COVID-19’s Impact on Nonprofits’ Revenues, Digitization, and Mergers

The impact of COVID-19 on life around the globe is extraordinary, and nonprofits are no exception to the disruption. As the chart above reveals, roughly 73 percent of the organizations La Piana Consulting recently surveyed reported a drop in revenue. That fact may be an unsurprising consequence of the COVID-19 crisis, but the scope of it is nonetheless shocking. However, the results weren't entirely bad: 26 percent of social service organizations reported revenue increases during this period, possibly reflecting rising demand and timely governmental or philanthropic response. One respondent described the funding outlook in these terms: "It’s really rough. It’s scary. We don’t know if we’ll survive through the shutdown and even if we do, we don’t have high hopes that the economy will return to normal any time soon, so revenue will continue to be difficult to raise or secure."

Other charts below use the same data—233 survey responses pulled from 331 overall—and dive into the digital transformation of nonprofits and their perspectives on mergers. Given that nearly a third of the respondents we culled from our survey results put themselves into the "other" category of issue focus, it's worth noting what some of those were. They included food, housing, philanthropy, capacity building, and many others.

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Going Virtual

Many people are wondering what the "new normal" is going to be. Working from home seems to be a big part of it for the nonprofits we surveyed. Eighty-two percent of respondents reported the majority of their staff are now working from home. Another 12 percent reported that half or fewer of their staff were working from home. Going virtual doesn't stop there—82 percent reported digitalizing some or all of the programs and services they offered. This trend generally held across all subsectors. As one respondent wrote, the pandemic "inspired us to be more agile, to pivot and approach issues more innovatively, and challenged us to look at our work differently going forward." Another noted that "it's been very difficult in many ways but also very positive in adapting our culture to be more fluid, nimble, and paperless.”

Mergers

Over more than two decades of helping hundreds of nonprofits merge, La Piana Consulting has observed the prevalence of mergers to be 1 percent or less of the sector in any given year. It is remarkable that 23 percent of the organizations responding to our survey are now considering such partnerships. One of them said they had been thinking about a merger with another group for years, and "COVID-19 has finally pushed us to begin those discussions." Another respondent described it in job terms: "In order to keep staff, we are exploring a partnership with another nonprofit to share [an] employee's time and cost of employment."

Read more stories by David La Piana.