: Nonprofits face challenges in 2020

It’s no understatement to say that most – if not all – of us can’t wait for the moment we slam the door on 2020. As we move into the new year, hopes rise for vaccines to end the fear and suffering experienced by too many individuals and families and to put us on a path to whatever the new normal will be.

There is no doubt our world has changed. The fact is, we’re still trying to understand the full impact of the pandemic. One thing we know for sure is the dramatic effect on the nonprofit sector, both in Arizona and across the country, on organizations and on the passionate men and women who serve their communities.

A national survey by the Orr Group showed that roughly 42% of responding nonprofit organizations predicted that fundraising will decrease significantly or somewhat next year.  

An Independent Sector survey of mid-sized nonprofit organizations collectively representing more than 152,000 employees and nearly $9.1 billion in contributions and revenue provided “clear evidence of a decline in revenue and individual giving that has forced nonprofits to limit needed services and layoff, furlough or reduce pay and benefits for their employees.” This, at a time when the demand for services and resources has significantly increased.

Specifically, the Independent Sector national survey reported that in response to the crisis, 71% of responding organizations reduced services and operations, 67% furloughed employees, 55% closed offices and 51% laid off staff.

From the donor side, The NonProfit Times published a story on Dec. 1 about a Fidelity Investments survey of 491 donor-advised fund participants that showed nearly half had “upped their giving. Only four percent reported scaling back their contributions” and that “among donors, 61% wanted to help individuals suffering from the economic impact of the pandemic, while 54% wanted to help nonprofit organizations.”

Almost two-thirds of the respondents were “very concerned about small or community-based nonprofits, while 60% feared for the viability of human service organizations such as homeless shelters and food banks. Another 45% cited arts organizations as likely to have a rough go … and four in ten mentioned educational organizations as those potentially facing tough times,” Richard H. Levey wrote.

The situation is no different in Arizona.

A poll of Arizona nonprofits conducted by the Alliance in late September showed that the pandemic created major financial and operational challenges. Nearly 85% of the more than 200 respondents reported changing, expanding or revising their methods of service delivery, much of it reverting to online or virtual assistance where appropriate. 

When asked about the greatest needs through the end of the calendar year, more than 51% need cash flow to meet operational needs due to lost revenue, 43.5% reported the need to effectively and safely manage a return to in-person work and service delivery, and almost 61% need help to navigate additional funding resources from philanthropic sources.

At the same time, without additional Paycheck Protection Program or COVID-related emergency funding grants, nearly 61% projected net operating losses of between 10 and 50%, with almost 31% in the 10-20% range.

The good news is that more than half of those responding to our poll indicated that it is “highly unlikely” they would close permanently during the next fiscal year if funding does not improve in 2021. 

But their ability to continue and even expand services in a post-COVID world requires a shift in thinking to adapt to the current environment. 

The blog Bloomerang projected that “only some elements of the previous methods of operation will work and may be restored. Change will be determined by empirical efforts, surveys, statistical analysis—a much larger involvement of those served and those providing resources.”

The online “knowledge and connection hub” MissionBox offered these ideas for moving forward: “Grieve the ‘Good Old Days’ at Your Nonprofit, Accept What Is and Move On” and “Get Determined, Creative and Open to Change.” 

Also guiding the operational pivot is that 8 in 10 people responding to a Global Trends in Giving Report indicated their preferred method of giving is online and that more than half of donors were enrolled in a recurring giving program.

One means of providing support to Arizona nonprofits is through donations of money, in-kind items and volunteer hours. Given the movement to online giving, donations can easily be made all-year through the website www.azgives.org.

In the new year and beyond, it’s up to all of us together to ensure that the thousands of nonprofits in Arizona can continue doing their great work in communities across the state.

 

Kristen Merrifield is CEO of the Alliance of Arizona Nonprofits. 

Comments (1)

Add a comment

Add a Comment