Finding an industry or sector of society that has not been impacted by COVID-19 would be difficult, and the nonprofit sector is no exception. This ever-changing situation has hurt nonprofits while also bringing many to the forefront of charitable and community safety efforts. When the crisis has lessened, the face of nonprofits will have changed. By taking a look at the immediate COVID impact on the nonprofit world, charitable organizations can face the future with the right planning in place.
Donations Down in Light of Economic Concerns
One of the biggest problems created by the coronavirus for nonprofits is a drop in donations. For example, Minnesota nonprofits, numbering about 9,000, lost about $1 billion in donations and other revenue in April 2020 due to the coronavirus. Nonprofit entities in every state across the nation are similarly affected.
This happened for two reasons. First, major spring fundraising events had to be canceled. Benefit concerts, races, and similar local events simply couldn't happen with social distancing in place. Second, normal giving dropped as people struggled with job loss and the economic impact of COVID-19 on their own families.
Since nonprofits don't run at a profit, many lack a financial cushion to help at this time. A drop in revenue, even a small one, puts these organizations at risk of serious financial distress.
Increased Demand for Nonprofit Services
In spite of the loss of donations, nonprofits in mental health, substance abuse, safety, and food or shelter industries are seeing an increase in demand for services. With the growing numbers of people unemployed, food banks are in high demand, and some are struggling to keep up. The increased number of people struggling with depression increases the demand for substance abuse and mental health counseling services. This combined with the revenue shortages makes it difficult for these organizations to help the people that need their services.
Nonprofits Included in Economic Stimulus Act
When Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES), they included loans and aid that some nonprofits could utilize to get them through the challenges of coronavirus and its aftermath. Some of the loans to help with the COVID impact on nonprofits include:
Paycheck Protection Program – These emergency SBA 7(a) loans are available for nonprofit entities to use to pay their staff and their operating costs while donations and income are low. This loan has a 1% interest rate and is forgivable under the right circumstances. This loan is available to those with 500 or fewer employees.
Expanded IDLE & Emergency Grants – This is an SBA 7(b) loan that is available to nonprofits. The CARES Act did not change the IDLE requirements and limits for nonprofits, but expanded options to for-profit businesses. Nonprofits have a 2.75% interest rate for this loan, and the first $10,000 is forgivable.
Mid-Size Loan Program – This new program allows nonprofits with 500 to 10,000 employees to apply for a loan with a 2% interest rate. This loan is non-forgivable.
To get through the challenges of COVID-19, many nonprofits have applied for and received these loans.
In Spite of Challenges, Organizations Are Rising to the Call
There's no denying the coronavirus has created difficult challenges for nonprofits, especially those relating to money. Yet these are the times for which many of these organizations were created to make a difference. As such, nonprofits are rising to the challenge and striving hard to help the people who need it most, all while getting creative to find ways to fund their efforts.
Feeding America, for example, is using its COVID-19 Response Fund to help local food banks across the nation get the food they need to feed their communities. Because this national nonprofit has a large reach, they are able to fundraise more effectively than the local food banks. They also have the ability to work with government leaders to help with federal nutrition programs to protect people from hunger during this time.
Oxfam America works to fight poverty around the globe. They have increased their efforts in the United States in light of the pandemic and the increased numbers of people struggling with a lack of income at this time. They work hard to ensure people can find work, get food, and have access to water. During the COVID-19 pandemic, they have been working hard with migrant populations to ensure their needs are met.
Some nonprofits are having to adjust their offerings to help with COVID impact. For example, Healthy Start, a Florida nonprofit that works with mothers and babies, had to add diaper and formula delivery services to needy families because of the coronavirus. The economic challenges families are facing make it impossible for some new moms to afford diapers and formula, and many can't get to the store to get these supplies. Healthy Start ensures they get what they need.
This is just the tip of the iceberg on how many nonprofits are rising to the occasion during this difficult time. In spite of poor funding and economic strain, these charitable organizations work hard to ensure the people they serve have their needs met.
Coronavirus and its aftermath have shown the importance of nonprofit organizations to help the neediest and most vulnerable people in the community. It has also shown the importance of strong nonprofit management and leadership to ensure these organizations weather tough times.
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