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COVID-19 Reveals The United States’ Reliance On The Social Sector

by M&Co. Staff

In times of crisis, people look to their governments to solve problems. We are seeing this across the globe during the COVID-19 pandemic. More often than not, vulnerable and underserved communities also turn to non-profit organizations that provide food and medication delivery and mental health services. Non-profit fundraising is integral to the continuation of these services, especially when communities are under economic pressure.

In recent years, the U.S. saw an uptick in demand for non-profit services. The NonProfit Times reports that “the number of nonprofits has increased by almost 75% between 2000 and 2016.” Also, 80 percent of nonprofit revenue in the United States comes from government grants or contracts and fees for services. According to the Urban Institute, non-profits contributed an estimated $985.4 billion to the U.S. economy in 2015, making up 5.4% of the country’s GDP. We expect growth will be negatively impacted by the current economic and social crisis.

COVID-19 has reaffirmed the increasing role that the social sector plays in helping societies function. But now, at the time when they are needed the most, those services are in danger of being discontinued as governments face financial challenges due to rising unemployment rates and budget cuts.

It is imperative that the social sector be able to withstand the negative financial implications of this crisis. As nonprofits look to survive, here are some of the ways they can address common challenges.

Limited Staffing

Many nonprofits, especially small and medium-sized organizations, have a limited number of paid staff and rely on volunteers. Around 25% of adult Americans volunteer, according to non-profit coalition Independent Sector. However, it can be difficult to recruit new volunteers when many households are under pressure during an economic crisis – and even more so due to current social distancing.

One solution is to form a partnership with a private sector company. It should be an organization with corporate social responsibility initiatives that are aligned with your nonprofit’s mission and values. Don’t limit your outreach to organizations that provide same or similar services as yours. You may have a better chance of forming a partnership with an entity that is lacking what you can contribute.

Stretched Budgets

Many organizations are struggling with disruptions to non-profit fundraising, especially ones funded by government. According to Giving USA, foundations make up 18% of donations to non-profits, while the vast majority of charitable giving in the United States is done by individuals. With today’s economic uncertainties, it can be difficult to secure individual donationsDue to COVID-19, mandatory shutdowns of non-essential businesses have resulted in the cancellation of galas, fundraisers, panels, and other programming that help non-profit fundraising.

In order to continue services, non-profits should develop a financial and operational plan for engaging with their supporters and not rely on in-person fundraisers are not feasible or permitted. That means using online auctions for fundraising and engaging with supporters through webinars and social media.

Lack of Brand Recognition

It can be challenging for non-profits to communicate their impact and effectiveness to their donors during a crisis. Many foundations make project-based donations. These donations often have a narrow set of criteria that non-profits must meet in order to qualify for a grant. Since non-profits tend to be mission-based rather than performance based, it can be difficult for funders to understand if an organization’s programming is benefitting the community at large.

A non-profit should have a clear and strong mission statement readily available on its website. The stronger the mission statement, the more it can serve as a tool to solicit external stakeholders. Also, a non-profit should have a communications and outreach plan that will amplify its voice to effectively engage with its supporters.

The current pandemic serves as a reference point from which organizations will learn to prepare contingency plans. Contingency plans enable them to continue operations during an unpredictable event. We all benefit if non-profit organizations serve our communities during a crisis of this scale in the future. Now is the time for the non-profit sector to innovate. With streamlined processes and improved communication infrastructures, non-profits can continue to provide critical services to the most vulnerable among us.

Learn how our public affairs and government relations practice can help with non-profit fundraising and operational challenges. 

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