COVID-19 Has Created Major Challenges for North Carolina Nonprofits

Last updated: October 7, 2020

David Heinen, Vice President for Public Policy and Advocacy

In late May, the North Carolina Center for Nonprofits and the NC Office of Strategic Partnerships launched a survey of charitable nonprofits across North Carolina to get a sense of how the COVID-19 pandemic has affected their operations and their communities. More than 2,000 individuals (representing 1,772 total nonprofits) responded to the survey, and their answers provide insights about the challenges facing North Carolina’s nonprofit sector. The NC Office of Strategic Partnerships recently released its report on the survey findings, along with the complete dataset from the survey.

Here are some of the key takeaways from nonprofits’ responses.

The pandemic has greatly affected nonprofits’ operations

Unsurprisingly, the vast majority of North Carolina nonprofits (94%) say that the pandemic has affected their operations. Three-fourth (75%) of nonprofits have experienced a disruption in their programs and services since March, and 71% of responding organizations said they cannot achieve their mission without in-person, physical contact. Notably, this program disruption is particularly problematic for arts and cultural organizations, 64% of which are unable to meet their missions without in-person, physical contact.

Nonprofits have fewer personnel to respond to increasing needs

As is typical during times of crisis, many nonprofit service providers have experienced a significant increase in demand for services during the COVID-19 pandemic. Overall 40% of respondents have experienced and increase in demand for services, and 60% anticipate that demand for services will be higher than usual over the next six months. The expected increase in need for services is notably higher for organizations serving people in poverty (75%), and human service organizations (73%), and health/mental health organizations (70%), but much lower for arts and cultural organizations (36%). In addition, 40% of respondents expect to have a demand for new services over the next 6 months. 

Nonprofits’ ability to meet growing needs appears to be hampered by having fewer people on staff to provide these programs and services. Among survey respondents, the average staffing levels dropped from 30 employees prior to the COVID-19 pandemic to 18 employees at the end of June. Nonprofits serving communities of color have suffered particularly precipitous loss of staff, with average employment declining from 34 to 17 employees over the first three months of the pandemic. The job loss in the nonprofit sector is not yet finished, as 30% of respondents agreed or strongly agreed that they anticipate laying off staff in the next six months.

Traditionally, many nonprofits have been able to turn to volunteers to fill in gaps in their staffing capacity. However, the realities of the public health response to COVID-19 has meant that far fewer North Carolinians are willing and/or able to volunteer. The average nonprofit responding to the survey had 119 volunteers at the end of June, down from 193 volunteers prior to the pandemic. Overall, nonprofits responding to the survey had lost more than 134,000 volunteers during the first three months of the pandemic. 

North Carolina’s nonprofits have suffered significant financial losses due to COVID-19

Overall, three-fourths (75%) of nonprofits responding to the survey indicated that they have lost revenue in the past three months, and 80% expect a further reduction in revenue over the next six months. While the survey did not ask what types of revenue losses nonprofits were experiencing, other evidence suggests that charitable organizations have experienced significant declines in fees for services, state and local grants and contracts, and individual donations:

  • With many nonprofit programs closed due to COVID-19, earned income has declined for organizations that operate partly on a fee-for-service model such as childcare organizations, arts and cultural nonprofits, and charities that operate thrift stores. Notably, 88% of arts and cultural organizations (which tend to rely heavily on earned income) that responded to the survey experienced lost revenue over the last three months.
  • Individual giving has declined with many donors finding themselves out of work or facing financial uncertainty. A June 2020 report from the Fundraising Effectiveness Project showed that donations to nonprofits declined by 6% during the first quarter of 2020.
  • With a steep decline in sales tax revenue during the pandemic, state and local governments are facing significant budget shortfalls for the upcoming fiscal year. It is quite likely that these budget shortfalls will lead to the elimination or reduction of many grants and contracts with nonprofits that provide public services.

February 2020 study in Nonprofit Quarterly found that program fees ($1 trillion), individual donations ($265 billion), and state and local grants and contracts ($187 billion) are three of the four largest revenue sources for America’s nonprofits. 

Paycheck Protection Program loans have provided a temporary lifeline for many nonprofits

As part of the federal CARES Act, Congress established the Paycheck Protection Program (PPP) to provide immediate access to capital to nonprofits and businesses by offering fully forgivable loans for organizations that maintain their payrolls through either June 30 or December 31 (depending on the terms of their PPP loans). Overall, 45% of survey respondents said they have received PPP loans, including 52% of nonprofits serving people in poverty, 51% of nonprofits serving communities of color, 50% of arts and cultural nonprofits and human service organizations, and 49% of health/mental health organizations. 

Nonprofits want access to (unrestricted) funding, advocacy, and interns

Survey respondents were asked what resources would be most helpful for outside organizations to provide to help them weather the crisis. Nonprofits indicated that the most helpful resources would be: 

  1. Information about private funding (91% agreed that this would be helpful).
  2. Updates on current or pending legislation and executive action (88%).
  3. Advocacy for polices and/or funding (87%).
  4. Information about government funding (87%).
  5. Highlighting positive stories about nonprofits (82%).
  6. Sharing strategies for disaster and crisis preparation (77%).

In addition, 55% of survey respondents indicated that it would helpful to have an intern over the next six months.

Nonprofits are particularly in need of unrestricted funding sources. More than two-thirds (77%) of respondents agreed or strongly agreed that additional flexibility in their use of grant funding would be very important or extremely important in the coming months.

North Carolina’s nonprofits are not going away

Even with significant losses of staff, volunteers, and revenue sources, most nonprofits plan to continue to provide their programs in services for the foreseeable future. Only 11% of survey respondents agreed that they would be forced to close in the next six months.

The results of this survey show the many new challenges that the pandemic has created for North Carolina nonprofits and the communities they serve. The Center is sharing these results with policymakers and funders to help them better understand he needs of nonprofits so that we can work together to develop solutions that will strengthen nonprofits as they help with recovery in communities throughout the state.

 

Compare results from the Center's March COVID-19 Impact and Support survey.

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